UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________________________

FORM 10-Q

(Mark One)



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

For the quarterly period ended September 30, ~~2017~~2018



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

For the transition period from to

Commission file number: 001-37870

TiVo Corporation

(Exact name of registrant as specified in its charter)



Delaware		61-1793262
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
~~Two Circle Star Way,~~2160 Gold Street, San ~~Carlos,~~Jose, CA ~~94070~~95002
(Address of principal executive offices, including zip code)

(408) ~~562-8400~~519-9100

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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. YesþNoo

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes þNoo

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 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 þ	Accelerated filer o	Non-accelerated filer o
		~~(Do not check if a smaller reporting company)~~
Smaller reporting company o	Emerging growth company o

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes oNoþ

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



(in thousands)	Outstanding as of
Class	October ~~27, 2017~~31, 2018
Common Stock	~~122,054~~123,927

TIVO CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS




PART I. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive ~~(Loss) Income~~Loss	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
ITEM 2.	~~MANAGEMENT’S~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3540
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	5058
ITEM 4.	CONTROLS AND PROCEDURES	5058

PART II. OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	5159
ITEM 1A.	RISK FACTORS	5159
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	5159
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	5159
ITEM 4.	MINE SAFETY DISCLOSURES	5159
ITEM 5.	OTHER INFORMATION	5159
ITEM 6.	EXHIBITS	5260
	SIGNATURES	5361

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TIVO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)


	September 30, 2017			December 31, 2016			September 30, 2018			December 31, 2017
ASSETS	(Unaudited)						(Unaudited)
Current assets:
Cash and cash equivalents	$	92,787		$	192,627		$	149,655		$	128,965
Short-term marketable securities	132,418			117,084			162,073			140,866
Accounts receivable, net	191,010			147,142			173,749			180,768
Inventory	11,710			13,186			7,963			11,581
Prepaid expenses and other current assets	47,449			37,400			36,012			40,719
Total current assets	475,374			507,439			529,452			502,899
Long-term marketable securities	88,112			128,929			70,296			82,711
Property and equipment, net	44,339			48,372			50,689			55,244
Intangible assets, net	685,455			806,838			524,057			643,924
Goodwill	1,813,236			1,812,118			1,813,183			1,813,227
Other long-term assets	66,235			17,147			57,104			65,673
Total assets	$	3,172,751		$	3,320,843		$	3,044,781		$	3,163,678

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	124,977		$	226,451		$	92,557		$	135,852
Deferred revenue	67,445			49,145
Unearned revenue							49,667			55,393
Current portion of long-term debt	7,000			7,000			7,000			7,000
Total current liabilities	199,422			282,596			149,224			198,245
Taxes payable, less current portion	4,936			4,893			4,694			3,947
Deferred revenue, less current portion	43,521			43,545
Unearned revenue, less current portion							50,356			58,283
Long-term debt, less current portion	973,957			967,732			982,801			976,095
Deferred tax liabilities, net	78,399			77,454			51,150			50,356
Other long-term liabilities	28,528			34,987			14,982			23,736
Total liabilities	1,328,763			1,411,207			1,253,207			1,310,662
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000 shares authorized; no shares issued or outstanding	—			—			—			—
Common stock, $0.001 par value, 250,000 shares authorized; 123,040 shares issued and 121,895 shares outstanding as of September 30, 2017; and 120,526 shares issued and 120,061 shares outstanding as of December 31, 2016	123			121
Treasury stock, 1,145 shares and 465 shares as of September 30, 2017 and December 31, 2016, respectively, at cost	(22,430		)	(9,646		)
Common stock, $0.001 par value, 250,000 shares authorized; 125,629 shares issued and 123,875 shares outstanding as of September 30, 2018; and 123,385 shares issued and 122,116 shares outstanding as of December 31, 2017							126			123
Treasury stock, 1,754 shares and 1,269 shares as of September 30, 2018 and December 31, 2017, respectively, at cost							(31,495		)	(24,740		)
Additional paid-in capital	3,280,689			3,280,905			3,249,615			3,273,022
Accumulated other comprehensive loss	(3,304		)	(7,049		)	(4,297		)	(2,738		)
Accumulated deficit	(1,411,090		)	(1,354,695		)	(1,422,375		)	(1,392,651		)
Total stockholders’ equity	1,843,988			1,909,636			1,791,574			1,853,016
Total liabilities and stockholders’ equity	$	3,172,751		$	3,320,843		$	3,044,781		$	3,163,678

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

TIVO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Revenues, net:
Licensing, services and software	$	188,031		$	148,509		$	577,545		$	390,998		$	160,783		$	188,031		$	516,495		$	577,545
Hardware	9,867			4,612			34,675			5,752			3,926			9,867			10,911			34,675
Total Revenues, net	197,898			153,121			612,220			396,750			164,709			197,898			527,406			612,220
Costs and expenses:
Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets	42,811			31,661			124,398			78,651			40,749			42,811			126,547			124,398
Cost of hardware revenues, excluding depreciation and amortization of intangible assets	9,889			4,560			35,877			5,072			4,220			9,889			14,260			35,877
Research and development	48,872			30,380			144,386			76,112			42,053			48,872			133,894			144,386
Selling, general and administrative	47,431			54,697			147,121			134,463			39,867			47,431			133,906			147,121
Depreciation	5,015			4,622			15,869			13,181			5,338			5,015			16,252			15,869
Amortization of intangible assets	41,722			24,925			125,100			63,087			37,242			41,722			119,463			125,100
Restructuring and asset impairment charges	3,710			22,311			17,623			24,644			2,921			3,710			8,568			17,623
Total costs and expenses	199,450			173,156			610,374			395,210			172,390			199,450			552,890			610,374
Operating (loss) income	(1,552		)	(20,035		)	1,846			1,540			(7,681		)	(1,552		)	(25,484		)	1,846
Interest expense	(10,990		)	(11,021		)	(31,827		)	(32,411		)	(12,436		)	(10,990		)	(36,241		)	(31,827		)
Interest income and other, net	1,059			353			3,819			322			861			1,059			2,971			3,819
(Loss) income on interest rate swaps	(39		)	1,697			(1,374		)	(16,897		)
Gain (loss) on interest rate swaps													1,033			(39		)	7,185			(1,374		)
TiVo Acquisition litigation	(1,100		)	—			(14,006		)	—			—			(1,100		)	—			(14,006		)
Loss on debt extinguishment	—			—			(108		)	—			—			—			—			(108		)
Loss on debt modification	—			—			(929		)	—			—			—			—			(929		)
Loss before income taxes	(12,622		)	(29,006		)	(42,579		)	(47,446		)
Income tax expense (benefit)	4,341			(83,445		)	13,816			(74,825		)
(Loss) income from continuing operations, net of tax	(16,963		)	54,439			(56,395		)	27,379
Loss from discontinued operations, net of tax	—			(4,517		)	—			(4,517		)
Net (loss) income	$	(16,963	)	$	49,922		$	(56,395	)	$	22,862
Loss from continuing operations before income taxes													(18,223		)	(12,622		)	(51,569		)	(42,579		)
Income tax expense													4,769			4,341			13,305			13,816
Loss from continuing operations, net of tax													(22,992		)	(16,963		)	(64,874		)	(56,395		)
Income from discontinued operations, net of tax													143			—			3,738			—
Net loss													$	(22,849	)	$	(16,963	)	$	(61,136	)	$	(56,395	)

Basic (loss) earnings per share:
Basic loss per share:
Continuing operations	$	(0.14	)	$	0.60		$	(0.47	)	$	0.32		$	(0.19	)	$	(0.14	)	$	(0.53	)	$	(0.47	)
Discontinued operations	—			(0.05		)	—			(0.05		)	—			—			0.03			—
Basic (loss) earnings per share	$	(0.14	)	$	0.55		$	(0.47	)	$	0.27
Basic loss per share													$	(0.19	)	$	(0.14	)	$	(0.50	)	$	(0.47	)
Weighted average shares used in computing basic per share amounts	120,935			91,131			119,994			84,895			123,459			120,935			122,756			119,994

Diluted (loss) earnings per share:
Diluted loss per share:
Continuing operations	$	(0.14	)	$	0.59		$	(0.47	)	$	0.32		$	(0.19	)	$	(0.14	)	$	(0.53	)	$	(0.47	)
Discontinued operations	—			(0.05		)	—			(0.05		)	—			—			0.03			—
Diluted (loss) earnings per share	$	(0.14	)	$	0.54		$	(0.47	)	$	0.27
Diluted loss per share													$	(0.19	)	$	(0.14	)	$	(0.50	)	$	(0.47	)
Weighted average shares used in computing diluted per share amounts	120,935			92,144			119,994			85,858			123,459			120,935			122,756			119,994

Dividends declared per share	$	0.18		$	—		$	0.54		$	—		$	0.18		$	0.18		$	0.54		$	0.54

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

TIVO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~(LOSS) INCOME~~LOSS

(In thousands)

(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net (loss) income $ (16,963 ) $ 49,922
$ (56,395 ) $ 22,862
Other comprehensive income, net of tax:
Foreign currency translation adjustment 267
452
3,394
2,636
Unrealized gains (losses) on marketable securities 82
(282 ) 351
493
Other comprehensive income, net of tax 349
170
3,745
3,129
Comprehensive (loss) income $ (16,614 ) $ 50,092
$ (52,650 ) $ 25,991



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net loss	$	(22,849	)	$	(16,963	)	$	(61,136	)	$	(56,395	)
Other comprehensive (loss) income, net of tax:
Change in foreign currency translation adjustment	(286		)	267			(1,889		)	3,394
Unrealized gains on marketable securities
Change in unrealized gains on marketable securities	222			82			114			351
Less: Reclassification adjustment on sale	—			—			216			—
Other comprehensive (loss) income, net of tax	(64		)	349			(1,559		)	3,745
Comprehensive loss	$	(22,913	)	$	(16,614	)	$	(62,695	)	$	(52,650	)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

TIVO CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2018			2017
Cash flows from operating activities:
Net (loss) income	$	(56,395	)	$	22,862
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Loss from discontinued operations, net of tax	—			4,517
Net loss							$	(61,136	)	$	(56,395	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Income from discontinued operations, net of tax							(3,738		)	—
Depreciation	15,869			13,181			16,252			15,869
Amortization of intangible assets	125,100			63,087			119,463			125,100
Amortization of convertible note discount and note issuance costs	11,016			10,468			11,586			11,016
Restructuring and asset impairment charges	17,623			24,644			8,568			17,623
Equity-based compensation	38,781			32,031			28,226			38,781
Change in fair value of interest rate swaps	(5,102		)	9,716			(10,245		)	(5,102		)
TiVo Acquisition litigation	14,006			—			—			14,006
Loss on debt extinguishment	108			—			—			108
Loss on debt modification	929			—			—			929
Deferred income taxes	1,035			(87,512		)	(447		)	1,035
Other operating, net	(3,358		)	1,548			1,819			(3,358		)
Changes in operating assets and liabilities:
Accounts receivable	(42,155		)	(9,798		)	30,548			(42,155		)
Inventory	1,476			1,260			3,618			1,476
Prepaid expenses and other current assets and other long-term assets	(58,411		)	(10,737		)	7,377			(58,411		)
Accounts payable and accrued expenses and other long-term liabilities	(29,680		)	2,663			(35,237		)	(29,680		)
Taxes payable	2,141			(1,827		)	(474		)	2,141
Deferred revenue	18,276			2,071
Unearned revenue							(2,445		)	18,276
Net cash provided by operating activities of continuing operations							113,735			51,259
Net cash provided by operating activities of discontinued operations							—			—
Net cash provided by operating activities	51,259			78,174			113,735			51,259
Cash flows from investing activities:
Payments for purchase of short- and long-term marketable securities	(121,979		)	(132,159		)	(150,583		)	(121,979		)
Proceeds from sales or maturities of short- and long-term marketable securities	150,261			183,992			142,753			150,261
Cash acquired in Tivo Acquisition, net of cash paid	—			166,312
Return of cash paid for TiVo Acquisition	25,143			—			—			25,143
Payment to Dissenting Holders in TiVo Acquisition	(117,030		)	—			—			(117,030		)
Payments for purchase of property and equipment	(22,534		)	(15,810		)	(17,053		)	(22,534		)
Payments for purchase of patents	(2,000		)	(2,500		)	—			(2,000		)
Other investing, net	(67		)	(48		)	15			(67		)
Net cash (used in) provided by investing activities	(88,206		)	199,787
Cash flows from financing activities:
Net cash used in investing activities							(24,868		)	(88,206		)
Cash flows used in financing activities:
Proceeds from issuance of long-term debt, net of issuance costs	681,552			—			—			681,552
Principal payments on long-term debt	(687,750		)	(5,250		)	(5,250		)	(687,750		)
Payments for dividends	(65,238		)	—			(66,687		)	(65,238		)
Payments for purchase of warrants	—			(2,923		)
Proceeds from sale of call options	—			5,706
Payments for contingent consideration and deferred holdback	(2,650		)	(750		)	(1,874		)	(2,650		)
Payments for withholding taxes related to net settlement of restricted awards	(12,784		)	(9,365		)	(6,755		)	(12,784		)
Proceeds from exercise of employee stock options and employee stock purchase plan	22,364			13,964
Net cash (used in) provided by financing activities	(64,506		)	1,382
Proceeds from employee stock purchase plan and exercise of employee stock options							12,854			22,364
Net cash used in financing activities							(67,712		)	(64,506		)
Effect of exchange rate changes on cash and cash equivalents	1,613			1,598			(465		)	1,613
Net (decrease) increase in cash and cash equivalents	(99,840		)	280,941
Net increase (decrease) in cash and cash equivalents							20,690			(99,840		)
Cash and cash equivalents at beginning of period	192,627			101,675			128,965			192,627
Cash and cash equivalents at end of period	$	92,787		$	382,616		$	149,655		$	92,787

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

TIVO CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

On April 28, 2016, Rovi Corporation ("Rovi") and TiVo Inc. (renamed TiVo Solutions Inc. ("TiVo Solutions")) entered into an Agreement and Plan of Merger (the “Merger Agreement”) for Rovi to acquire TiVo Solutions in a cash and stock transaction (the "TiVo Acquisition"). Following consummation of the TiVo Acquisition on September 7, 2016 (the "TiVo Acquisition Date"), TiVo Corporation (the "Company"), a Delaware corporation founded in April 2016 as Titan Technologies Corporation and then a wholly-owned subsidiary of Rovi, owns both Rovi and TiVo Solutions. ~~The common stocks of Rovi and TiVo Solutions were de-registered after completion of the TiVo Acquisition.~~

The Company is a global leader in media and entertainment products that power consumer entertainment experiences and enable its customers to deepen and further monetize their audience relationships. The Company provides a broad set of intellectual property, cloud-based services and set-top box ("STB") solutions that enable people to find and enjoy online video, television ("TV"), movies and music entertainment, including content discovery through ~~device embedded~~device-embedded and cloud-based user experience ("UX"), including interactive program guides (“IPGs”), digital video recorders ("DVRs"), natural language voice and text search, cloud-based recommendations services and ~~our~~the Company's extensive entertainment metadata (i.e., descriptive information, promotional images or other content that describes or relates to television shows, videos, movies, sports, music, books, games or other entertainment content). The Company's integrated platform includes software and cloud-based services that provide an all-in-one approach for navigating a fragmented universe of content by seamlessly combining live, recorded, video-on-demand ("VOD") and over-the-top ("OTT") content into one intuitive user interface with simple universal search, discovery, viewing and recording, to create a unified viewing experience. The Company distributes its products through service provider relationships, integrated into ~~third party~~third-party devices and directly to retail consumers. The Company also offers data analytics solutions ~~including advertising and programming promotion optimizers,~~ which enable advanced audience targeting and measurement in linear ~~television~~and OTT TV advertising. Solutions are sold globally to cable, satellite, consumer electronics ("CE"), entertainment, media and online distribution companies, and, in the United States, ~~we sell~~the Company sells a suite of DVR and whole home media products and services directly to retail consumers.

Basis of Presentation and Principles of Consolidation

Rovi is the predecessor registrant to TiVo Corporation and therefore, for periods prior to the TiVo Acquisition Date, the Condensed Consolidated Financial Statements reflect the financial position, results of operations and cash flows of Rovi. As used herein, the “Company” refers to Rovi when referring to periods prior to and including the TiVo Acquisition Date and to TiVo Corporation when referring to periods subsequent to the TiVo Acquisition Date. The Company’s results of operations include the operations of TiVo Solutions after the TiVo Acquisition Date. See Note 2 for additional information on the TiVo Acquisition.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted in accordance with such rules and regulations. However, the Company believes the disclosures made are adequate to make the information not misleading. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, which in the opinion of management, are considered necessary to present fairly the results for the periods presented.

The information contained in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto and other disclosures contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017. The Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Comprehensive Loss and the Condensed Consolidated Statements of Cash Flows for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, ~~2017,~~2018, for any future year, or for any other future interim period.

The accompanying ~~unaudited~~ Condensed Consolidated Financial Statements include the accounts of TiVo Corporation and subsidiaries and affiliates in which the Company has a controlling financial interest after the elimination of intercompany accounts and transactions.

~~Certain prior year amounts have been reclassified to conform to the current year presentation.~~

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and related disclosures atas of the date of the financial statements and the results of operations for the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, long-lived asset impairment, including goodwill and intangible assets, equity-based compensation and income taxes. Actual results may differ from those estimates.

Concentrations of Risk

~~Customers representing 10% or more of Total Revenues, net were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
AT&T Inc. ("AT&T") 14 % 13 % 14 % 13 %
Charter Communications Inc. (1 ) (1 ) (1 ) 11 %

~~(1) Customer represented less than 10% of Total Revenues, net.~~

~~Substantially all of the Company's revenue from AT&T is reported in the Intellectual Property Licensing segment.~~

~~Customers representing 10% or more of Accounts receivable, net were as follows.~~

September 30, 2017 December 31, 2016
AT&T 22 % 15 %
Virgin Media Inc. (1)
13 %

~~(1) Customer represented less than 10% of Accounts receivable, net.~~

The TiVo service is enabled ~~through the use of~~using a DVR manufactured by a ~~third-party contract manufacturer.~~third-party. The Company also relies on third parties with whom it outsources supply-chain activities related to inventory warehousing, order fulfillment, distribution and other direct sales logistics. The Company cannot be sure that these parties will perform their obligations as expected or that any revenue, cost savings or other benefits will be derived from the efforts of these parties. If any of these parties breaches or terminates their agreement with the Company or otherwise fails to perform their obligations in a timely manner, the Company may be delayed or prevented from commercializing its products and services.

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. A receivable related to revenue recognized for multi-year licenses is recognized when the Company has an unconditional right to invoice and receive payment in the future related to those licenses.

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 timing of cash collection, an evaluation is performed to determine whether the contract includes a significant financing component. As the primary purpose of the Company's invoicing terms is to provide customers with simplified and predictable ways of purchasing products and services, significant financing components are generally not identified in the Company’s contracts with customers.

The Company performs ongoing credit evaluations of its customers. The Company reviews its accounts receivable to identify potential collection issues. A specific allowance for doubtful accounts is recorded when warranted by specific customer circumstances, such as in the case of a bankruptcy filing, a deterioration in the customer's operating results or financial position or the past due status of a receivable based on its contractual payment terms. For customers for which a specific allowance for doubtful accounts was recorded, adjustments to recoverability estimates are recorded when there are subsequent changes in the specific customer's circumstances. For accounts receivable not specifically reserved, an allowance for doubtful accounts is recorded based on historical loss experience and other currently available evidence. Accounts receivable deemed uncollectible are charged off when collection efforts have been exhausted.

Contract Assets

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. The incremental costs of obtaining a contract with a customer are recognized as an asset when the expected period of benefit is greater than one year. The incremental costs of obtaining a contract with a customer are amortized on a straight-line basis over a period of time commensurate with the period of benefit, generally three to five years, which considers the transfer of goods or services to which the assets relate, technological developments during the period of benefit, customer history and other factors. The period of benefit is generally the estimated life of the customer relationship if renewals are expected, and may exceed the contract term. Amortization of the capitalized incremental costs of obtaining a contract with a customer is included in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Contract assets are classified as current or noncurrent in the Condensed Consolidated Balance Sheets based on when the asset is expected to be realized. Contract assets are subject to periodic impairment reviews.

Contract Liabilities, including Unearned Revenue

Contract liabilities are mainly comprised of unearned revenue related to consumer lifetime subscriptions to the TiVo service and multi-period licensing or cloud-based services and other offerings for which the Company is paid in advance of when control of the good or service is transferred to the customer. Unearned revenue also includes amounts related to professional services to be performed in the future. Unearned revenue arises when cash payments are received or due, including amounts which are refundable, in advance of performance. Contract liabilities exclude amounts expected to be refunded. Payment terms and conditions vary by contract type, location of customer and the products or services offered. For certain products or services and customer types, payment before the products or services are delivered to the customer is required.

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 taxes collected from customers which are subsequently remitted to governmental authorities.

Depending on the terms of the contract, a portion of the consideration received may be deferred because of a requirement to satisfy a future obligation. Stand-alone selling price for separate performance obligations is based on observable prices charged to customers for goods or services sold separately or the cost-plus-a-margin approach when observable prices are not available, considering overall pricing objectives.

Arrangements with Multiple Performance Obligations

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. The allocation of transaction price among performance obligations in a contract may impact the amount and timing of revenue recognized in the Condensed Consolidated Statements of Operations during a given period.

Contract Modifications

Contracts may be modified due to changes in contract specifications or customer requirements. Contract modifications occur when the change in terms either creates new enforceable rights and obligations or changes existing enforceable rights and obligations. The effect of a contract modification for goods and services that are not distinct in the context of the contract on the transaction price is recognized as an adjustment to revenue on a cumulative catch-up basis. Contract modifications that result in goods or services that are distinct from the previously existing contract are accounted for prospectively.

Variable Consideration

When a contract with a customer includes a variable transaction price, an estimate of the consideration to which the Company expects to be entitled to for transferring the promised goods or services is made at contract inception. Depending on the terms of the contract, variable consideration is estimated using either the expected value approach or the most likely value approach. Under either approach to estimating variable consideration, the estimate considers all information (historical, current and forecast) that is reasonably available at contract inception. The amount of variable consideration is estimated at contract inception and updated as additional information becomes available. The estimate of variable consideration is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Subsequent changes in the transaction price resulting from changes in the estimate of variable consideration are allocated to the performance obligations in the contract on the same basis as at contract inception.

Certain payments to retailers and distributors, such as market development funds and revenue shares, are treated as a reduction of the transaction price, and therefore revenue, rather than Selling, general and administrative expense. The reduction of revenue is recognized at the later of when revenue is recognized for the transfer of the related goods or services to the customer or when the Company pays or promises to pay the consideration.

When variable consideration is in the form of a sales-based or usage-based royalty in exchange for a license of intellectual property, or when a license of intellectual property 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.

Significant Judgments

Determining whether promises to transfer multiple goods and services in contracts with customers are considered distinct performance obligations that should be accounted for separately requires significant judgment, including related to the level of integration and interdependency between the performance obligations. In addition, judgment is necessary to allocate the transaction price to the distinct performance obligations, including whether there is a discount or significant financing component to be allocated based on the relative stand-alone selling price of the various performance obligations.

Significant judgment is required to determine the stand-alone selling price for each distinct performance obligation when an observable price is not available. In instances where ~~a supply agreement does~~stand-alone selling price is not ~~exist and suppliers fail to perform their obligations,~~directly observable, such as when the ~~Company may be unable to find alternative suppliers or deliver its products and services to its customers on time, if at all. The~~ Company does not ~~have~~sell the good or service separately, the stand-alone selling price is determined using a ~~long-term written supply agreement with Broadcom Corporation,~~range of inputs that includes market conditions and other observable inputs. More than one stand-alone selling price may exist for individual goods and services due to the ~~sole supplier~~stratification of those goods and services, considering attributes such as the size of the customer and geographic region.

Due to the nature of the work required to be performed on some performance obligations, significant judgment may be required to determine the transaction price. It is common for the Company's license agreements to contain provisions that can either increase or decrease the transaction price. These variable amounts are generally estimated based on usage or the achievement of performance metrics. In addition to estimating variable consideration, significant judgment is necessary to identify forms of variable consideration, determine whether the variable consideration relates to a sales-based or usage-based royalty of intellectual property and the determination of whether and when to include estimates of variable consideration in the transaction price.

Some hardware products are sold with a right of return and in other circumstances, other credits or incentives may be provided such as consideration (sales incentives) given to customers or resellers, which are accounted for as variable consideration and recognized as a reduction to the revenue recognized. Estimates of returns, credits and incentives are made at contract inception and updated each reporting period.

In contracts where the Company does not host the TiVo service and that include engineering services that are essential to the functionality of the licensed technology or involve significant customization or modification of software, the Company recognizes revenue as progress toward completion occurs using an input method based on the ratio of costs incurred to date to total estimated costs of the project. Significant judgment is required to estimate the remaining effort to complete the project. These estimates are reassessed throughout the term of the arrangement.

On an ongoing basis, management evaluates its estimates, inputs and assumptions related to revenue recognition. Using different estimates, inputs or assumptions may materially affect the reported amounts of assets and liabilities as of the date of the financial statements and the results of operations for the reporting period.

Nature of goods and services

The following is a discussion of the principal activities from which the Company generates its revenue.

Patent Licensing Agreements

The Company licenses its discovery patent portfolio to traditional pay TV providers, virtual service providers, OTT video providers, CE manufacturers and others. The Company licenses its patented technology portfolio under two revenue models: (i) fixed-fee licenses and (ii) per-unit royalty licenses.

The Company's long-term fixed-fee license agreements provide rights to future patented technologies over the term of the agreement that are highly interdependent or highly interrelated to the patented technologies provided at the inception of the agreement. The Company treats these rights as a single performance obligation with revenue recognized on a straight-line basis over the term of the fixed-fee license agreement.

At times, the Company enters into license agreements in which a licensee is released from past patent infringement claims and is granted a license to ship an unlimited number of units over a future period for a fixed fee. In these arrangements, the Company allocates the transaction price between the release for past patent infringement claims and the future license. In determining the stand-alone selling price of the release for past patent infringement claims and the future license, the Company considers such factors as the number of units shipped in the past and in what geographies these units were shipped, the number of units expected to be shipped in the future and in what geographies these units are expected to be shipped, as well as the licensing rate the Company generally receives for units shipped in the same geographies. As the release from past patent infringement claims is generally satisfied at execution of the agreement, the transaction price allocated to the release from past patent infringement claims is generally recognized in the period the agreement is executed and the amount of transaction price allocated to the future license is recognized ratably over the future license term.

The Company recognizes revenue from per-unit royalty licenses in the period in which the licensee's sales are estimated to have occurred, which results in an adjustment to revenue when actual sales are subsequently reported by the licensees, which is generally in the month or quarter following usage or shipment. The Company generally recognizes revenue from per-unit royalty licenses on a per-subscriber per-month model for licenses with service providers and a per-unit shipped model for licenses with CE manufacturers.

Arrangements with Multiple System Operators for the TiVo Service

The Company's arrangements with multiple system ~~controller~~operators ("MSOs") typically include software customization and set-up services, associated maintenance and support, limited training, post-contract support, TiVo-enabled DVRs, non-DVR STBs and the TiVo service.

The Company has two types of arrangements with MSOs that include technology deployment and engineering services. In instances where the Company hosts the TiVo service, non-refundable payments received for customization and set-up services are deferred and recognized as revenue over the contractual term. The related cost of such services is capitalized to the extent it is deemed recoverable and amortized to cost of revenues over the same period as the related TiVo service revenue is recognized. The Company estimates the stand-alone selling prices for training, DVRs, non-DVR STBs and maintenance and support based on the price charged in stand-alone sales of the promised good or service. The stand-alone selling price for the TiVo service is determined considering the size of the MSO and expected volume of deployment, market conditions, competitive landscape, internal costs and total gross margin objectives. For a term license to the TiVo service, the Company receives license fees for the hosted TiVo service on either a per-subscriber per-month basis or a fixed fee. The Company recognizes revenue from per-subscriber per-month licenses during the month the TiVo service is provided to the customer and recognizes revenue from fixed fee licenses ratably over the license period.

In arrangements where the Company does not host the TiVo service and that include engineering services that are essential to the functionality of the licensed technology or involve significant customization or modification of the software, the Company recognizes revenue as progress toward completion is made using an input method based on the ratio of costs incurred to date to total estimated costs of the project. Project costs are primarily labor related to the specific activities required for the project. Costs related to general infrastructure or uncommitted platform development are not included in the project cost estimates and are expensed as incurred. Estimating project costs requires forecasting costs, tracking progress toward completion and projecting the remaining effort to complete the project. These estimates are reassessed throughout the term of the arrangement, and revisions to estimates are recognized on a cumulative catch-up basis when the changed conditions become known. Provisions for losses are recorded when estimates indicate it is probable that a loss will be incurred for the contract. The Company generally recognizes revenue from license fees for the TiVo service that it does not host on a per-subscriber per-month basis due to the recognition constraint on intellectual property usage-based royalties.

Subscription Services

Subscription services revenues primarily consist of fees to provide customers with access to one or more of the Company's hosted products such as its i-Guide IPG, advanced search and recommendations, metadata and analytics products, including routine customer support. The Company generally receives per-subscriber per-month fees for its i-Guide IPG and search and recommendations service and revenue is recorded in the month the customer uses the service. The Company generally receives a monthly or quarterly fee from its metadata or analytics licenses for the right to use its metadata or access its analytics platform and to receive regular updates. Revenue from the Company's metadata and analytics service is recognized ratably over the subscription period.

Passport Software

The Company licenses its Passport IPG software to pay TV providers in North and South America. The Company generally receives per-subscriber per-month fees for licenses to its Passport IPG software and support. Due to the usage-based royalty provisions of the revenue recognition guidance, revenue is generally recognized in the month the customer uses the software.

Advertising

The Company generates advertising revenue through its IPGs. Advertising revenue is recognized when the related advertisement is provided. Advertising revenue is recorded net of agency commissions and revenue shares with service providers and CE manufacturers.

TiVo-enabled DVRs and TiVo Service

The Company sells TiVo-enabled DVRs and the related service directly to customers through sales programs via the TiVo.com website and licenses the sale of TiVo-enabled DVRs through a limited number of retailers. For sales through the TiVo.com website, the customer receives a DVR and commits to either a minimum subscription period of one year or for the lifetime of the DVR. After the initial subscription period, customers have various pricing options when they renew their subscription. Customers have the right to return the DVR within 30 days of purchase. Customers have the right to cancel their subscription to the TiVo service within 30 days of subscription activation for a full refund. For licensed sales of TiVo-enabled DVRs through retailers, the customer commits to either a minimum subscription period of one year or for the lifetime of the DVR.

The stand-alone selling price for the TiVo service is established based on stand-alone sales of the service and varies by the length of the service period. The stand-alone selling price of the DVR is determined based on the price for which the Company would sell the DVR without any service commitment from the customer.

The transaction price allocated to the DVR is recognized as revenue on delivery and the transaction price allocated to the TiVo service is recognized as revenue ratably over the service period. Subscription revenues from lifetime subscriptions are recognized ratably over the estimated useful life of the DVR associated with the subscription. The estimated useful life for a DVR depends on a number of assumptions, including, but not limited to, customer retention rates, the timing of new product introductions and historical experience. As of September 30, 2018, the Company recognizes revenue for lifetime subscriptions over a 66-month period. The Company periodically reassesses the estimated useful life of a DVR. When the actual useful life of the DVR materially differs from the Company's estimate, the estimated useful life of the DVR is adjusted, which could result in the recognition of revenue over a longer or shorter period of time.

Shipping and handling costs associated with outbound freight after control of a DVR has transferred to a customer are accounted for as a fulfillment cost and are included in Cost of hardware revenues, excluding depreciation and amortization of intangible assets as incurred.

Recent Accounting Pronouncements

Standards Recently Adopted

In January 2017, the Financial Accounting Standards ("FASB") simplified the goodwill impairment test by eliminating its second step. Pursuant to the simplified test, an entity performs its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company elected to early adopt the simplified test. Application of this guidance on January 1, 2017 did not have an effect on the Condensed Consolidated Financial Statements.

In March 2016, the FASB simplified certain areas of accounting for stock-based compensation, including accounting for the income tax consequences of stock-based compensation, determining the classification of awards as either equity or liabilities, presenting certain items within the statement of cash flows and introducing an accounting policy election to account for forfeitures of nonvested awards as they occur. Application of this guidance on January 1, 2017 increased the Company's deferred tax assets and the related valuation allowance by $70.1 million, resulting in no material effect on the Condensed

~~Consolidated Financial Statements. On adoption, the Company did not change its accounting policy of estimating forfeitures for nonvested awards subject to service conditions.~~

In March 2016, the FASB clarified the assessment of whether contingent options that can accelerate the payment of principal on debt instruments requires bifurcation as an embedded derivative. The amendments require a contingent option embedded in a debt instrument to be evaluated for possible separate accounting as a derivative instrument without regard to the nature of the exercise contingency. Application of the clarified guidance on January 1, 2017 did not have an effect on the Condensed Consolidated Financial Statements.

In July 2015, the FASB changed the measurement principle for inventory from the lower of cost or market to the lower of cost and net realizable value for entities that do not use the last-in, first-out ("LIFO") or retail inventory method. The changes also eliminated the requirement to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory for entities that do not use the LIFO or retail inventory method. Application of the changed measurement principle for inventory on January 1, 2017 did not have an effect on the Condensed Consolidated Financial Statements.

~~Standards Pending Adoption~~

In March 2017, the FASB shortened the amortization period for certain investments in callable debt securities held at a premium to the earliest call date. Application of the shortened amortization period is effective for the Company in the first quarter of 2019 on a modified retrospective basis, with early application permitted. The Company does not expect application of the shortened amortization period to have a material effect on its Condensed Consolidated Financial Statements.

~~In January 2017, the FASB~~ clarified the definition of a business. The clarified guidance provides a more defined framework to use in determining when a set of assets and activities constitute a business. The clarified definition iswas effective for the Company ~~in the first quarter of~~on January 1, 2018 onand was applied using a prospective ~~basis, with early application permitted. The Company does~~transition approach. Application of this guidance did not ~~expect application of the clarified definition of a business to~~ have ~~a material~~an effect on ~~its~~the Condensed Consolidated Financial Statements.

In October 2016, the FASB amended its guidance on the tax effects of intra-entity transfers of assets other than inventory. The amended guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The ~~amendments are~~amendment was effective for the Company ~~in the first quarter of~~on January 1, 2018 and ~~is required to be~~was applied onusing a modified retrospective ~~basis. Early application is permitted. The Company does~~transition approach. Application of this guidance did not ~~expect application of the amended guidance to~~ have ~~a material~~an effect on ~~its~~the Condensed Consolidated Financial Statements.

In August 2016, the FASB issued clarifying guidance on the presentation of eight specific cash flow issues for which previous guidance was either unclear or not specific. The clarified guidance was effective for the Company on January 1, 2018 and was applied using a retrospective transition approach. Application of this guidance did not have an effect on the Condensed Consolidated Financial Statements.

In March 2016, the FASB provided guidance for the derecognition of prepaid stored-value product liabilities, such as gift cards. Pursuant to this guidance, among other criteria, prepaid stored-value product liabilities are eligible to be derecognized when the likelihood of redemption becomes remote. The guidance was effective for the Company on January 1, 2018 and was applied using a modified retrospective transition approach. On adoption, the Company recorded a cumulative effect adjustment, net of tax effects, of $2.2 million that reduced Accumulated deficit for prepaid stored-value product liabilities where the likelihood of redemption was deemed to be remote at the adoption date.

In May 2014, the FASB issued an amended accounting standard for revenue recognition. The core principle of the amended revenue recognition guidance is for an entity to recognize revenue to depict the transfer ofpromisedgoods or services to customers in amounts that reflect the consideration to which the entity expects to be entitled inexchange for those goods or services. The amendments also require enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In addition, the FASB amended its guidance related to the capitalization and amortization of the incremental costs of obtaining a contract with a customer. The Company adopted the amended revenue and cost recognition guidance on January 1, 2018 using the modified retrospective transition approach. On adoption, the Company recorded a cumulative effect adjustment, net of tax effects, that reduced Accumulated deficit by $27.9 million for the effects of the amended revenue recognition guidance and reduced Accumulated deficit by $1.3 million for the effects of capitalizing incremental costs to obtain contracts with customers. The significant differences giving rise to the cumulative effect adjustments are described in Note 5. Results for periods beginning after December 31, 2017 are presented under the amended revenue and cost recognition guidance, while prior period amounts were not restated and continue to be reported in accordance with the Company's previous revenue and cost recognition policies.

Standards Pending Adoption

In August 2018, the FASB modified the requirements for capitalizing costs incurred to implement a hosting arrangement that is a service contract. The modified requirements were intended to align the cost capitalization requirements for hosting arrangements with the cost capitalization requirements for internal-use software. The modified guidance is effective for the Company ~~in the first quarter of 2018 and is required to~~beginning on January 1, 2020, with early adoption permitted. The guidance can be applied onprospectively to all arrangements entered into or materially modified after the effective date or using a retrospective ~~basis. Early application is permitted.~~transition approach. The Company ~~is evaluating~~does not expect application of the modified requirements for capitalizing costs incurred to implement a hosting arrangement to have a material effect ~~of application~~ on its Condensed Consolidated Financial Statements.

In March 2017, the FASB shortened the amortization period for certain investments in callable debt securities held at a premium to the earliest call date. Application of the shortened amortization period is effective for the Company beginning on January 1, 2019 on a modified retrospective basis, with early application permitted. The Company does not expect application of the shortened amortization period to have a material effect on its Condensed Consolidated Financial Statements.

In June 2016, the FASB issued updated guidance that requires entities to use a current expected credit loss model to measure credit-related impairments for financial instruments held at amortized cost. The current expected credit loss model is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect ~~collectibility.~~collectability. Current expected credit losses, and subsequent adjustments, represent an estimate of lifetime expected credit losses that are recorded as an allowance deducted from the amortized cost ~~basis~~ of the financial instrument. The updated guidance also amends the ~~current~~ other-than-temporary impairment model for available-for-sale debt securities by requiring the recognition of impairments for credit-related losses through an allowance and eliminating the length of time a security has been in an unrealized loss position as a consideration in the determination of whether a credit loss exists. The updated guidance is effective for the Company ~~in the first quarter of~~beginning on January 1, 2020 and is effective using a modified retrospective transition approach for the provisions related to application of the current expected credit loss model to financial instruments and using a prospective transition approach for the provisions related to credit losses on available-for-sale debt

securities. Early application is permitted. The Company is evaluating the effect of application on its Condensed Consolidated Financial Statements.

In March 2016, the FASB provided guidance on the derecognition of prepaid stored-value product liabilities, such as gift cards. The guidance is effective for the Company in the first quarter of 2018 and may be applied using a full retrospective or modified retrospective approach, with early adoption permitted. The Company is evaluating the effect of application on its Condensed Consolidated Financial Statements.

In February 2016, the FASB issued a new accounting standard for leases. The new lease accounting standard generally requires the recognition of ~~financing~~operating and ~~operating~~financing lease liabilities and corresponding right-of-use assets on the ~~balance sheet.~~statement of financial position. For operating leases, a lessee recognizes its total lease expense as an operating expense over the lease term. For financing leases, a lessee recognizes amortization of the right-of-use asset as an operating expense over the lease term separately from interest on the lease liability. ~~For operating leases, a lessee recognizes its total~~On transition, the difference between the right-of-use asset and lease ~~expense~~liabilities, net of any previously recognized lease-related assets and liabilities and any resulting deferred tax impact, is recognized as an ~~operating expense over the~~adjustment to retained earnings.

The new lease ~~term. The amendments are~~accounting standard is effective for the Company ~~in the first quarter of~~beginning on January 1, 2019 using a modified retrospective transition approach, with early application permitted. The Company is evaluating the effect of application on its Condensed Consolidated Financial Statements and expects to ~~recognize its~~apply the package of practical expedients permitted under the transition guidance within the new lease accounting standard, which among other things, permits the historical lease classification to carryforward. The Company also expects to apply a practical expedient to combine lease and non-lease components within a lease and to apply the transition alternative to record the cumulative effect of adoption on the date of initial application (i.e., January 1, 2019). Adoption of the new lease accounting standard is expected to result in the recognition of the present value of the Company's existing ~~operating~~minimum lease ~~commitments~~payments as ~~operating~~ lease liabilities and a corresponding right-of-use ~~assets.~~

~~In May 2014,~~asset, which may be material to the ~~FASB issued an amended~~Condensed Consolidated Balance Sheets. The new lease accounting standard ~~for revenue recognition. The amendments address how revenue~~ is ~~recognized in order~~not expected to ~~improve comparability between~~materially affect the ~~financial statements of companies applying U.S. GAAP and International FinancialReporting Standards. The core principle of the amended revenue standard is for an entity to recognize revenue to depict the transfer ofpromisedgoods or services to customers in amounts that reflect the consideration to which the entity expects to be entitled in~~exchange for those goods or services. In addition, the FASB amended its guidance related to the capitalization and amortization of the incremental costs of obtaining a contract with a customer. The amendments also require enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The amendments are effective for the Company in the first quarter of~~2018 and may be applied using a full retrospective or modified retrospective approach. The Company expects to initially apply the amendments in the first quarter of2018 using the modified retrospective transition approach.~~

~~While the Company has not finalized its evaluation of the effect of the amended revenue recognition standard on its~~ Condensed Consolidated ~~Financial~~ Statements revenue from both its fixed-fee and per-unit intellectual property licensees may be materially impacted. Under the amended revenue recognition standard, the Company may be required to recognize a substantial portion of license fees under a fixed-fee intellectual property license agreement at inception of the agreement, as opposed to recognizing the license fees ratably over the license term, which is its practice in accordance with existing U.S. GAAP. This could impact revenue recognition for all fixed-fee intellectual property license agreements, including certain fixed-fee agreements that license the Company's existing intellectual property portfolio and intellectual property that is added to the Company's portfolio during the term of the license. In addition, in accordance with existing U.S. GAAP, the Company currently recognizes revenue from per-unit royalty licenses with certain consumer electronics manufacturers and third party IPG providers in the period the licensee reports its sales, which is generally in the quarter after the underlying sales by the licensee occurred. On adoption of the amended revenue recognition standard, per-unit royalties are recognized as revenue during the period in which the licensee's sales are estimated to have occurred, which results in an adjustment to revenue when actual amounts are subsequently reported by the Company's licensees. In addition, some deferred revenue recognized in accordance with existing U.S. GAAP could be eliminated as part of the effect of adoption. The Company is evaluating~~the effect of the amended revenue recognition standard on its~~Operations, Condensed Consolidated ~~Financial~~ Statements

~~In accordance with existing U.S. GAAP, cost deferrals related to obtaining a contract have been minimal; however, under~~ of Comprehensive Loss or the ~~amended cost capitalization guidance, the deferral~~Condensed Consolidated Statements of incremental costs to obtain a contract with a customer are expected to be more significant. Any incremental costs to obtain a contract with a customer capitalized would be amortized over a period of time commensurate with the period of benefit, which may exceed the contract term, and would be subject to periodic impairment reviews. The Company is currently assessing the types and amounts of costs requiring capitalization and the associated amortization period.Cash Flows.

(2) Acquisitions

TiVo Acquisition

On September 7, 2016, Rovi completed its acquisition of TiVo Solutions, a global leader in next-generation video technology and innovative cloud-based software-as-a-service solutions. On the TiVo Acquisition Date, each issued and outstanding share of TiVo Solutions common stock (other than shares of TiVo Solutions common stock held by those TiVo Solutions stockholders who had properly demanded and not waived or withdrawn appraisal rights under Delaware law as further discussed below) automatically converted into the right to receive $2.75 per share in cash and 0.3853 (the “Exchange Ratio”) validly issued, fully paid and non-assessable shares of TiVo Corporation common stock. As the employee restricted stock awards, stock options and performance-based restricted stock awards remained outstanding after the TiVo Acquisition Date, employee holders were not eligible for the cash component of the merger consideration and the number of TiVo Corporation restricted stock awards or stock options delivered at the TiVo Acquisition Date was based on an exchange ratio of 0.5186.

TiVo Solutions' results of operations and cash flows have been included in the Condensed Consolidated Financial Statements for periods subsequent to September 7, 2016. For the three months ended September 30, 2017, TiVo Corporation's results include revenue and operating loss from TiVo Solutions of $85.1 million and $0.6 million, respectively. For the nine months ended September 30, 2017, TiVo Corporation's results include revenue and operating loss from TiVo Solutions of $264.8 million and $1.9 million, respectively.

~~Purchase Price~~

In November 2016, holders of 9.1 million shares of TiVo Solutions common stock outstanding at the TiVo Acquisition Date who did not vote to approve the TiVo Acquisition ("Dissenting Holders") filed a petition for appraisal ~~("Dissenting Holders", and~~pursuant to Section 262 of the ~~shares held by such Dissenting Holders, the "Dissenting Shares")~~Delaware General Corporation Law in the ~~Delaware~~ Court of ~~Chancery. See Note 10 for additional information about~~Chancery of the ~~claims asserted by the Dissenting Holders.~~

AsState of ~~December 31, 2016, $79.0 million was included in the aggregate merger consideration based on 9.1 million Dissenting Shares assuming a right to receive 0.3853 shares~~Delaware (In re Appraisal of TiVo, Corporation common stock, or 3.5 million shares of TiVo Corporation common stock. In addition, on the TiVo Acquisition Date, TiVo Corporation paid the cash portion of the merger consideration related to the Dissenting Shares, which was $2.75 per share, to an account held by the exchange agent in the TiVo Acquisition. As of December 31, 2016, the exchange agent in the TiVo Acquisition was holding $25.3 million in cash, substantially all of which related to the Dissenting Holders. The accrued merger consideration was presented in Accounts payable and accrued expenses on the Condensed Consolidated Balance Sheets as of December 31, 2016.

Inc., C.A. No. 12909-CB (Del. Ch.)). On March 27, 2017, TiVo Corporation ~~agreed~~executed a settlement agreement with the Dissenting Holders to settle ~~the~~their claims ~~of the Dissenting Holders~~ for $117.0 million, which was paid in cash in April 2017. In connection with the settlement, in March 2017, the exchange agent in the TiVo Acquisition returned $25.1 million in cash related to the Dissenting Holders to TiVo Corporation. As the amount paid to Dissenting Holders resulted from a settlement other than a judgment from the Delaware Court of Chancery, a TiVo Acquisition litigation loss of $12.9 million was recognized in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2017. ~~The TiVo Acquisition litigation loss includes the settlement amount in excess of the amount due to the Dissenting Holders as merger consideration.~~

(3) Discontinued Operations

In ~~the three months ended September 30, 2017, a $1.1 million loss was recognized related to a separate TiVo Acquisition litigation matter.~~

~~Final Purchase Price Allocation~~

The Condensed Consolidated Financial Statements have been prepared using the acquisition method of accounting under U.S. GAAP with Rovi treated as the acquirer of TiVo Solutions for accounting purposes. Under the acquisition method of accounting, the purchase consideration delivered by TiVo Corporation to complete the TiVo Acquisition was allocated to the assets acquired and liabilities assumed generally based on their fair value at the TiVo Acquisition Date. TiVo Corporation has made significant estimates and assumptions in determining the fair value of the assets acquired and liabilities assumed based on discussions with TiVo Solutions’ management and TiVo Corporation’s informed insights into the industries in which TiVo Solutions competes.

~~Changes in the preliminary purchase price allocation from December 31, 2016 to the end of the measurement period were as follows (in thousands):~~

December 31, 2016 Measurement Period Adjustments September 30, 2017
Prepaid expenses and other current assets and other long-term assets $ 25,909
$ 2
$ 25,911
Goodwill 468,330
932
469,262
Accounts payable and accrued expenses and other long-term liabilities (73,456 ) (1,175 ) (74,631 )
Deferred tax liabilities, net (97,305 ) 241
(97,064 )
Total merger consideration 1,129,726
—
1,129,726

~~If the measurement period adjustments had been recognized as of the TiVo Acquisition Date, their effect on Net (loss) income for~~ the three and nine months ended September 30, ~~2017 would have been immaterial.~~

~~Unaudited Pro Forma Information~~

~~The following unaudited pro forma financial information (in thousands, except per share amounts) has been adjusted to give effect to~~2018, the TiVo Acquisition as if it were consummated on January 1, 2015. The unaudited pro forma financial information is presented for informational purposes only. The unaudited pro forma financial information is not intended to represent or be indicativeCompany recognized Income from discontinued operations, net of ~~the results~~tax of ~~operations that would have been reported had the TiVo Acquisition occurred on January 1, 2015~~$0.1 million and ~~should not be taken as representative of future results of operations of the combined company.~~

Three Months Ended September 30, Nine Months Ended September 30,
2016 2016
Total Revenues, net $ 211,724
$ 619,885
Net loss $ (35,712 ) $ (118,906 )
Basic loss per share $ (0.31 ) $ (1.03 )
Diluted loss per share $ (0.31 ) $ (1.03 )

The unaudited pro forma financial information includes material, nonrecurring pro forma adjustments directly attributable to the TiVo Acquisition primarily related to a reduction in revenues and costs to adjust TiVo Solutions' historical deferred revenue amortization and deferred technology cost amortization to fair value, the elimination of intercompany revenue as TiVo Solutions purchased products from Rovi prior to the TiVo Acquisition Date, adjustments to the amortization of intangible assets, adjustments for direct and incremental acquisition-related costs and the related tax effects, as well as Rovi's deferred tax asset valuation allowance release$3.7 million, respectively, as a result of the TiVo Acquisition reflected in the historical financial statements. The unaudited pro forma financial information does not include any cost saving synergies from operating efficiencies or the effect of incremental costs incurred from integrating the companies.

~~(3) Discontinued Operations and Assets Held for Sale~~

~~DivX and MainConcept~~

During the fourth quarter of 2013, the Company determined it would pursue selling its DivX and MainConcept businesses. DivX and MainConcept were providers of high-quality video compression-decompression software and a software library that enabled the distribution of content across the internet and through recordable media, in either physical or streamed forms. On March 31, 2014, the Company sold its DivX and MainConcept businesses for $52.5 million in cash, plus up to $22.5 million in additional payments based on the achievementexpiration of certain ~~revenue milestones over~~indemnification obligations and the ~~three years following~~execution of settlement agreements during the ~~acquisition. In the three years following the acquisition of DivX and MainConcept, no additional payments were received as the revenue milestones were not satisfied.~~period associated with previous business disposals, partially offset by an increase in legal defense costs.

(4) Financial Statement Details

~~Accounts receivable, net (in thousands):~~

September 30, 2017 December 31, 2016
Accounts receivable, gross $ 193,223
$ 149,105
Less: Allowance for doubtful accounts (2,213 ) (1,963 )
Accounts receivable, net $ 191,010
$ 147,142

Inventory (in thousands):


	September 30, 2017		December 31, 2016		September 30, 2018		December 31, 2017
Raw materials	$	3,134	$	1,595	$	1,042	$	1,846
Finished goods	8,576		11,591		6,921		9,735
Inventory	$	11,710	$	13,186	$	7,963	$	11,581

Property and equipment, net (in thousands):


	September 30, 2017			December 31, 2016			September 30, 2018			December 31, 2017
Computer software and equipment	$	154,039		$	136,776		$	158,490		$	150,098
Leasehold improvements	27,061			26,201			45,303			44,981
Furniture and fixtures	7,063			6,627			9,971			9,137
Property and equipment, gross	188,163			169,604			213,764			204,216
Less: Accumulated depreciation and amortization	(143,824		)	(121,232		)	(163,075		)	(148,972		)
Property and equipment, net	$	44,339		$	48,372		$	50,689		$	55,244

Accounts payable and accrued expenses (in thousands):


	September 30, 2017		December 31, 2016		September 30, 2018		December 31, 2017
Accounts payable	$	11,027	$	29,218	$	10,828	$	10,517
Accrued compensation and benefits	34,712		54,571		33,566		47,886
Accrual for merger consideration	—		78,981
Other accrued liabilities	79,238		63,681		48,163		77,449
Accounts payable and accrued expenses	$	124,977	$	226,451	$	92,557	$	135,852

~~Supplemental~~

(5) Revenues

Adoption of Amended Revenue and Cost Recognition Guidance

The Company adopted the provisions of the amended revenue recognition guidance described in Note 1 using the modified retrospective transition approach on January 1, 2018. As such, the amended revenue recognition guidance was applied to those contracts which were not completed as of December 31, 2017. Results for periods beginning after December 31, 2017 are presented under the amended revenue recognition guidance, while prior period amounts were not restated and continue to be reported in accordance with the previous revenue recognition guidance.

In addition, the Company adopted amended guidance related to the capitalization and amortization of incremental costs to obtain a contract with a customer and guidance for the de-recognition of prepaid stored-value product liabilities, such as gift cards, each as described in Note 1 using the modified retrospective transition approach on January 1, 2018.

The cumulative effect of these changes on the Condensed Consolidated Balance Sheets on adoption was as follows (in thousands):



				Contracts with Customers			Costs to Obtain Contracts with Customers			De-recognition of Prepaid Stored Value Product Liabilities
	December 31, 2017			Contracts with Customers			Costs to Obtain Contracts with Customers			De-recognition of Prepaid Stored Value Product Liabilities			January 1, 2018
Accounts receivable, net	$	180,768		$	24,177		$	—		$	—		$	204,945
Prepaid expenses and other current assets	40,719			(2,705		)	525			—			38,539
Other long-term assets	65,673			(4,419		)	819			—			62,073
Accounts payable and accrued expenses	(135,852		)	—			—			2,155			(133,697		)
Unearned revenue	(55,393		)	11,208			—			—			(44,185		)
Deferred tax liabilities, net	(50,356		)	(348		)	—			—			(50,704		)
Accumulated deficit	1,392,651			(27,913		)	(1,344		)	(2,155		)	1,361,239

The most significant impact of the amended revenue recognition guidance relates to the accounting for software arrangements. Under prior industry-specific software revenue recognition guidance, when the Company concluded it did not have vendor-specific objective evidence ("VSOE") of fair value for the undelivered elements of an arrangement, revenue was deferred until the last element without VSOE was delivered. The amended revenue recognition guidance eliminated the concept of VSOE of fair value. The amended revenue recognition guidance requires an evaluation of whether the undelivered elements are distinct performance obligations and, therefore, should each be recognized separately when delivered. On adoption of the amended revenue recognition guidance, the Company accounted for the software and support elements of the TiVo Solutions international MSO agreements as two distinct performance obligations. These agreements contain minimum guarantees, and on adoption of the amended revenue recognition guidance, $34.4 million of these minimums were recorded as an increase in Accounts receivable, net and a reduction to Accumulated deficit as the software was delivered prior to the date of adoption.

The amended revenue recognition guidance also requires the Company to record revenue related to fixed-fee patent licensing agreements that do not provide the right to future patented technologies acquired by the Company during the term of the license when access to the existing patented technology is granted to the licensee. Under prior revenue recognition guidance, the Company recognized revenue from this type of fixed-fee license agreement on a straight-line basis over the term of the agreement. On adoption of the amended revenue recognition guidance, the Company recorded a $10.2 million reduction in Unearned revenue and Accumulated deficit for this type of fixed-fee license agreement.

The amended revenue recognition guidance includes specific guidance for contract modifications. Based on the nature of the modification, the revenue recognized for the contract may be updated on a cumulative catch-up basis on execution of the modification or updated prospectively as a result of the modification. For certain contract modifications, this accounting treatment differs from the accounting treatment in accordance with previous revenue recognition guidance.

Prior to the adoption of the amended revenue recognition guidance, the Company recognized revenue from per-unit royalty licenses with certain CE manufacturers and third party IPG providers in the period the licensee reported its sales to the Company, which was generally in the month or quarter after the underlying sales by the licensee occurred. On adoption of the amended revenue recognition guidance, revenue from per-unit royalty licenses is recognized in the period in which the licensee's sales are estimated to have occurred, limited to the amount of revenue that is not subject to a significant risk of reversal, which results in an adjustment to revenue when actual amounts are subsequently reported by the Company's licensees.

Pursuant to the amended cost capitalization guidance, incremental costs to obtain a contract with a customer are capitalized and amortized over a period of time commensurate with the expected period of benefit, which may exceed the contract term. Prior to the adoption of the amended cost capitalization guidance, the Company expensed incremental costs to obtain a contract with a customer as incurred.

The impact of adoption of the amended revenue and cost recognition guidance on the Condensed Consolidated Statements of Operations was as follows (in thousands):



	Three Months Ended September 30, 2018
	As Reported			As If Applying Prior Guidance			Effect of Change Higher/(Lower)
Total Revenues, net	$	164,709		$	170,868		$	(6,159	)
Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets	40,749			41,512			(763		)
Selling, general and administrative	39,867			40,195			(328		)
Loss from continuing operations before income taxes	(18,223		)	(13,155		)	(5,068		)
Income tax expense	4,769			5,143			(374		)
Loss from continuing operations, net of tax	(22,992		)	(18,298		)	(4,694		)



	Nine Months Ended September 30, 2018
	As Reported			As If Applying Prior Guidance			Effect of Change Higher/(Lower)
Total Revenues, net	$	527,406		$	543,871		$	(16,465	)
Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets	126,547			128,458			(1,911		)
Selling, general and administrative	133,906			134,232			(326		)
Loss from continuing operations before income taxes	(51,569		)	(37,341		)	(14,228		)
Income tax expense	13,305			14,460			(1,155		)
Loss from continuing operations, net of tax	(64,874		)	(51,801		)	(13,073		)

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 ~~flow information~~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 less than one year, contracts for which revenue is recognized based on the amount which the Company has the right to invoice for services performed and amounts attributable to variable consideration arising from (i) a sales-based or usage-based royalty of an intellectual property 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 tables depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors by disaggregating revenue by product offering (in Note 15), significant customer, contract-type and geographic area. These tables include revenue recognized from contracts with customers and revenue from other sources, including out-of-license settlements. As noted above, amounts for the three and nine months ended September 30, 2017 have not been adjusted to reflect adoption of the amended revenue recognition guidance.

Customers representing 10% or more of Total Revenues, net were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
AT&T Inc. ("AT&T")	11	%	14	%	10	%	14	%

Substantially all revenue from AT&T is reported in the Intellectual Property Licensing segment.

By segment, the pattern of revenue recognition was as follows (in thousands):



	Three Months Ended September 30, 2018
	Product		Intellectual Property Licensing		Total Revenues, net
Goods and services transferred at a point in time	$	22,093	$	26,528	$	48,621
Goods and services transferred over time	72,519		39,768		112,287
Out-of-license settlements	—		3,801		3,801
Total Revenues, net	$	94,612	$	70,097	$	164,709



	Nine Months Ended September 30, 2018
	Product		Intellectual Property Licensing		Total Revenues, net
Goods and services transferred at a point in time	$	79,569	$	81,977	$	161,546
Goods and services transferred over time	224,682		125,212		349,894
Out-of-license settlements	—		15,966		15,966
Total Revenues, net	$	304,251	$	223,155	$	527,406

Total Revenues, net by geographic area was as follows (in thousands):



	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
United States	$	115,312	$	351,423
United Kingdom	9,131		56,361
Rest of the world	40,266		119,622
Total Revenues, net	$	164,709	$	527,406

Revenue by geography is predominately based on the end user's location. Other than the United States, no country accounted for more than 10% of revenue for the three months ended September 30, 2018. Other than the United States and the United Kingdom, no country accounted for more than 10% of revenue for the nine months ended September 30, 2018.

Accounts receivable, net (in thousands):

Nine Months Ended September 30,
2017 2016
Significant noncash transactions
Fair value of shares issued in connection with TiVo Acquisition $ 536
$ 751,385



	September 30, 2018			December 31, 2017
Accounts receivable, gross	$	176,499		$	183,343
Less: Allowance for doubtful accounts	(2,750		)	(2,575		)
Accounts receivable, net	$	173,749		$	180,768

Customers representing 10% or more of Accounts receivable, net were as follows.



	September 30, 2018		December 31, 2017
AT&T	16	%	28	%
Virgin Media	11	%	(a)

(a) Customer below 10% of Accounts receivable, net as of the date presented.

Contract Balances

Contract assets primarily consist of revenue recognized in excess of the amount billed to the customer, limited to net realizable value and deferred engineering costs for significant software customization or modification and set-up services to the extent deemed recoverable. 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. Following adoption of the amended revenue recognition guidance, contract assets were recorded in the Condensed Consolidated Balance Sheets as follows (in thousands):



	September 30, 2018		January 1, 2018
Accounts receivable, net	$	46,154	$	68,858
Prepaid expenses and other current assets	1,527		1,167
Other long-term assets	7,988		6,783
Total contract assets, net	$	55,669	$	76,808

No impairment losses were recognized with respect to contract assets for the three and nine months ended September 30, 2018.

Contract liabilities are mainly comprised of unearned revenue related to consumer lifetime subscriptions for the TiVo service and multi-period licensing or cloud-based services and other offerings for which the Company is paid in advance of when control of the promised good or service is transferred to the customer. Unearned revenue also includes amounts related to professional services to be performed in the future. For the three and nine months ended September 30, 2018, the Company recognized $10.3 million and $33.3 million, respectively, of revenue that had been included in Unearned revenue as of December 31, 2017.

As of September 30, 2018, approximately $818.6 millionof revenue is expected to be recognized from remaining performance obligations that are primarily related to fixed-fee intellectual property and software-as-a-service agreements, which is expected to be recognized as follows: 7.2% in the remainder of 2018, 25.6% in 2019, 18.5% in 2020, 13.0% in 2021, 9.5% in 2022, and 26.1% thereafter.

~~(5)~~(6) Investments

The amortized cost and fair value of cash, cash equivalents and marketable securities by significant investment category were as follows (in thousands):


	September 30, 2017									September 30, 2018
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash	$	33,753	$	—	$	—		$	33,753	$	45,530	$	—	$	—		$	45,530
Cash equivalents - Money market funds	59,034		—		—			59,034		104,125		—		—			104,125
Cash and cash equivalents	$	92,787	$	—	$	—		$	92,787	$	149,655	$	—	$	—		$	149,655

Auction rate securities	$	10,800	$	—	$	(216	)	$	10,584
Corporate debt securities	96,853		5		(108		)	96,750		$	115,765	$	4	$	(420	)	$	115,349
Foreign government obligations	2,248		—		(4		)	2,244
U.S. Treasuries / Agencies	111,205		—		(253		)	110,952		117,298		—		(278		)	117,020
Marketable securities	$	221,106	$	5	$	(581	)	$	220,530	$	233,063	$	4	$	(698	)	$	232,369
Cash, cash equivalents and marketable securities								$	313,317								$	382,024


	December 31, 2016									December 31, 2017
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash	$	50,969	$	—	$	—		$	50,969	$	38,996	$	—	$	—		$	38,996
Cash equivalents - Money market funds	141,658		—		—			141,658		89,969		—		—			89,969
Cash and cash equivalents	$	192,627	$	—	$	—		$	192,627	$	128,965	$	—	$	—		$	128,965

Auction rate securities	$	10,800	$	—	$	(432	)	$	10,368	$	10,800	$	—	$	(216	)	$	10,584
Corporate debt securities	106,128		8		(215		)	105,921		102,794		—		(397		)	102,397
Foreign government obligations	2,246		—		(8		)	2,238		2,249		—		(4		)	2,245
U.S. Treasuries / Agencies	127,734		14		(262		)	127,486		108,781		—		(430		)	108,351
Marketable securities	$	246,908	$	22	$	(917	)	$	246,013	$	224,624	$	—	$	(1,047	)	$	223,577
Cash, cash equivalents and marketable securities								$	438,640								$	352,542

The Company attributes unrealized losses on its auction rate securities to liquidity issues rather than credit issues. The Company’s auction rate securities are comprised solely of AAA-rated federally insured student loans. The Company continues to earn interest on its auction rate securities and has the ability and intent to hold these securities until they recover their amortized cost.

As of September 30, ~~2017,~~2018, the amortized cost and fair value of marketable securities, by contractual maturity, were as follows (in thousands):


	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in less than 1 year	$	132,637	$	132,418	$	162,530	$	162,073
Due in 1-2 years	77,669		77,528		70,533		70,296
Due in more than 2 years	10,800		10,584
Total	$	221,106	$	220,530	$	233,063	$	232,369

As of September 30, ~~2017~~2018 and December 31, ~~2016, non-marketable~~2017, the Condensed Consolidated Balance Sheets include equity securities accounted for under the equity method ~~had~~with a carrying amount of ~~$1.0~~$1.7 million and ~~$1.6~~$1.1 million, respectively, and ~~non-marketable~~ equity securities ~~accounted for under the cost method had~~without a readily determinable fair value with a carrying amount of ~~$2.7~~$1.5 million and ~~$2.7~~$1.5 million, respectively. ~~We periodically review our non-marketable~~The carrying amount of the Company's equity securities without a readily determinable fair value is measured as cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for ~~potential impairment.~~the identical, or a similar, security of the same issuer. No impairments or adjustments to the carrying amount of the Company's equity securities without a readily determinable fair value were recognized ~~during~~for the three and nine months ended September 30, ~~2017 on non-marketable equity securities.~~2018 and 2017.

~~(6)~~(7) Fair Value Measurements

Fair Value Hierarchy

The Company uses valuation techniques that are based on observable and unobservable inputs to measure fair value. Observable inputs are developed using publicly available information and reflect the assumptions market participants would use, while unobservable inputs are developed using the best information available about the assumptions market participants would use. Fair value measurements are classified in a hierarchy that gives the highest priority to observable inputs and the lowest priority to unobservable inputs. Assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement in its entirety:

Level 1. Quoted prices in active markets for identical assets or liabilities.

Level 2. Inputs other than Level 1 inputs that are observable for the asset or liability, either directly or indirectly, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or market-corroborated inputs.

Level 3. Unobservable inputs for the asset or liability.

The Company recognizes transfers between levels of the fair value hierarchy as of the end of the reporting period. For the three and nine months ended September 30, 2018 and 2017, there were no transfers between levels of the fair value hierarchy.

Recurring Fair Value Measurements

Assets and liabilities reported at fair value on a recurring basis in the Condensed Consolidated Balance Sheets were classified in the fair value hierarchy as follows (in thousands):


	September 30, 2017											September 30, 2018
	Total			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents
Money market funds	$	59,034		$	59,034	$	—		$	—		$	104,125		$	104,125	$	—		$	—
Short-term marketable securities
Corporate debt securities	56,595			—		56,595			—			85,785			—		85,785			—
Foreign government obligations	2,244			—		2,244			—
U.S. Treasuries / Agencies	73,579			—		73,579			—			76,288			—		76,288			—
Prepaid expenses and other current assets
Interest rate swaps												231			—		231			—
Long-term marketable securities
Auction rate securities	10,584			—		—			10,584
Corporate debt securities	40,155			—		40,155			—			29,564			—		29,564			—
U.S. Treasuries / Agencies	37,373			—		37,373			—			40,732			—		40,732			—
Other long-term assets
Interest rate swaps												440			—		440			—
Total Assets	$	279,564		$	59,034	$	209,946		$	10,584		$	337,165		$	104,125	$	233,040		$	—
Liabilities
Accounts payable and accrued expenses
Cubiware contingent consideration	$	(3,451	)	$	—	$	—		$	(3,451	)
Other long-term liabilities
Interest rate swaps	(14,850		)	—		(14,850		)	—			$	(145	)	$	—	$	(145	)	$	—
Total Liabilities	$	(18,301	)	$	—	$	(14,850	)	$	(3,451	)	$	(145	)	$	—	$	(145	)	$	—

The Company's interest rate swaps are subject to master netting arrangements and have been presented on a net basis in the Condensed Consolidated Balance Sheets where applicable. As of September 30, 2018, interest rate swaps in an asset position with a fair value of $0.7 million that mature in 2021 were netted against interest rate swaps in a liability position with a fair value of $0.2 millionthat mature in 2021 in the Condensed Consolidated Balance Sheets and in the table above.


	December 31, 2016											December 31, 2017
	Total			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)			Total			Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Assets
Cash and cash equivalents
Money market funds	$	141,658		$	141,658	$	—		$	—		$	89,969		$	89,969	$	—		$	—
Short-term marketable securities
Corporate debt securities	76,568			—		76,568			—			49,396			—		49,396			—
Foreign government obligations												2,245			—		2,245			—
U.S. Treasuries / Agencies	40,516			—		40,516			—			89,225			—		89,225			—
Long-term marketable securities
Auction rate securities	10,368			—		—			10,368			10,584			—		—			10,584
Corporate debt securities	29,353			—		29,353			—			53,001			—		53,001			—
Foreign government obligations	2,238			—		2,238			—
U.S. Treasuries / Agencies	86,970			—		86,970			—			19,126			—		19,126			—
Total Assets	$	387,671		$	141,658	$	235,645		$	10,368		$	313,546		$	89,969	$	212,993		$	10,584
Liabilities
Accounts payable and accrued expenses
Cubiware contingent consideration	$	(1,988	)	$	—	$	—		$	(1,988	)	$	(2,234	)	$	—	$	—		$	(2,234	)
Interest rate swaps	(648		)	—		(648		)	—
Other long-term liabilities
Cubiware contingent consideration	(3,285		)	—		—			(3,285		)
Interest rate swaps	(19,303		)	—		(19,303		)	—			(9,735		)	—		(9,735		)	—
Total Liabilities	$	(25,224	)	$	—	$	(19,951	)	$	(5,273	)	$	(11,969	)	$	—	$	(9,735	)	$	(2,234	)

~~The Company recognizes transfers between levels~~Rollforward of ~~the fair value hierarchy at the end of the reporting period. For the three and nine months ended September 30, 2017 and 2016, there were no transfers between levels of the fair value hierarchy.~~Level 3 Fair Value Measurements

Changes in the fair value of assets and liabilities classified in Level 3 of the fair value hierarchy were as follows (in thousands):


	Three Months Ended September 30,										Three Months Ended September 30,
	2017					2016					2018			2017
	Auction Rate Securities		Cubiware Contingent Consideration			Auction Rate Securities		Cubiware Contingent Consideration			Cubiware Contingent Consideration			Auction Rate Securities		Cubiware Contingent Consideration
Balance at beginning of period	$	10,584	$	(5,715	)	$	10,260	$	—		$	(3,599	)	$	10,584	$	(5,715	)
Assumed in TiVo Acquisition	—		—			—		(7,542		)
Settlements	—		2,650			—		—			1,874			—		2,650
Loss included in earnings	—		(386		)	—		(67		)
Unrealized gains included in other comprehensive income	—		—			108		—
Transfers out (a)											1,700			—		—
Gain (loss) included in earnings											25			—		(386		)
Balance at end of period	$	10,584	$	(3,451	)	$	10,368	$	(7,609	)	$	—		$	10,584	$	(3,451	)



	Nine Months Ended September 30,
	2018						2017
	Auction Rate Securities			Cubiware Contingent Consideration			Auction Rate Securities		Cubiware Contingent Consideration
Balance at beginning of period	$	10,584		$	(2,234	)	$	10,368	$	(5,273	)
Sales	(10,715		)	—			—		—
Settlements	—			1,874			—		2,650
Transfers out (a)	—			1,700			—		—
Gain (loss) included in earnings	(85		)	(1,340		)	—		(828		)
Unrealized loss reclassified on sale	216			—			—		—
Unrealized gains included in other comprehensive income	—			—			216		—
Balance at end of period	$	—		$	—		$	10,584	$	(3,451	)


(a)	During the three and nine months ended September 30, 2018, $1.7 million related to the Cubiware contingent consideration was reclassified to a contingent liability that is not measured at fair value.

For the three and nine months ended September 30, ~~2017,~~2018, the ~~Loss~~Gain (loss) included in earnings related to the Cubiware contingent consideration liability is included in Selling, general and administrative expense ~~as a $243 thousand cost~~ related to remeasurement of the liability as a $0.1 million gain and ~~$143 thousand of~~a $1.1 million loss, respectively, and in Interest expense related to accretion of the liability to future ~~value.~~

Nine Months Ended September 30,
2017 2016
Auction Rate Securities Cubiware Contingent Consideration Auction Rate Securities Cubiware Contingent Consideration
Balance at beginning of period $ 10,368
$ (5,273 ) $ 10,260
$ —
Assumed in TiVo Acquisition —
—
—
(7,542 )
Settlements —
2,650
—
—
Loss included in earnings —
(828 ) —
(67 )
Unrealized gains included in other comprehensive income 216
—
108
—
Balance at end of period $ 10,584
$ (3,451 ) $ 10,368
$ (7,609 )

value of less than $0.1 million and $0.2 million, respectively. For the three and nine months ended September 30, 2017, the ~~Loss~~Gain (loss) included in earnings related to the Cubiware contingent consideration liability is included in Selling, general and administrative expense ~~as a $0.3 million cost~~ related to remeasurement of the liability as a $0.2 million and ~~$0.5~~$0.3 million ofloss, respectively, and in Interest expense related to accretion of the liability to future ~~value.~~

~~Non-recurring Fair Value Measurements~~

~~In May 2017, TiVo Corporation vacated a portion of a leased facility as part of its ongoing~~ ~~TiVo Integration Restructuring Plan~~ ~~(as described in Note 8) resulting in a $6.7 million loss on the impairment of certain property and equipment, principally leasehold improvements. The fair~~ value of ~~the impaired assets was estimated using a discounted cash flow analysis that incorporated among other items, the timing~~$0.1 million and amount of expected future cash flows associated with the assets, income tax rates, and economic and market conditions, as well as a risk adjusted discount rate. The fair value of the impaired assets would be classified in Level 2 of the fair value hierarchy.$0.5 million, respectively.

Valuation Techniques

The fair value of marketable securities, other than auction rate securities, is estimated using observable market-corroborated inputs, such as quoted prices in active markets for similar assets or independent pricing vendors, obtained from a ~~third party~~third-party pricing service.

The fair value of auction rate securities is estimated using a discounted cash flow analysis or other type of valuation model. These estimates are highly judgmental and incorporate, among other items, the likelihood of redemption, credit and liquidity spreads, duration, interest rates and the timing and amount of expected future cash flows. These securities are also compared, when possible, to other observable data for securities with characteristics similar to the securities held by the Company.

The fair value of contingent consideration liabilities related to acquisitions is estimated utilizing a probability-weighted discounted cash flow analysis based on the terms of the underlying purchase agreement. The significant unobservable inputs used in calculating the fair value of contingent consideration liabilities related to acquisitions include financial performance scenarios, the probability of achieving those scenarios and the ~~risk adjusted~~risk-adjusted discount rate.

The fair value of interest rate swaps is estimated using a discounted cash flow analysis that considers the expected future cash flows of each interest rate swap. This analysis reflects the contractual terms of the interest rate swap, including the remaining period to maturity, and uses market-corroborated inputs, including forward interest rate curves and implied interest rate volatilities. The fair value of an interest rate swap is estimated by netting the discounted future fixed cash payments against the discounted expected variable cash receipts. The variable cash receipts are estimated based on an expectation of future interest rates derived from forward interest rate curves. The fair value of an interest rate swap also incorporates credit valuation adjustments to reflect the nonperformance risk of the Company and the respective counterparty. In adjusting the fair value of its interest rate swaps for the effect of nonperformance risk, the Company considers the effect of its master netting agreements.

Other Fair Value Disclosures

The carrying amount and fair value of debt issued or assumed by the Company were as follows (in thousands):


	September 30, 2017				December 31, 2016				September 30, 2018				December 31, 2017
	Carrying Amount		Fair Value (1)		Carrying Amount		Fair Value (1)		Carrying Amount		Fair Value (a)		Carrying Amount		Fair Value (a)
2020 Convertible Notes	$	308,167	$	347,367	$	297,646	$	349,140	$	322,849	$	328,412	$	311,766	$	326,888
2021 Convertible Notes	48		48		48		48		48		48		48		48
Term Loan Facility B	672,742		678,943		677,038		686,766		666,904		668,574		671,281		679,722
Total Long-term debt	$	980,957	$	1,026,358	$	974,732	$	1,035,954	$	989,801	$	997,034	$	983,095	$	1,006,658

~~(1)~~(a)

The fair value of debt issued or assumed by the Company is estimated using quoted prices for the identical instrument in a market that is not active and considers interest rates currently available to companies of similar credit standing for similar terms and remaining maturities and considers the nonperformance risk of the Company. If reported at fair value in the Condensed Consolidated Balance Sheets, debt issued or assumed by the Company would be classified in Level 2 of the fair value hierarchy.

~~(7)~~(8) Goodwill and Intangible Assets, Net

Goodwill

Goodwill allocated to the reportable segments and changes in the carrying amount of goodwill ~~for the nine months ended September 30, 2017~~by reportable segment were as follows (in thousands):

Intellectual Property Licensing Product Total
Beginning of period $ 1,291,120
$ 520,998
$ 1,812,118
TiVo Acquisition 212
720
932
Foreign currency translation —
186
186
End of period $ 1,291,332
$ 521,904
$ 1,813,236



	Product			Intellectual Property Licensing		Total
December 31, 2017	$	521,895		$	1,291,332	$	1,813,227
Foreign currency translation	(44		)	—		(44		)
September 30, 2018	$	521,851		$	1,291,332	$	1,813,183

~~Goodwill resulting from the TiVo Acquisition was allocated to the Company's reportable segments based on the relative fair value of the TiVo Solutions~~ ~~businesses assigned to the Company's reporting units.~~

Goodwill at each reporting unit 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.

Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):

September 30, 2017
Gross Accumulated
Amortization Net
Finite-lived intangible assets
Developed technology and patents $ 1,034,128
$ (654,102 ) $ 380,026
Existing contracts and customer relationships 402,936
(120,496 ) 282,440
Content databases and other 59,697
(50,708 ) 8,989
Trademarks / Tradenames 8,300
(8,300 ) —
Total finite-lived intangible assets 1,505,061
(833,606 ) 671,455
Indefinite-lived intangible assets
TiVo Tradename 14,000
—
14,000
Total intangible assets $ 1,519,061
$ (833,606 ) $ 685,455


	December 31, 2016							September 30, 2018
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Finite-lived intangible assets
Developed technology and patents	$	1,031,280	$	(586,800	)	$	444,480	$	1,034,085	$	(742,956	)	$	291,129
Existing contracts and customer relationships	402,143		(64,123		)	338,020		402,896		(190,692		)	212,204
Content databases and other	59,390		(49,052		)	10,338		57,157		(50,433		)	6,724
Trademarks / Tradenames	8,300		(8,300		)	—		8,300		(8,300		)	—
Total finite-lived intangible assets	1,501,113		(708,275		)	792,838		1,502,438		(992,381		)	510,057
Indefinite-lived intangible assets
TiVo Tradename	14,000		—			14,000		14,000		—			14,000
Total intangible assets	$	1,515,113	$	(708,275	)	$	806,838	$	1,516,438	$	(992,381	)	$	524,057



	December 31, 2017
	Gross		Accumulated Amortization			Net
Finite-lived intangible assets
Developed technology and patents	$	1,034,458	$	(676,465	)	$	357,993
Existing contracts and customer relationships	403,244		(139,289		)	263,955
Content databases and other	57,053		(49,077		)	7,976
Trademarks / Tradenames	8,300		(8,300		)	—
Total finite-lived intangible assets	1,503,055		(873,131		)	629,924
Indefinite-lived intangible assets
TiVo Tradename	14,000		—			14,000
Total intangible assets	$	1,517,055	$	(873,131	)	$	643,924

Patent ~~Acquisitions~~Acquisition

In the nine months ended September 30, 2017, the Company purchased a portfolio of patents for $2.0 million in cash. The Company accounted for the patent portfolio purchase as an asset acquisition and is amortizing the purchase price over a weighted average period of five years.

In January 2016, the Company purchased a portfolio of patents for $2.5 million in cash. The Company accounted for the patent portfolio purchase as an asset acquisition and is amortizing the purchase price over a weighted average period of five years.

Future Amortization of Finite-Lived Intangible Assets

As of September 30, ~~2017,~~2018, future estimated amortization expense for finite-lived intangible assets was as follows (in thousands):


Remainder of 2017	$	41,538
2018	147,432
Remainder of 2018			$	27,763
2019	109,996		109,855
2020	109,172		109,109
2021	66,363		66,341
2022			38,602
Thereafter	196,954		158,387
Total	$	671,455	$	510,057

~~(8)~~(9) Restructuring and Asset Impairment Charges

Components of Restructuring and asset impairment charges were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Facility-related costs	$	3,034	$	—	$	4,244	$	214	$	99	$	3,034	$	387	$	4,244
Severance costs	220		7,580		4,260		7,968		2,822		220		5,606		4,260
Share-based payments	456		14,731		2,374		14,731		—		456		2,575		2,374
Contract termination costs	—		—		4		1,279		—		—		—		4
Asset impairment	—		—		6,741		452		—		—		—		6,741
Restructuring and asset impairment charges	$	3,710	$	22,311	$	17,623	$	24,644	$	2,921	$	3,710	$	8,568	$	17,623

~~Accrued~~Components of accrued restructuring costs were as follows (in thousands):


	September 30, 2017		December 31, 2016		September 30, 2018		December 31, 2017
Facility-related costs	$	3,006	$	758	$	459	$	693
Severance costs	668		3,796		3,337		584
Contract termination costs	68		183		—		37
Accrued restructuring costs	$	3,742	$	4,737	$	3,796	$	1,314

~~We expect~~The Company expects a substantial portion of the ~~Accrued~~accrued restructuring costs ~~including those associated with the TiVo Acquisition,~~ to be paid ~~at various dates~~by the end of 2018.

Profit Improvement Plan

In February 2018, the Company announced its intention to explore strategic alternatives. In connection with exploring strategic alternatives, the Company initiated certain cost saving actions (the "Profit Improvement Plan"). As a result of the Profit Improvement Plan, the Company expects to move certain positions to lower cost locations, eliminate layers of management and rationalize facilities resulting in severance costs and the termination of certain leases and other contracts. Restructuring activities for the Profit Improvement Plan for the nine months ended September 30, 2018 were as follows (in thousands):



	Balance at Beginning of Period		Restructuring Expense		Cash Settlements			Non-Cash Settlements			Other			Balance at End of Period
Facility-related costs	$	—	$	47	$	(47	)	$	—		$	—		$	—
Severance costs	—		5,478		(2,276		)	—			(11		)	3,191
Share-based payments	—		2,575		—			(2,575		)	—			—
Total	$	—	$	8,100	$	(2,323	)	$	(2,575	)	$	(11	)	$	3,191

The Company expects to incur material restructuring costs in connection with the Profit Improvement Plan through ~~December 31, 2017.~~the middle of 2019.

TiVo Integration Restructuring Plan

Following completion of the TiVo Acquisition, TiVo Corporation began implementing ~~its~~ integration plans ~~which are~~that were intended to realize operational synergies between Rovi and TiVo Solutions (the "TiVo Integration Restructuring Plan"). As a result of these integration plans, ~~TiVo Corporation expects to eliminate~~the Company eliminated duplicative positions resulting in severance costs and the termination of certain leases and other contracts. ~~In May 2017, TiVo Corporation vacated a portion of a leased facility resulting in a $6.7 million loss on the impairment of certain property and equipment, principally leasehold improvements.~~ Restructuring activities related to the TiVo Integration Restructuring Plan for the nine months ended September 30, ~~2017~~2018 were as follows (in thousands):


	Balance at Beginning of Period		Restructuring Expense		Cash Settlements			Non-Cash Settlements			Other			Balance at End of Period		Balance at Beginning of Period		Restructuring Expense		Cash Settlements			Other			Balance at End of Period
Facility-related costs	$	224	$	3,610	$	(1,204	)	$	—		$	(237	)	$	2,393	$	111	$	280	$	(165	)	$	(39	)	$	187
Severance costs	3,504		4,413		(7,354		)	—			(31		)	532		448		127		(564		)	1			12
Share-based payments	—		2,374		—			(2,374		)	—			—
Contract termination costs	63		4		(67		)	—			—			—
Asset impairment	—		6,741		—			(6,741		)	—			—
Total	$	3,791	$	17,142	$	(8,625	)	$	(9,115	)	$	(268	)	$	2,925	$	559	$	407	$	(729	)	$	(38	)	$	199

As of September 30, 2018, the TiVo Integration Restructuring Plan is substantially complete.

Legacy Rovi and TiVo Solutions Restructuring Plans

InPrior to the TiVo Acquisition, Rovi and TiVo Solutions had each initiated restructuring plans. As of September 30, 2018, the Legacy Rovi Restructuring Plan and the Legacy TiVo Solutions Restructuring Plan are complete. For the nine months ended September 30, 2017, certain termination benefits were offered by TiVo Solutions in connection with the elimination of a number of positions prior to the TiVo Acquisition Date (the "Legacy TiVo Solutions Restructuring Plans") expired. As a result of these termination benefits expiring unused,2018, Restructuring and asset impairment charges of $0.1 million were recognized ~~for~~in the ~~nine months ended September 30, 2017 were reduced by $0.2 million.~~Condensed Consolidated Statements of Operations related to these plans. As of September 30, ~~2017, the Legacy TiVo Solutions Restructuring Plans were completed and no Accrued~~2018, accrued restructuring costs of $0.4 million are included in the Condensed Consolidated Balance Sheets related to the Legacy ~~TiVo Solutions Restructuring Plans.~~

~~Legacy~~ Rovi Restructuring ~~Plans~~Plan.

In the three months ended March 31, 2016, Rovi initiated certain facility rationalization activities (the "Legacy Rovi Restructuring Plans"), including relocating its corporate headquarters from Santa Clara, California to San Carlos, California and consolidating its Silicon Valley operations into the corporate headquarters, and eliminated a number of positions associated with a reorganization of the sales force structure, downsizing the global services workforce and eliminating certain general and administrative positions. As a result of changes in estimates related to sublease rental rates expected to be obtained for vacated facilities, Restructuring and asset impairment charges were reduced by $0.2 million in the three months ended September 30, 2017. As a result of the Legacy Rovi Restructuring Plans, Restructuring and asset impairment charges of $0.6 million and $2.3 million, respectively, were recognized in the nine months ended September 30, 2017 and 2016.

As of September 30, 2017, Accrued restructuring costs of $0.8 million are included in Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets related to the Legacy Rovi Restructuring Plans.

~~(9)~~(10) Debt and Interest Rate Swaps

A summary of debt issued by or assumed by the ~~Company's financing arrangements~~Company was as follows (dollars in thousands):


				September 30, 2017				December 31, 2016							September 30, 2018				December 31, 2017
	Stated Interest Rate	Issue Date	Maturity Date	Outstanding Principal		Carrying Amount		Outstanding Principal		Carrying Amount		Stated Interest Rate	Issue Date	Maturity Date	Outstanding Principal		Carrying Amount		Outstanding Principal		Carrying Amount
2020 Convertible Notes	0.500%	March 4, 2015	March 1, 2020	$	345,000	$	308,167	$	345,000	$	297,646	0.500%	March 4, 2015	March 1, 2020	$	345,000	$	322,849	$	345,000	$	311,766
2021 Convertible Notes	2.000%	September 22, 2014	October 1, 2021	48		48		48		48		2.000%	September 22, 2014	October 1, 2021	48		48		48		48
Term Loan Facility B	Variable	July 2, 2014	July 2, 2021	677,250		672,742		682,500		677,038		Variable	July 2, 2014	July 2, 2021	670,250		666,904		675,500		671,281
Total Long-term debt				$	1,022,298	980,957		$	1,027,548	974,732					$	1,015,298	989,801		$	1,020,548	983,095
Less: Current portion of long-term debt						7,000				7,000							7,000				7,000
Long-term debt, less current portion						$	973,957			$	967,732						$	982,801			$	976,095

2020 Convertible Notes

Rovi issued $345.0 million in aggregate principal of 0.500% Convertible Senior Notes that mature March 1, 2020 (the “2020 Convertible Notes”) at par pursuant to an Indenture dated March 4, 2015 (as supplemented, the "2015 Indenture"). The 2020 Convertible Notes were sold in a private placement and bear interest at an annual rate of 0.500% payable semi-annually in arrears on March 1 and September 1 of each year, commencing September 1, 2015. In connection with the TiVo Acquisition, TiVo Corporation and Rovi entered into a supplemental indenture under which TiVo Corporation became a guarantor of the 2020 Convertible Notes and the notes became convertible into TiVo Corporation common stock.

The 2020 Convertible Notes were convertible at an initial conversion rate of 34.5968 shares of TiVo Corporation common stock per $1,000 of principal of notes, which was equivalent to an initial conversion price of $28.9044 per share of TiVo Corporation common stock. The conversion rate and conversion price are subject to adjustment pursuant to the 2015 Indenture, including as a result of dividends paid by TiVo Corporation. As of September 30, ~~2017,~~2018, the 2020 Convertible Notes are convertible at a conversion rate of ~~35.6341~~37.4422 shares of TiVo Corporation common stock per $1,000 principal of notes, which is equivalent to a conversion price of ~~$28.0630~~$26.7078 per share of TiVo Corporation common stock.

Holders may convert the 2020 Convertible Notes, prior to the close of business on the business day immediately preceding December 1, 2019, in multiples of $1,000 of principal under the following circumstances:

during any calendar quarter commencing after the calendar quarter ending on June 30, 2015 (and only during such calendar quarter), if the last reported sale price of TiVo Corporation's common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

during the five business day period after any ten consecutive trading day period in which the trading price per $1,000 of principal of 2020 Convertible Notes for each trading day was less than 98% of the product of the last reported sale price of TiVo Corporation’s common stock and the conversion rate on each such trading day; or

on the occurrence of specified corporate events.

On or after December 1, 2019 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert the 2020 Convertible Notes, in multiples of $1,000 of principal, at any time.

In addition, during the 35-day trading period following a Merger Event, as defined in the 2015 Indenture, holders may convert the 2020 Convertible Notes, in multiples of $1,000 of principal.

On conversion, a holder will receive the conversion value of the 2020 Convertible Notes converted based on the conversion rate multiplied by the volume-weighted average price of TiVo Corporation’s common stock over a specified observation period. On conversion, Rovi will pay cash up to the aggregate principal of the 2020 Convertible Notes converted and deliver shares of TiVo Corporation’s common stock in respect of the remainder, if any, of the conversion obligation in excess of the aggregate principal of the 2020 Convertible Notes being converted.

The conversion rate is subject to adjustment in certain events, including certain events that constitute a "Make-Whole Fundamental Change" (as defined in the 2015 Indenture). In addition, if Rovi undergoes a "Fundamental Change" (as defined in the 2015 Indenture) prior to March 1, 2020, holders may require Rovi to repurchase for cash all or a portion of the 2020 Convertible Notes at a repurchase price equal to 100% of the principal of the repurchased 2020 Convertible Notes, plus accrued and unpaid interest. The conversion rate is also subject to customary anti-dilution adjustments.

The 2020 Convertible Notes are not redeemable prior to maturity by Rovi and no sinking fund is provided. The 2020 Convertible Notes are unsecured and do not contain financial covenants or restrictions on the payment of dividends, the incurrence of indebtedness or the repurchase of other securities by Rovi. The 2015 Indenture includes customary terms and covenants, including certain events of default after which the 2020 Convertible Notes may be due and payable immediately.

TiVo Corporation has separately accounted for the liability and equity components of the 2020 Convertible Notes. The initial carrying amount of the liability component was calculated by estimating the value of the 2020 Convertible Notes using TiVo Corporation’s estimated non-convertible borrowing rate of 4.75% at the time the instrument was issued. The carrying amount of the equity component, representing the value of the conversion option, was determined by deducting the liability component from the principal of the 2020 Convertible Notes. The difference between the principal of the 2020 Convertible Notes and the liability component is considered a debt discount which is being amortized to interest expense using the effective interest method over the expected term of the 2020 Convertible Notes. The equity component of the 2020 Convertible Notes was recorded as a component of Additional paid-in capital in the Condensed Consolidated Balance Sheets

and will not be remeasured as long as it continues to meet the conditions for equity classification. Related to the 2020 Convertible Notes, the Condensed Consolidated Balance Sheets included the following (in thousands):


	September 30, 2017			December 31, 2016			September 30, 2018			December 31, 2017
Liability component
Principal outstanding	$	345,000		$	345,000		$	345,000		$	345,000
Less: Unamortized debt discount	(32,716		)	(42,144		)	(19,622		)	(29,499		)
Less: Unamortized debt issuance costs	(4,117		)	(5,210		)	(2,529		)	(3,735		)
Carrying amount	$	308,167		$	297,646		$	322,849		$	311,766

Equity component	$	63,854		$	63,854		$	63,854		$	63,854

Components of interest expense related to the 2020 Convertible Notes included in the Condensed Consolidated Statements of Operations were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Stated interest	$	431	$	431	$	1,294	$	1,294	$	431	$	431	$	1,294	$	1,294
Amortization of debt discount	3,179		3,035		9,428		9,000		3,331		3,179		9,877		9,428
Amortization of debt issuance costs	374		338		1,093		988		412		374		1,206		1,093
Total interest expense	$	3,984	$	3,804	$	11,815	$	11,282	$	4,174	$	3,984	$	12,377	$	11,815

Rovi incurred $9.3 million in transaction costs related to the issuance of the 2020 Convertible Notes which were allocated to liability and equity components based on the relative amounts calculated for the 2020 Convertible Notes at the date of issuance. Transaction costs of $7.6 million attributable to the liability component were recorded in Long-term debt, less current portion in the Condensed Consolidated Balance Sheets and are being amortized to interest expense using the effective interest method over the expected term of the 2020 Convertible Notes. Transaction costs of $1.7 million attributable to the equity component were recorded as a component of Additional paid-in capital in the Condensed Consolidated Balance Sheets.

Purchased Call Options and Sold Warrants related to the 2020 Convertible Notes

Concurrent with the issuance of the 2020 Convertible Notes in 2015, Rovi paid $64.8 million to purchase call options with respect to its common stock. The call options gave TiVo Corporation the right, but not the obligation, to purchase up to 11.9 million shares of TiVo Corporation's common stock at an exercise price of $28.9044 per share, which corresponds to the initial conversion price of the 2020 Convertible Notes, and are exercisable by TiVo Corporation on conversion of the 2020 Convertible Notes. The exercise price is subject to adjustment, including as a result of dividends paid by TiVo Corporation. As of September 30, ~~2017,~~2018, the call options give TiVo Corporation the right, but not the obligation, to purchase up to ~~12.3~~12.9 million shares of TiVo Corporation's common stock at an exercise price of ~~$28.0630~~$26.7078 per share. The call options are intended to reduce the potential dilution from conversion of the 2020 Convertible Notes. The purchased call options are separate transactions from the 2020 Convertible Notes and holders of the 2020 Convertible Notes do not have any rights with respect to the purchased call options.

Concurrent with the issuance of the 2020 Convertible Notes in 2015, Rovi received $31.3 million from the sale of warrants that provide the holder of the warrant the right, but not the obligation, to purchase up to 11.9 million shares of TiVo Corporation common stock at an exercise price of $40.1450 per share. The exercise price is subject to adjustment, including as a result of dividends paid by TiVo Corporation. As of September 30, ~~2017, the~~2018, 12.5 million warrants ~~have~~were outstanding with an exercise price of ~~$38.9764~~$37.0942 per share. The warrants are exercisable beginning June 1, 2020 and can be settled in cash or shares at TiVo Corporation's election. The warrants were entered into to offset the cost of the purchased call options. The warrants are separate transactions from the 2020 Convertible Notes and holders of the 2020 Convertible Notes do not have any rights with respect to the warrants.

The amounts paid to purchase the call options and received to sell the warrants were recorded in Additional paid-in capital in the Condensed Consolidated Balance Sheets.

2021 Convertible Notes

TiVo Solutions issued $230.0 million in aggregate principal of 2.0% Convertible Senior Notes that mature October 1, 2021 (the "2021 Convertible Notes") at par pursuant to an Indenture dated September 22, 2014 (as supplemented, "the 2014 Indenture"). The 2021 Convertible Notes bear interest at an annual rate of 2.0%, payable semi-annually in arrears on April 1 and October 1 of each year, commencing April 2015. On October 12, 2016, TiVo Solutions repaid $229.95 million of the par value of the 2021 Convertible Notes.

The 2021 Convertible Notes were convertible at an initial conversion rate of 56.1073 shares of TiVo Solutions common stock per $1,000 principal of notes, which was equivalent to an initial conversion price of $17.8230 per share of TiVo Solutions common stock. Following the TiVo Acquisition, the 2021 Convertible Notes were convertible at a conversion rate of 21.6181 shares of TiVo Corporation common stock per $1,000 principal of notes and $154.30 per $1,000 principal of notes, which was equivalent to a conversion price of $39.12 per share of TiVo Corporation common stock. The conversion rate and conversion price are subject to adjustment pursuant to the 2014 Indenture, including as a result of dividends paid by TiVo Corporation. As of September 30, ~~2017,~~2018, the 2021 Convertible Notes are convertible at a conversion rate of ~~22.0534~~23.4025 shares of

TiVo Corporation common stock per $1,000 principal of notes and $154.30 per $1,000 principal of notes, which is equivalent to a conversion price of ~~$38.3478~~$36.1372 per share of TiVo Corporation common stock.

TiVo Solutions can settle the 2021 Convertible Notes in cash, shares of common stock, or any combination thereof pursuant to the 2014 Indenture. Subject to certain exceptions, holders may require TiVo Solutions to repurchase, for cash, all or part of their 2021 Convertible Notes upon a “Fundamental Change” (as defined in the 2014 Indenture) at a price equal to 100% of the principal amount of the 2021 Convertible Notes being repurchased plus any accrued and unpaid interest up to, but excluding, the “Fundamental Change Repurchase Date” (as defined in the 2014 Indenture). In addition, on a “Make-Whole Fundamental Change” (as defined in the 2014 Indenture) prior to the maturity date of the 2021 Convertible Notes, TiVo Solutions will, in some cases, increase the conversion rate for a holder that elects to convert its 2021 Convertible Notes in connection with such Make-Whole Fundamental Change.

Senior Secured Credit Facility

On July 2, 2014, Rovi Corporation, as parent guarantor, and two of its wholly-owned subsidiaries, Rovi Solutions Corporation and Rovi Guides, Inc., as borrowers, and certain of its other subsidiaries, as subsidiary guarantors, entered into a Credit Agreement (the “Credit Agreement”). After the completion of the TiVo Acquisition, TiVo Corporation became a guarantor under the Credit Agreement. The Credit Agreement provided for a (i) five-year $125.0 million term loan A facility (“Term Loan Facility A”), (ii) seven-year $700.0 million term loan B facility (“Term Loan Facility B” and together with Term Loan Facility A, the “Term Loan Facility”) and (iii) five-year $175.0 million revolving credit facility (including a letter of credit sub-facility) (the "Revolving Facility” and together with the Term Loan Facility, the “Senior Secured Credit Facility”). In September 2015, Rovi made a voluntary principal prepayment to extinguish Term Loan Facility A and elected to terminate the Revolving Facility.

Prior to the refinancing described below, loans under Term Loan Facility B bore interest, at the Company's option, at a rate equal to either LIBOR, plus an applicable margin equal to 3.00% per annum (subject to a 0.75% LIBOR floor) or the prime lending rate, plus an applicable margin equal to 2.00% per annum.

On January 26, 2017, TiVo Corporation, as parent guarantor, two of its wholly-owned subsidiaries, Rovi Solutions Corporation and Rovi Guides, Inc., as borrowers, and certain of TiVo Corporation’s other subsidiaries, as subsidiary guarantors, entered into Refinancing Agreement No. 1 with respect to Term Loan Facility B. The $682.5 million in proceeds from Refinancing Agreement No. 1 was used to repay existing loans under Term Loan Facility B in full. The borrowing terms for Refinancing Agreement No. 1 are substantially similar to the borrowing terms of Term Loan Facility B. However, loans under Refinancing Agreement No. 1 bear interest, at the borrower's option, at a rate equal to either LIBOR, plus an applicable margin equal to 2.50% per annum (subject to a 0.75% LIBOR floor) or the prime lending rate, plus an applicable margin equal to 1.50% per annum. Refinancing Agreement No. 1 requires quarterly principal payments of $1.75 million through June 2021, with any remaining balance payable in July 2021. Refinancing Agreement No. 1 is part of the Senior Secured Credit Facility.

The refinancing of Term Loan Facility B resulted in a Loss on debt extinguishment of $0.1 million and a Loss on debt modification of $0.9 million for the nine months ended September 30, 2017. Creditors in Term Loan Facility B that elected not to participate in Refinancing Agreement No. 1 were extinguished. Creditors in Term Loan Facility B that elected to participate in Refinancing Agreement No. 1 and for which the present value of future cash flows was not substantially different were accounted for as a debt modification.

The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, and dividends and other distributions. The Credit Agreement is secured by substantially all of the Company's assets. The Company may be required to make an additional payment on the Term Loan Facility each February. This payment is calculated as a percentage of the prior year's "Excess Cash Flow" as defined in the Credit Agreement. No additional payment was required in February ~~2017.~~

2018.

Debt Maturities

As of September 30, ~~2017,~~2018, aggregate expected ~~future~~ principal payments on long-term debt, including the current portion of long-term debt, were as follows (in thousands):


Remainder of 2017	$	1,750
2018	7,000
2019 (1)	352,000
Remainder of 2018			$	1,750
2019 (a)			352,000
2020	7,000		7,000
2021	654,548		654,548
Total	$	1,022,298	$	1,015,298


~~(1)~~(a)	While the 2020 Convertible Notes are scheduled to mature on March 1, 2020, future principal payments are presented based on the date the 2020 Convertible Notes can be freely converted by holders, which is December 1, 2019. However, the 2020 Convertible Notes may be converted by holders prior to December 1, 2019 in certain circumstances.

Interest Rate Swaps

The Company issues long-term debt denominated in U.S. dollars based on market conditions at the time of financing and may enter into interest rate swaps to achieve a primarily fixed interest rate. Alternatively, the Company may choose not to enter into an interest rate ~~swaps~~swap or may terminate a previously executed interest rate swap if it believes a larger proportion of floating-rate debt would be beneficial. The Company has not designated any of its interest rate swaps as hedges for accounting purposes. The Company records interest rate swaps in the Condensed Consolidated Balance Sheets at fair value with changes in fair value recorded as ~~(Loss) income~~Gain (loss) on interest rate swaps in the Condensed Consolidated Statements of Operations. Amounts are presented in the Condensed Consolidated Balance Sheets after considering the right of offset ~~and the effect of~~based on its master netting agreements. During the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, the Company recorded ~~a loss~~gains of ~~$39~~$1.0 million and losses of $39.0 thousand, ~~and a gain of $1.7 million,~~ respectively, from adjusting its interest rate swaps to fair value. During the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, the Company recorded ~~a loss~~gains of ~~$1.4~~$7.2 million and ~~$16.9~~losses of $1.4 million, respectively, from adjusting its interest rate swaps to fair value.

Details of the Company's interest rate swaps as of September 30, ~~2017~~2018 and December 31, ~~2016~~2017 were as follows (dollars in thousands):

Notional
Contract Inception Contract Effective Date Contract Maturity September 30, 2017 December 31, 2016 Interest Rate Paid Interest Rate Received
Senior Secured Credit Facility
May 2012 April 2014 March 2017 $ —
$ 215,000
(1) One month USD-LIBOR
June 2013 January 2016 March 2019 $ 250,000
$ 250,000
2.23% One month USD-LIBOR
September 2014 January 2016 July 2021 $ 125,000
$ 125,000
2.66% One month USD-LIBOR
September 2014 March 2017 July 2021 $ 200,000
$ 200,000
2.93% One month USD-LIBOR


~~(1)~~	~~The Company paid a fixed interest rate which gradually increased from 0.65% for the three-month settlement period ended in June 2014 to 2.11% for the settlement period ended in March 2017.~~



			Notional
Contract Inception	Contract Effective Date	Contract Maturity	September 30, 2018		December 31, 2017		Interest Rate Paid	Interest Rate Received
Senior Secured Credit Facility
June 2013	January 2016	March 2019	$	250,000	$	250,000	2.23%	One-month USD-LIBOR
September 2014	January 2016	July 2021	$	125,000	$	125,000	2.66%	One-month USD-LIBOR
September 2014	March 2017	July 2021	$	200,000	$	200,000	2.93%	One-month USD-LIBOR

~~(10)~~

(11) Commitments and Contingencies

Purchase Commitments

In August 2016, Rovi entered into a 10-year patent license agreement with DISH. Under the terms of the license agreement, DISH will pay a monthly, per-subscriber license fee to Rovi for the period beginning on April 5, 2016 consistent with Rovi’s existing licensing program for its largest pay TV providers. In addition, DISH agreed to provide TiVo Solutions with a release for all past products and a going-forward covenant not-to-sue under DISH’s existing patents during the 10-year license term in exchange for TiVo Solutions providing DISH certain TiVo Solutions products during the term and cash payments by TiVo Solutions to DISH of $60.3 million in the aggregate, of which $30.3 million was paid in the third quarter of 2017, $15.0 million was paid in the second quarter of 2017 and $15.0 million was paid in the fourth quarter of 2016. The TiVo Solutions release and covenant transaction is being recognized as a reduction to revenue over the license term in the Condensed Consolidated Statements of Operations. No changes were made to the prior, existing patent settlement between EchoStar Corporation and DISH Network Corporation (together, "EchoStar"), and TiVo Solutions as a result of this agreement.

~~The Company purchases components from a variety of suppliers and uses several contract manufacturers to provide manufacturing services for its products.~~ During the normal course of business, ~~in order to manage manufacturing~~the Company orders finished goods from a third party with advanced lead times ~~and help ensure adequate component supply,~~that allow the ~~Company enters into agreements with contract manufacturers and suppliers that either allow them~~third party to procure ~~inventory based on criteria as defined by~~component supplies necessary to satisfy the Company ~~or that establish the parameters defining the Company’s requirements.~~’s purchase orders. A significant portion of the Company’s purchase commitments ~~arising from these agreements consists~~consist of firm, non-cancelable and unconditional purchase commitments. In certain instances, ~~these agreements allow~~ the Company has the option to cancel, reschedule or adjust ~~the Company’s~~its purchase commitments based on ~~its~~ business needs prior to ~~firm orders being placed.~~the purchase order becoming non-cancelable. As of September 30, ~~2017,~~2018, the Company had total purchase

commitments for finished-goods inventory of ~~$8.7~~$4.4 million, of which ~~$1.3~~$0.7 million was accrued in the Condensed Consolidated Balance Sheets.

Indemnifications

In the normal course of business, the Company provides indemnifications of varying scopes and amounts to certain of its licensees against claims made by third parties arising out of the use and / or incorporation of the Company's products, intellectual property, services and / or technologies into the licensees' products and services. TiVo Solutions has also indemnified certain customers and business partners for, among other things, the licensing of its products, the sale of its DVRs, and the provision of engineering and consulting services. The Company’s obligation under its indemnification agreements with customer and business partners would arise in the event ~~that~~ a third party filed a claim against one of the parties that was covered by the Company’s indemnification. Pursuant to these agreements, the Company may indemnify the other party for certain losses suffered or incurred by the indemnified party in connection with various types of claims, which may include, without limitation, intellectual property infringement, advertising and consumer disclosure laws, certain tax liabilities, negligence and intentional acts in the performance of services and violations of laws.

In some cases, the Company may receive tenders of defense and indemnity arising ~~out of~~from products, intellectual property services and / or technologies that are no longer provided by the Company due to having divested certain assets, but which were previously licensed or provided by the Company.

The term of the Company's indemnification obligations is generally perpetual. The Company's indemnification obligations are typically limited to the cumulative amount paid to the Company by the licensee under the license agreement; however, some license agreements, including those with the Company's largest ~~multiple system operators~~MSO and digital broadcast satellite providers, have larger limits or do not specify a limit on amounts that may be payable under the indemnity arrangements.

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 nature of the claim asserted; the relative merits of the claim; the financial ability of the party suing the indemnified party 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. Due to the nature of the Company's potential indemnity liability, the Condensed Consolidated Financial Statements could be materially adversely affected in a particular period by one or more of these indemnities.

Under certain circumstances, TiVo Solutions may seek to recover some or all amounts paid to an indemnified party from its insurers. TiVo Solutions does not have any assets held either as collateral or by third parties that, on the occurrence of

an event requiring it to indemnify a customer, ~~TiVo Solutions~~that could ~~obtain~~be obtained and ~~liquidate~~liquidated to recover all or a portion of the amounts paid pursuant to its indemnification obligations.

Legal Proceedings

The Company may be involved in various lawsuits, claims and proceedings, including intellectual property, commercial, securities and employment matters that arise in the normal course of business. The Company accrues a liability when management believes information available prior to the issuance of the financial statements indicates it is probable a loss has been incurred as of the date of the financial statements and the amount of loss can be reasonably estimated. The Company adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Legal costs are expensed as incurred.

On June 15, 2011, TNS Media Research, LLC (d/b/a Kantar Media Audiences, or Kantar) brought a claim for declaratory judgment against TRA Global Inc. (which was acquired by TiVo Inc. in July 2012 and renamed TiVo Research and Analytics, Inc. or TiVo Research) in U.S. District Court alleging non-infringement of a TiVo Research patent, among other claims. TiVo Research responded by alleging affirmative defenses as well as counterclaims alleging infringement by Kantar of the TiVo Research patent at issue and one other patent. On February 22, 2016, the District Court granted Kantar's summary judgment motion on invalidity under Section 101 as to each of TiVo Research's asserted patent claims. On May 18, 2018, the District Court granted Kantar’s motion for attorneys' fees and expenses related to TiVo Research’s patent claims in this action. During the three months ended June 30, 2018, TiVo Research recorded a $4.5 million loss and agreed to transfer of ownership of the two patents at issue to Kantar as part of a settlement agreement. TiVo Research paid the settlement during the three and nine months ended September 30, 2018.

The Company believes it has recorded adequate provisions for any such matters and, as of September 30, ~~2017,~~2018, it was not reasonably possible that a material loss had been incurred in excess of the amounts recognized in the Condensed Consolidated Financial Statements. ~~Legal costs are expensed as incurred.~~ Based on its experience, the Company believes that damage amounts claimed in these matters are not meaningful indicators of potential liability. Some of the matters pending against the Company involve potential compensatory, punitive or treble damage claims or sanctions, that, if granted, could require the Company to pay damages or make other expenditures in amounts that could have a material adverse effect on its Condensed Consolidated Financial Statements.

On November 15, 2016, Driehaus Appraisal Litigation Fund, L.P., Driehaus Companies Profit Sharing Plan and Trust, and Richard H. Driehaus IRA (the “Driehaus Entities”) filed a petition for appraisal pursuant to Section 262 Given the inherent uncertainties of litigation, the ultimate outcome of the ~~Delaware General Corporation Law ("Section 262") in~~ongoing matters described herein cannot be predicted with certainty. While litigation is inherently unpredictable, the ~~Court of Chancery of~~Company believes it has valid defenses with respect to the ~~State of Delaware covering a total of 1.9 million shares of common stock of TiVo Solutions in connection with~~legal matters pending against it. Nevertheless, the TiVo Acquisition. Additionally, on November 15, 2016, Fir Tree Value Master Fund L.P. and Fir Tree Capital Opportunity Master Fund L.P. (the “Fir Tree Entities” and together with the Driehaus Entities, the “Appraisal Petitioners”) filed a petition for appraisal pursuant to Section 262 in the Court of Chancery of the State of Delaware covering a total of 7.2 million shares of common stock of TiVo Solutions in connection with the TiVo Acquisition. On January 11, 2017, the Court of Chancery consolidated the two petitions into a consolidated action entitled In re Appraisal of TiVo, Inc., C.A. No. 12909-CB (Del. Ch.). The Appraisal Petitioners were also seeking the payment of their costs and attorneys’ fees. As discussed in Note 2, on March 27, 2017, TiVo Corporation executed a settlement agreement with the Dissenting Holders to settle the claims of the Dissenting Holders for $117.0 million, which was paid in cash in April 2017.

On January 27, 2017, UBS Securities LLC ("UBS") filed a complaint against TiVo Solutions alleging TiVo Solutions breached its contractual obligations to UBS under a September 14, 2010 letter agreement (the "Letter Agreement") whereby TiVo Solutions retained UBS as its financial advisor. In the complaint, UBS alleged that TiVo Solutions never terminated its Letter Agreement with UBS and, as a result, TiVo Solutions breached its obligations to UBS by (i) not paying UBS's annual retainer fee of $0.3 million for an unspecified number of years, but totaling an amount of $1.4 million, including unpaid retainer fees and out-of-pocket expenses, and (ii) not considering or retaining UBS as TiVo Solutions' financial advisor in connection with its merger with Rovi, for which UBS alleged TiVo Solutions owed it a fee of $14.5 million (the amount TiVo Solutions paid its financial advisor for the merger). The Company and UBS settled this matter in May 2017 for $0.7 million, toCondensed Consolidated Financial Statements could be ~~paid~~materially adversely affected in a ~~combination~~particular period by the resolution of ~~a current cash payment and potential future service fees.~~one or more of these contingencies.

~~(11)~~(12) Stockholders' Equity

Earnings (Loss) Per Share

Basic earnings per share ("EPS") is computed using the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares and dilutive common share equivalents outstanding during the period, except for periods of a loss from continuing operations. In periods of a loss from continuing operations, no common share equivalents are included in Diluted EPS because their effect would be anti-dilutive.

The number of shares used to calculate Basic ~~EPS~~ and Diluted EPS were as follows (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016	2018	2017	2018	2017
Weighted average shares used in computing basic per share amounts	120,935	91,131	119,994	84,895	123,459	120,935	122,756	119,994
Dilutive effect of equity-based compensation awards	—	1,013	—	963	—	—	—	—
Weighted average shares used in computing diluted per share amounts	120,935	92,144	119,994	85,858	123,459	120,935	122,756	119,994

Weighted average potential shares excluded from the calculation of Diluted EPS as their effect would have been anti-dilutive were as follows (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2017	2016	2017	2016	2018	2017	2018	2017
Restricted awards	5,234	1,483	4,444	2,176	5,401	5,234	4,153	4,444
Stock options	2,544	3,332	3,004	3,497	1,907	2,544	2,238	3,004
2020 Convertible Notes ~~(1)~~(a)	12,294	11,936	12,294	11,936	12,918	12,294	12,918	12,294
2021 Convertible Notes ~~(1)~~(a)	1	1,470	1	494	1	1	1	1
Warrants related to 2020 Convertible Notes ~~(1)~~(a)	12,079	11,936	12,079	11,936	12,525	12,079	12,424	12,079
Weighted average potential shares excluded from the calculation of Diluted EPS	32,152	30,157	31,822	30,039	32,752	32,152	31,734	31,822


~~(1)~~(a)	See Note 910 for additional details.

The calculation of earnings per share for the three and nine months ended September 30, 2016 excludes 3.8 million shares of TiVo Corporation common stock that were potentially issuable to Dissenting Holders as the Dissenting Holders had not decided whether or not to receive the consideration they were entitled to as a result of the TiVo Acquisition. As the contingency had not been satisfied as of September 30, 2016, the potentially issuable shares of common stock were excluded from the calculation of Basic and Diluted EPS. See Note 2 for additional details.

For the three months ended September 30, 2018 and 2017, ~~and 2016,0.5~~0.6 million and ~~0.7~~0.5 million weighted average performance-based restricted awards, respectively, were excluded from the calculation of Diluted EPS as the performance metric had yet to be ~~achieved or their inclusion would have been anti-dilutive.~~achieved. For the nine months ended September 30, 2018 and 2017, ~~and 2016,0.5~~0.9 million and ~~0.7~~0.5 million weighted average performance-based restricted awards, respectively, were excluded from the calculation of Diluted EPS as the performance metric had yet to be ~~achieved or their inclusion would have been anti-dilutive.~~achieved.

Effect of the 2020 Convertible Notes and related transactions on Diluted EPS

In periods when the Company reports income from continuing operations, the potential dilutive effect of additional shares of common stock that may be issued on conversion of the 2020 Convertible Notes are included in the calculation of Diluted EPS ~~under the treasury stock method~~ if the price of the Company’s common stock exceeds the conversion price. The 2020 Convertible Notes have no impact on Diluted EPS until the price of the Company's common stock exceeds the conversion price of ~~$28.0630~~$26.7078 per share because the principal of the 2020 Convertible Notes is required to be settled in cash. Based on the closing price of the Company's common stock of ~~$19.85~~$12.45 per share on September 30, ~~2017,~~2018, the if-converted value of the 2020 Convertible Notes was less than the outstanding principal.

~~Under the treasury stock method, the~~The 2020 Convertible Notes would be dilutive if the Company’s common stock ~~closes~~closed at or above ~~$28.0630~~$26.7078 per share. However, on conversion, no economic dilution is expected from the 2020 Convertible Notes as the exercise of call options purchased by the Company with respect to its common stock described in Note 910 is expected to eliminate any potential dilution from the 2020 Convertible Notes that would have otherwise occurred. The call options are always excluded from the calculation of Diluted EPS as they are anti-dilutive under the treasury stock method.

The warrants sold by the Company with respect to its common stock in connection with the 2020 Convertible Notes described in Note 910 have an effect on Diluted EPS when the Company’s share price exceeds the warrant’s strike price of

~~$38.9764~~ $37.0942 per share. As the price of the Company’s common stock increases above the warrant strike price, additional dilution would occur.

Changes in Shareholders Equity

Changes in stockholders' equity for the three and nine months ended September 30, 2018 were as follows (in thousands):



	Common stock			Treasury stock					Additional paid-in capital			Accumulated other comprehensive loss			Accumulated deficit			Total stockholders’ equity
	Shares	Amount		Shares		Amount
Balance as of June 30, 2018	124,528	$	125	(1,557	)	$	(28,925	)	$	3,257,093		$	(4,233	)	$	(1,399,526	)	$	1,824,534
Net loss															(22,849		)	(22,849		)
Other comprehensive income, net of tax												(64		)				(64		)
Issuance of common stock under employee stock purchase plan	511	—							5,278									5,278
Issuance of restricted stock, net	590	1							—									1
Equity-based compensation									9,526									9,526
Dividends									(22,282		)							(22,282		)
Withholding taxes related to net share settlement of restricted stock units				(197	)	(2,570		)										(2,570		)
Balance as of September 30, 2018	125,629	$	126	(1,754	)	$	(31,495	)	$	3,249,615		$	(4,297	)	$	(1,422,375	)	$	1,791,574



	Common stock			Treasury stock					Additional paid-in capital			Accumulated other comprehensive loss			Accumulated deficit			Total stockholders’ equity
	Shares	Amount		Shares		Amount
Balance as of December 31, 2017	123,385	$	123	(1,269	)	$	(24,740	)	$	3,273,022		$	(2,738	)	$	(1,392,651	)	$	1,853,016
Cumulative effect adjustment (a)															31,412			31,412
Net loss															(61,136		)	(61,136		)
Other comprehensive income, net of tax												(1,559		)				(1,559		)
Issuance of common stock under employee stock purchase plan	1,150	2							12,852									12,854
Issuance of restricted stock, net	1,094	1							—									1
Equity-based compensation									30,252									30,252
Dividends									(66,511		)							(66,511		)
Withholding taxes related to net share settlement of restricted stock units				(485	)	(6,755		)										(6,755		)
Balance as of September 30, 2018	125,629	$	126	(1,754	)	$	(31,495	)	$	3,249,615		$	(4,297	)	$	(1,422,375	)	$	1,791,574

(a) See Note 1 and Note 5 for additional information.

Share Repurchase Program

On February 14, 2017, TiVo Corporation's Board of Directors approved an increase to the share repurchase program authorization to $150.0 million. The February 2017 authorization includes amounts which were outstanding under previously authorized share repurchase programs. During the three and nine months ended September 30, 2018 and 2017, no shares were repurchased under the share repurchase program. As of September 30, ~~2017,~~2018, the Company had $150.0 million of share repurchase authorization remaining.

The Company issues restricted ~~awards~~stock and restricted stock units (collectively, "restricted awards") as part of the ~~equity incentive~~equity-based compensation plans described in Note ~~12.~~13. For the majority of restricted ~~awards,~~stock units, shares are withheld to satisfy required withholding taxes at the vesting date. Shares withheld to satisfy required withholding taxes in connection with the vesting of restricted awards are treated as common stock repurchases in the Condensed Consolidated Financial Statements because they reduce the number of shares that would have been issued on vesting. However, these withheld shares are not considered common stock repurchases under the Company's authorized share repurchase plan. During the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, the Company withheld ~~0.1~~0.2 million and ~~0.3~~0.1 million shares of common stock to satisfy ~~$1.5~~$2.6 million and ~~$5.3~~$1.5 million of required withholding taxes, respectively. During the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, the Company withheld ~~0.7~~0.5 million and ~~0.4~~0.7 million shares of common stock to satisfy ~~$12.8~~$6.8 million and ~~$9.4~~$12.8 million of required withholding taxes, respectively.

~~Dividend~~Dividends

For the three ~~and nine~~ months ended September 30, 2018 and 2017, the Company declared and paid dividends of $0.18 and $0.18 per share, respectively, for aggregate cash payments of $22.3 million and $21.9 million, respectively. For the nine months ended September 30, 2018 and 2017, the Company declared and paid dividends of $0.54 and $0.54 per share, respectively, for aggregate cash payments of ~~$21.9~~$66.7 million and $65.2 million, respectively. ~~No dividend payments were made in the three and nine months ended September 30, 2016.~~

Section 382 Transfer Restrictions

On September 7, 2016, upon the effective time of the TiVo Acquisition, the Company’s certificate of incorporation was amended and restated to include certain transfer restrictions intended to preserve tax benefits related to the net operating loss carryforwards (“NOLs”) of the Company pursuant to Section 382 of Internal Revenue Code of 1986, as amended (the “Code”), that apply to transfers made by 5% stockholders, transferees related to a 5% stockholder, transferees acting in coordination with a 5% stockholder, or transfers that would result in a stockholder becoming a 5% stockholder. If the Company experiences an “ownership change,” as defined in Section 382 of the Code, its ability to fully utilize the NOLs on an annual basis will be substantially limited, and the timing of the usage of the NOLs could be substantially delayed, which could therefore significantly impair the value of those benefits. These transfer restrictions are intended to act as a deterrent to any person (an “Acquiring Person”) acquiring (together with all affiliates and associates of such person) beneficial ownership of 5% or more of the Company's outstanding common stock within the meaning of Section 382 of the Code, without the approval

of the Company's Board of Directors. Such transfer restrictions will expire on the earlier of (i) the repeal of Section 382 or any successor statute if the Company’s Board of Directors determines that such restrictions are no longer necessary or desirable for the preservation of certain tax benefits, (ii) the beginning of a taxable year to which the Company’s Board of Directors determines that no tax benefits may be carried forward or (iii) the end of the day on September 7, 2019, three years from the effective time of the TiVo Acquisition when the Company’s certificate of incorporation was amended and restated to include certain transfer restrictions. The Company conducted a stockholder advisory vote with respect to the maintenance of such transfer restrictions in its certificate of incorporation at its 2017 Annual Meeting of Stockholders and the stockholders approved of such transfer restrictions.

~~(12)~~(13) Equity-based Compensation

Restricted Awards and Stock Options

The Company grants equity-based compensation awards from the Rovi 2008 Equity Incentive Plan (the “Rovi 2008 Plan”). The Rovi 2008 Plan permits the grant of restricted ~~stock, restricted stock units,~~awards, stock options and similar types of equity awards to employees, officers, directors and consultants of the Company. Restricted stock is considered outstanding at the time of the grant as holders are entitled to voting rights. ~~Awards of restricted stock and restricted stock units (collectively, "restricted awards")~~Restricted awards are generally subject to a ~~four year~~four-year graded vesting period. Stock options generally have vesting periods of four years with one quarter of the grant vesting on the first anniversary of the grant, followed by monthly vesting thereafter. Stock options generally have a contractual term of seven years. As of September 30, ~~2017,~~2018, the Company had 30.0 million shares of common stock reserved and ~~11.1~~10.8 million shares of common stock available for issuance under the Rovi 2008 Plan.

On September 7, 2016, the Company assumed the TiVo Inc. Amended and Restated 2008 Equity Incentive Award Plan (the “TiVo 2008 Plan”). The Company amended and restated the TiVo 2008 Plan effective as of the closing of the TiVo Acquisition to be the TiVo Corporation Titan Equity Incentive Award Plan for purposes of awards granted following the ~~closing of the~~ TiVo ~~Acquisition.~~Acquisition Date. The TiVo 2008 Plan permits the grant of restricted ~~stock, restricted stock units,~~awards, stock options and similar types of equity awards to employees, officers, directors and consultants of the Company. Restricted stock is considered outstanding at the time of the grant as holders are entitled to voting rights. Restricted awards assumed from the TiVo 2008 Plan are generally subject to a ~~three year~~three-year vesting period, with semiannual vesting. Restricted awards issued by the Company from the TiVo 2008 Plan are generally subject to a ~~four year~~four-year graded vesting period. Stock options assumed from the TiVo 2008 Plan generally have a ~~four year~~four-year vesting period with one quarter of the grant vesting on the first anniversary of the grant followed by monthly vesting thereafter. Stock options assumed from the TiVo 2008 Plan generally have a contractual term of seven years. As of September 30, ~~2017,~~2018, there were 3.9 million shares of common stock reserved for future issuance as outstanding awards vest under the TiVo 2008 Plan. The TiVo 2008 Plan expired in August 2018, and ~~3.9 million~~no further shares of common stock are available for future grant under the TiVo 2008 Plan.

The Company also grants performance-based restricted stock units to certain of its senior officers for three-year performance periods. Vesting in the performance-based restricted stock units ~~may~~is subject to ~~either~~a market ~~conditions or performance conditions~~condition, as well as a ~~three-year~~ service ~~period.~~condition. Depending on the level of achievement, the maximum number of shares that could be issued on vesting generally could be up to 200% of the target number of performance-based restricted stock units granted.

For 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 (a relative Total Shareholder Return metric). For awards subject to performance conditions, the fair value per award is fixed at the grant date; however, the amount of compensation expense is adjusted throughout the performance period based on the probability of achievement of the performance condition (a target revenue compound annual growth rate and a target Adjusted EBITDA (as defined in Note 14) margin), with compensation expense based on the number of shares ultimately issued.condition.

Employee Stock Purchase Plan

The Company’s 2008 Employee Stock Purchase Plan (“ESPP”) allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP consists of up to four consecutive six-month purchase periods within a ~~twenty-four month~~twenty-four-month offering period. Employees purchase shares each purchase period at the lower of 85% of the market value of the Company’s common stock at either the beginning of the offering period or the end of the purchase period.

As of September 30, ~~2017,~~2018, the Company had ~~5.8~~4.7 million shares of common stock reserved and ~~5.8~~4.7 million shares available for issuance under the ESPP.

Valuation Techniques and Assumptions

~~For~~The Company's restricted awards are generally not eligible for dividend protection. Prior to and including February 14, 2017, the fair value of restricted awards subject to service ~~or performance~~ conditions ~~granted prior to February 14, 2017, fair value~~ was estimated as the price of the Company's common stock at the close of trading on the date of grant. AsSubsequent to February 14, 2017, the fair value of restricted awards subject to service ~~or performance~~ conditions ~~granted after February 14, 2017 are not dividend-protected, fair value~~ is estimated as the price of the Company's common stock at the close of trading on the date of grant, less the present value of dividends expected to be paid during the vesting period.

A Monte Carlo simulation is used to estimate the fair value of restricted ~~stock units~~awards subject to market ~~conditions.~~conditions with expected volatility estimated using the historical volatility of the Company's common stock.

The Company uses the Black-Scholes-Merton option-pricing formula to estimate the fair value of stock options and ESPP shares. The ~~fair value of stock options and ESPP shares is estimated on the grant date using~~Black-Scholes-Merton option-pricing formula uses complex and subjective inputs, such as the expected volatility of the Company's common stock over the expected term of the ~~award~~grant and projected employee exercise behavior.

~~Assumptions used to estimate the fair value of equity-based compensation awards granted during the period were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Restricted stock units subject to market conditions:
Expected volatility 53.1 % 55.9 % 53.1 % 55.9 %
Expected term 2.5 years
2.7 years
2.5 years
3.0 years
Risk-free interest rate 1.5 % 1.0 % 1.5 % 1.0 %
Expected dividend yield 3.9 % 0.0 % 3.9 % 0.0 %
ESPP shares:
Expected volatility 42.2 % 50.4 % 42.0 % 55.6 %
Expected term 1.3 years
1.3 years
1.3 years
1.3 years
Risk-free interest rate 1.3 % 0.5 % 1.1 % 0.6 %
Expected dividend yield 3.9 % 0.0 % 2.4 % 0.0 %
Stock options:
Expected volatility N/A
55.5 % N/A
55.7 %
Expected term N/A
4.1 years
N/A
4.1 years
Risk-free interest rate N/A
0.9 % N/A
1.1 %
Expected dividend yield N/A
0.0 % N/A
0.0 %

Expected volatility is estimated using a combination of historical volatility and implied volatility derived from publicly-traded options on the Company's common stock. ~~When historical data is available and relevant, the~~The expected term ~~of the award~~ is estimated by calculating the ~~average term from~~period the award is expected to be outstanding based on historical ~~experience. When there is insufficient historical data to provide a reasonable basis on which to estimate~~experience and the ~~expected term, the Company uses an average~~terms of the ~~vesting period and the contractual term of the award to estimate the expected term of the award.~~grant. The risk-free interest rate is estimated based on the yield on U.S. Treasury zero-coupon bonds with remaining terms similar to the expected term ~~of the award~~ at the grant date. For ~~awards~~stock options and ESPP shares granted prior to and including February 14, 2017, the Company assumed an expected dividend yield of zero as it had not historically paid a dividend. For ~~awards~~stock options and ESPP shares granted subsequent to February 14, 2017, the Company assumes a constant dividend yield commensurate with the dividend yield aton the grant date.

Weighted-average assumptions used to estimate the fair value of equity-based compensation awards granted during the period were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Restricted stock units subject to market conditions
Expected volatility	39.2	%	53.1	%	39.2	%	53.1	%
Expected term	2.5 years		2.5 years		2.5 years		2.5 years
Risk-free interest rate	2.6	%	1.5	%	2.6	%	1.5	%
Expected dividend yield	5.5	%	3.9	%	5.5	%	3.9	%
ESPP shares
Expected volatility	44.3	%	42.2	%	43.5	%	42.0	%
Expected term	1.3 years		1.3 years		1.3 years		1.3 years
Risk-free interest rate	2.5	%	1.3	%	2.2	%	1.1	%
Expected dividend yield	6.1	%	3.9	%	5.7	%	2.4	%

The number of awards expected to vest during the requisite service period is estimated at the time of grant using historical data and equity-based compensation is only recognized for awards for which the requisite service is expected to be rendered. Forfeiture estimates are revised during the requisite service period and the effect of changes in the number of awards expected to vest during the requisite service period is recognized ason a cumulative ~~effect adjustment~~catch-up basis in the period estimates are revised.

The weighted-average grant date fair value of equity-based awards (per award) and pre-tax equity-based compensation expense (in thousands) was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016		2018		2017		2018		2017
Weighted average grant date fair value
Restricted awards	$	17.05	$	16.70	$	17.48	$	22.98	$	11.55	$	17.05	$	11.72	$	17.48
ESPP shares	$	5.78	$	7.02	$	5.70	$	7.30	$	3.67	$	5.78	$	3.94	$	5.70
Stock options	N/A		$	7.21	N/A		$	10.15

Equity-based compensation
Pre-tax equity-based compensation, excluding amounts included in restructuring expense	$	13,007	$	13,676	$	38,781	$	32,031	$	9,471	$	13,007	$	28,226	$	38,781
Pre-tax equity-based compensation, included in restructuring expense	$	456	$	14,731	$	2,374	$	14,731	$	—	$	456	$	2,575	$	2,374

Included in Pre-tax equity-based compensation, excluding amounts included in restructuring expense is $3.5 million of expense for the three and nine months ended September 30, 2016 related to the incremental fair value resulting from the replacement of TiVo Solutions equity-based awards with corresponding TiVo Corporation equity-based awards.

As of September 30, ~~2017,~~2018, there was ~~$79.2~~$76.2 million of unrecognized compensation cost, net of estimated forfeitures, related to unvested equity-based awards which is expected to be recognized over a remaining weighted average period of ~~2.4~~2.5 years.

Equity-Based Compensation Award Activity

Activity related to the Company's restricted awards for the nine months ended September 30, ~~2017~~2018 was as follows:


	Restricted Awards (In Thousands)		Weighted-Average Grant Date Fair Value		Restricted Awards (In Thousands)		Weighted-Average Grant Date Fair Value
Outstanding as of beginning of period	5,162		$	21.80	5,899		$	17.78
Granted	2,719		$	17.48	3,339		$	11.72
Vested	(2,212	)	$	22.34	(1,552	)	$	20.41
Forfeited	(384	)	$	20.42	(2,135	)	$	15.02
Outstanding as of end of period	5,285		$	19.49	5,551		$	14.46

As of September 30, ~~2017, 4.6~~2018, 5.4 million restricted stock units were unvested, which includes ~~0.5~~0.3 million performance-based restricted stock units. As of September 30, ~~2017, 0.7~~2018, 0.2 million shares of restricted stock were unvested. The aggregate fair value of restricted awards vested during the three months ended September 30, 2018 and 2017 ~~and 2016~~ was ~~$5.0~~$8.6 million and ~~$13.1~~$5.0 million, respectively. The aggregate fair value of restricted awards vested during the nine months ended September 30, 2018 and 2017 ~~and 2016~~ was ~~$41.6~~$21.5 million and ~~$34.5~~$41.6 million, respectively.

Activity related to the Company's stock options for the nine months ended September 30, ~~2017~~2018 was as follows:


	Options (In Thousands)		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (In Thousands)		Options (In Thousands)		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value (In Thousands)
Outstanding as of beginning of period	3,938		$	28.21				2,368		$	27.16
Exercised	(463	)	$	14.56
Forfeited and expired	(1,011	)	$	37.29				(497	)	$	36.45
Outstanding as of end of period	2,464		$	27.05	2.7 years	$	537	1,871		$	24.69	1.2 years	$	—
Vested and expected to vest as of September 30, 2017	2,430		$	27.11	2.6 years	$	531
Exercisable as of September 30, 2017	2,049		$	27.83	2.4 years	$	486
Vested and expected to vest as of September 30, 2018								1,871		$	24.69	1.2 years	$	—
Exercisable as of September 30, 2018								1,825		$	24.71	1.2 years	$	—

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value that option holders would have received had all option holders exercised their options at the end of the last trading day in the period. The aggregate intrinsic value is the difference between the closing price of the Company's common stock on the last trading day of the period and the exercise price of the stock option, multiplied by the number of in-the-money stock options.

The aggregate intrinsic value of stock options exercised is the difference between the market price of the Company's common stock at the time of exercise and the exercise price of the stock option multiplied by the number of stock options exercised. No stock options were exercised during the three and nine months ended September 30, 2018. The aggregate intrinsic value of stock options exercised during the three ~~months ended September 30, 2017~~ and ~~2016 was immaterial. The aggregate intrinsic value of stock options exercised during the~~ nine months ended September 30, 2017 ~~and 2016~~ was ~~$2.0~~less than $0.1 million and ~~$0.7~~$2.0 million, respectively.

~~(13)~~(14) Income Taxes

Due to the fact that the Company has significant net operating loss carryforwards and has recorded a valuation allowance against a significant portion of its deferred tax assets, foreign withholding taxes are the primary driver of Income tax ~~expense (benefit).~~expense.

During the three and nine months ended September 30, 2016, the Company recorded an income tax benefit of $88.1 million due to a change in the deferred tax asset valuation allowance resulting from the TiVo Acquisition. In connection with the TiVo Acquisition, a deferred tax liability was recorded for finite-lived intangible assets. These deferred tax liabilities are considered a source of future taxable income which allowed TiVo Corporation to reduce its pre-acquisition deferred tax asset

valuation allowance. The change in the pre-acquisition deferred tax asset valuation allowance is a transaction recognized separate from the business combination and reduces income tax expense in the period of the business combination.

Components of Income tax expense ~~(benefit)~~ were as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,					Nine Months Ended September 30,
	2017			2016			2017			2016			2018		2017			2018			2017
Foreign withholding tax	$	4,106		$	3,316		$	11,118		$	9,759		$	3,566	$	4,106		$	10,635		$	11,118
State income tax	(992		)	140			143			263			42		(992		)	221			143
Foreign income tax	252			934			996			1,771			18		252			578			996
Increase in (release of) deferred tax asset valuation allowance	348			(88,138		)	195			(88,138		)
Change in net deferred tax liabilities	691			303			1,372			1,224			213		691			(277		)	1,372
Change in unrecognized tax benefits	(64		)	—			(8		)	296			62		(64		)	59			(8		)
Income tax expense (benefit)	$	4,341		$	(83,445	)	$	13,816		$	(74,825	)
Transition Tax													868		—			868			—
Change in indefinite reinvestment assertion													—		—			1,221			—
Release of deferred tax asset valuation allowance													—		348			—			195
Income tax expense													$	4,769	$	4,341		$	13,305		$	13,816

The Company believes it has provided adequate reserves for all tax deficiencies or reductions in tax benefits that could result from U.S. federal, state and foreign tax audits. The Company regularly assesses the potential outcomes of these audits in order to determine the appropriateness of its tax ~~provision.~~positions. Adjustments to accruals for unrecognized tax benefits are made to reflect the impact of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular income tax audit. However, income tax audits are inherently unpredictable and there can be no assurance ~~that~~ the Company will accurately predict the outcome of these audits. The amounts ultimately paid on resolution of an audit could be materially different from the amounts previously recognized, and therefore the resolution of one or more of these uncertainties in any particular period could have a material adverse impact on the Condensed Consolidated Financial Statements.

Tax Act of 2017

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act of 2017”) was signed into law. The Tax Act of 2017 enacted comprehensive tax reform that made broad and complex changes to the U.S. federal income tax code which affect 2017, including, but not limited to requiring a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years (the "Transition Tax"). The Tax Act of 2017 also establishes new tax laws which affect 2018 and later years, including, but not limited to, a reduction of the U.S. federal income tax rate from 35% to 21%, a general elimination of U.S. federal income taxes on dividends from foreign subsidiaries and a new provision designed to tax global intangible low-taxed income (“GILTI”), a limitation of the deductibility of interest expense, a limitation of the deduction for newly generated net operating losses to 80% of current year taxable income and the elimination of net operating loss carrybacks.

On December 22, 2017, the SEC Staff issued guidance to address the application of U.S. GAAP in situations where a registrant does not have the necessary information to complete the accounting for certain effects of the Tax Act of 2017. As of September 30, 2018, the Company had not completed its accounting for the income tax effects of the Tax Act of 2017. Where the Company has made reasonable estimates of the effect, but for which the analysis is not yet complete, the Company has recorded provisional amounts based on information available as of September 30, 2018. During the three and nine months ended September 30, 2018, the provisional amounts recognized as of December 31, 2017 were adjusted as described below. Where the Company has not been able to make reasonable estimates of the effect the Tax Act of 2017, no amounts have been recognized and the Company has continued to account for those items based on the tax laws in effect immediately prior to enactment of the Tax Act of 2017. The items described below, including the provisional items, are subject to change as additional information becomes available, limited to a measurement period of one year from enactment of the Tax Act of 2017.

The Transition Tax on unrepatriated foreign earnings is a tax on previously untaxed accumulated and current earnings and profits (“E&P”) of the Company’s foreign subsidiaries. Based on the amount of post-1986 E&P of the Company's foreign subsidiaries, as well as the amount of non-U.S. income taxes paid on such earnings, during the nine months ended September 30, 2018, the Company revised its estimate of the Transition Tax to $33.7 million. The Company expects to use$32.8 million of available tax credits to offset the majority of the Transition Tax. As of September 30, 2018, the Company estimates the Transition Tax for U.S. states that have enacted laws to conform with the Tax Act of 2017 to be less than $0.1 million, which is substantially offset by U.S. state net operating losses, resulting in no net estimated U.S. state Transition Tax. Accordingly, during the three and nine months ended September 30, 2018, the Company recognized $0.9 million of Transition Tax expense that is not expected to be offset by available tax credits. To complete its estimate of the Transition Tax, the Company must complete its calculation of the effects on U.S. states whose laws conform with the Tax Act of 2017.

The Tax Act of 2017 requires that certain income (i.e., GILTI) earned by foreign subsidiaries must be included currently in the gross income of the U.S. shareholder. Due to the complexity of the GILTI rules and the lack of clear guidance on federal and state application of the GILTI rules, as of September 30, 2018, the Company has not completed its analysis of the tax impacts of the GILTI. However, the Company has recorded provisional tax expense that is not material to the Company's financial statements for the three and nine months ended September 30, 2018. The tax effect of GILTI is fully offset by the Company’s net operating losses, resulting in no net U.S. federal income tax expense from GILTI. To complete its estimate of GILTI, the Company must complete its calculation of the effects on U.S. states whose laws conform with the Tax Act of 2017. Under U.S. GAAP, the Company is permitted to make an accounting policy election to either treat taxes due on future inclusions in U.S. taxable income related to GILTI as a component of current income tax expense when incurred or to factor such amounts into the Company’s measurement of its deferred tax expense. The Company has made an accounting policy election to treat GILTI as a component of current income tax expense.

The Tax Act of 2017 created a minimum tax on corporations for payments to related foreign persons (referred to as the base erosion and anti-abuse tax ("BEAT")). Due to the complexity of the BEAT rules and the lack of clear guidance on federal and U.S. state application of the BEAT rules, including rules on the ability to use loss carryovers to offset BEAT liability, the Company has not completed its analysis of the effects of the BEAT as of September 30, 2018. During the three and nine months ended September 30, 2018, the Company provisionally estimated it has no BEAT liability.

As a result of the Tax Act of 2017, during the nine months ended September 30, 2018, the Company changed its assertion regarding the indefinite reinvestment of undistributed foreign earnings. In the year ended December 31, 2017, the Company accrued a Transition Tax liability for U.S. federal and certain U.S. state income taxes on its non-U.S. subsidiaries’ previously undistributed foreign earnings. The nature of the Transition Tax is that undistributed foreign earnings are now considered previously taxed income ("PTI") for U.S. federal income tax purposes. However, because the PTI was previously taxed, any repatriation of PTI is not subject to additional U.S. federal income tax. The Company determined that a distribution of PTI would be subject to tax, and provisionally recorded $1.2 million in foreign withholding taxes during the nine months ended September 30, 2018. The Company's revised assertion regarding indefinite reinvestment of undistributed earnings is that only undistributed earnings in excess of PTI are indefinitely reinvested. The Company previously asserted that all of its foreign undistributed earnings were indefinitely reinvested.

~~(14)~~(15) Segment Information

Reportable segments are identified based on the Company's organizational structure and information reviewed by the Company’s chief operating decision maker ("CODM") to evaluate performance and allocate resources. The Company's operations are organized into two reportable segments for financial reporting purposes: Product and Intellectual Property ~~Licensing~~Licensing. The Product segment consists primarily of licensing Company-developed UX products and ~~Product.~~services to multi-channel video service providers and CE manufacturers, in-guide advertising, data analytics and licensing the TiVo service, licensing metadata and selling TiVo-enabled devices. The Product segment also includes legacy Analog Content Protection, VCR Plus+ and media recognition products. The Intellectual Property Licensing segment consists primarily of licensing the Company's patent portfolio to U.S. and international ~~pay-television~~pay TV providers (directly and through their suppliers), mobile device manufacturers, consumer electronics ("CE") manufacturers and over-the-top ("OTT") video providers. The Product segment consists primarily of licensing Company-developed IPG products and services to multi-channel video service providers and CE manufacturers, in-guide advertising revenue, data analytics revenue and revenue from licensing the TiVo service, licensing metadata and selling TiVo-enabled devices. The Product segment also includes sales of legacy Analog Content Protection, VCR Plus+ and media recognition products.

During the first quarter of 2017, the Company reorganized the presentation of revenue within its Intellectual Property Licensing segment to US Pay TV Providers and Other to better portray its growth strategy. Revenue from US Pay TV Providers includes direct and indirect licensing of multi-channel linear video providers regardless of the particular distribution technology (e.g., cable, satellite or the internet). Specifically, this includes licensing to traditional Pay TV providers and internet-based Pay TV providers based in the U.S. Other revenue includes licensing international Pay TV providers, mobile device manufacturers, CE manufacturers and ~~on-demand~~ OTT video providers. ~~Revenue within the Intellectual Property Licensing segment for prior periods has been reclassified to conform to the current presentation.~~

Segment results are derived from the Company's internal management reporting system. The accounting policies used to derive segment results are substantially the same as those used by the consolidated company. Intersegment revenues and expenses have been eliminated from segment financial information as transactions between reportable segments are excluded from the measure of segment profitability reviewed by the CODM. In addition, certain costs are not allocated to the segments as they are considered corporate costs. Corporate costs primarily include general and administrative costs such as corporate management, finance, legal and human resources. The CODM uses an Adjusted EBITDA (as defined below) measure to evaluate the performance of, and allocate resources to, the segments. Segment balance sheets are not used by the CODM to allocate resources or assess performance.

Segment results were as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Intellectual Property Licensing
US Pay TV Providers	$	63,288		$	58,150		$	195,365		$	135,027
Other	31,020			24,936			93,859			72,038
Revenues, net	94,308			83,086			289,224			207,065
Adjusted Operating Expenses (1)	24,243			19,349			69,247			51,203
Adjusted EBITDA (2)	70,065			63,737			219,977			155,862
Product
Platform Solutions	82,244			47,285			253,398			119,364			$	73,147		$	82,244		$	241,295		$	253,398
Software and Services	20,718			19,994			65,739			59,863			19,851			20,718			57,949			65,739
Other	628			2,756			3,859			10,458			1,614			628			5,007			3,859
Revenues, net	103,590			70,035			322,996			189,685			94,612			103,590			304,251			322,996
Adjusted Operating Expenses (1)	91,307			59,807			280,314			150,957			79,347			91,307			250,280			280,314
Adjusted EBITDA (2)	12,283			10,228			42,682			38,728			15,265			12,283			53,971			42,682
Corporate:
Intellectual Property Licensing
US Pay TV Providers													44,474			63,288			143,606			195,365
CE Manufacturers													8,859			15,479			26,754			38,296
New Media, International Pay TV Providers and Other													16,764			15,541			52,795			55,563
Revenues, net													70,097			94,308			223,155			289,224
Adjusted Operating Expenses (1)	15,851			14,151			47,084			38,406			23,461			24,243			73,790			69,247
Adjusted EBITDA (2)	(15,851		)	(14,151		)	(47,084		)	(38,406		)	46,636			70,065			149,365			219,977
Consolidated:
Corporate
Adjusted Operating Expenses (1)													14,825			15,851			45,385			47,084
Adjusted EBITDA (2)													(14,825		)	(15,851		)	(45,385		)	(47,084		)
Consolidated
Total Revenues, net	197,898			153,121			612,220			396,750			164,709			197,898			527,406			612,220
Adjusted Operating Expenses (1)	131,401			93,307			396,645			240,566			117,633			131,401			369,455			396,645
Adjusted EBITDA (2)	66,497			59,814			215,575			156,184			47,076			66,497			157,951			215,575
Depreciation	5,015			4,622			15,869			13,181			5,338			5,015			16,252			15,869
Amortization of intangible assets	41,722			24,925			125,100			63,087			37,242			41,722			119,463			125,100
Restructuring and asset impairment charges	3,710			22,311			17,623			24,644			2,921			3,710			8,568			17,623
Equity-based compensation	13,007			13,676			38,781			32,031			9,471			13,007			28,226			38,781
Transaction, transition and integration costs	3,394			13,996			15,701			20,039
Earnout amortization and settlement	958			319			2,875			1,508
Transition and integration costs													(148		)	3,394			9,303			15,701
Earnout amortization													—			958			1,494			2,875
CEO transition cash costs													—			—			(975		)	—
Remeasurement of contingent consideration	243			—			317			—			(67		)	243			1,104			317
Gain on settlement of acquired receivable	—			—			(2,537		)	—			—			—			—			(2,537		)
Change in franchise tax reserve	—			—			—			154
Operating (loss) income	(1,552		)	(20,035		)	1,846			1,540			(7,681		)	(1,552		)	(25,484		)	1,846
Interest expense	(10,990		)	(11,021		)	(31,827		)	(32,411		)	(12,436		)	(10,990		)	(36,241		)	(31,827		)
Interest income and other, net	1,059			353			3,819			322			861			1,059			2,971			3,819
(Loss) income on interest rate swaps	(39		)	1,697			(1,374		)	(16,897		)
Gain (loss) on interest rate swaps													1,033			(39		)	7,185			(1,374		)
TiVo Acquisition litigation	(1,100		)	—			(14,006		)	—			—			(1,100		)	—			(14,006		)
Loss on debt extinguishment	—			—			(108		)	—			—			—			—			(108		)
Loss on debt modification	—			—			(929		)	—			—			—			—			(929		)
Loss before income taxes	$	(12,622	)	$	(29,006	)	$	(42,579	)	$	(47,446	)
Loss from continuing operations before income taxes													$	(18,223	)	$	(12,622	)	$	(51,569	)	$	(42,579	)

(1)

Adjusted Operating Expenses is defined as operating expenses excluding ~~depreciation, amortization~~Depreciation, Amortization of intangible assets, ~~restructuring~~Restructuring and asset impairment charges, ~~equity-based~~Equity-based compensation, ~~transaction, transition~~Transition and integration costs, ~~gain on settlement of acquired receivable,~~ retention earn-outs payable to former shareholders of acquired businesses, ~~earn-out settlements, changes in~~CEO transition cash costs, Remeasurement of contingent consideration and ~~changes in franchise tax reserves.~~Gain on settlement of acquired receivable.

(2)

Adjusted EBITDA is defined as operating income excluding ~~depreciation, amortization~~Depreciation, Amortization of intangible assets, ~~restructuring~~Restructuring and asset impairment charges, ~~equity-based~~Equity-based compensation, ~~transaction, transition~~Transition and integration costs, retention earn-outs payable to former shareholders of acquired businesses, CEO transition cash costs, Remeasurement of contingent consideration and Gain on settlement of acquired receivable.

gain on settlement of acquired receivable, retention earn-outs payable to former shareholders of acquired businesses, earn-out settlements, changes in contingent consideration and changes in franchise tax reserves.

~~(15) Subsequent Event~~

~~On November 1, 2017, TiVo Corporation's Board of Directors declared a cash dividend of $0.18 per share, payable on December 20, 2017, to stockholders of record on December 6, 2017.~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q for TiVo Corporation (the “Company,” “we” or “us”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including the discussion contained in Item 2., "Management’s Discussion and Analysis of Financial Condition and Results of Operations." We have based these forward-looking statements on our current expectations and projections about future events or future financial performance, which include implementing our business strategy, successfully integrating Rovi Corporation ("Rovi") and TiVo Inc. (renamed TiVo Solutions Inc. (“TiVo Solutions”)) following our acquisition of TiVo ~~Inc.~~Solutions on September 7, 2016 (the "TiVo Acquisition"), realizing planned synergies and cost-savings associated with the TiVo Acquisition, future revenues to be recognized following adoption of the amended revenue recognition guidance, the expected impact of the Tax Act of 2017, the Company’s previously announced exploration of strategic alternatives and its related cost-saving and restructuring activities, developing and introducing new technologies, obtaining, maintaining and expanding market acceptance of the technologies we offer, successfully renewing intellectual property licenses with the major North American pay TV service providers and competition in our markets.

In some cases, these forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “future,” “predict,” “potential,” “intend,” or “continue,” and similar expressions. These statements are based on the beliefs and assumptions of our management and on information currently available to our management. Our actual results, performance and achievements may differ materially from the results, performance and achievements expressed or implied in such forward-looking statements. For a discussion of some of the factors that might cause such a difference, see the "Risk Factors" contained in Part II, Item 1A. of this Quarterly Report on Form 10-Q. Except as required by law, we specifically disclaim any obligation to update such forward-looking statements.

The following commentary should be read in conjunction with the ~~Condensed~~ Consolidated Financial Statements and related notes thereto contained in Part II, Item 8. of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 and the Condensed Consolidated Financial Statements and related notes thereto contained in Part I, Item 1. of this Quarterly Report on Form ~~10-Q.~~10-Q, which are incorporated by reference herein.

Executive Overview of Results

On September 7, 2016 (the "TiVo Acquisition Date"), Rovi Corporation ("Rovi") completed its acquisition of TiVo Inc. (renamed TiVo Solutions Inc. ("TiVo Solutions")), a global leader in next-generation video technology and innovative cloud-based software-as-a-service solutions, for $1.1 billion (the "TiVo Acquisition"). The TiVo Acquisition created a new company, TiVo Corporation ~~("TiVo" or the "Company"), which~~ is a global leader in entertainment technology and audience insights. From the interactive program guide ("IPG") to the digital video recorder ("DVR"), we provide innovative products and licensable technologies that enable the world’s leading media and entertainment companies to deliver the ultimate entertainment experience and improve how people find content across a changing media landscape. For further details on the TiVo Acquisition, see Note 2 of the Condensed Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q, which is incorporated by reference herein.

Our operations are organized into two reportable segments for financial reporting purposes: Product and Intellectual Property ~~Licensing~~Licensing. The Product segment consists primarily of licensing Company-developed user experience ("UX") products and ~~Product.~~ services to multi-channel video service providers and consumer electronics ("CE") manufacturers, in-guide advertising, analytics, licensing the TiVo service, licensing metadata and selling TiVo-enabled devices. We group our Product segment into three verticals based on the products delivered to our customer: Platform Solutions; Software and Services; and Other. Platform Solutions includes licensing Company-developed UX products, the TiVo service and selling TiVo-enabled devices. Software and Services includes licensing our metadata, advanced search and recommendation and data analytics products, as well as in-guide advertising. Other includes legacy Analog Content Protection ("ACP"), VCR Plus+ and media recognition products.

The Intellectual Property Licensing segment consists primarily of licensing our patent portfolio to U.S. and international ~~pay-television~~pay television ("TV") providers (directly and through their suppliers), mobile device manufacturers, ~~consumer electronics ("CE")~~CE manufacturers and over-the-top ("OTT") video providers. Our broad portfolio of licensable technology patents covers many aspects of content discovery, DVR, video-on-demand (“VOD”), OTT experiences, multi-screen functionality and personalization, as well as interactive applications and advertising. We group our Intellectual Property Licensing ~~revenues~~segment into ~~two~~three verticals based primarily on the business of our customer: US Pay TV Providers; CE Manufacturers; and New Media, International Pay TV Providers and Other. ~~Revenue from~~ US Pay TV Providers includes direct and indirect licensing of ~~multi-channel linear video providers~~traditional US Pay TV Providers regardless of the particular distribution technology (e.g., cable, satellite or the internet). ~~Specifically, this~~CE Manufacturers includes the licensing of our patents to traditional CE manufacturers. New Media, International Pay TV Providers and Other includes licensing to ~~traditional Pay~~international pay TV providers, ~~and internet-based Pay TV providers based in the U.S. Other revenue includes licensing international Pay TV~~virtual service providers, mobile device manufacturers ~~CE manufacturers~~ and ~~on-demand OTT video providers.~~

~~The Product segment consists primarily of the licensing of Company-developed IPG products~~content and services to multi-channel video service providers and CE manufacturers, in-guide advertising revenue, analytics revenue and revenue from licensing the TiVo service, licensing metadata and selling TiVo-enabled devices. We group our Product revenues into three verticals based on the products delivered to our customer: Platform Solutions; Software and Services; and Other. Platform Solutions includes revenue from licensing Company-developed IPG products and the TiVo service and selling TiVo-enabled devices. Software and Services includes revenue from licensing our metadata, advanced search and recommendation and data

~~analytics products, as well as in-guide advertising revenue. Other revenue includes sales of legacy Analog Content Protection ("ACP"), VCR Plus+ and~~new media ~~recognition products.~~companies.

Total Revenues, net for the three months ended September 30, ~~2017 increased~~2018 decreased by ~~29%~~17% compared to the prior year primarily as a result of a $21.1 million decrease in revenue from TiVo Solutions agreements that were entered into with AT&T, DirecTV, EchoStar and Verizon prior to the TiVo Acquisition Date as ~~including TiVo Solutions' results~~a result of contract expirations and adopting the amended revenue recognition guidance on January 1, 2018, a $5.9 million decrease in Hardware revenue primarily resulting from a planned transition away from the hardware business, a $4.5 million decrease in revenue from two international multiple system operators ("MSO") software customers as a result of adopting the amended revenue recognition guidance and a $3.3 million decrease in catch-up payments intended to make us whole for the ~~full~~pre-license period ~~increased revenue by $63.5 million. The benefit from higher TiVo Solutions revenue was partially offset by lower revenue from the remainder~~ of ~~Intellectual Property Licensing and Product.~~use. For additional details on the changes in Total Revenues, net, see the discussion of our segment results below.

Our Intellectual Property Licensing ~~contract~~agreement with Comcast ~~Corporation ("Comcast")~~ expired on March 31, 2016. Our Product relationship with Comcast, primarily a metadata license, ~~remained in effect through~~expired on September 30, 2017. The expiration of our intellectual property license with Comcast, as well as litigation initiated against Comcast, has resulted in a reduction of revenue and an increase in litigation costs. While ~~the Company anticipates~~we anticipate Comcast will eventually execute a new intellectual property license, the length of time that Comcast is out of license prior to executing a new license is uncertain. The amount of revenue recognized in the reporting period in which a new license is executed is uncertain and ~~will depend~~depends on a variety of factors, including license terms such as duration, pricing, covered products and fields of use, and the duration of the out-of-license period. In addition, while litigation costs ~~may increase,~~have increased, whether the litigation initiated against Comcast will cause total expenses to increase or decrease longer-term will be a function of several factors, including the length of time Comcast is out of license and the length of time we remain in litigation with Comcast.

For the three months ended September 30, ~~2017,~~2018, our ~~Net loss~~Loss from continuing operations, net of tax was ~~$17.0~~$23.0 million, or ~~$0.14~~$0.19 per diluted share, compared to ~~a Net income of $49.9~~$17.0 million, or ~~$0.54~~$0.14 per diluted share, in the prior year. The ~~change~~larger loss was ~~primarily due to the three months ended September 30, 2016 including an income tax benefit of $88.1 million~~ due to a ~~change~~$33.2 million decrease in ~~the deferred tax asset valuation allowance resulting from the TiVo Acquisition~~revenue, which was partially offset by a $5.7 million decrease in ~~Restructuring~~Cost of hardware revenues, excluding depreciation and ~~asset impairment charges~~amortization of ~~$18.6 million.~~

intangible assets primarily resulting from a planned transition away from the hardware business, a $6.8 million decrease in Research and development costs, a $7.6 million decrease in Selling, general and administrative expenses and a $4.5 million decrease in Amortization of intangible assets. The decrease in Research and development and Selling, general and administrative expenses reflect benefits from cost saving initiatives, including lower consulting and compensation costs.

Comparison of Three and Nine Months Ended September 30, ~~2017~~2018 and ~~2016~~2017

The condensed consolidated results of operations for the three and nine months ended September 30, ~~2017~~2018 compared to the prior year were as follows (dollars in thousands):


	Three Months Ended September 30,											Three Months Ended September 30,
	2017			2016			Change $			Change %		2018			2017			Change $			Change %
Revenues, net:
Licensing, services and software	$	188,031		$	148,509		$	39,522		27	%	$	160,783		$	188,031		$	(27,248	)	(14	)%
Hardware	9,867			4,612			5,255			114	%	3,926			9,867			(5,941		)	(60	)%
Total Revenues, net	197,898			153,121			44,777			29	%	164,709			197,898			(33,189		)	(17	)%
Costs and expenses:
Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets	42,811			31,661			11,150			35	%	40,749			42,811			(2,062		)	(5	)%
Cost of hardware revenues, excluding depreciation and amortization of intangible assets	9,889			4,560			5,329			117	%	4,220			9,889			(5,669		)	(57	)%
Research and development	48,872			30,380			18,492			61	%	42,053			48,872			(6,819		)	(14	)%
Selling, general and administrative	47,431			54,697			(7,266		)	(13	)%	39,867			47,431			(7,564		)	(16	)%
Depreciation	5,015			4,622			393			9	%	5,338			5,015			323			6	%
Amortization of intangible assets	41,722			24,925			16,797			67	%	37,242			41,722			(4,480		)	(11	)%
Restructuring and asset impairment charges	3,710			22,311			(18,601		)	(83	)%	2,921			3,710			(789		)	(21	)%
Total costs and expenses	199,450			173,156			26,294			15	%	172,390			199,450			(27,060		)	(14	)%
Operating loss	(1,552		)	(20,035		)	18,483			(92	)%	(7,681		)	(1,552		)	(6,129		)	395	%
Interest expense	(10,990		)	(11,021		)	31			—	%	(12,436		)	(10,990		)	(1,446		)	13	%
Interest income and other, net	1,059			353			706			200	%	861			1,059			(198		)	(19	)%
(Loss) income on interest rate swaps	(39		)	1,697			(1,736		)	(102	)%
Gain (loss) on interest rate swaps												1,033			(39		)	1,072			(2,749	)%
TiVo Acquisition litigation	(1,100		)	—			(1,100		)	N/a		—			(1,100		)	1,100			N/a
Loss before income taxes	(12,622		)	(29,006		)	16,384			(56	)%
Income tax expense (benefit)	4,341			(83,445		)	87,786			(105	)%
(Loss) income from continuing operations, net of tax	(16,963		)	54,439			(71,402		)	(131	)%
Loss from discontinued operations, net of tax	—			(4,517		)	4,517			(100	)%
Net (loss) income	$	(16,963	)	$	49,922		$	(66,885	)	(134	)%
Loss from continuing operations before income taxes												(18,223		)	(12,622		)	(5,601		)	44	%
Income tax expense												4,769			4,341			428			10	%
Loss from continuing operations, net of tax												(22,992		)	(16,963		)	(6,029		)	36	%
Income from discontinued operations, net of tax												143			—			143			N/a
Net loss												$	(22,849	)	$	(16,963	)	$	(5,886	)	35	%


	Nine Months Ended September 30,											Nine Months Ended September 30,
	2017			2016			Change $			Change %		2018			2017			Change $			Change %
Revenues, net:
Licensing, services and software	$	577,545		$	390,998		$	186,547		48	%	$	516,495		$	577,545		$	(61,050	)	(11	)%
Hardware	34,675			5,752			28,923			503	%	10,911			34,675			(23,764		)	(69	)%
Total Revenues, net	612,220			396,750			215,470			54	%	527,406			612,220			(84,814		)	(14	)%
Costs and expenses:
Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets	124,398			78,651			45,747			58	%	126,547			124,398			2,149			2	%
Cost of hardware revenues, excluding depreciation and amortization of intangible assets	35,877			5,072			30,805			607	%	14,260			35,877			(21,617		)	(60	)%
Research and development	144,386			76,112			68,274			90	%	133,894			144,386			(10,492		)	(7	)%
Selling, general and administrative	147,121			134,463			12,658			9	%	133,906			147,121			(13,215		)	(9	)%
Depreciation	15,869			13,181			2,688			20	%	16,252			15,869			383			2	%
Amortization of intangible assets	125,100			63,087			62,013			98	%	119,463			125,100			(5,637		)	(5	)%
Restructuring and asset impairment charges	17,623			24,644			(7,021		)	(28	)%	8,568			17,623			(9,055		)	(51	)%
Total costs and expenses	610,374			395,210			215,164			54	%	552,890			610,374			(57,484		)	(9	)%
Operating income	1,846			1,540			306			20	%
Operating (loss) income												(25,484		)	1,846			(27,330		)	(1,480	)%
Interest expense	(31,827		)	(32,411		)	584			(2	)%	(36,241		)	(31,827		)	(4,414		)	14	%
Interest income and other, net	3,819			322			3,497			1,086	%	2,971			3,819			(848		)	(22	)%
Loss on interest rate swaps	(1,374		)	(16,897		)	15,523			(92	)%
Gain (loss) on interest rate swaps												7,185			(1,374		)	8,559			(623	)%
TiVo Acquisition litigation	(14,006		)	—			(14,006		)	N/a		—			(14,006		)	14,006			N/a
Loss on debt extinguishment	(108		)	—			(108		)	N/a		—			(108		)	108			N/a
Loss on debt modification	(929		)	—			(929		)	N/a		—			(929		)	929			N/a
Loss before income taxes	(42,579		)	(47,446		)	4,867			(10	)%
Income tax expense (benefit)	13,816			(74,825		)	88,641			(118	)%
(Loss) income from continuing operations, net of tax	(56,395		)	27,379			(83,774		)	(306	)%
Loss from discontinued operations, net of tax	—			(4,517		)	4,517			(100	)%
Net (loss) income	$	(56,395	)	$	22,862		$	(79,257	)	(347	)%
Loss from continuing operations before income taxes												(51,569		)	(42,579		)	(8,990		)	21	%
Income tax expense												13,305			13,816			(511		)	(4	)%
Loss from continuing operations, net of tax												(64,874		)	(56,395		)	(8,479		)	15	%
Income from discontinued operations, net of tax												3,738			—			3,738			N/a
Net loss												$	(61,136	)	$	(56,395	)	$	(4,741	)	8	%

Total Revenues, net

For the three months ended September 30, ~~2017,~~2018, Total Revenues, net ~~increased 29%~~decreased 17% compared to the prior year as Product revenues decreased $9.0 million and Intellectual Property Licensing ~~and Product revenues increased $11.2 million and $33.6 million, respectively. These increases were primarily a result~~revenue decreased $24.2 million. The adoption of the ~~TiVo Acquisition. Intellectual Property Licensing~~amended revenue recognition guidance on January 1, 2018 decreased revenue for the three months ended September 30, 2018 by $6.2 million compared to what revenue would have been under the prior revenue recognition guidance. Product generated ~~47.7%~~57.4% and ~~54.3%~~52.3% of Total Revenues, net for the three months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

For the nine months ended September 30, ~~2017,~~2018, Total Revenues, net ~~increased 54%~~decreased 14% compared to the prior year as Product revenues decreased $18.7 million and Intellectual Property Licensing ~~and Product revenues increased $82.2 million and $133.3 million, respectively. These increases were primarily a result~~revenue decreased $66.1 million. The adoption of the ~~TiVo Acquisition. Intellectual Property Licensing~~amended revenue recognition guidance on January 1, 2018 decreased revenue for the nine months ended September 30, 2018 by $16.5 million compared to what revenue would have been under the prior revenue recognition guidance. Product generated ~~47.2%~~57.7% and ~~52.2%~~52.8% of Total Revenues, net for the nine months ended September 30, ~~2017~~2018 and ~~2016,~~2017, respectively.

For ~~additional~~ details on the changes in Total Revenues, net, see the discussion of our segment results below. For the year ended December 31, 2018, we expect revenue to be approximately $20 million lower under the amended revenue recognition guidance than it would have been under the prior revenue recognition guidance.

Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets

Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets, ~~consist~~consists primarily of employee-related costs, patent prosecution, maintenance and litigation costs and an allocation of overhead and facilities costs, as well as service center and other expenses related to providing the TiVo ~~service.~~service and our metadata offering.

For the three and nine months ended September 30, ~~2017,~~2018, Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets decreased 5% and increased ~~35% compared to~~2%, respectively. For the ~~prior year primarily as a result of the TiVo Acquisition, as including TiVo Solutions' results for the full period increased~~three months ended September 30, 2018, lower compensation costs and benefits from cost saving initiatives were partially offset by $7.6 million. Other than the effects of including TiVo Solutions in the results for the full period, Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets increased $3.6 million from the prior period primarily due to a $2.8 millionan increase in patent litigation ~~and maintenance~~ costs of $1.1 million, which primarily ~~relate~~related to the ongoing Comcast litigation.

For the nine months ended September 30, 2017, Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets increased 58% compared to the prior year primarily as a result of the TiVo Acquisition, as including TiVo Solutions' results for the full period increased costs by $40.4 million. Other than the effects of including TiVo Solutions in the results for the full period, Cost of licensing, services and software revenues, excluding depreciation and amortization of intangible assets increased $5.3 million from the prior period due to a $7.52018, an $11.2 million increase in patent litigation ~~and maintenance~~ costs, ~~which~~ primarily ~~relate~~related to the ongoing Comcast litigation, ~~which were~~was partially offset by benefits from cost saving initiatives, lower compensation costs and a ~~$2.9~~$0.3 million decrease in ~~compensation costs.~~Transition and integration costs associated with the TiVo Acquisition. We expect to continue to incur material expenses related to the Comcast litigation.

Cost of hardware revenues, excluding depreciation and amortization of intangible assets

Cost of hardware revenues, excluding depreciation and amortization of intangible assets includes all product-related costs associated with TiVo-enabled devices, including manufacturing costs, employee-related costs, warranty costs and order fulfillment costs, as well as certain licensing costs and an allocation of overhead and facilities costs. Hardware is sold by the Company primarily as a means to ~~grow our Licensing, services and software revenues and, as~~generate revenue from the TiVo service. As a result, generating positive gross margins from hardware sales is not the primary goal of ~~the~~our hardware operations.

For the three and nine months ended September 30, ~~2017,~~2018, the ~~increase~~decrease in Cost of hardware revenues, excluding depreciation and amortization of intangible assets was attributable to ~~including TiVo Solutions' results for~~ the ~~full period.~~

~~For~~planned transition away from the ~~nine months ended September 30, 2017, the increase~~hardware business and a $1.0 million decrease in Cost of hardware revenues, excluding depreciation and amortization of intangible assets was attributable to including TiVo Solutions' results for the full period and an increase in Transaction, transitionTransition and integration costs associated with the TiVo ~~Acquisition of $1.0 million.~~Acquisition.

Research and development

Research and development expenses are comprised primarily of employee-related costs, consulting costs and an allocation of overhead and facilities costs.

For the three months ended September 30, ~~2017,~~2018, Research and development expenses ~~increased 61%~~decreased 14% compared to the prior year primarily as a result of the TiVo Acquisition, as including TiVo Solutions' results for the full period increased costs by $19.5 million. Other than the effects of including TiVo Solutions in the results for the full period, Research and development costs decreased $1.0 million primarily due to a ~~$0.8~~$3.6 million decrease in ~~Transaction, transition~~consulting costs, a $1.6 million decrease in facilities and information technology costs and a $0.7 million decrease in Transition and integration costs associated with the TiVo Acquisition.

For the nine months ended September 30, ~~2017,~~2018, Research and development expenses ~~increased 90%~~decreased 7% compared to the prior year primarily as a result of the TiVo Acquisition, as including TiVo Solutions' results for the full period increased costs by $70.5 million. Other than the effects of including TiVo Solutions in the results for the full period, Research and development costs decreased $2.2 million primarily due to a ~~$2.9~~$10.2 million decrease in ~~compensation~~consulting costs, ~~partially offset by an increase~~a $4.5 million decrease in ~~Transaction, transition~~facilities and information technology costs and a $2.0 million decrease in Transition and integration costs associated with the TiVo Acquisition, ~~of $1.9 million.~~partially offset by a $5.7 million increase in compensation costs.

For the three and nine months ended September 30, 2018, certain contractors were converted to employees in India in connection with the ongoing Profit Improvement restructuring action described below. These contractor conversions reduce consulting costs and increase compensation costs.

Selling, general and administrative

Selling expenses are comprised primarily of employee-related costs, including travel costs, advertising costs and an allocation of overhead and facilities costs. General and administrative expenses are comprised primarily of employee-related costs, including travel costs, corporate accounting, consulting, legal and tax fees and an allocation of overhead and facilities costs.

The ~~13%~~16% decrease in Selling, general and administrative expenses ~~for~~during the three months ended September 30, ~~2017~~2018 was primarily due to a ~~$9.7~~$3.6 million decrease in ~~Transaction, transition~~compensation costs, a $2.8 million decrease in Transition and integration costs associated with the TiVo Acquisition ~~which was partially offset by a $0.9 million increase in consulting costs, including TiVo Solutions' results for the full period which increased costs by $0.8 million~~ and ~~a $0.7 million increase in compensation costs.~~benefits from cost saving initiatives.

The 9% ~~increase~~decrease in Selling, general and administrative expenses during the nine months ended September 30, ~~2017~~2018 was primarily due to ~~the TiVo Acquisition as~~a $11.0 million decrease in compensation costs, including TiVo Solutions' results for the full period increased costs by $21.8 million. Other than the effects of including TiVo Solutions in the results for the full period, Selling, general and administrative costs decreased $9.1 million primarily as a result of turnover among the senior executive staff including our former Chief Executive Officer, a ~~$7.5~~$3.1 million decrease in ~~Transaction, transition~~Transition and integration costs associated with the TiVo Acquisition, ~~and~~ a ~~$1.5~~$2.3 million decrease in ~~compensation costs.~~

~~We anticipate incurring transition and integration-related costs, primarily consisting of employee-related~~consulting costs and ~~information systems investments~~benefits from cost saving initiatives. These decreases were partially offset by a $2.5 million gain in ~~connection with integrating~~ the ~~operations~~prior year from the settlement of ~~TiVo Solutions with the operations of Rovi through the first half of 2018.~~an acquired receivable.

~~Depreciation and~~ Amortization of intangible assets

~~For~~The decrease in Amortization of intangible assets expenses during the three and nine months ended September 30, ~~2017, Depreciation and Amortization of~~2018 was primarily due to certain TiVo Solutions intangible assets ~~increased from~~becoming fully amortized during the ~~prior year due to the TiVo Acquisition. For the~~ three ~~and nine~~ months ended September 30, 2017, the inclusion of TiVo Solutions increased Depreciation by $1.5 million and $6.0 million, respectively, and increased Amortization of intangible assets by $17.2 million and $63.3 million, respectively.2018.

Restructuring and asset impairment charges

~~TiVo Integration~~In February 2018, we announced our intention to explore strategic alternatives. In connection with exploring strategic alternatives, we initiated certain cost saving actions (the "Profit Improvement Plan"). As a result of the Profit Improvement Plan, we expect to move certain positions to lower cost locations, eliminate layers of management and rationalize facilities resulting in severance costs and the termination of certain leases and other contracts. In connection with the Profit Improvement Plan, we expect to generate approximately $25 million in annualized cost savings and to incur material restructuring costs through the middle of 2019. As a result of actions associated with the Profit Improvement Plan, Restructuring ~~Plan~~charges of $2.8 million and $8.1 million, primarily for severance-related benefits, were recognized in the three and nine months ended September 30, 2018, respectively.

Following completion of the TiVo Acquisition, integration plans were implemented which ~~are~~were intended to realize operational synergies between Rovi and TiVo Solutions (the "TiVo Integration Restructuring Plan"). We ~~expect to eliminate~~eliminated duplicative positions resulting in severance costs and the termination of certain leases and other contracts as part of the integration ~~plans. We expect to generate~~activities. In connection with the TiVo Integration Restructuring Plan, we generated over ~~$100~~$110 million in annualized cost synergies from the TiVo Acquisition and have taken actions to produce approximately $90 million of run-rate synergies as of September 30, 2017. We expect to achieve the remaining cost synergies in the first half of 2018.synergies. As a result of ~~these~~ actions associated with the TiVo Integration Restructuring Plan, Restructuring and asset impairment charges of $3.9 million were recognized in the three months ended September 30, 2017, and $0.4 million and $17.1 million ~~respectively,~~ were recognized in ~~connection with~~the nine months ended September 30, 2018 and 2017, respectively. No Restructuring and asset impairment charges were recognized for the TiVo Integration Restructuring Plan in the three months ended September 30, 2018.

Interest expense

The $1.4 million and $4.4 million increase in Interest expense during the three and nine months ended September 30, ~~2017~~2018 was primarily ~~related~~due to ~~termination and transition agreements executed with former TiVo Solutions' employees. Restructuring and asset impairment charges for the nine months ended September 30, 2017 also includes~~ an ~~impairment charge of $6.7 million from vacating a leased facility.~~

~~We expect to incur restructuring costs~~increase in ~~connection with the~~ ~~TiVo Integration Restructuring Plan~~ ~~through the first half of 2018.~~

~~Legacy Rovi Restructuring Plans~~

In the three months ended March 31, 2016, Rovi initiated certain facility rationalization activities (the "Legacy Rovi Restructuring Plans"), including relocating its corporate headquarters from Santa Clara, California to San Carlos, California and consolidating its Silicon Valley operations into the corporate headquarters, and eliminating a number of positionsinterest rates associated with Term Loan Facility B, which bears interest, at our election, at a ~~reorganization of~~rate equal to either London Interbank Offering Rate ("LIBOR"), plus an applicable margin equal to 2.50% per annum (subject to a 0.75% LIBOR floor) or the ~~sales force structure, downsizing the global services workforce and eliminating certain general and administrative positions. As a result of changes in estimates related~~prime lending rate, plus an applicable margin equal to sublease rental rates expected to be obtained for vacated facilities, Restructuring and asset impairment charges were reduced by $0.2 million in the three months ended September 30, 2017. As a result of the Legacy Rovi Restructuring Plans, Restructuring and asset impairment charges of $0.6 million and $2.3 million, respectively, were recognized in the nine months ended September 30, 2017 and 2016.1.50% per annum.

Interest income and other, net

The ~~$0.7~~$0.2 million ~~increase~~decrease in Interest income and other, net during the three months ended September 30, ~~2017~~2018 was primarily due to ~~a decreased loss on~~$1.4 million in higher foreign currency ~~of $0.4 million. The $3.5~~losses, partially offset by a $0.6 million increase in interest income due to an increase in interest rates and interest earning assets and a $0.5 million gain from the sale of a strategic investment.

The $0.8 million decrease in Interest income and other, net during the nine months ended September 30, ~~2017~~2018 was primarily due to ~~a $3.1~~$2.6 million ~~gain~~of lower gains from the sale of strategic ~~investments.~~investments and $0.2 million in higher foreign currency losses, partially offset by a $1.2 million increase in income from an equity method investment and a $1.2 million increase in interest income due to an increase in interest rates and interest earning assets.

~~(Loss) income~~Gain (loss) on interest rate swaps

We have not designated any of our interest rate swaps as hedges for accounting purposes. Therefore, changes in the fair value of our interest rate swaps are not offset by changes in the fair value of the related hedged item in our Condensed Consolidated Statements of Operations (see Note 910 to the Condensed Consolidated Financial Statements included in Part I, Item 1.1 of this Quarterly Report on Form 10-Q which is incorporated by reference herein). We generally utilize interest rate

swaps to convert the interest rate on a portion of our loans with a floating interest rate to a fixed interest rate. Under the terms of our interest rate swaps, we ~~generally~~ receive a floating rate of interest and pay a fixed rate of interest. When there is an increase in

expected future ~~London Interbank Offering Rate ("LIBOR"),~~LIBOR, we generally have gains when adjusting our interest rate swaps to fair value. When there is a decrease in expected future LIBOR, we generally have losses when adjusting our interest rate swaps to fair value.

TiVo Acquisition litigation

On November 15, 2016, holders of 9.1 million shares of TiVo Solutions common stock outstanding at the TiVo Acquisition Date who did not vote to approve the TiVo Acquisition filed a petition for appraisal ("Dissenting Holders"~~, and the shares held by such Dissenting Holders, the "Dissenting Shares"~~) in the Delaware Court of Chancery.

On March 27, 2017, TiVo Corporation agreed to settle the claims of the Dissenting Holders for $117.0 million, which was paid in cash in April 2017. ~~In connection with the settlement, in March 2017, the exchange agent in the TiVo Acquisition returned $25.1 million in cash related to the Dissenting Holders to TiVo Corporation.~~ As the amount paid to Dissenting Holders resulted from a settlement other than a judgment from the Delaware Court of Chancery, a TiVo Acquisition litigation loss of $12.9 million was recognized in the Condensed Consolidated Statements of Operations for the nine months ended September 30, 2017. The TiVo Acquisition litigation loss represents the settlement amount in excess of the amount due to the Dissenting Holders as merger consideration.

~~In the three months ended September 30, 2017, a $1.1 million loss was recognized related to a separate TiVo Acquisition litigation matter.~~

Loss on debt extinguishment and Loss on debt modification

On January 26, 2017, TiVo Corporation, as parent guarantor, two of its wholly-owned subsidiaries, Rovi Solutions Corporation and Rovi Guides, Inc., as borrowers, and certain of TiVo Corporation’s other subsidiaries, as subsidiary guarantors, entered into Refinancing Agreement No. 1 with respect to Term Loan Facility B. The $682.5 million in proceeds from Refinancing Agreement No. 1 was used to repay existing loans under Term Loan Facility B in full. ~~The refinancing of Term Loan Facility B resulted in a Loss on debt extinguishment of $0.1 million and a Loss on debt modification of $0.9 million for the nine months ended September 30, 2017.~~ Creditors in Term Loan Facility B that elected not to participate in Refinancing Agreement No. 1 were ~~extinguished.~~extinguished, resulting in a Loss on debt extinguishment of $0.1 million for the nine months ended September 30, 2017. Creditors in Term Loan Facility B that elected to participate in Refinancing Agreement No. 1 and for which the present value of future cash flows was not substantially different were accounted for as a debt ~~modification.~~modification, resulting in a Loss on debt modification of $0.9 million for the nine months ended September 30, 2017.

Income tax expense ~~(benefit)~~

Due to our significant net operating loss carryforwards and a valuation allowance applied against a significant portion of our deferred tax assets, foreign withholding taxes are the primary driver of our Income tax ~~expense (benefit).~~expense.

We recorded Income tax expense for the three months ended September 30, 2018 of $4.8 million, which primarily consists of $3.6 million of Foreign withholding tax and a $0.9 million Transition Tax associated with the Tax Act of 2017. We recorded Income tax expense for the three months ended September 30, 2017 of $4.3 million, which primarily consists of $4.1 million of ~~foreign~~Foreign withholding ~~taxes, a~~tax and $0.7 million ~~increase~~from a Change in net deferred tax liabilities, ~~and a $0.3 million increase in our deferred tax asset valuation allowance,~~ partially offset by a $1.0 million ~~reduction of state~~benefit from State income ~~taxes.~~tax.

We recorded Income tax ~~benefit~~expense for the ~~three~~nine months ended September 30, ~~2016~~2018 of ~~$83.4~~$13.3 million, which primarily consists of an$10.6 million of Foreign withholding tax, $1.2 million from a Change in indefinite reinvestment assertion regarding the indefinite reinvestment of certain foreign earnings, a $0.9 million Transition Tax associated with the Tax Act of 2017 and $0.6 million of Foreign income tax, partially offset by a $1.0 million benefit ~~of $88.1 million due~~ to continuing operations from a change in the deferred tax asset valuation allowance resulting from the TiVo Acquisition. In connection with the TiVo Acquisition, a deferred tax liability was recorded for finite-lived intangible assets. These deferred tax liabilities are considered a source of future taxable income which allowed TiVo Corporation to reduce its pre-acquisition deferred tax asset valuation allowance. The change in the pre-acquisition deferred tax asset valuation allowance is a transaction recognized separate from the business combination and reduces income tax expense in the period of the business combination. Offsetting the change in the deferred tax asset valuation allowance was $3.3 million of foreign withholding taxes and $0.9 million of foreign income taxes.

gain on discontinued operations. We recorded Income tax expense for the nine months ended September 30, 2017 of $13.8 million, which primarily consists of $11.1 million of ~~foreign~~Foreign withholding ~~taxes, a~~tax, $1.4 million ~~increase~~from a Change in net deferred tax liabilities and $1.0 million of ~~foreign~~Foreign income taxes. We recorded Income tax benefit for the nine months ended September 30, 2016 of $74.8 million, which primarily consists of an income tax benefit of $88.1 million due to a change in the deferred tax asset valuation allowance resulting from the TiVo Acquisition. Offsetting the change in the deferred tax asset valuation allowance was $9.8 million of foreign withholding taxes, $1.8 million of foreign income taxes and a $1.2 million increase in net deferred tax liabilities.tax.

The year-over-year ~~increase~~decrease in foreign withholding taxes ~~for three and nine months ended September 30, 2017~~ was due to a ~~larger~~smaller portion of license fees received in ~~2017~~2018 coming from licensees in countries subject to foreign withholding taxes.

We have not completed our accounting for the effects of the Tax Act of 2017 which was signed into law on December 22, 2017. The Tax Act of 2017 enacted comprehensive tax reform that made broad and complex changes to the U.S. federal tax code as described in Note 14 of the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated by reference herein.

Income from discontinued operations, net of tax

In the three and nine months ended September 30, 2018, we recognized Income from discontinued operations, net of tax of $0.1 million and $3.7 million, respectively, as a result of the expiration of certain indemnification obligations and the execution of settlement agreements during the period associated with previous business disposals, partially offset by an increase in legal defense costs.

Segment Results

We report segment information in the same way management internally organizes the business for assessing performance and making decisions regarding the allocation of resources to the business units. The terms Adjusted Operating Expenses and Adjusted EBITDA in the following discussion use the definitions provided in Note 1415 of the Condensed Consolidated Financial Statements included in Part I, Item 1.1 of this Quarterly Report on Form 10-Q, which is incorporated by reference herein.

~~During~~Product

The Product segment's results of operations for the ~~first quarter of 2017, the Company reorganized the presentation of revenue within its Intellectual Property Licensing segment to US Pay TV Providers~~three and ~~Other to better portray our growth strategy. Revenue within the Intellectual Property Licensing segment for prior periods has been reclassified to conform~~nine months ended September 30, 2018 compared to the prior year were as follows (dollars in thousands):



	Three Months Ended September 30,
	2018			2017			Change $			Change %
Platform Solutions	$	73,147		$	82,244		$	(9,097	)	(11	)%
Software and Services	19,851			20,718			(867		)	(4	)%
Other	1,614			628			986			157	%
Product Revenues	94,612			103,590			(8,978		)	(9	)%
Adjusted Operating Expenses	79,347			91,307			(11,960		)	(13	)%
Adjusted EBITDA	$	15,265		$	12,283		$	2,982		24	%
Adjusted EBITDA Margin	16.1		%	11.9		%



	Nine Months Ended September 30,
	2018			2017			Change $			Change %
Platform Solutions	$	241,295		$	253,398		$	(12,103	)	(5	)%
Software and Services	57,949			65,739			(7,790		)	(12	)%
Other	5,007			3,859			1,148			30	%
Product Revenues	304,251			322,996			(18,745		)	(6	)%
Adjusted Operating Expenses	250,280			280,314			(30,034		)	(11	)%
Adjusted EBITDA	$	53,971		$	42,682		$	11,289		26	%
Adjusted EBITDA Margin	17.7		%	13.2		%

For the three and nine months ended September 30, 2018, the $9.1 million and $12.1 million decrease in Platform Solutions revenue was primarily attributable to a decrease in hardware revenue due to a planned transition away from the hardware business. Platform Solutions revenue includes total hardware revenue of $3.9 million and $9.9 million for the three months ended September 30, 2018 and 2017, respectively, and $10.9 million and $34.7 million for the nine months ended September 30, 2018 and 2017, respectively. Hardware revenue is expected to continue to decline due to the planned transition away from the business and as MSO partners continue to shift to deploying the TiVo service on third-party hardware resulting in a decrease in the number of TiVo set-top boxes ("STBs") sold to MSO partners.

In addition, Platform Solutions revenue from two international MSO software customers decreased by $4.5 million and $13.8 million for the three and nine months ended September 30, 2018, respectively, due to adopting the amended revenue recognition guidance on January 1, 2018. A reduction in revenue from these two international MSO customers is expected to continue for the remainder of 2018. These two international MSO software customer licenses included minimum guaranteed royalties, most of which were recorded as an adjustment to Accumulated deficit as part of the cumulative effect of adopting the amended revenue recognition guidance as we have separated the license and support into distinct performance obligations. Under the previous revenue recognition guidance, revenue from these transactions would have been recognized over the license term as we did not have vendor-specific objective evidence ("VSOE") of fair value of support. Under the amended revenue

recognition guidance, VSOE of fair value is no longer required, which results in revenue being recognized earlier than it would have been under the prior revenue recognition guidance.

The decrease in Platform Solutions revenue for the nine months ended September 30, 2018 was partially offset by a $22.8 million increase in revenue from an international MSO customer exercising a contractual option during the three months ended March 31, 2018 to purchase a fully paid license to its current ~~presentation.~~version of the TiVo software and purchasing additional engineering services. Under the prior industry-specific software revenue recognition guidance, we would have recognized $1.9 million more and $19.9 million less in revenue for the three and nine months ended September 30, 2018, respectively, from this customer.

For the three months ended September 30, 2018, Software and Services revenue decreased $0.9 million primarily due to a $2.3 million decrease in advertising and analytics revenue and the expiration of our metadata license with Comcast on September 30, 2017. These decreases were partially offset by a $1.9 million increase in Personalized Content Discovery professional services revenue. For the nine months ended September 30, 2018, Software and Services revenue decreased $7.8 million as a result of a $5.2 million decrease in advertising and analytics revenue and a $4.1 million decrease in metadata revenue, which was primarily due to expiration of our metadata license with Comcast on September 30, 2017, partially offset by a $1.5 million increase in Personalized Content Discovery revenue.

For the three and nine months ended September 30, 2018, Other revenue is primarily derived from ACP sales, which is expected to decline in the future.

Product Adjusted Operating Expenses decreased 13% and 11% for the three and nine months ended September 30, 2018 compared to the prior year due to decreases of $5.7 million and $21.6 million, respectively, in Cost of hardware revenues as a result of the planned transition away from the hardware business and benefits from cost savings initiatives.

The increase in Adjusted EBITDA Margin for the three months ended September 30, 2018 primarily relates a shift in the Product business mix toward higher margin products as hardware becomes a smaller portion of the Product business as a result of the planned transition away from the hardware business and benefits from cost savings initiatives, partially offset by the effects of adopting the amended revenue recognition standard. The increase in Adjusted EBITDA Margin for the nine months ended September 30, 2018 includes a benefit from adopting the amended revenue recognition standard as a result of the fully paid software license discussed above, a shift in business mix toward higher margin products and benefits from cost savings initiatives.

Intellectual Property Licensing

The Intellectual Property Licensing segment's results of operations for the three and nine months ended September 30, ~~2017~~2018 compared to the prior year were as follows (dollars in thousands):


	Three Months Ended September 30,										Three Months Ended September 30,
	2017			2016			Change $		Change %		2018			2017			Change $			Change %
US Pay TV Providers	$	63,288		$	58,150		$	5,138	9	%	$	44,474		$	63,288		$	(18,814	)	(30	)%
Other	31,020			24,936			6,084		24	%
CE Manufacturers											8,859			15,479			(6,620		)	(43	)%
New Media, International Pay TV Providers and Other											16,764			15,541			1,223			8	%
Intellectual Property Licensing Revenues	94,308			83,086			11,222		14	%	70,097			94,308			(24,211		)	(26	)%
Adjusted Operating Expenses	24,243			19,349			4,894		25	%	23,461			24,243			(782		)	(3	)%
Adjusted EBITDA	$	70,065		$	63,737		$	6,328	10	%	$	46,636		$	70,065		$	(23,429	)	(33	)%
Adjusted EBITDA Margin	74.3		%	76.7		%					66.5		%	74.3		%


	Nine Months Ended September 30,										Nine Months Ended September 30,
	2017			2016			Change $		Change %		2018			2017			Change $			Change %
US Pay TV Providers	$	195,365		$	135,027		$	60,338	45	%	$	143,606		$	195,365		$	(51,759	)	(26	)%
Other	93,859			72,038			21,821		30	%
CE Manufacturers											26,754			38,296			(11,542		)	(30	)%
New Media, International Pay TV Providers and Other											52,795			55,563			(2,768		)	(5	)%
Intellectual Property Licensing Revenues	289,224			207,065			82,159		40	%	223,155			289,224			(66,069		)	(23	)%
Adjusted Operating Expenses	69,247			51,203			18,044		35	%	73,790			69,247			4,543			7	%
Adjusted EBITDA	$	219,977		$	155,862		$	64,115	41	%	$	149,365		$	219,977		$	(70,612	)	(32	)%
Adjusted EBITDA Margin	76.1		%	75.3		%					66.9		%	76.1		%

For the three and nine months ended September 30, ~~2017, Intellectual Property Licensing~~2018, revenue ~~increased 14% compared to the prior year due to a 9% increase in US Pay TV Providers revenue and a 24% increase in Other revenue. Revenue~~ from US Pay TV Providers ~~increased~~decreased primarily due to ~~an increase~~decreases of ~~$18.4~~$20.9 million ~~in TiVo Solutions revenue. Partially offsetting this increase was an $8.7~~and $51.2 million, ~~decrease~~respectively, in revenue from ~~licenses~~TiVo Solutions agreements entered into with ~~large~~AT&T, DirecTV, EchoStar and Verizon Communications, Inc. ("Verizon") prior to the TiVo Acquisition Date as a result of adopting the amended revenue recognition guidance on January 1, 2018 and contract expirations. Revenue from catch-up payments from US Pay TV Providers ~~primarily due to agreements executed in 2016 that included catch-up payments~~ intended to make us whole for the pre-license period of use increased revenue by $1.1 million and ~~the loss of $3.3~~decreased revenue by $2.1 million in revenue from TiVo Solutions prior to the TiVo Acquisition Date. The increase in Other revenue was primarily due to an increase of $6.6 million in revenue from license agreements which include catch-up payments intended to make us whole for the ~~pre-license period of use.~~

~~For the~~three and nine months ended September 30, 2017, Intellectual Property Licensing revenue increased 40% compared to the prior year due to a 45% increase in US Pay TV Providers revenue and a 30% increase in Other revenue. Revenue from US Pay TV Providers increased primarily due to an increase of $72.2 million in TiVo Solutions revenue. Partially offsetting this increase was the expiration of the Comcast license on March 31, 2016 and the loss of $7.3 million of revenue from TiVo Solutions prior to the TiVo Acquisition Date. The increase in Other revenue was primarily due to an increase of $21.2 million of TiVo Solutions revenue, which includes an increase of $13.6 million in catch-up payments in intended to make us whole for the pre-license period of use.2018, respectively.

Prior to the TiVo Acquisition Date, TiVo Solutions entered into ~~intellectual property licenses and settlements~~agreements with AT&T, DirecTV, EchoStar and Verizon ~~Communications, Inc. These agreements expire in~~that expired by the end of July 2018. Revenue from US Pay TV Providers includes ~~$18.4~~$2.8 million and ~~$55.5~~$23.7 million for the three ~~and nine~~ months ended September 30, 2018 and 2017, respectively, from these agreements. ~~Based on current U.S. GAAP, revenue and cash received from the contractual minimums under these licenses are expected to be as follows (in thousands):~~

Revenues Cash Receipts
Remainder of 2017 $ 18,307
$ 6,016
2018 42,715
32,714
Thereafter —
21,558
Total $ 61,022
$ 60,288

~~Prior to the TiVo Acquisition Date, TiVo Solutions also entered into a software and patent non-assertion agreement with DirecTV, which expires in February 2018.~~ Revenue ~~for the three and nine months ended September 30, 2017~~ from US Pay TV Providers includes ~~$5.2~~$20.1 million and ~~$15.6~~$71.3 million for the nine months ended September 30, 2018 and 2017, respectively, from ~~this agreement and we anticipate recognizing an additional $5.7 million in revenue during the remainder of 2017 and $2.8 million in the first quarter of 2018 from this agreement.~~

these agreements. Consistent with our expectations, to date, renewals of the ~~prior~~ TiVo Solutions intellectual property licenses ~~described above~~ have not been executed on terms consistent with TiVo Solutions' historical pricing, and we do not anticipate that the remaining agreements will be renewed on terms similar to their historical pricing. We do, however, anticipate generating meaningful future revenues from licensing the TiVo Solutions patent portfolio to other parties (such as the Samsung license agreement executed in the fourth quarter of 2016).

~~Intellectual Property Licensing Adjusted Operating Expenses increased 25% and 35% during~~For the three and nine months ended September 30, ~~2017, respectively, primarily due~~2018, the decrease in revenue from CE Manufacturers was partially attributable to a customer being out-of-license. We anticipate this customer will eventually execute a new license. On occasion, we have licenses expire in a given period where the ~~effect of including TiVo Solutions'~~customer is licensed later in the year, which results in catch-up payments intended to make us whole for the ~~full~~out-of-license period. Revenue from catch-up payments intended to make us whole for the pre-license period ~~and an increase~~ of ~~$2.8~~use decreased revenue from CE Manufacturers by $3.9 million and ~~$7.5~~$4.1 million ~~respectively,~~ for ~~patent litigation and maintenance costs which primarily relate to the ongoing Comcast litigation.~~

~~The decline in Adjusted EBITDA Margin for Intellectual Property Licensing in~~ the three ~~months ended September 30, 2017 is primarily the result of the increase in patent litigation~~ and ~~maintenance costs discussed above. The improvement in Adjusted EBITDA Margin for Intellectual Property Licensing in the~~ nine months ended September 30, ~~2017 is primarily the result of the increase~~2018, respectively. Additionally, a decrease in our licensees' market share, combined with continuing pressures on our licensees' business models, has caused revenue ~~partially offset by the increase in patent litigation and maintenance costs discussed above.~~

~~Product~~

~~The Product segment's results of operations for the three months ended September 30, 2017 compared~~from CE Manufacturers to ~~the prior year were as follows (dollars in thousands):~~

Three Months Ended September 30,
2017 2016 Change $ Change %
Platform Solutions $ 82,244
$ 47,285
$ 34,959
74 %
Software and Services 20,718
19,994
724
4 %
Other 628
2,756
(2,128 ) (77 )%
Product Revenues 103,590
70,035
33,555
48 %
Adjusted Operating Expenses 91,307
59,807
31,500
53 %
Adjusted EBITDA $ 12,283
$ 10,228
$ 2,055
20 %
Adjusted EBITDA Margin 11.9 % 14.6 %

Nine Months Ended September 30,
2017 2016 Change $ Change %
Platform Solutions $ 253,398
$ 119,364
$ 134,034
112 %
Software and Services 65,739
59,863
5,876
10 %
Other 3,859
10,458
(6,599 ) (63 )%
Product Revenues 322,996
189,685
133,311
70 %
Adjusted Operating Expenses 280,314
150,957
129,357
86 %
Adjusted EBITDA $ 42,682
$ 38,728
$ 3,954
10 %
Adjusted EBITDA Margin 13.2 % 20.4 %
decline. Such declines could continue unless we are able to successfully license new entrants to this market.

For the three months ended September 30, ~~2017, Product~~2018, the change in New Media, International Pay TV Providers and Other reflects growth in revenue ~~increased 48% compared~~from New Media and International Pay TV customers, partially offset by a decrease of $0.5 million in revenue from catch-up payments intended to the prior year as Platform Solutions and Software and Services revenues increased 74% and 4%, respectively, while Other revenue decreased 77%. TiVo Solutions contributed $36.0 million and $1.6 million of the increase in Platform Solutions and Software and Services revenues, respectively. TiVo Solutions Product revenue includes $9.3 million of hardware revenuemake us whole for the three months ended September 30, 2017. Hardware revenue is expected to decrease in the future as multiple system operator partners shift to deploying the TiVo service on third-party hardware resulting in a decrease in the numberpre-license period of TiVo manufactured set-top boxes sold to multiple system operator partners. Other than the effects of including TiVo Solutions in the results for the full period, Platform Solutions revenue decreased $1.0 million primarily as a result of the renewal of an iGuide service provider contract at a lower rate. Other than the effects of including TiVo Solutions in the results for the full period, Software and Services revenue decreased $0.9 million as a result of a decline in metadata revenue. Other revenue primarily consists of ACP revenue, which is expected to continue to decline in the future.

use. For the nine months ended September 30, ~~2017, Product~~2018, the change in New Media, International Pay TV Providers and Other reflects a decrease of $5.3 million in revenue ~~increased 70% compared~~from catch-up payments intended to the prior year as Platform Solutions and Software and Services revenues increased 112% and 10%, respectively, while Other revenue decreased 63%. TiVo Solutions contributed $139.2 million and $10.5 million of the increase in Platform Solutions and Software and Services revenues, respectively. TiVo Solutions Product revenue includes $31.4 million of hardware salesmake us whole for the ~~nine months ended September 30, 2017. Other than the effects~~pre-license period of ~~including TiVo Solutions~~use, partially offset by growth in ~~the results for the full period, Platform Solutions~~ revenue decreased $5.2 million primarily as a result of the renewal of an iGuide service provider contract at a lower rate. Other than the effects of including TiVo Solutions in the results for the full period, Softwarefrom New Media and ~~Services revenue decreased $4.6 million as a result of a decline in metadata revenues. The $6.6 million decline in Other revenue was the result of a continued decline in ACP revenue.~~International Pay TV customers.

~~Product~~Intellectual Property Licensing Adjusted Operating Expenses decreased 3% and increased ~~53% and 86% for~~7% during the three and nine months ended September 30, ~~2017, respectively, compared to~~2018, respectively. For the ~~prior year primarily as a result of including TiVo Solutions' results for~~three months ended September 30, 2018, the ~~full period,~~decline in Adjusted Operating Expenses reflects benefits from cost savings initiatives, partially offset by ~~lower compensation~~a $1.1 million increase in patent litigation costs, ~~and~~which primarily relates to the ongoing Comcast litigation. For the nine months ended September 30, 2018, the increase in Adjusted Operating Expenses reflects an $11.2 million increase in patent litigation costs, which primarily relates to the ongoing Comcast litigation, partially offset by benefits from cost ~~saving~~savings initiatives.

The decrease in Adjusted EBITDA Margin for the three and nine months ended September 30, ~~2017 relates to~~2018 is primarily the result of a ~~change~~decrease in ~~Product business mix following the TiVo Acquisition toward lower margin hardware products.~~Intellectual Property Licensing revenue and an increase in patent litigation costs, partially offset by benefits from cost savings initiatives.

Corporate

Corporate costs primarily include general and administrative costs such as corporate management, finance, legal and human resources.

Corporate costs for the three and nine months ended September 30, ~~2017~~2018 compared to the prior year were as follows (dollars in thousands):

Three Months Ended September 30,
2017 2016 Change $ Change %
Adjusted Operating Expenses $ 15,851
$ 14,151
$ 1,700
12 %



	Three Months Ended September 30,
	2018		2017		Change $			Change %
Adjusted Operating Expenses	$	14,825	$	15,851	$	(1,026	)	(6	)%

Nine Months Ended September 30,
2017 2016 Change $ Change %
Adjusted Operating Expenses $ 47,084
$ 38,406
$ 8,678
23 %



	Nine Months Ended September 30,
	2018		2017		Change $			Change %
Adjusted Operating Expenses	$	45,385	$	47,084	$	(1,699	)	(4	)%

For the three and nine months ended September 30, ~~2017,~~2018, the ~~increase~~decrease in Corporate Adjusted Operating Expenses primarily reflects ~~the effect of including TiVo Solutions in results for the full period, offset by~~ a ~~decrease in compensation costs and benefits~~benefit from cost ~~saving~~savings initiatives.

Liquidity and Capital Resources

We finance our business primarily from operating cash flow. We believe our cash position remains strong and our cash, cash equivalents and marketable securities and anticipated operating cash flow, supplemented with access to capital markets as necessary, are generally sufficient to support our operating businesses, capital expenditures, restructuring activities, maturing debt, interest payments and income tax payments, in addition to investments in future growth opportunities and payments for dividends and share repurchases for at least the next twelve months. Our access to capital markets may be constrained and our cost of borrowing may increase under certain business, market and economic conditions; however, our use of a variety of funding sources to meet our liquidity needs is designed to facilitate continued access to sufficient capital resources under such conditions.

As of September 30, ~~2017,~~2018, we had ~~$92.8~~$149.7 million in Cash and cash equivalents, ~~$132.4~~$162.1 million in Short-term marketable securities and ~~$88.1~~$70.3 million in Long-term marketable securities. Our cash, cash equivalents and marketable securities are held in numerous locations around the world, with ~~$231.0~~$84.6 million held by our foreign subsidiaries as of September 30, ~~2017.~~2018. Due to our net operating loss carryforwards and the effects of the Tax Act of 2017, we could repatriate amounts to the U.S. with minimal income tax ~~impacts.~~effects.

Sources and Uses of Cash

Cash flows for the nine months ended September 30, ~~2017~~2018 compared to the prior year were as follows (in thousands):

Nine Months Ended September 30,
2017 2016 Change $ Change %
Net cash provided by operating activities $ 51,259
$ 78,174
$ (26,915 ) (34 )%
Net cash (used in) provided by investing activities (88,206 ) 199,787
(287,993 ) (144 )%
Net cash (used in) provided by financing activities (64,506 ) 1,382
(65,888 ) (4,768 )%
Effect of exchange rate changes on cash and cash equivalents 1,613
1,598
15
1 %
Net (decrease) increase in cash and cash equivalents $ (99,840 ) $ 280,941
$ (380,781 ) (136 )%



	Nine Months Ended September 30,
	2018			2017			Change $			Change %
Net cash provided by operating activities of continuing operations	$	113,735		$	51,259		$	62,476		122	%
Net cash used in investing activities	(24,868		)	(88,206		)	63,338			(72	)%
Net cash used in financing activities	(67,712		)	(64,506		)	(3,206		)	5	%
Effect of exchange rate changes on cash and cash equivalents	(465		)	1,613			(2,078		)	(129	)%
Net increase (decrease) in cash and cash equivalents	$	20,690		$	(99,840	)	$	120,530		(121	)%

Net cash provided by operating activities of continuing operations for the nine months ended September 30, ~~2017 decreased $26.9~~2018 increased $62.5 million. The ~~decrease~~increase was primarily due to the timing of collections on Accounts receivable, net, ~~higher~~$45.3 million of cash ~~bonus~~used in 2017 to prepay a license and lower payments in ~~2017, payments made to DISH in connection with the 2016 agreement described below~~2018 for restructuring plans and ~~payments made in connection with the~~ ~~TiVo Integration Restructuring Plan~~,corporate bonuses, partially offset by ~~benefits from~~$7.4 million in payments related to TiVo Solutions' acquisition of Cubiware as performance milestones were achieved during the ~~TiVo Acquisition~~nine months ended September 30, 2018 and certain cash collections in advance of revenue being ~~recognized.~~recognized in 2017. We expect to make material cash payments for restructuring actions in connection with the ~~TiVo Integration Restructuring~~Profit Improvement Plan through the ~~first half~~middle of ~~2018.~~2019. The availability of cash generated by our operations in the future could be adversely affected by business

risks including, but not limited to, the Risk Factors described in Part I,II, Item 1A. ~~of our Annual Report on Form 10-K, which are incorporated by reference herein.~~

In August 2016, Rovi entered into a 10-year patent license agreement with DISH Network Corporation ("DISH"). As part of the agreement, DISH agreed to provide TiVo Solutions with a release for all past products and a going-forward covenant not-to-sue under DISH’s existing patents during the 10-year license term in exchange for TiVo Inc. providing DISH certain TiVo Inc. products during the license term and cash payments by TiVo Inc. to DISH of $60.3 million, of which $30.3 million was paid in the third quarter of 2017, $15.0 million was paid in the second quarter of 2017 and $15.0 million was paid in the fourth quarter of 2016. The agreement with DISH is described in more detail in Note 10 to the Condensed Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q, which isare incorporated by reference herein.

Net cash ~~(used in) provided~~used in investing activities for the nine months ended September 30, 2018 decreased $63.3 million. Net proceeds from marketable security investment transactions decreased by $36.1 million compared to the prior year. The decrease in capital expenditures for the nine months ended September 30, 2018 was primarily associated with infrastructure projects designed to integrate the TiVo Acquisition in 2017. We expect 2018 full year capital expenditures of approximately $25 million for infrastructure projects designed to support anticipated growth in our business and to strengthen our operations infrastructure. We also expect elevated capital expenditures to continue in 2019 as we complete the facility rationalization portion of our Profit Improvement Plan.

Net cash used in investing activities for the nine months ended September 30, 2017 ~~decreased $288.0 million.~~also reflects transactions related to the Dissenting Holders in connection with the TiVo Acquisition. On November 15, 2016, holders of 9.1 million shares of TiVo Solutions common stock outstanding at the TiVo Acquisition Date who did not vote to approve the TiVo Acquisition filed a petition for appraisal in the Delaware Court of Chancery. On March 27, 2017, TiVo Corporation agreed to settle the claims of the Dissenting Holders for $117.0 million, which was paid in cash in April 2017. In connection with the settlement, in March 2017, the exchange agent in the TiVo Acquisition returned $25.1 million in cash related to the Dissenting Holders to TiVo Corporation. For additional details

regarding the settlement with the Dissenting Holders, see Note 2 ~~and Note 10~~ to the Condensed Consolidated Financial Statements included in Part I, Item 1.1 of this Quarterly Report on Form 10-Q, which ~~are~~is incorporated by reference herein. Investing activities for the nine months ended September 30, 2016 included net cash acquired in the TiVo Acquisition in excess of the cash portion of the merger consideration by $166.3 million. Net proceeds from marketable security investment activities decreased by $23.6 million compared to the prior year. The increase in capital expenditures for the nine months ended September 30, 2017 was primarily associated with infrastructure projects designed to integrate the TiVo Acquisition. We anticipate capital expenditures to support the anticipated growth in our business and strengthen our operations infrastructure of between $35 million and $45 million in 2017.

Net cash ~~(used in) provided by~~used in financing activities for the nine months ended September 30, ~~2017~~2018 includes ~~$12.8~~a decrease of $6.0 million in tax withholding payments from the net share settlement of restricted awards, ~~and a $2.7 million contingent consideration payment in connection with TiVo Solutions acquisition of Cubiware,~~ partially offset by ~~the receipt~~a decrease in cash receipts of ~~$22.4~~$9.5 million from ~~the exercise of employee stock options and~~ sales of stock through our employee stock purchase ~~plan.~~plan and the exercise of employee stock options. Net cash ~~(used in) provided by~~used in financing activities for the nine months ended September 30, 2018 and 2017 each reflect $5.3 million in principal payments on Term Loan Facility B. The nine months ended September 30, 2017 also includes the effect of refinancing Term Loan Facility ~~B and $5.3 million in principal payments on Term Loan Facility~~ B.

For the three and nine months ended September 30, 2017, we declared and paid dividends of $0.18 and $0.54 per share, respectively, for aggregate payments of $21.9 million and $65.2 million, respectively. No dividend payments were made in the three and nine months ended September 30, 2016. On November 1, 2017, we declared a cash dividend of $0.18 per share, payable on December 20, 2017 to stockholders of record on December 6, 2017.

~~Net cash (used in) provided by financing activities for~~ the nine months ended September 30, ~~2016 includes $9.4~~2018 and 2017, dividends of $0.54 per share were declared resulting in an aggregate cash payment of $66.7 million ~~in tax withholding payments from the net share settlement of restricted awards~~ and ~~$5.3~~$65.2 million, ~~in principal payments on Term Loan Facility B offset by the receipt of $14.0 million from the exercise of employee stock options and sales of stock through our employee stock purchase plan.~~respectively.

On February 14, 2017, TiVo Corporation's Board of Directors approved an increase to the ~~share~~stock repurchase program authorization to $150.0 ~~million. The February 2017 authorization includes amounts~~million, which ~~were outstanding under previously authorized share repurchase programs.~~remains available as of September 30, 2018.

Capital Resources

The outstanding principal and carrying amount of debt we issued ~~were~~or assumed was as follows (in thousands):


	September 30, 2017				December 31, 2016				September 30, 2018				December 31, 2017
	Outstanding Principal		Carrying Amount		Outstanding Principal		Carrying Amount		Outstanding Principal		Carrying Amount		Outstanding Principal		Carrying Amount
2020 Convertible Notes	$	345,000	$	308,167	$	345,000	$	297,646	$	345,000	$	322,849	$	345,000	$	311,766
2021 Convertible Notes	48		48		48		48		48		48		48		48
Term Loan Facility B	677,250		672,742		682,500		677,038		670,250		666,904		675,500		671,281
Total	$	1,022,298	$	980,957	$	1,027,548	$	974,732	$	1,015,298	$	989,801	$	1,020,548	$	983,095

During the next twelve months, $7.0 million of outstanding principal is scheduled to ~~be repaid.~~mature. For more information on our borrowings, see Note 910 to the Condensed Consolidated Financial Statements included in Part I, Item 1.1 of this Quarterly Report on Form 10-Q, which is incorporated by reference herein.

2020 Convertible Notes

Rovi issued $345.0 million in aggregate principal of 0.500% Convertible Notes that mature on March 1, 2020 at par pursuant to an Indenture dated March 4, 2015 (the "2015 Indenture").

are convertible at a conversion rate of ~~35.6341~~37.4422 shares of TiVo Corporation common stock per $1,000 principal of notes, which is equivalent to a conversion price of ~~$28.0630~~$26.7078 per share of TiVo Corporation common stock.

Holders may convert the 2020 Convertible Notes prior to the close of business on the business day immediately preceding December 1, 2019, in multiples of $1,000 of principal under the following circumstances:

during any calendar quarter commencing after the calendar quarter ending on June 30, 2015 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

during the five business day period after any ten consecutive trading day period in which the trading price per $1,000 of principal of 2020 Convertible Notes for each trading day was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or

on the occurrence of specified corporate events.

In addition, during the 35-day trading period following a Merger Event, as defined in the 2015 Indenture, holders may convert the 2020 Convertible Notes, in multiples of $1,000 of principal.

On conversion, a holder will receive the conversion value of the 2020 Convertible Notes converted based on the conversion rate multiplied by the volume-weighted average price of our common stock over a specified observation period. On conversion, Rovi will pay cash up to the aggregate principal of the 2020 Convertible Notes converted and deliver shares of our common stock in respect of the remainder, if any, of the conversion obligation in excess of the aggregate principal of the 2020 Convertible Notes being converted.

The conversion rate is subject to adjustment in certain events, including certain events that constitute a "Make-Whole Fundamental Change" (as defined in the 2015 Indenture). In addition, if we undergo a "Fundamental Change" (as defined in the 2015 Indenture) prior to March 1, 2020, holders may require Rovi to repurchase for cash all or a portion of the 2020 Convertible Notes at a repurchase price equal to 100% of the principal of the repurchased 2020 Convertible Notes, plus accrued and unpaid interest. The conversion rate is also subject to customary anti-dilution adjustments.

2021 Convertible Notes

TiVo Solutions issued $230.0 million in aggregate principal of 2.0% Convertible Senior Notes that mature October 1, 2021 (the "2021 Convertible Notes") at par pursuant to an Indenture dated September 22, 2014 ("the 2014 Indenture"). On October 12, 2016, TiVo Solutions repaid $229.95 million of the par value of the 2021 Convertible Notes.

Fundamental Change” (as defined in the 2014 Indenture) prior to the maturity date of the 2021 Convertible Notes, TiVo Solutions will, in some cases, increase the conversion rate for a holder that elects to convert its 2021 Convertible Notes in connection with such Make-Whole Fundamental Change.

Senior Secured Credit Facility

On July 2, 2014, Rovi Corporation, as parent guarantor, and two of its wholly-owned subsidiaries, Rovi Solutions Corporation and Rovi Guides, Inc., as borrowers, and certain of its other subsidiaries, as subsidiary guarantors, entered into a Credit Agreement (the “Credit Agreement”). After the completion of the TiVo Acquisition, TiVo Corporation became a guarantor under the Credit Agreement. The Credit Agreement provided for a (i) five-year $125.0 million term loan A facility (the “Term Loan Facility A”), (ii) seven-year $700.0 million term loan B facility (the “Term Loan Facility B” and together with Term Loan Facility A, the “Term Loan Facility”) and (iii) five-year $175.0 million revolving credit facility (including a letter of credit sub-facility) (the "Revolving Facility” and together with the Term Loan Facility, the “Senior Secured Credit Facility”). In September 2015, Rovi made a voluntary principal prepayment to extinguish Term Loan Facility A and elected to terminate the Revolving Facility.

Prior to the refinancing described below, Term Loan Facility B was amortizing in equal quarterly installments in an aggregate annual amount equal to 1% of the original principal amount thereof, with any remaining balance payable on the final maturity date of Term Loan Facility B. Prior to the refinancing described below, loans under Term Loan Facility B bore interest, at our option, at a rate equal to either LIBOR, plus an applicable margin equal to 3.00% per annum (subject to a 0.75% LIBOR floor) or the prime lending rate, plus an applicable margin equal to 2.00% per annum.

On January 26, 2017, TiVo Corporation, as parent guarantor, two of its wholly-owned subsidiaries, Rovi Solutions Corporation and Rovi Guides, Inc., as borrowers, and certain of TiVo Corporation’s other subsidiaries, as subsidiary guarantors, entered into Refinancing Agreement No. 1 with respect to Term Loan Facility B. The $682.5 million in proceeds from Refinancing Agreement No. 1 was used to repay existing loans under Term Loan Facility B in full. The borrowing terms for Refinancing Agreement No. 1 are substantially similar to the borrowing ~~terms.~~terms of Term Loan Facility B. However, loans under Refinancing Agreement No. 1 bear interest, at the borrower's option, at a rate equal to either LIBOR, plus an applicable margin equal to 2.50% per annum (subject to a 0.75% LIBOR floor) or the prime lending rate, plus an applicable margin equal to 1.50% per annum. Refinancing Agreement No. 1 requires quarterly principal payments of $1.75 million through June 2021, with any remaining balance payable in July 2021. Refinancing Agreement No. 1 is part of the Senior Secured Credit ~~Facility,~~Facility.

The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants applicable to us and our subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness, dividends and other distributions. The Credit Agreement is secured by substantially all of the Company's assets. We may be required to make an additional payment on Refinancing Agreement No. 1 each February. This payment is calculated as a percentage of the prior year's "Excess Cash Flow" as defined in the Credit Agreement. No additional payment was required in February ~~2017.~~2018.

Critical Accounting Policies and Estimates

The preparation of our Condensed Consolidated Financial Statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates, assumptions and judgments that affect the amounts reported in the financial statements and accompanying ~~notes.~~notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Our estimates, assumptions and judgments are based on historical experience and various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amount of assets and liabilities that are not readily apparent from other sources. Making estimates, assumptions and judgments about future events is inherently unpredictable and is subject to significant uncertainties, some of which are beyond our control. Management believes the estimates, assumptions and judgments employed and resulting amounts reported in the Condensed Consolidated Financial Statements are reasonable; however, actual results could differ materially.

On January 1, 2017, we ~~elected to early adopt a new~~adopted an amended accounting standard that eliminated the second step of the goodwill impairment test. As a result of adopting the change in accounting, a goodwill impairment loss is measured as the amount by which the carrying amount of a reporting unit exceeds its fair value.for revenue recognition. For additional information, see Note 1 and Note 5 to the Condensed Consolidated Financial Statements included in Part I, Item 1.1 of this Quarterly Report on Form 10-Q, which isare incorporated by reference herein.

Other than the adoption of the ~~simplified goodwill impairment test,~~amended revenue recognition guidance, there have been no significant changes to our critical accounting policies and estimates as compared to those disclosed in "Critical Accounting Policies and Estimates" in Part II, Item 7.7 of our Annual Report on Form 10-K for the year ended December 31, 2017, which is incorporated by reference herein.

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 we expect to receive in exchange for those goods or services, which may include various combinations of products and services which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental authorities.

Arrangements with Multiple Performance Obligations

Some of our 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. The allocation of transaction price among performance obligations in a contract may impact the amount and timing of revenue recognized in the Condensed Consolidated Statements of Operations during a given period.

Contract Modifications

Variable Consideration

When a contract with a customer includes a variable transaction price, an estimate of the consideration to which we expect to be entitled to for transferring the promised goods or services is made at contract inception. Depending on the terms of the contract, variable consideration is estimated using either the expected value approach or the most likely value approach. Under either approach to estimating variable consideration, the estimate considers all information (historical, current and forecast) that is reasonably available at contract inception. The amount of variable consideration is estimated at contract inception and updated as additional information becomes available. The estimate of variable consideration is included in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Subsequent changes in the transaction price resulting from changes in the estimate of variable consideration are allocated to the performance obligations in the contract on the same basis as at contract inception.

Significant Judgments

Significant judgment is required to determine the stand-alone selling price for each distinct performance obligation when an observable price is not available. In instances where stand-alone selling price is not directly observable, such as when we do not sell the good or service separately, the stand-alone selling price is determined using a range of inputs that includes market conditions and other observable inputs. More than one stand-alone selling price may exist for individual goods and services due to the stratification of those goods and services, considering attributes such as the size of the customer and geographic region.

Due to the nature of the work required to be performed on some performance obligations, significant judgment may be required to determine the transaction price. It is common for our license agreements to contain provisions that can either increase or decrease the transaction price. These variable amounts are generally estimated based on usage or the achievement of performance metrics. In addition to estimating variable consideration, significant judgment is necessary to identify forms of variable consideration, determine whether the variable consideration relates to a sales-based or usage-based royalty of intellectual property and the determination of whether and when to include estimates of variable consideration in the transaction price.

In contracts where we do not host the TiVo service and that include engineering services that are essential to the functionality of the licensed technology or involve significant customization or modification of software, we recognize revenue as progress toward completion occurs using an input method based on the ratio of costs incurred to date to total estimated costs of the project. Significant judgment is required to estimate the remaining effort to complete the project. These estimates are reassessed throughout the term of the arrangement.

Nature of goods and services

The following is a discussion of the principal activities from which we generate revenue.

Patent Licensing Agreements

We license our discovery patent portfolio to traditional pay TV providers, virtual service providers, OTT video providers, CE manufacturers and others. We license our patented technology portfolio under two revenue models: (i) fixed fee licenses and (ii) per-unit royalty licenses.

Our long-term fixed-fee license agreements provide rights to future patented technologies over the term of the agreement that are highly interdependent or highly interrelated to the patented technologies provided at the inception of the agreement. We treat these rights as a single performance obligation with revenue recognized on a straight-line basis over the term of the fixed-fee license agreement.

At times, we enter into license agreements in which a licensee is released from past patent infringement claims and is granted a license to ship an unlimited number of units over a future period for a fixed fee. In these arrangements, we allocate the transaction price between the release for past patent infringement claims and the future license. In determining the stand-alone selling price of the release for past patent infringement claims and the future license, we consider such factors as the number of units shipped in the past and in what geographies these units where shipped, the number of units expected to be shipped in the future and in what geographies these units are expected to be shipped, as well as the licensing rate we generally

receive for units shipped in the same geographies. As the release from past patent infringement claims is generally satisfied at execution of the agreement, the transaction price allocated to the release from past patent infringement claims is generally recognized in the period the agreement is executed and the amount of transaction price allocated to the future license is recognized ratably over the future license term.

We recognize revenue from per-unit royalty licenses in the period in which the licensee's sales are estimated to have occurred, which results in an adjustment to revenue when actual sales are subsequently reported by the licensees, which is generally in the month or quarter following usage or shipment. We generally recognize revenue from per-unit royalty licenses on a per-subscriber per-month model for licenses with service providers and a per-unit shipped model for licenses with CE manufacturers.

Arrangements with Multiple System Operators for the TiVo Service

Our arrangements with multiple system operators ("MSOs") typically include software customization and set-up services, associated maintenance and support, limited training, post-contract support, TiVo-enabled digital video recorders ("DVRs"), non-DVR STBs and the TiVo service.

We have two types of arrangements with MSOs that include technology deployment and engineering services. In instances where we host the TiVo service, non-refundable payments received for customization and set-up services are deferred and recognized as revenue over the contractual term. The related cost of such services is capitalized to the extent it is deemed recoverable and amortized to cost of revenues over the same period as the related TiVo service revenue is recognized. We estimate the stand-alone selling prices for training, DVRs, non-DVR STBs and maintenance and support based on the price charged in stand-alone sales of the promised good or service. The stand-alone selling price for the TiVo service is determined considering the size of the MSO and expected volume of deployment, market conditions, competitive landscape, internal costs and total gross margin objectives. For a term license to the TiVo service, we receive license fees for the hosted TiVo service on either a per-subscriber per-month basis or a fixed fee. We recognize revenue from per-subscriber per-month licenses during the month the TiVo service is provided to the customer and recognizes revenue from fixed fee licenses ratably over the license period.

In arrangements where we do not host the TiVo service and that include engineering services that are essential to the functionality of the licensed technology or involve significant customization or modification of the software, we recognize revenue as progress toward completion is made using an input method based on the ratio of costs incurred to date to total estimated costs of the project. Project costs are primarily labor related to the specific activities required for the project. Costs related to general infrastructure or uncommitted platform development are not included in the project cost estimates and are expensed as incurred. Estimating project costs requires forecasting costs, tracking progress toward completion and projecting the remaining effort to complete the project. These estimates are reassessed throughout the term of the arrangement, and revisions to estimates are recognized on a cumulative catch-up basis when the changed conditions become known. Provisions for losses are recorded when estimates indicate it is probable that a loss will be incurred for the contract. We generally recognize revenue from license fees for the TiVo service that it does not host on a per-subscriber per-month basis due to the recognition constraint on intellectual property usage-based royalties.

Subscription Services

Subscription services revenues primarily consist of fees to provide customers with access to one or more of our hosted products such as our i-Guide IPG, advanced search and recommendations, metadata and analytics products, including routine customer support. We generally receive per-subscriber per-month fees for our i-Guide IPG and search and recommendations service and revenue is recorded in the month the customer uses the service. We generally receive a monthly or quarterly fee from its metadata or analytics licenses for the right to use its metadata or access its analytics platform and to receive regular updates. Revenue from our metadata and analytics service is recognized ratably over the subscription period.

Passport Software

We license our Passport IPG software to pay TV providers in North and South America. We generally receive per-subscriber per-month fees for licenses to the Passport IPG software and support. Due to the usage-based royalty provisions of the revenue recognition guidance, revenue is generally recognized in the month the customer uses the software.

Advertising

We generate advertising revenue through our IPGs. Advertising revenue is recognized when the related advertisement is provided. Advertising revenue is recorded net of agency commissions and revenue shares with service providers and CE manufacturers.

TiVo-enabled DVRs and TiVo Service

We sell TiVo-enabled DVRs and the related service directly to customers through sales programs via the TiVo.com website and license the sale of TiVo-enabled DVRs through a limited number of retailers. For sales through the TiVo.com website, the customer receives a DVR and commits to either a minimum subscription period of one year or for the lifetime of the DVR. After the initial subscription period, customers have various pricing options when they renew their subscription. Customers have the right to return the DVR within 30 days of purchase. Customers have the right to cancel their subscription to the TiVo service within 30 days of subscription activation for a full refund. For licensed sales of TiVo-enabled DVRs through retailers, the customer commits to either a minimum subscription period of one year or for the lifetime of the DVR.

The stand-alone selling price for the TiVo service is established based on stand-alone sales of the service and varies by the length of the service period. The stand-alone selling price of the DVR is determined based on the price for which we would sell the DVR without any service commitment from the customer.

The transaction price allocated to the DVR is recognized as revenue on delivery and the transaction price allocated to the TiVo service is recognized as revenue ratably over the service period. Subscription revenues from lifetime subscriptions are recognized ratably over the estimated useful life of the DVR associated with the subscription. The estimated useful life for a DVR depends on a number of assumptions, including, but not limited to, customer retention rates, the timing of new product introductions and historical experience. As of September 30, 2018, we recognize revenue for lifetime subscriptions over a 66-month period. We periodically reassess the estimated useful life of a DVR. When the actual useful life of the DVR materially differs from our estimate, the estimated useful life of the DVR is adjusted, which could result in the recognition of revenue over a longer or shorter period of time.

Contractual Obligations

As a result of TiVo Solutions' acquisition of Cubiware, certain payments contingent on the occurrence of specified events may be payable. The contingent payments include guaranteed payments of $9.0 million provided certain key individuals remained employed through May 2018 and additional cash earn-outs (not to exceed $14.4 million in aggregate) payable through May 2018 contingent on the achievement of certain revenue and earnings before interest, depreciation, income taxes and amortization targets for each of the twelve month periods following the date of TiVo Solutions' acquisition of Cubiware. During the nine months ended September 30, 2018, $5.5 million was paid related to the guaranteed payments and $1.9 million was paid related to the additional earn-out. As of September 30, 2018, total payments of $5.2 million have been earned, but remain unpaid pending the resolution of a matter for which the selling shareholders have an indemnification obligation to TiVo Solutions.

In the normal course of business, we order finished goods inventory with advanced lead times from a third party that allow the third party to procure inventory based on our purchase orders. As a result of a manufacturing outsourcing agreement that became effective during the nine months ended September 30, 2018, our unconditional purchase obligations as of September 30, 2018 were reduced to $4.4 million.

For information about our contractual obligations, see "Contractual Obligations" in Part II, Item 7.7 of our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, which is incorporated by reference herein.

On March 27, 2017, TiVo Corporation agreed to settle the claims of the Dissenting Holders for $117.0 million, which was paid in cash in April 2017. For additional details regarding the settlement with the Dissenting Holders, see Note 2 and Note 10 to the Condensed Consolidated Financial Statements included in Part I, Item 1. of this Quarterly Report on Form 10-Q, which are incorporated by reference herein.

In September 2016, TiVo Solutions entered into an agreement with DISH under which DISH agreed to provide TiVo Solutions with a release for all past products and a going-forward covenant not-to-sue under DISH’s existing patents during the 10-year license term in exchange for TiVo Solutions providing DISH certain TiVo Solutions products during the term and cash payments by TiVo Solutions to DISH of $60.3 million, of which $30.3 million was paid in the third quarter of 2017, $15.0 million was paid in the second quarter of 2017 and $15.0 million was paid in the fourth quarter of 2016.

Other than the items described above, our contractual obligations have not changed materially since December 31, ~~2016.~~2017.

Off-Balance Sheet Arrangements

For information about our off-balance sheet arrangements, see "Off-Balance Sheet Arrangements" in Part II, Item 7.7 of our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, which is incorporated by reference herein. Since December 31, ~~2016,~~2017, we have not engaged in any material off-balance sheet arrangements, including the use of structured

finance vehicles, special purpose entities or variable interest entities.

Recent Accounting Pronouncements

For a summary of applicable recent accounting pronouncements, see Note 1 to the Condensed Consolidated Financial Statements included in Part I, Item 1.1 of this Quarterly Report on Form 10-Q, which is incorporated by reference herein.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, we are exposed to market risks, including those related to changes in interest rates, foreign currency exchange rates and security prices that could ~~impact~~affect our financial position, results of operations or cash flows. For quantitative and qualitative disclosures about market risk, see Part II, Item ~~7A.~~7A of our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2017, which is incorporated reference herein. Our exposure to market risk has not changed materially since December 31, ~~2016.~~2017.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of management, including our Interim Chief Executive Officer and our Chief Financial Officer, 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). In 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 necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on their evaluation, our Interim Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

On September 7, 2016, we completed our acquisition of TiVo Solutions. As a result of the TiVo Acquisition, we have incorporated internal controls over significant processes specific to the acquisition and to post-acquisition activities that we believe are appropriate and necessary in consideration of the related integration, including controls associated with the TiVo Acquisition for the valuation of certain assets acquired and liabilities assumed, as well as the adoption of common financial reporting and internal control practices for the combined company. As we further integrate TiVo Solutions~~, we will continue to review our internal controls to validate that they are effective and integrated appropriately.~~

We are in the process of evaluating the existing controls and procedures of TiVo Solutions and integrating TiVo Solutions into our internal control over financial reporting. In accordance with SEC Staff guidance permitting a company to exclude an acquired business from management’s assessment of the effectiveness of internal control over financial reporting for the year in which the acquisition is completed, we excluded TiVo Solutions from our assessment of the effectiveness of internal control over financial reporting as of December 31, 2016.

Changes in Internal Control Over Financial Reporting

We believe there have been no changes to our internal controls over financial reporting during the quarter ended September 30, ~~2017,~~2018, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information with respect to this item is contained in Note 1011 to the Condensed Consolidated Financial Statements included in Part I, Item 1.1 of this Quarterly Report on Form 10-Q, which is incorporated by reference herein.

ITEM 1A. RISK FACTORS

~~For information about our risk factors, see "Risk Factors" in Part 1, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference herein.~~ Management believes that there have been no significant changes to the risk factors associated with our business ~~since~~as compared to those disclosed in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017, which is incorporated by reference herein.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

~~TiVo Corporation~~We may choose to repurchase shares under ~~its~~our ongoing repurchase program when sufficient liquidity exists, the shares are trading at a discount relative to estimated intrinsic value and there are no alternative investment opportunities expected to generate a higher risk-adjusted return on investment.

The following table provides information about the Company's purchases of its common stock during the three months ended September 30, ~~2017~~2018 (in thousands, except per share amounts):

Period Total Number of Shares Purchased (1) Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
July 2017 —
$ —
— $ 150,000.0
August 2017 —
$ —
— $ 150,000.0
September 2017 —
$ —
— $ 150,000.0
Total —
$ —
—



Period	Total Number of Shares Purchased (1)	Average Price Paid Per Share (1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2)
July 2018	—	$	—	—	$	150,000
August 2018	—	$	—	—	$	150,000
September 2018	—	$	—	—	$	150,000
Total	—	$	—	—


(1)	Excludes shares withheld to satisfy minimum statutory tax withholding requirements in connection with the net share settlement of restricted stock units. During the three months ended September 30, ~~2017, the Company~~2018, we withheld ~~0.1~~0.2 million shares of common stock to satisfy ~~$1.5~~$2.6 million of required withholding taxes.


(2)	On February 14, 2017, TiVo Corporation's Board of Directors approved an increase to its common stock repurchase program authorization to $150.0 million. The February 2017 authorization includes amounts which were outstanding under previously authorized share repurchase programs.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Incorporated by Reference
Exhibit Number Exhibit Description Company Form
Filing
Date

Exhibit
Number
Filed Herewith
10.01
TiVo Corporation Executive Severance Plan*

TiVo Corp.
8-K
7/7/2017 10.1
10.02
Form of Restricted Stock Unit Notice and Agreement for TiVo Corporation Titan Equity Incentive Award Plan (stock-settled) (Former TiVo Inc. Employee Form)*
X
10.03
Form of Restricted Stock Unit Notice and Agreement for TiVo Corporation Titan Equity Incentive Award Plan (stock-settled) (Non-Former TiVo Inc. Employee Form)*
X
31.01
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.02
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
32.01
Certification of Chief Executive Officer pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002
**
32.02
Certification of Chief Financial Officer pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002
**
101.INS XBRL Instance Document X
101.SCH XBRL Taxonomy Extension Schema Document X
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X
101.DEF XBRL Taxonomy Extension Definition Linkbase Document X
101.LAB XBRL Taxonomy Extension Label Linkbase Document X
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X



		Incorporated by Reference
Exhibit Number	Exhibit Description	Company Form+	Filing Date	Exhibit Number	Filed Herewith
10.01	Form of Notice of Restricted Stock Unit/Restricted Stock Unit Agreement pursuant to Rovi 2008 Equity Incentive Plan**				X
10.02	Form of Notice of Restricted Stock Unit/Restricted Stock Unit Agreement pursuant to TiVo Corporation Titan Equity Incentive Plan**				X
10.03	2018 Senior Executive Company Incentive Plan**				X
10.04	Offer letter to Raghavendra Rau dated July 23, 2018**	8-K	July 27, 2018	10.1
10.05	Executive Severance and Arbitration Agreement with Raghavendra Rau dated July 23, 2018**	8-K	July 27, 2018	10.2
31.01	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.02	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
32.01	Certification of Chief Executive Officer pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002				*
32.02	Certification of Chief Financial Officer pursuant to Section 1350 of the Sarbanes-Oxley Act of 2002				*
101.INS	XBRL Instance Document				X
101.SCH	XBRL Taxonomy Extension Schema Document				X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				X


*	Furnished herewith.


**	Management contract or compensatory plan or arrangement.


**	~~Furnished herewith.~~

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



TIVO CORPORATION
Authorized Officer:
Date:	By:	/s/ ~~Thomas Carson~~Raghavendra Rau
November ~~2, 2017~~7, 2018		~~Thomas Carson~~Raghavendra Rau
		Interim President and Chief Executive Officer

Principal Financial Officer:
Date:	By:	/s/ Peter C. Halt
November ~~2, 2017~~7, 2018		Peter C. Halt
		Chief Financial Officer

Principal Accounting Officer:
Date:	By:	/s/ Wesley Gutierrez
November ~~2, 2017~~7, 2018		Wesley Gutierrez
		Chief Accounting Officer and Treasurer

5361



	December 31, 2016			Measurement Period Adjustments			September 30, 2017
Prepaid expenses and other current assets and other long-term assets	$	25,909		$	2		$	25,911
Goodwill	468,330			932			469,262
Accounts payable and accrued expenses and other long-term liabilities	(73,456		)	(1,175		)	(74,631		)
Deferred tax liabilities, net	(97,305		)	241			(97,064		)
Total merger consideration	1,129,726			—			1,129,726



	Revenues		Cash Receipts
Remainder of 2017	$	18,307	$	6,016
2018	42,715		32,714
Thereafter	—		21,558
Total	$	61,022	$	60,288