Adeia Inc. Fair Value Disclosure
NOTE 7 – FAIR VALUE
The Company follows the authoritative guidance for fair value measurement and the fair value option for financial assets and financial liabilities. The Company carries its financial instruments at fair value with the exception of its long-term debt. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
Level 1 |
Quoted prices in active markets for identical assets. |
Level 2 |
Observable market-based inputs or unobservable inputs that are corroborated by market data. |
Level 3 |
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. |
When applying fair value principles in the valuation of assets, the Company is required to maximize the use of quoted market prices and minimize the use of unobservable inputs. The Company calculates the fair value of its Level 1 and Level 2 instruments based on the exchange traded price of similar or identical instruments, where available, or based on other observable inputs. There were no significant transfers into or out of Level 1 or Level 2 that occurred between December 31, 2025 and December 31, 2024.
The following sets forth the fair value, and classification within the hierarchy, of the Company’s assets required to be measured at fair value on a recurring basis as of December 31, 2025 (in thousands):
|
|
Fair Value |
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
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Assets |
|
|
|
|
|
|
|
|
|
|
|
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Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds - equity securities |
|
$ |
200 |
|
|
$ |
200 |
|
|
$ |
— |
|
|
$ |
— |
|
Corporate bonds and notes - debt securities |
|
|
53,784 |
|
|
|
— |
|
|
|
53,784 |
|
|
|
— |
|
Commercial paper - debt securities |
|
|
8,113 |
|
|
|
— |
|
|
|
8,113 |
|
|
|
— |
|
Treasury and agency notes and bills - debt securities |
|
|
1,700 |
|
|
|
— |
|
|
|
1,700 |
|
|
|
— |
|
Total Assets |
|
$ |
63,797 |
|
|
$ |
200 |
|
|
$ |
63,597 |
|
|
$ |
— |
|
The following sets forth the fair value, and classification within the hierarchy, of the Company’s assets required to be measured at fair value on a recurring basis as of December 31, 2024 (in thousands):
|
|
Fair Value |
|
|
Quoted |
|
|
Significant |
|
|
Significant |
|
||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marketable securities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds - equity securities |
|
$ |
4,322 |
|
|
$ |
4,322 |
|
|
$ |
— |
|
|
$ |
— |
|
Corporate bonds and notes - debt securities |
|
|
25,762 |
|
|
|
— |
|
|
|
25,762 |
|
|
|
— |
|
Commercial paper - debt securities |
|
|
2,689 |
|
|
|
— |
|
|
|
2,689 |
|
|
|
— |
|
Treasury and agency notes and bills - debt securities |
|
|
3,616 |
|
|
|
— |
|
|
|
3,616 |
|
|
|
— |
|
Total Assets |
|
$ |
36,389 |
|
|
$ |
4,322 |
|
|
$ |
32,067 |
|
|
$ |
— |
|
Financial Instruments Not Recorded at Fair Value
The Company’s long-term debt is carried at amortized cost and is measured at fair value on a quarterly basis for disclosure purposes. The carrying amounts and estimated fair values are as follows (in thousands):
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|
December 31, 2025 |
|
|
December 31, 2024 |
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|
Carrying |
|
|
Estimated Fair |
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|
Carrying |
|
|
Estimated Fair |
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Long-term debt, net (1) |
|
$ |
418,454 |
|
|
$ |
419,501 |
|
|
$ |
475,456 |
|
|
$ |
475,456 |
|
(1) Carrying amounts of long-term debt are net of unamortized debt discount and issuance costs of $8.3 million and $11.6 million as of December 31, 2025 and 2024, respectively. See “Note 10 – Debt” for additional information.
If reported at fair value in the Consolidated Balance Sheets, the Company’s debt would be classified within Level 2 of the fair value hierarchy. The fair value of the debt was estimated based on the quoted market prices for the same or similar issues.
Non-Recurring Fair Value Measurements
Patents
During the years ended December 31, 2025, 2024, and 2023, the Company executed certain license agreements that included noncash consideration in the form of patents. For noncash consideration received in the year ended December 31, 2025, the Company determined the fair value of patents at contract inception using an analysis of comparable market transactions (the
market approach). Significant management judgment was required in the selection and weighting of comparable market transactions. Noncash consideration received in the form of patents is recorded as an intangible asset and included in the transaction price for revenue recognition purposes. See “Note 4 – Revenue” for a detailed discussion on revenue and revenue recognition.
The estimated fair value of the patents represents a Level 3 fair value measurement, and the value of the patents is amortized as a non-cash expense over the patents’ estimated useful lives. For impairment related fair value measurements, see “Note 9 – Goodwill And Identified Intangible Assets”.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 19, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 24, 2022 | |
| 2020 | Feb 26, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.