press release with tables formatted:
(BSNS WIRE) InterDigital Announces Strong Third Quarter Financial Results;
95% Growth in Recurring Patent Licensing Revenue Drives Profitable Results
High-Tech Writers / Business Editors
KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--IDCC--
InterDigital Communications Corporation (Nasdaq:IDCC), a
leading architect, designer and provider of wireless technology and
product platforms, today announced revenues of $26.8 million and net
income of $3.4 million, or $0.06 per share (diluted), for its third
quarter ended September 30, 2003. InterDigital's cash and short-term
investment position remained strong, ending third quarter 2003 at
$105.9 million, up $18.4 million versus year-end 2002. During third
quarter 2003, the Company expended approximately $44 million in
connection with the repurchase of two million shares of the Company's
stock under a previously announced share repurchase program and the
acquisition of substantially all of the assets of Tantivy
Communications, Inc.
Revenues in third quarter 2003 of $26.8 million (all of which were
recurring patent licensing royalties) increased $12.1 million, or 82%,
over third quarter 2002 revenues of $14.7 million. Third quarter 2002
revenue consisted of $13.8 million of recurring patent licensing
royalties and $0.9 million of specialized engineering services
revenue. The 95% increase in recurring patent licensing royalty
revenue was driven by $4.4 million related to 2003 patent license
agreements with Ericsson and Sony Ericsson, and an increase of $8.6
million in aggregate royalties from NEC Corporation of Japan, Sharp
Corporation and Sanyo Corporation (Sanyo). Included in third quarter
2003 revenue was $2.2 million related to a true up of Sanyo's actual
reported royalties in excess of estimates for first half 2003.
The Company reported net income of $3.4 million, or $0.06 per
share (diluted), for third quarter 2003, compared to a net loss of
$5.8 million, or $0.11 per share in third quarter 2002. Operating
expenses of $21.4 million increased 8% over third quarter 2002 and 2%
over second quarter 2003. The increase in operating expenses over
third quarter 2002 was due, in large part, to higher directors' and
officers' liability insurance premiums, patent licensing costs,
royalty related commissions costs and consulting costs associated with
a review and update of the Company's strategic plan. Included in third
quarter 2002 operating results was a provision for an estimated loss
of $1.2 million associated with an amendment to the Wideband Time
Division Duplex (WTDD) technology development agreement with Nokia.
Tax expense, which mainly consists of non-U.S. withholding taxes on
patent licensing royalties, increased in third quarter 2003 due to the
recognition of a higher level of royalties subject to such withholding
tax.
For first nine months 2003, revenues were $89.9 million, an
increase of 48% versus revenues of $60.8 million in first nine months
2002. The Company reported net income of $33.2 million for first nine
months 2003, or $0.55 per share (diluted), compared to a net loss of
$3.4 million, or $0.06 per share in first nine months 2002. Absent
non-recurring revenue items associated with the discontinuation of
sales of covered products by Kyocera in 2002 and past infringement
related to new patent license agreements in first nine months 2002 and
2003, adjusted first nine months 2003 revenue of $69.4 million would
have increased 51% over comparable first nine months 2002 revenue of
$46.0 million. As expected, no specialized engineering services
revenue from Nokia for WTDD technology development work was recognized
in first nine months 2003, resulting in a decrease of $4.5 million in
specialized engineering service revenue versus first nine months 2002.
"We've added licensees and the sales of our licensees have grown
over the past year. These are the key factors driving our revenue
growth and have contributed to profitability in each quarter of 2003,"
said Howard Goldberg, President and Chief Executive Officer. "We're
benefiting from increased replacement demand for mobile phones, driven
by innovative new products such as camera phones, and by the very
early stages of growth in WCDMA infrastructure and handset sales. As
we look forward, we're encouraged by consensus projections of higher
handset shipments in both fourth quarter 2003 and 2004.
"We're pleased to announce the successful completion of the WTDD
technology program under our development agreement with Nokia, an
agreement spanning over four years. Additionally, we're pleased that
Huawei Technologies chose Infineon, our partner and technology
licensee, as its supplier of handset technology to be included on its
WCDMA mobile phone platform. This handset solution includes embedded
technology jointly developed by Infineon and InterDigital. The first
commercial commitment for this product is an important market
milestone for both organizations.
"Of course, we continue to focus appropriate internal and external
resources toward the resolution of open patent licensing issues with
both Nokia and Samsung. The Nokia arbitration process is moving
forward. Absent a change in its position, we expect that Samsung will
file a demand for arbitration in the near future. We remain confident
and very committed to our position in these matters," concluded Mr.
Goldberg.
Rich Fagan, Chief Financial Officer, commented, "We're quite
pleased with the strong financial performance we've achieved in 2003,
including the significant increase in our recurring patent licensing
royalties over the past two quarters. The quantity, quality and
predictability of our revenue and cash flow streams continue to
improve. Looking forward, we expect to benefit from the continued
solid performance of our key licensees and to expand our licensee base
over the next twelve months. We also will recognize the final $1.0
million of specialized engineering services revenue related to the
Nokia WTDD agreement during fourth quarter 2003. We currently
anticipate that fourth quarter 2003 operating expenses could increase
5% - 10% over third quarter 2003 levels. Contributing to the increase
will be higher directors' and officers' liability insurance premiums.
Additionally, as we continue to grow our business, we expect to
increase our investment in marketing, patent licensing and employee
development activities."
About InterDigital
InterDigital architects, designs and provides advanced wireless
technologies and products that drive voice and data communications.
The Company offers technology and product solutions for mainstream
wireless applications that deliver cost and time-to-market advantages
for its customers. InterDigital has a strong portfolio of patented
technologies covering 2G, 2.5G and 3G standards, which it licenses
worldwide. For more information, please visit InterDigital's web site:
www.interdigital.com. InterDigital is a registered trademark of
InterDigital Communications Corporation. All other trademarks are the
property of their respective owners.
This press release contains forward-looking statements regarding,
among other things, our current beliefs, plans, and expectations as to
(i) demand for and shipments of handsets, (ii) the inclusion of our
technology in Huawei's WCDMA mobile phone platform, (iii) resolution
of patent licensing issues with Nokia and Samsung, (iv), our ability
to expand our licensee base and benefit from the performance of our
licensees, (v) our revenues, capital expenditures, and operating
expenses, and (vi) our ability to grow our business. Words such as
"expect", "continue", "projections", "anticipate", "forward, or
similar expressions are intended to identify such forward-looking
statements.
Forward-looking statements are subject to risks and uncertainties.
Actual outcomes could differ materially from those expressed in
forward-looking statements due to a variety of factors in addition to
those specifically identified above including, but not limited to: (i)
the disputes, and the length and resolution of the disputes, as to the
applicability of the terms of the Ericsson and Sony Ericsson licensing
agreements to the royalty obligations of Nokia and Samsung under their
licensing agreements; (ii) the review, negotiation and dispute
resolution processes permitted under Nokia's and Samsung's license
agreements and the results therefrom; (iii) our ability to enter into
additional license agreements; (iv) a failure by any licensee to
realize our and market projections for sales of covered products and
the accuracy of market projections; (v) technical, financial or other
difficulties or delays related to our and/or Infineon's technologies
and products, and market acceptance thereof; (vi) the market share and
the performance of our licensees in selling their products, and our
ability to adequately prosecute, enforce and protect our patents and
other intellectual property rights; (vii) the market relevance of our
technologies; changes in technology preferences of strategic partners
or consumers; the availability or development of substitute or
competitive technologies; our ability to leverage our existing and
enter into additional strategic relationships; competitively priced
products and possess adequate manufacturing and distribution networks;
failure of the 3G market or the wireless data services market to
materialize in the manner, scope or time frame anticipated, the
ability of operators to deliver 3G services in volume; the success of
underlying 3G technology; and the successful delivery of
differentiated applications by 3G products; (ix) the effects of global
economic conditions and governmental licensing decisions, and (x)other
factors listed in the Company's most recently filed Form 10-K, Form
10-Q, and Forms 8-K. We undertake no duty to publicly update any
forward-looking statements, whether as a result of new information,
future events or otherwise.
-0-
*T
SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS
----------------------------------------------------------------------
For the Periods Ended September 30
(Dollars in thousands except per share data)
(unaudited)
For the Three Months For the Nine Months
Ended Ended
Sept. 30, Sept. 30,
--------------------- ---------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
REVENUES: $ 26,790 $ 14,706 $ 89,891 $ 60,804
---------- ---------- ---------- ----------
OPERATING EXPENSES:
Sales and marketing 1,330 1,075 3,473 3,447
General and
administrative 4,567 3,248 13,305 11,011
Patents administration
and licensing 4,263 3,019 11,338 9,339
Development 11,253 12,441 34,054 36,072
---------- ---------- ---------- ----------
21,413 19,783 62,170 59,869
---------- ---------- ---------- ----------
Income (loss) from
operations 5,377 (5,077) 27,721 935
OTHER INCOME - - 10,580 -
NET INTEREST INCOME 405 525 1,298 1,580
---------- ---------- ---------- ----------
Income (loss) before
income taxes 5,782 (4,552) 39,599 2,515
INCOME TAX PROVISION (2,317) (1,246) (6,249) (5,785)
---------- ---------- ---------- ----------
Net income (loss) 3,465 (5,798) 33,350 (3,270)
PREFERRED STOCK DIVIDENDS (34) (35) (101) (103)
---------- ---------- ---------- ----------
NET INCOME (LOSS)
APPLICABLE TO COMMON
SHAREHOLDERS $ 3,431 $ (5,833) $ 33,249 $ (3,373)
========== ========== ========== ==========
NET INCOME (LOSS) PER
COMMON SHARE - BASIC $0.06 $(0.11) $0.60 $(0.06)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
- BASIC 55,912 52,956 55,475 52,762
========== ========== ========== ==========
NET INCOME (LOSS) PER
COMMON SHARE - DILUTED $0.06 $(0.11) $0.55 $(0.06)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
- DILUTED 60,109 52,956 60,192 52,762
========== ========== ========== ==========
SUMMARY CASH FLOW
For the Periods Ended September 30
(Dollars in thousands)
(unaudited)
----------------------------------------------------------------------
For the Three Months For the Nine Months
Ended Ended
Sept. 30, Sept. 30,
--------------------- ---------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net income (loss) before
pref. stock dividends $3,465 $(5,798) $33,350 $(3,270)
Depreciation &
amortization 2,742 3,010 7,996 8,569
Increase in deferred
revenue 1,500 - 55,988 59,250
Deferred revenue
recognized (16,612) (7,029) (44,984) (35,735)
Decrease (increase) in
operating working
capital, deferred charges
and other 33,517 11,125 2,687 (17,664)
Capital spending & patent
additions (3,805) (2,873) (8,574) (8,032)
---------- ---------- ---------- ----------
CASH FLOW BEFORE
FINANCING ACTIVITIES
AND ASSET ACQUISITION 20,807 (1,565) 46,463 3,118
Increase in notes
receivable - - (1,446) -
Acquisition of Tantivy
assets (10,430) - (10,430) -
Debt decrease & preferred
dividends (48) (132) (183) (401)
Net stock (acquired)
issued (32,320) 242 (16,042) 3,502
---------- ---------- ---------- ----------
NET (DECREASE) INCREASE
IN CASH AND SHORT-TERM
INVESTMENTS $ (21,991) $ (1,455) $ 18,362 $ 6,219
========== ========== ========== ==========
CONDENSED BALANCE SHEETS
----------------------------------------------------------------------
(Dollars in thousands)
(unaudited)
Sept. 30, 2003 Dec. 31, 2002
-------------- --------------
Assets
-----------------------------------------
Cash & short-term investments $105,928 $87,566
Accounts receivable 52,978 53,486
Other current assets 4,747 7,627
Property & equipment (net) 12,363 14,091
Patents (net) & other non-current assets 41,907 28,408
-------------- --------------
TOTAL ASSETS $217,923 $191,178
============== ==============
Liabilities and Shareholders' Equity
-----------------------------------------
Current portion of long-term debt $199 $189
Accounts payable & accrued liabilities 13,849 14,124
Foreign & domestic taxes payable 2,953 5,434
Deferred revenue 101,674 90,670
Long-term debt & long-term liabilities 3,439 1,970
-------------- --------------
TOTAL LIABILITIES 122,114 112,387
SHAREHOLDERS' EQUITY 95,809 78,791
-------------- --------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $217,923 $191,178
============== ==============
*T
SOURCE: InterDigital Communications Corporation
CONTACT INFORMATION:
InterDigital Communications Corporation
Media Contact:
Dawn Goldstein, 610-878-7800
e-mail: dawn.goldstein@interdigital.com
or
Investor Contact:
Janet Point, 610-878-7800
e-mail: janet.point@interdigital.com
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