Complete earnings release w/ tables formatted:
(BSNS WIRE) InterDigital Announces Strong First Quarter 2003 Results; New License Agreements
Drive Profitable Performance
Business Editors/High-Tech Writers
KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--May 13, 2003--InterDigital
Communications Corporation (Nasdaq:IDCC), a leading architect,
designer and provider of wireless technology and product platforms,
today reported revenues of $37.3 million and net income of $26.7
million, or $0.45 per share (diluted), for its first quarter ended
March 31, 2003. In addition, InterDigital reported its cash and
short-term investment position grew to $94.6 million at March 31,
2003, up $7.0 million over year-end 2002, including a net receipt of
$11.9 million from NEC Corporation of Japan (NEC). The Company's cash
position was further strengthened early in the second quarter 2003 by
the receipt of approximately $25 million of scheduled payments
associated with new patent license agreements with Ericsson and Sony
Ericsson.
Revenues in first quarter 2003 of $37.3 million increased $16.4
million, or 78%, over first quarter 2002 revenues of $20.9 million.
The increase was due largely to the recognition of $24.7 million of
royalties associated with new patent license agreements with Ericsson
and Sony Ericsson, offset in part, by an expected decrease of $1.9
million in specialized engineering service revenue. Included in the
$24.7 million was $20.3 million of royalties from Sony Ericsson
related to pre-2003 handset sales.
Recurring royalty revenues in first quarter 2003 of $17 million
increased 53% over comparable first quarter 2002 revenue of $11.1
million, aided by current royalties from Sony Ericsson and Ericsson of
$2.9 million and $1.5 million respectively, and an increase of $1.2
million in royalties from NEC.
The Company reported net income of $26.7 million, or $0.45 per
share (diluted), for first quarter 2003, compared to net income of
$16,000, or breakeven earnings per share in first quarter 2002. The
improvement in net income compared to first quarter 2002 was due to
the recognition of $20.3 million of royalties from Sony Ericsson, and
other income of $10.6 million associated with the settlement of the
Ericsson litigation in first quarter 2003, net of a related insurance
reimbursement obligation. Operating expenses increased 2% over first
quarter 2002 to $19.9 million, mainly as a result of higher directors'
and officers' liability insurance premiums, and patent administration
and licensing costs. Tax expense decreased in first quarter 2003 due
in part to the level of royalty revenue not subject to non-U.S.
withholding tax.
"I am very pleased with our performance in the first quarter,"
said Howard Goldberg, President and Chief Executive Officer. "You can
see the impact of increasing momentum in every area of our business.
We have been successful in creating a broad-based revenue stream that
spans across multiple technologies, standards and applications.
"Recurring royalty revenues now constitute the foundation of our
revenues, reflecting the strength of our global patent licensing
program. We expect that strength will be reflected in the expansion of
our licensing base with new agreements during the remainder of 2003.
At the same time, we are making substantial progress in rapidly moving
technology to product and targeting product to market in early 2004.
"Resolution of the royalty issues with Nokia and Samsung is our
highest priority and we remain confident in our position. We're
continuing separate discussions with both companies. To facilitate a
timely conclusion of all issues, we have initiated the contractual
resolution process with Nokia to determine the royalties to be paid
under its license agreement. This establishes the timetable for
discussions, senior executive meetings, and any future initiation of
arbitration, if necessary," concluded Mr. Goldberg.
Rich Fagan, Chief Financial Officer commented, "Our first quarter
2003 results gave us a good start to the year. We benefited from
important contributions from Ericsson, Sony Ericsson, NEC and Sharp.
While we expect to expand our licensing base this year, we anticipate
second quarter 2003 revenues to be generated primarily by royalties
from the same licensees that contributed to first quarter 2003
results. Of course, our 2003 revenues could be materially affected in
a positive way by the successful resolution of issues with Nokia and
Samsung. We anticipate that operating expenses will gradually increase
in coming quarters as we move our Wideband Time Division Duplex
development efforts toward creation of field trial demonstration
products."
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.
This press release contains forward-looking statements regarding,
among other things, our current beliefs, plans and expectations as to
(i) our ability to expand our licensing base and move technology to
product, and the timing thereof, (ii) resolution of the royalty issues
with Nokia and Samsung, and the timing thereof, and (iii) revenues and
operating expenses. Words such as "expect", "targeting", "anticipate",
"future", 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 any
such forward-looking statement due to a variety of factors in addition
to those specifically identified above including, but not limited to:
(i) any disputes, and the length and resolution of any 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/or 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; (v) unanticipated development costs, technical, financial or
other difficulties or delays related to the development of our
technologies and products; (vi) the impact of the Severe Acute
Respiratory Syndrome epidemic on our ability to engage in negotiations
in Asia and elsewhere; (vii) our ability to enter into additional
licenses, and to extend the term of the Sharp patent license agreement
on favorable terms or at all, in or applicable to, the second quarter
2003, 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; and (viii)
as well as other factors listed in the Company's most recently filed
Form 10-K. We undertake no duty to publicly update any forward-looking
statements, whether as a result of new information, future events or
otherwise.
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SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS
For the Periods Ended March 31
(Dollars in thousands except per share data)
(unaudited)
For the Three Months
Ended March 31,
---------------------
2003 2002
---------- ----------
REVENUES: $ 37,324 $ 20,949
---------- ----------
OPERATING EXPENSES:
Sales and marketing 1,210 1,090
General and administrative 4,117 3,694
Patents administration and licensing 3,139 2,855
Development 11,388 11,815
---------- ----------
19,854 19,454
---------- ----------
Income (loss) from operations 17,470 1,495
OTHER INCOME 10,580 -
NET INTEREST INCOME 419 500
---------- ----------
Income before income taxes 28,469 1,995
INCOME TAX PROVISION (1,742) (1,945)
---------- ----------
Net income 26,727 50
PREFERRED STOCK DIVIDENDS (34) (34)
---------- ----------
NET INCOME TO COMMON SHAREHOLDERS $26,693 $16
========== ==========
NET INCOME PER COMMON SHARE - BASIC $0.49 $0.00
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC 54,604 53,966
========== ==========
NET INCOME PER COMMON SHARE - DILUTED $0.45 $0.00
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - DILUTED 58,666 56,847
========== ==========
SUMMARY CASH FLOW
For the Periods Ended March 31
(Dollars in thousands)
(unaudited)
For the Three Months
Ended March 31,
---------------------
2003 2002
---------- ----------
Net income before pref. stock dividends $26,727 $50
Depreciation & amortization 2,604 2,684
Increase in deferred revenue 32,236 46,000
Deferred revenue recognized (10,964) (12,867)
Decrease (increase) in operating working
capital, deferred charges and other (49,680) (45,720)
Capital spending & patent additions (1,649) (2,688)
---------- ----------
CASH FLOW BEFORE FINANCING
ACTIVITIES (726) (12,541)
Debt decrease & preferred dividends (81) 57
Net stock issued 7,823 698
---------- ----------
NET INCREASE (DECREASE) IN CASH
AND SHORT-TERM INVESTMENTS $ 7,016 $(11,786)
========== ==========
CONDENSED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
March 31, December 31,
2003 2002
------------ ------------
Assets
Cash & short-term investments $94,582 $87,566
Accounts receivable 99,638 53,486
Other current assets 8,192 7,627
Property & equipment (net) 12,934 14,091
Patents (net) & other non-current assets 27,987 28,408
------------ ------------
TOTAL ASSETS $243,333 $191,178
============ ============
Liabilities and Shareholders' Equity
Current portion of long-term debt $192 $189
Accounts payable & accrued liabilities 10,266 14,124
Foreign & domestic taxes payable 3,940 5,434
Deferred revenue 111,942 90,670
Long-term debt & long-term liabilities 3,540 1,970
------------ ------------
TOTAL LIABILITIES 129,880 112,387
SHAREHOLDERS' EQUITY 113,453 78,791
------------ ------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $243,333 $191,178
============ ============
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--30--DES/ph*
CONTACT: InterDigital Communications Corporation
Media Contact:
Dawn Goldstein, 610/878-7800
dawn.goldstein@interdigital.com
or
InterDigital Communications Corporation
Investor Contact:
Janet Point, 610/878-7800
janet.point@interdigital.com
SOURCE: InterDigital Communications Corporation
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