-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QPldiEWILGg1nhjNWwLqm7/9wlLNKa01LVcRDPbM8je9N+/sce4quLVTUTfCYTax sD5Nd/HQWFX7IJ3VQdySUA== 0001157523-03-006608.txt : 20031113 0001157523-03-006608.hdr.sgml : 20031113 20031113082730 ACCESSION NUMBER: 0001157523-03-006608 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031113 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERDIGITAL COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000354913 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 231882087 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11152 FILM NUMBER: 03995792 BUSINESS ADDRESS: STREET 1: 781 THIRD AVE CITY: KING OF PRUSSIA STATE: PA ZIP: 19406-1409 BUSINESS PHONE: 6102787800 MAIL ADDRESS: STREET 1: 781 THIRD AVE STREET 2: 2200 RENAISANCE BLVD STE 105 CITY: KING OF PRUSSIA STATE: PA ZIP: 19406-1409 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL MOBILE MACHINES CORP DATE OF NAME CHANGE: 19920703 8-K 1 a4515597.txt INTERDIGITAL 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (Date of earliest event reported): November 13, 2003 -------------- InterDigital Communications Corporation (Exact name of registrant as specified in its charter) Pennsylvania 1-11152 23-1882087 (State or other (Commission File Number) (IRS Employer jurisdiction of Identification No.) incorporation) 781 Third Avenue, King of Prussia, PA 19406-1409 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: 610-878-7800 Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits 99.1 Press release dated November 13, 2003. Item 12. Results of Operations and Financial Condition. On November 13, 2003, InterDigital Communications Corporation issued a press release announcing its results of operations and financial condition for the quarter ended September 30, 2003. A copy of this press release is attached hereto as Exhibit 99.1. The information in this Form 8-K and the Exhibit attached hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized. INTERDIGITAL COMMUNICATIONS CORPORATION By: /s/ R. J. Fagan ------------------------------------------ Richard J. Fagan Executive Vice President and Chief Financial Officer Dated: November 13, 2003 EXHIBIT INDEX Exhibit No. Description - ------------ ------------ 99.1 Press release dated November 13, 2003 EX-99 3 a4515597ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 InterDigital Announces Strong Third Quarter Financial Results; 95% Growth in Recurring Patent Licensing Revenue Drives Profitable Results KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--Nov. 13, 2003--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. 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 ============== ============== CONTACT: 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 -----END PRIVACY-ENHANCED MESSAGE-----