-----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, L6Y44eHUeYUAjjDQhdeZQoWkEWpbfl5a8rvBmSew72rBJ0J+qot3K51DpPxZX8Sk GqNyeizTNO2REtWo/QO3UQ== 0001157523-04-004609.txt : 20040510 0001157523-04-004609.hdr.sgml : 20040510 20040510110002 ACCESSION NUMBER: 0001157523-04-004609 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040510 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040510 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: 04791416 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 a4636655.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): May 10, 2004 -------------- InterDigital Communications Corporation (Exact name of registrant as specified in its charter) Pennsylvania 1-11152 23-1882087 (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation) Identification No.) 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 May 10, 2004. Item 12. Results of Operations and Financial Condition. On May 10, 2004, InterDigital Communications Corporation issued a press release announcing its results of operations and financial condition for the quarter ended March 31, 2004. 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 Chief Financial Officer Dated: May 10, 2004 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 99.1 Press release dated May 10, 2004 EX-99.1 2 a4636655ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 InterDigital Announces Strong First Quarter Financial Results; 90% Growth in Recurring Patent Licensing Revenue Drives Profitable Results KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--May 10, 2004--InterDigital Communications Corporation (Nasdaq:IDCC), a leading architect, designer and provider of wireless technology and product platforms, today announced revenues of $33.0 million and net income of $5.8 million, or $0.10 per share (diluted), for its first quarter ended March 31, 2004. In addition, InterDigital reported its cash and short-term investment position grew to $125.4 million at March 31, 2004, up $19.4 million over year-end 2003. Howard Goldberg, President and Chief Executive Officer, stated, "I am very pleased with our first quarter 2004 results. It's evident that we have built a quality recurring royalty revenue stream that continues to grow. Our cash position is extremely strong, providing us significant flexibility to pursue attractive opportunities. Further, we expect to expand our licensee base throughout the remainder of 2004. We also continue to invest in the development of technology solutions that have strong intellectual property generation potential while creating product options aligned with market and customer needs." First Quarter Summary Revenues in first quarter 2004 were $33.0 million compared to $37.3 million in first quarter 2003. Recurring patent license royalties for first quarter 2004 of $32.4 million increased $15.4 million, or 90%, when compared to first quarter 2003. First quarter 2003 revenue consisted of $17.0 million of recurring patent license royalties and $20.3 million of non-recurring revenue associated with Sony Ericsson's pre-2003 handset sales. The increase in recurring royalties was primarily driven by growth in royalties from NEC Corporation of Japan (NEC), Sharp and Sony Ericsson. NEC's royalties increased $11.4 million, a portion of which related to 3G handset shipments that were delayed from calendar fourth quarter 2003 to calendar first quarter 2004. The Company reported net income of $5.8 million, or $0.10 per share (diluted), for first quarter 2004, compared to net income of $26.7 million, or $0.45 per share (diluted) in first quarter 2003. Results for first quarter 2003 included the benefit of $30.8 million (pre-tax) of non-recurring items related to Sony Ericsson's pre-2003 handset sales and the settlement of litigation with Ericsson. Absent these items, the Company would have reported a net loss of $3.6 million, or $0.07 per share. Operating expenses of $24.9 million in first quarter 2004 increased 26% over first quarter 2003 and 9% over fourth quarter 2003, in line with previous Company guidance. The increase in operating expenses over first quarter 2003 was due, in large part, to additional personnel and facilities costs related to a 2003 asset acquisition and other increases associated with annual wage inflation, patent licensing costs and public entity costs. Tax expense increased in first quarter 2004 due to a higher level of royalty revenue subject to non-U.S. withholding tax. Howard Goldberg added, "We continue to focus appropriate internal and external resources toward the resolution of arbitrations with Nokia and Samsung and litigation with Lucent. In the Samsung matter, the arbitration panel has been selected and we expect the parties will begin the discovery portion of the arbitration process in the near future. We remain confident in our positions in these matters." 2004 Outlook Rich Fagan, Chief Financial Officer commented, "Assuming our key licensees continue to perform well, we expect recurring royalties from our existing licensees to be in the range of $27 million to $30 million per quarter over the remainder of 2004. We also expect to conclude additional patent license agreements during 2004 which should be accretive. Excluding repositioning charges and any higher-than planned patent enforcement costs, we expect that second quarter 2004 operating expenses will increase 4%-6% over first quarter 2004 levels as expenses from a recently implemented long-term incentive program are offset in part by cost savings from repositioning activities. We currently expect that our operating expenses for the third and fourth quarters of 2004 will not exceed the levels anticipated for second quarter 2004. We also continue to expect to be cash flow positive for the full year 2004." 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) our ability to expand our licensee base throughout 2004; (ii) our planned investment in development of technology with strong intellectual property potential and ability to create product options; (iii) the Nokia and Samsung arbitrations and Lucent litigation; (iv) the amount and timing of recurring royalties; (v) our ability to conclude additional patent licenses in 2004; and, (vi) our cash flow and operating expenses. 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) unanticipated changes in the schedule or costs associated with the Nokia and Samsung arbitrations or Lucent litigation; (ii) delays in concluding additional license agreements; (iii) changes in the market share and sales performance of our primary licensees, delays in product shipments of our licensees, inaccuracy of market projections; (iv) 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, and (v) and other factors listed in the Company's most recently filed Forms 10-K and Form 10-Q 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 March 31 (Dollars in thousands except per share data) (unaudited) For the Three Months Ended March 31, --------------------- 2004 2003 ---------- ---------- REVENUES: $ 33,016 $ 37,324 ---------- ---------- OPERATING EXPENSES: Sales and marketing 1,614 1,210 General and administrative 5,390 4,117 Patents administration and licensing 5,000 3,139 Development 12,914 11,388 ---------- ---------- 24,918 19,854 ---------- ---------- Income from operations 8,098 17,470 OTHER INCOME - 10,580 NET INTEREST INCOME 428 419 ---------- ---------- Income before income taxes 8,526 28,469 INCOME TAX PROVISION (2,692) (1,742) ---------- ---------- Net income 5,834 26,727 PREFERRED STOCK DIVIDENDS (34) (34) ---------- ---------- NET INCOME APPLICABLE TO COMMON SHAREHOLDERS $ 5,800 $ 26,693 ========== ========== NET INCOME PER COMMON SHARE - BASIC $0.11 $0.49 ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC 55,146 54,604 ========== ========== NET INCOME PER COMMON SHARE - DILUTED $0.10 $0.45 ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED 59,745 58,666 ========== ========== SUMMARY CASH FLOW ----------------- (Dollars in thousands) (unaudited) For the Three Months Ended March 31, --------------------- 2004 2003 ---------- ---------- Net income before pref. stock dividends $5,834 $26,727 Depreciation & amortization 2,671 2,604 Increase in deferred revenue 22,784 32,236 Deferred revenue recognized (12,709) (10,964) Increase in operating working capital, deferred charges and other (2,487) (49,325) Capital spending & patent additions (3,096) (1,649) ---------- ---------- CASH FLOW BEFORE FINANCING ACTIVITIES AND ASSET ACQUISITION 12,997 (371) Debt decrease & preferred dividends (50) (47) Net stock issued 6,492 7,434 ---------- ---------- NET INCREASE IN CASH AND SHORT-TERM INVESTMENTS $ 19,439 $ 7,016 ========== ========== Certain prior period amounts have been reclassified to conform to the 2004 presentation. CONDENSED BALANCE SHEETS ------------------------ (Dollars in thousands) (unaudited) March 31, Dec. 31, 2004 2003 ---------- ---------- Assets - ------ Cash & short-term investments $125,366 $105,927 Accounts receivable 36,342 37,839 Other current assets 8,025 8,628 Property & equipment (net) 11,213 12,137 Patents (net) & other non-current assets 44,992 40,634 ---------- ---------- TOTAL ASSETS $225,938 $205,165 ========== ========== Liabilities and Shareholders' Equity - ------------------------------------ Current portion of long-term debt $186 $193 Accounts payable & accrued liabilities 12,454 16,236 Foreign & domestic taxes payable 2,817 1,259 Deferred revenue 96,668 86,595 Long-term debt & long-term liabilities 3,354 3,397 ---------- ---------- TOTAL LIABILITIES 115,479 107,680 SHAREHOLDERS' EQUITY 110,459 97,485 ---------- ---------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $225,938 $205,165 ========== ========== CONTACT: InterDigital Communications Corporation Media: Dawn Goldstein, 610-878-7800 e-mail: dawn.goldstein@interdigital.com or Investor: Janet Point, 610-878-7800 e-mail: janet.point@interdigital.com -----END PRIVACY-ENHANCED MESSAGE-----