InterDigital, Inc. (NASDAQ:IDCC), a mobile technology research and
development company, today announced results for the first quarter
ended March 31, 2016.
First Quarter 2016 Financial Highlights
- First quarter 2016 recurring revenue was $103.6 million,
consisting of current patent royalties and current technology
solutions revenue, compared to $110.4 million in first quarter
2015. This decrease in recurring revenue was primarily
attributable to a slightly lower base of fixed-fee revenue.
- Total revenue was $107.8 million, compared to $110.4 million in
first quarter 2015. First quarter 2016 included $4.2 million
of past patent royalties, primarily related to the resolution of a
dispute with an existing licensee. This was the fifth
consecutive quarter in which total revenues exceeded $100
million.
- First quarter 2016 operating expenses were $59.4 million,
compared to $59.1 million in first quarter 2015, and included $4.9
million in non-recurring charges. Intellectual property
enforcement expenses were $4.1 million, a 64% decrease compared to
$11.5 million in first quarter 2015.
- Net income1 was $28.1 million, or $0.79 per diluted share,
compared to $29.1 million, or $0.78 per diluted share, in first
quarter 2015.
“We’re very pleased with the quarter, which marks the fifth
consecutive quarter of total revenues topping the $100 million
mark. While we’ve always underlined the slight element of
seasonality in our business driven by product launches, our first
quarter revenues also speak to the strength of our core business,”
said William J. Merritt, President and CEO, InterDigital. “We’re
also pleased to note that our licensing efforts with Huawei have
moved forward significantly, which should further extend our
licensing reach and drive additional revenue. Finally, during
the first half of the year we continued to successfully drive our
research and development forward, with our wireless research teams
actively participating in the 5G standardization process and our
IoT engineers advancing the development of our IoT technology,
which was recently recognized with an innovation award from market
research firm Frost and Sullivan.”
Additional Financial Highlights for First Quarter
2016
- The slight increase in operating expenses of $0.3 million was
primarily attributable to non-recurring charges related to
performance-based incentive compensation ($3.0 million) and
severance ($1.9 million), partially offset by the $7.4 million
decrease in intellectual property enforcement costs. The
performance-based incentive compensation charge resulted from
increased accrual rates for our long-term performance-based
compensation plans, following recent developments that are expected
to result in the collection of amounts currently due to
InterDigital.
- In first quarter 2016, the company had free cash flow2 of $6.6
million, compared to $7.5 million of negative free cash flow in
first quarter 2015. Ending cash and short-term investments
totaled $658.7 million, after the disbursement of $230 million to
repay the company's 2.50% senior convertible notes on March 15,
2016.
- During first quarter 2016, the company repurchased 0.9 million
shares of common stock for $40.4 million. From April 1, 2016
through April 27, 2016, the company repurchased an additional 0.1
million shares at a cost of $5.3 million, bringing the total number
of shares repurchased under the company's current $400 million
stock repurchase program to 6.4 million shares at a cost of $294.8
million.
- The company's first quarter 2016 effective tax rate was
approximately 34.1% as compared to 38.4% during first quarter 2015,
based on the statutory federal tax rate net of discrete federal and
state taxes.
Conference Call Information
InterDigital will host a conference call on Thursday, April 28,
2016 at 10:00 a.m. Eastern Time to discuss its first quarter 2016
financial performance and other company matters. For a live
Internet webcast of the conference call, visit
www.interdigital.com and click on the link to the Live Webcast
under the Events tab of the Investors section on the homepage. The
company encourages participants to take advantage of the Internet
option.
For telephone access to the conference, call (800) 768-6570
within the United States or (785) 830-1942 from outside the United
States. Please call by 9:50 a.m. ET on April 28 and give the
operator Conference ID number 2436414.
An Internet replay of the conference call will be available on
InterDigital's website in the Investors section. In addition, a
telephone replay will be available from 1:00 p.m. ET April 28
through 1:00 p.m. ET May 3. To access the recorded replay, call
(888) 203-1112 or (719) 457-0820 and use the replay code
2436414.
About InterDigital®
InterDigital develops mobile technologies that are at the core
of devices, networks, and services worldwide. We solve many of the
industry's most critical and complex technical challenges,
inventing solutions for more efficient broadband networks and a
richer multimedia experience years ahead of market deployment.
InterDigital has licenses and strategic relationships with many of
the world's leading wireless companies. Founded in 1972,
InterDigital is listed on NASDAQ and is included in the S&P
MidCap 400® index.
InterDigital is a registered trademark of InterDigital,
Inc.
For more information, visit the InterDigital website:
www.interdigital.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934,
as amended. Such statements include information regarding our
current beliefs, plans and expectations, including, without
limitation, (i) our belief that the progress of our licensing
efforts with Huawei should further extend our licensing reach and
drive additional revenue and (ii) our expectation that the
developments involving an arbitration award and related agreement
should result in the collection of all amounts currently due to us
under such award and agreement in second quarter 2016. Words
such as "believe," "anticipate," "estimate," "expect," "project,"
"intend," "plan," "forecast," and variations of any such words 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 or anticipated by such forward-looking
statements due to a variety of factors, including, without
limitation, those identified in this press release, as well as the
following: (i) unanticipated delays, difficulties or acceleration
in the execution of patent license agreements; (ii) our ability to
leverage our strategic relationships and secure new patent license
agreements on acceptable terms; (iii) our ability to enter into
sales and/or licensing partnering arrangements for certain of our
patent assets; (iv) our ability to enter into partnerships with
leading inventors and research organizations and identify and
acquire technology and patent portfolios that align with
InterDigital's roadmap; (v) our ability to commercialize the
company's technologies and enter into customer agreements; (vi) the
failure of the markets for the company's current or new
technologies to materialize to the extent or at the rate that we
expect; (vii) unexpected delays or difficulties related to the
development of the company's technologies; (viii) changes in the
market share and sales performance of our primary licensees, delays
in product shipments of our licensees, delays in the timely receipt
and final reviews of quarterly royalty reports from our licensees,
delays in payments from our licensees and related matters; (ix) the
resolution of current legal or regulatory proceedings, including
any awards or judgments relating to such proceedings, additional
legal or regulatory proceedings, changes in the schedules or costs
associated with legal or regulatory proceedings or adverse rulings
in such legal or regulatory proceedings; (x) changes or
inaccuracies in market projections; and (xi) changes in the
company's business strategy.
We undertake no duty to update publicly any forward-looking
statement, whether as a result of new information, future events or
otherwise, except as may be required by applicable law, regulation
or other competent legal authority.
Footnotes
1 Throughout this press release, net income (loss) and diluted
earnings per share ("EPS") are attributable to InterDigital, Inc.
(e.g., after adjustments for noncontrolling interests), unless
otherwise stated.
2 Free cash flow is a supplemental non-GAAP financial measure
that InterDigital believes is helpful in evaluating the company's
ability to invest in its business, make strategic acquisitions and
fund share repurchases, among other things. A limitation of
the utility of free cash flow as a measure of financial performance
is that it does not represent the total increase or decrease in the
company's cash balance for the period. InterDigital defines “free
cash flow” as net cash provided by operating activities less
purchases of property and equipment, technology licenses and
investments in patents. InterDigital's computation of free
cash flow might not be comparable to free cash flow reported by
other companies. The presentation of this financial
information, which is not prepared under any comprehensive set of
accounting rules or principles, is not intended to be considered in
isolation or as a substitute for the financial information prepared
and presented in accordance with GAAP. A detailed
reconciliation of free cash flow to net cash provided by operating
activities, the most directly comparable GAAP financial measure, is
provided at the end of this press release.
|
SUMMARY
CONSOLIDATED STATEMENTS OF OPERATIONS(dollars in thousands
except per share data)(unaudited) |
|
|
|
For the Three Months Ended March 31, |
|
2016 |
|
2015 |
REVENUES: |
|
|
|
Per-unit royalty revenue |
$ |
73,689 |
|
|
$ |
75,583 |
|
Fixed fee amortized royalty
revenue |
29,098 |
|
|
33,373 |
|
Current patent royalties |
102,787 |
|
|
108,956 |
|
Past patent royalties |
4,167 |
|
|
17 |
|
Total patent licensing
royalties |
106,954 |
|
|
108,973 |
|
Current technology solutions
revenue |
810 |
|
|
1,405 |
|
|
$ |
107,764 |
|
|
$ |
110,378 |
|
|
|
|
|
OPERATING
EXPENSES: |
|
|
|
Patent administration and
licensing |
27,167 |
|
|
31,625 |
|
Development |
20,269 |
|
|
17,991 |
|
Selling, general and
administrative |
11,972 |
|
|
9,518 |
|
|
59,408 |
|
|
59,134 |
|
|
|
|
|
Income from operations |
48,356 |
|
|
51,244 |
|
|
|
|
|
OTHER EXPENSE
(NET) |
(7,137 |
) |
|
(5,236 |
) |
Income before income taxes |
41,219 |
|
|
46,008 |
|
INCOME TAX
(PROVISION) |
(14,068 |
) |
|
(17,676 |
) |
NET INCOME |
$ |
27,151 |
|
|
$ |
28,332 |
|
Net loss attributable to
noncontrolling interest |
(920 |
) |
|
(733 |
) |
NET INCOME ATTRIBUTABLE
TO INTERDIGITAL, INC. |
$ |
28,071 |
|
|
$ |
29,065 |
|
NET INCOME PER COMMON
SHARE — BASIC |
$ |
0.80 |
|
|
$ |
0.79 |
|
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING — BASIC |
35,045 |
|
|
36,954 |
|
NET INCOME PER COMMON
SHARE — DILUTED |
$ |
0.79 |
|
|
$ |
0.78 |
|
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING — DILUTED |
35,377 |
|
|
37,329 |
|
CASH DIVIDENDS DECLARED
PER COMMON SHARE |
$ |
0.20 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
SUMMARY
CONSOLIDATED CASH FLOWS(dollars in
thousands)(unaudited) |
|
|
|
For the Three Months Ended March
31, |
|
2016 |
|
2015 |
Income before income taxes |
$ |
41,219 |
|
|
$ |
46,008 |
|
Taxes paid |
(14,423 |
) |
|
(12,714 |
) |
Non-cash expenses |
25,385 |
|
|
18,259 |
|
Increase in deferred revenue |
80,440 |
|
|
72,503 |
|
Deferred revenue recognized |
(34,594 |
) |
|
(44,157 |
) |
Increase (decrease) in operating
working capital, deferred charges and other |
(81,794 |
) |
|
(78,128 |
) |
Capital spending and capitalized
patent costs |
(9,656 |
) |
|
(9,265 |
) |
FREE CASH FLOW |
6,577 |
|
|
(7,494 |
) |
|
|
|
|
Tax benefit from share-based
compensation |
— |
|
|
1,539 |
|
Payments on long-term debt |
(230,000 |
) |
|
— |
|
Acquisition of patents |
(4,500 |
) |
|
(20,000 |
) |
Proceeds from noncontrolling
interests |
— |
|
|
1,275 |
|
Dividends paid |
(7,068 |
) |
|
(7,433 |
) |
Share repurchases |
(40,399 |
) |
|
(50,731 |
) |
Proceeds from issuance of senior
convertible notes |
— |
|
|
316,000 |
|
Purchase of convertible bond
hedge |
— |
|
|
(59,376 |
) |
Proceeds from issuance of
warrants |
— |
|
|
42,881 |
|
Payment of debt issuance costs |
— |
|
|
(9,403 |
) |
Unrealized gain (loss) on
short-term investments |
376 |
|
|
(5 |
) |
NET (DECREASE) INCREASE
IN CASH AND SHORT-TERM INVESTMENTS |
$ |
(275,014 |
) |
|
$ |
207,253 |
|
|
|
|
|
|
|
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS(dollars in
thousands)(unaudited) |
|
|
|
|
|
MARCH 31, 2016 |
|
DECEMBER 31, 2015 |
ASSETS |
|
|
|
Cash & short-term
investments |
$ |
658,694 |
|
|
$ |
933,708 |
|
Accounts receivable |
114,608 |
|
|
53,868 |
|
Other current assets |
24,794 |
|
|
23,391 |
|
Property &
equipment and patents (net) |
291,390 |
|
|
289,727 |
|
Other long-term assets
(net) |
185,175 |
|
|
173,791 |
|
TOTAL ASSETS |
$ |
1,274,661 |
|
|
$ |
1,474,485 |
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
Current portion of long-term
debt |
$ |
— |
|
|
$ |
227,174 |
|
Accounts payable, accrued
liabilities, taxes payable & dividends payable |
61,274 |
|
|
66,570 |
|
Current deferred revenue |
109,951 |
|
|
106,229 |
|
Long-term deferred revenue |
331,162 |
|
|
289,039 |
|
Long-term debt & other
long-term liabilities |
267,106 |
|
|
263,578 |
|
TOTAL LIABILITIES |
769,493 |
|
|
952,590 |
|
TOTAL INTERDIGITAL,
INC. SHAREHOLDERS' EQUITY |
494,712 |
|
|
510,519 |
|
Noncontrolling
interest |
10,456 |
|
|
11,376 |
|
TOTAL EQUITY |
505,168 |
|
|
521,895 |
|
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY |
$ |
1,274,661 |
|
|
$ |
1,474,485 |
|
|
|
|
|
|
|
|
|
RECONCILIATION OF FREE CASH FLOW TO NET
CASHPROVIDED BY OPERATING ACTIVITIES
In the summary consolidated cash flows and throughout this
release, the company refers to free cash flow. The table
below presents a reconciliation of this non-GAAP financial measure
to net cash provided by operating activities, the most directly
comparable GAAP financial measure.
|
|
|
|
|
For the Three Months Ended March 31, |
|
|
2016 |
|
2015 |
Net cash provided by
operating activities |
|
$ |
16,233 |
|
|
$ |
1,771 |
|
Purchases of property,
equipment, & technology licenses |
|
(1,594 |
) |
|
(838 |
) |
Capitalized patent
costs |
|
(8,062 |
) |
|
(8,427 |
) |
Free cash flow |
|
$ |
6,577 |
|
|
$ |
(7,494 |
) |
|
|
|
|
|
|
|
|
|
CONTACT:
InterDigital, Inc.:
Patrick Van de Wille
patrick.vandewille@interdigital.com
+1 (858) 210-4814
InterDigital (NASDAQ:IDCC)
Historical Stock Chart
From Mar 2024 to Apr 2024
InterDigital (NASDAQ:IDCC)
Historical Stock Chart
From Apr 2023 to Apr 2024