Net Income Triples to $30.6 Million, or $0.69 per Share
KING OF PRUSSIA, Pa. — (BUSINESS WIRE) — October 28, 2009 — InterDigital, Inc. (NASDAQ: IDCC) today announced results for the third quarter and nine months ended September 30, 2009. Highlights for third quarter 2009 include:
“The third quarter’s results demonstrate the value of InterDigital’s core business –inventing and licensing our pioneering technologies to the mobile wireless industry,” commented William J. Merritt, President and Chief Executive Officer. “As are result of our inventive strength, licensing skill, and fiscal discipline, today, we are in a position of unprecedented financial strength and stability. Looking forward, our financial picture will continue to be bright as we continue to add new licensees, like Pantech and Cinterion, and global demand for our licensee’s products, especially smartphones, increases as the industry emerges from the economic downturn.”
“We are also encouraged by emerging opportunities for developing the key technologies that will drive the future of wireless,” added Mr. Merritt. “Mobile wireless technology is at the heart of an ever-broadening range of consumer and enterprise products and applications. We see great opportunity to develop advanced technology solutions that will drive that expansion. So, whether it is inventions that increase bandwidth, enhance wireless security, drive seamless mobility across different networks, or enable ubiquitous machine-to-machine communications, InterDigital will be there.”
Third Quarter 2009 Summary
The company’s net income of $30.6 million, or $0.69 per diluted share, in third quarter 2009 more than tripled from third quarter 2008 net income of $9.2 million, or $0.20 per diluted share. This year-over-year increase was driven by revenue contributions from new patent license agreements with Samsung (signed in January 2009) as well as Pantech and Cinterion and reduced operating expenses resulting from the company’s repositioning announced on March 30, 2009.
Revenue in third quarter 2009 totaled $75.5 million, a 37 percent increase over the $55.1 million in third quarter 2008. Patent licensing royalties in third quarter 2009 of $73.0 million increased 38 percent over $52.9 million in third quarter 2008 primarily due to the new patent license agreement with Samsung signed in January 2009, as well as revenue related to the new patent license agreements with Pantech and Cinterion signed in third quarter 2009. Although third quarter 2009 per-unit royalties declined 6 percent on a year-over-year basis, these royalties increased 17 percent sequentially as the overall 3G mobile market improved.
Technology solutions revenue increased to $2.5 million in third quarter 2009 from $2.2 million in third quarter 2008, attributable to increased royalties earned on the company’s SlimChip™ modem IP in third quarter 2009. In third quarter 2009, 64 percent of total revenue of $75.5 million was attributable to companies that individually accounted for 10 percent or more of this amount, Samsung (34 percent), LG (19 percent), and Sharp (11 percent).
Third quarter 2009 operating expenses decreased 31 percent to $28.9 million in third quarter 2009 from $42.0 million in third quarter 2008. This reduction was due primarily to the company’s repositioning announced on March 30, 2009, which decreased development expenses by $12.8 million, or 54 percent year-over-year, from $23.5 million in third quarter 2008 to $10.7 million in third quarter 2009. Third quarter 2008 operating expenses included a $2.7 million reduction in litigation contingency costs associated with the resolution of the Nokia U.K. matters. In addition, based on revised expectations for the anticipated payout associated with a long-term performance-based incentive program, the company reduced the related accrual for the incentive program by $4.0 million in third quarter 2009. This adjustment reduced third quarter development expense, selling, general and administrative expense, and patent licensing and administration expense by $2.4 million, $1.1 million, and $0.5 million, respectively. Excluding the impact of this accrual adjustment, development expenses in third quarter 2009 would have been $13.1 million, a slight decline from $13.2 million in second quarter 2009. Patent litigation and arbitration costs of $3.3 million in third quarter 2009 decreased 42 percent from third quarter 2008 expenses of $5.8 million, primarily due to the resolution of the company’s various disputes with Samsung.
Net interest and investment income of $0.5 million in third quarter 2009 decreased from $1.1 million in third quarter 2008 primarily due to lower interest rates in third quarter 2009 compared to 2008.
The company’s third quarter 2009 effective tax rate was 35.0 percent, level with third quarter 2008.
Nine Months Summary
Net income for first nine months 2009 totaled $48.4 million, or $1.08
per diluted share, more than double the company’s net income of $22.4
million, or $0.48 per diluted share, in first nine months 2008. This
year-over-year increase was driven by revenue contributions from new
patent license agreements with Samsung, Pantech, and Cinterion, as well
as reduced operating expenses resulting from the company’s repositioning
announced on March 30, 2009.