InterDigital Announces Fourth Quarter and Full Year 2009 Financial Results

Full Year Net Income Quadruple Prior Year After Adjustments

KING OF PRUSSIA, Pa. — (BUSINESS WIRE) — February 24, 2010 — InterDigital, Inc. (NASDAQ: IDCC) today announced results for the fourth quarter and twelve months ended December 31, 2009.

Fourth Quarter 2009 Highlights:

  • Net income of $38.9 million, or $0.88 per diluted share
  • Pro forma net income of $27.1 million, or $0.61 per diluted share, exclusive of after-tax adjustments of $11.8 million related to foreign tax credits, investment impairment, and other items
  • Revenue of $76.4 million, a 30 percent increase over fourth quarter 2008

Full Year 2009 Highlights:

  • Net income of $87.3 million, or $1.95 per diluted share
  • Pro forma net income of $97.3 million, or $2.18 per diluted share, exclusive of after-tax adjustments of $10.1 million, related to repositioning charges, foreign tax credits, and other items
  • Revenue of $297.4 million
  • Free cash flow1 of $284.3 million
  • Ending cash and short-term investments totaling $409.8 million

“Our core business of developing and licensing our leading edge wireless technologies delivered exceptional fourth quarter and full year 2009 revenue growth and profitability,” stated William J. Merritt, President and Chief Executive Officer. “As a result, we enter 2010 in our strongest position ever. We intend to leverage this financial strength, our technical expertise, and innovative partnerships to continue to shape the future of mobile broadband through a suite of solutions to create more powerful and efficient networks and richer multimedia experiences.”

“We anticipated many years ago that the popularity of mobile data would saturate traditional wireless networks,” continued Mr. Merritt. “Our team is addressing this bandwidth challenge with fundamental innovations in spectrum optimization, cross-network connectivity and mobility, and intelligent data delivery techniques, samples of which we demonstrated at the Mobile World Congress earlier this month. We intend to continue to be a high-value innovator in the industry, creating solutions that not only drive the performance of wireless networks, but also the value of our company.”

Fourth Quarter 2009 Summary

The company’s fourth quarter 2009 net income of $38.9 million, or $0.88 per diluted share, posted a substantial increase compared to net income of $3.8 million or $0.09 per diluted share in fourth quarter 2008. 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).

Pro forma net income for fourth quarter 2009, which excludes the recognition of a $16.4 million tax benefit, a $3.9 million investment impairment, and other items noted in the company's pro forma consolidated statement of income, totaled $27.1 million, or $0.61 per diluted share, reflecting an increase of $19.6 million, more than three times the company's pro forma fourth quarter 2008 net income of $7.5 million, or $0.17 per diluted share.

Total revenue in fourth quarter 2009 totaled $76.4 million, a 30 percent increase from $58.7 million reported in fourth quarter 2008. Patent licensing royalties in fourth quarter 2009 of $72.6 million increased 36 percent over $53.6 million in fourth quarter 2008 primarily due to the new patent license agreement with Samsung signed in first quarter 2009, as well as revenue related to the new patent license agreements with Pantech and Cinterion signed in third quarter 2009. Technology solutions revenue decreased 25 percent to $3.8 million in fourth quarter 2009 from $5.1 million in fourth quarter 2008, driven by declines in services-related revenues derived from the SlimChip™ modem IP business. In fourth quarter 2009, 53 percent of total revenue of $76.4 million was attributable to companies that individually accounted for 10 percent or more of this amount, Samsung (34 percent) and LG (19 percent).

Fourth quarter 2009 operating expenses of $35.6 million decreased $18.3 million, or 34 percent, from $53.9 million in fourth quarter 2008. This reduction was due primarily to the company’s repositioning announced on March 30, 2009 and a fourth quarter 2008 adjustment to the company’s long-term performance-based cash incentive costs, both of which helped decrease development expenses by $17.1 million, or 56 percent year-over-year, from $30.4 million in fourth quarter 2008 to $13.3 million in fourth quarter 2009. Patent administration and licensing expenses increased 30 percent to $15.1 million in fourth quarter 2009 from $11.6 million in the comparable quarter 2008 due to higher levels of arbitration and litigation activity. Selling, general and administrative expenses declined from $11.9 million in fourth quarter 2008 to $5.6 million in fourth quarter 2009 primarily due to reduced long-term performance-based cash incentive costs, the fourth quarter 2008 establishment of a reserve for uncollectible accounts associated with the company’s SlimChip modem IP, and the fourth quarter 2009 partial release of that reserve.

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