InterDigital Announces First Quarter 2010 Financial Results

Near-Term Outlook

Scott McQuilkin, Chief Financial Officer, commented, “We are pleased with the continued momentum in our licensing program. We expect contributions from our newly added customers and will provide an update on our revenue expectations for second quarter 2010 after we receive and review the applicable patent license and product sales royalty reports."

“Regarding the sequential increase in operating expenses from fourth quarter 2009, approximately $6 million of that increase relates to increases in arbitration and litigation expenses, an adjustment to the company’s long-term compensation accrual and seasonal increases in the first part of the year,” continued Mr. McQuilkin. “For second quarter 2010, a portion of the seasonal increases in expenses will recur. Given the opportunity to further generate near term revenues from our SlimChip modem core platform, we expect to see a moderate increase in development expense in second quarter 2010, but this increase will be offset by associated revenues. Expenses for arbitration and litigation will be driven by the level of activity in those areas.”

Due to the repositioning announced in March 2009, the company reclassified its income statement presentation to better align its operating expense classifications with its ongoing activities. The company eliminated the General and administrative and Sales and marketing classifications within operating expenses and created the Selling, general and administrative classification. All costs previously reported under General and administrative have been reclassified to Selling, general and administrative, while Sales and marketing costs have been reclassified between Selling, general and administrative and Patent administration and licensing. Additionally, the company reclassified portions of its Development costs to Patent administration and licensing. InterDigital will provide an update on the company’s revenue expectations for second quarter 2010 upon receipt and review of applicable patent license and product sales royalty reports.

About InterDigital

InterDigital develops fundamental wireless technologies that are at the core of mobile 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 partnerships with many of the world’s leading companies.

InterDigital is a registered trademark and SlimChip is a trademark of InterDigital, Inc.

For more information, visit: www.interdigital.com

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 the information under the heading “Near-Term Outlook” and other information regarding our current beliefs, plans and expectations, including, without limitation: (i) the impact of our agreements with Casio, Beceem and other customers and (ii) second quarter 2010 revenue guidance. Words such as “future,” “will” 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 licensing and technology solutions agreements on acceptable terms; (iii) changes in the market share and sales performance of our primary licensees, delays in product shipments of our licensees and timely receipt and final reviews of quarterly royalty reports from our licensees and related matters; and (iv) the resolution of current legal proceedings, including any awards or judgments relating to such proceedings, additional legal proceedings, changes in the schedules or costs associated with legal proceedings or adverse rulings in such legal proceedings. 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.

   

SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands except per share data)
(unaudited)
 
For the Three Months Ended
March 31,
  2010       2009  
 
REVENUES $ 116,187   $ 70,561  
 
OPERATING EXPENSES:
Selling, general and administrative 7,519 8,254
Patent administration and licensing 17,823 12,137
Development 16,164 26,870
Repositioning   -    

37,063

 
  41,506     84,324  
 
Income (loss) from operations 74,681 (13,763 )
 
OTHER INCOME:
Interest and investment income, net   600     829  
 
Income (loss) before income taxes 75,281 (12,934 )
 
INCOME TAX (PROVISION) BENEFIT   (26,454 )   4,248  
 
NET INCOME (LOSS) $ 48,827   $ (8,686 )
 
NET INCOME (LOSS) PER COMMON SHARE - BASIC $ 1.11   $ (0.20 )
 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC

  43,614     43,501  
 
NET INCOME (LOSS) PER COMMON SHARE - DILUTED $ 1.09   $ (0.20 )
 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED

  44,237     43,501  
   

SUMMARY CONSOLIDATED BALANCE SHEET

(Dollars in thousands)
(unaudited)
 
March 31, 2010 December 31, 2009

Assets

Cash & short-term investments $ 482,388 $ 409,806
Accounts receivable, less allowance of $1,500 148,809 212,905
Current deferred tax assets 49,714 68,500
Other current assets 13,792 11,111
Property & equipment and Patents (net) 131,368 129,569
Other long-term assets (net)   100,020   73,894
TOTAL ASSETS $ 926,091 $ 905,785
 

Liabilities and Shareholders' Equity

Current portion of long-term debt $ 300 $ 584
Accounts payable, accrued liabilities & taxes payable 77,649 58,567
Current deferred revenue 181,441 193,409
Long-term deferred revenue 434,030 474,844
Long-term debt & long-term liabilities   5,504   8,844
TOTAL LIABILITIES 698,924 736,248
SHAREHOLDERS' EQUITY   227,167   169,537
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 926,091 $ 905,785
   

SUMMARY CASH FLOW

(Dollars in thousands)
(unaudited)
 
For the Three Months Ended
March 31,
  2010     2009  
 
Income (loss) before income taxes $ 75,281 $ (12,934 )
Taxes paid (16,500 ) (16,500 )

Depreciation, amortization, share-based compensation, & asset impairment

6,924 41,486
Increase in deferred revenue 8,575 300,000
Deferred revenue recognized (61,357 ) (52,819 )

Increase (Decrease) in operating working capital, deferred charges and other

59,779 (208,202 )
Capital spending, technology licensing & patent additions   (7,297 )   (7,906 )
FREE CASH FLOW 65,405 43,125
 
Tax benefit from share-based compensation 982 652
Debt decrease (354 ) (338 )
Proceeds from exercise of stock options 6,595 873
Unrealized (loss) on short term investments   (46 )   (72 )
NET INCREASE IN CASH
AND SHORT-TERM INVESTMENTS $ 72,582   $ 44,240  
 

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