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InterDigital Reports Fourth Quarter and Full Year 2015 Financial Results

WILMINGTON, Del., Feb. 18, 2016 (GLOBE NEWSWIRE) -- InterDigital, Inc. (NASDAQ:IDCC), a mobile technology research and development company, today announced results for the fourth quarter and full year ended December 31, 2015.

Fourth Quarter 2015 Financial Highlights

Full Year 2015 Financial Highlights

"2015 was a very strong year financially and represented continued progress towards our goals, both in terms of driving recurring revenue and carefully managing expenses," said William J. Merritt, President and CEO of InterDigital. "In 2016, building on our foundation of world-class research and mobile industry contributions, we'll continue to focus on broadening our wireless customer base while working to penetrate new markets in IoT and connected technologies."

Additional Financial Highlights for Fourth Quarter 2015

Additional Financial Highlights for Full Year 2015

Near-Term Outlook

"We currently expect that sales volumes of our per-unit licensees in fourth quarter 2015 will drive our first quarter 2016 total revenue to a range of between $99 million and $102 million, comprised entirely of recurring revenue," said Richard J. Brezski, Chief Financial Officer. "This expected sequential quarterly increase in recurring revenue is based on the same set of licensees and is driven, in part, by second half 2015 product introductions that saw market success, but it also reflects a cyclical element that is typically present in our first quarter results. Consistent with our practice, this revenue guidance is based on royalty reports received to date, and does not include the potential impact of any new patent license, technology solutions or patent sale agreements that may be signed, or any arbitration or dispute resolutions that may occur, during the balance of first quarter 2016."

Conference Call Information

InterDigital will host a conference call on Thursday, February 18, 2016 at 10:00 a.m. Eastern Time to discuss its fourth quarter and full year 2015 financial performance and other company matters.  A live Internet webcast of the conference call will be available at  www.interdigital.com, under "Events and Presentations" in the Investors section. The company encourages participants to take advantage of the Internet option.

For telephone access to the conference, call (877) 876-9175 within the United States or +1 (785) 424-1668 from outside the United States. Please call by 9:50 a.m. ET on February 18 and give the operator Conference ID number 5332394.

An Internet replay of the conference call will be available on InterDigital's website in the Investors section, under "Events and Presentations." In addition, a telephone replay will be available from 1:00 p.m. ET February 18 through 1:00 p.m. ET February 23. To access the recorded replay, call (888) 203-1112 or +1 (719) 457-0820 and use the replay code 5332394.

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 plans to continue to focus on broadening our wireless customer base while working to penetrate new markets in IoT and connected technologies and (ii) our current expectations with respect to the company's first quarter 2016 revenue. 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) amounts of royalties payable following routine audits, if any, and the timely receipt of such amounts during first quarter 2016; (x) 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; (xi) changes or inaccuracies in market projections; and (xii) 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 December 31,		 For the Year Ended
December 31,
 2015 2014 2015 2014
REVENUES:       
Per-unit royalty revenue$59,566  $49,220  $234,836  $157,250 
Fixed fee amortized royalty revenue31,718  33,358  131,837  121,903 
Current patent royalties91,284  82,578  366,673  279,153 
Past patent royalties16,720  1,050  65,814  124,236 
Total patent licensing royalties108,004  83,628  432,487  403,389 
Patent sales—  —  —  1,999 
Past technology solutions revenue2,768  —  2,852  800 
Current technology solutions revenue1,326  2,493  6,096  9,633 
 $112,098  $86,121  $441,435  $415,821 
        
OPERATING EXPENSES:       
Patent administration and licensing29,201  34,919  120,401  133,808 
Development19,767  17,440  72,702  75,300 
Selling, general and administrative9,790  8,474  39,783  37,753 
 58,758  60,833  232,886  246,861 
        
Income from operations53,340  25,288  208,549  168,960 
        
OTHER EXPENSE (NET)(6,444) (4,699) (27,534) (15,432)
Income before income taxes46,896  20,589  181,015  153,528 
INCOME TAX (PROVISION)(14,577) (7,361) (64,621) (52,108)
NET INCOME$32,319  $13,228  $116,394  $101,420 
Net loss attributable to noncontrolling interest(719) (562) (2,831) (2,922)
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC.$33,038  $13,790  $119,225  $104,342 
NET INCOME PER COMMON SHARE — BASIC$0.93  $0.37  $3.31  $2.65 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC35,429  37,207  36,048  39,420 
NET INCOME PER COMMON SHARE — DILUTED$0.92  $0.36  $3.27  $2.62 
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED35,887  37,873  36,463  39,879 
CASH DIVIDENDS DECLARED PER COMMON SHARE$0.20  $0.20  $0.80  $0.70 



SUMMARY CONSOLIDATED CASH FLOWS
(dollars in thousands)
(unaudited)
 
 For the Three Months
Ended December 31,		 For the Year Ended
December 31,
 2015 2014 2015 2014
Income before income taxes$46,896  $20,589  $181,015  $153,528 
Taxes paid(41,947) (28,836) (85,780) (114,876)
Non-cash expenses23,986  19,779  83,999  72,324 
Increase in deferred revenue22,910  2,013  113,962  272,885 
Deferred revenue recognized(37,396) (43,989) (163,354) (163,139)
Increase (decrease) in operating working capital, deferred charges and other72,328  86,428  (15,343) 21,291 
Capital spending and capitalized patent costs(7,625) (12,506) (33,466) (39,027)
FREE CASH FLOW79,152  43,478  81,033  202,986 
        
Tax benefit from share-based compensation331  (1,218) 2,457  — 
Acquisition of patents—  —  (20,000) (26,300)
Purchase of long-term investments(6,029) —  (12,623)  —
Proceeds from noncontrolling interests6,808  1,276  9,358  5,101 
Dividends paid(7,093) (7,609) (28,937) (23,729)
Share repurchases(7,358) (64,603) (96,410) (152,625)
Proceeds from other financing activities—  —  4,500  — 
Proceeds from issuance of convertible senior notes—  —  316,000  — 
Purchase of convertible bond hedge—  —  (59,376) — 
Proceeds from issuance of warrants—  —  42,881  — 
Payment of debt issuance costs—  —  (9,403) — 
Net proceeds from exercise of stock options17  33  46  402 
Unrealized gain (loss) on short-term investments436  (121) 254  (358)
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS$66,264  $(28,764) $229,780  $5,477 



CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
 
 DECEMBER 31,
2015		 DECEMBER 31,
2014
ASSETS   
Cash & short-term investments$933,708  $703,928 
Accounts receivable (net)53,868  51,702 
Other current assets23,391  32,227 
Property & equipment and patents (net)289,727  278,086 
Other long-term assets (net)173,791  127,019 
TOTAL ASSETS$1,474,485  $1,192,962 
    
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current portion of long-term debt$227,174  $— 
Accounts payable, accrued liabilities, taxes payable & dividends payable66,570  80,474 
Current deferred revenue106,229  124,695 
Long-term deferred revenue289,039  293,342 
Long-term debt & other long-term liabilities263,578  218,774 
TOTAL LIABILITIES952,590  717,285 
TOTAL INTERDIGITAL, INC. SHAREHOLDERS' EQUITY510,519  468,328 
Noncontrolling interest11,376  7,349 
TOTAL EQUITY521,895  475,677 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,474,485  $1,192,962 


RECONCILIATION OF FREE CASH FLOW TO NET CASH
PROVIDED 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 December 31,		 For the Year Ended
December 31,
  2015 2014 2015 2014
Net cash provided by operating activities $86,777  $55,984  $114,499  $242,013 
Purchases of property, equipment, & technology licenses (1,865) (3,899) (3,700) (7,095)
Capitalized patent costs (5,760) (8,607) (29,766) (31,932)
Free cash flow $79,152  $43,478  $81,033  $202,986 


  

CONTACT:
InterDigital, Inc.:
Patrick Van de Wille
patrick.vandewille@interdigital.com
 +1 (858) 210-4814

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