InterDigital Announces Strong Second Quarter 2002 Results; Profitable Performance Driven by Licensing Revenues
KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--Aug. 6, 2002--InterDigital Communications Corporation (Nasdaq:IDCC), a leading architect, designer and provider of wireless technology and product platforms, today reported revenues of $25.1 million and net income of $2.4 million, or $0.04 per share (diluted), for its second quarter ended June 30, 2002.
Further, InterDigital's cash and short-term investment position grew to $98.0 million at June 30, 2002, up $7.7 million over year-end 2001.
Revenues in the second quarter 2002 of $25.1 million increased $10.2 million, or 68%, over last year's second quarter, as higher royalty revenue more than offset an expected decrease in revenue from specialized engineering services.
Royalty revenue in the second quarter of 2002 totaled $23.5 million, an increase of $16.5 million, or 239%, over the $7.0 million reported in the second quarter of 2001. The increase in royalty revenue was due largely to the impact of key licensing events in early 2002, improved performance in the marketplace by a key licensee and the accelerated recognition of $6.9 million of deferred revenue.
The $6.9 million is associated with a non-refundable and non-transferable royalty prepayment previously received from a licensee that has discontinued sales of covered GSM products.
In the second quarter 2002, specialized engineering services revenue associated with the completion stage of Wideband Time Division Duplex (WTDD) technology development work for Nokia was $1.6 million, compared to peak development-related revenues of $8.0 million in the comparable period last year.
The Company reported net income of $2.4 million, or $0.04 per share (diluted), for the second quarter 2002, compared to a net loss of $2.5 million, or $0.05 per share, in the second quarter of 2001. The improvement in operating results compared to last year's second quarter was due to the overall increase in revenues, partially offset by planned increases in operating expenses.
Operating expenses increased 15% over the prior year's quarter to $20.6 million, reflecting an increase in patent enforcement activities and continued investments in advanced technology development and marketing. In addition, net interest income for the second quarter 2002 decreased as a result of lower interest rates on investments in 2002 compared to 2001.
Tax expense increased in the second quarter 2002 due to higher foreign withholding taxes related to the increased royalty revenue recognized in the period.
"We are very pleased to follow a successful first quarter with a very strong second quarter, despite the persistence of challenging market conditions," said Howard Goldberg, President and Chief Executive Officer. "The strong performance in the quarter reflects the success of our patent licensing program in both the 2G and 3G market. Notably, at the beginning of the second quarter we received nearly $30 million (net of non-U.S. withholding taxes) associated with the 2G and 3G patent licensing agreements with NEC Corporation of Japan. Further, the growth in both revenues and cash reinforces our capability to continue focused investments in the long-term future of our business."
For the first six months of 2002, the Company reported net income of $2.5 million, or $0.04 per share (diluted), compared to a net loss of $4.6 million, or $0.09 per share, in the first six months of 2001. Revenues in the first six months of 2002 were $46.1 million versus revenues of $29.6 million in the first six months of 2001.
Rich Fagan, Chief Financial Officer, commented, "Our results for the second quarter 2002 give us confidence that we can now exceed our originally stated target of 10% to 20% revenue growth for the year. Based on our estimated ranges of expected recurring royalties, we are now optimistic that we will achieve 30% to 40% revenue growth in 2002. Our royalties in the quarter, absent the recognition of the $6.9 million of deferred revenue, were approximately 140% higher than those of last year's same quarter and grew nicely over comparable revenues in the first quarter 2002. Excluding the $6.9 million deferred revenue item, we would have recorded revenues of $18.3 million and a net loss of $0.06 per share for the second quarter 2002.
"Looking ahead to the second half of the year, we expect our near-term royalty revenue will continue to be affected by sales trends in the mobile wireless market, particularly the sales performance of a select number of leading Japanese equipment producers that represent a significant portion of our licensees. Our revenues also will be affected by our ability to expand our licensee base and our success in other patent enforcement activities. We foresee that our third and fourth quarter 2002 operating expense levels generally will be in line with those experienced in the second quarter 2002 as we maintain our commitment to investing in technology and product development for Wideband CDMA technology platforms. Based on our estimated ranges of expected recurring royalties, currently planned expenses and our ongoing licensing activities, we are targeting near breakeven cash flow for the year," Mr. Fagan concluded. |
