InterDigital Announces Financial Results for Second Quarter 2016
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InterDigital Announces Financial Results for Second Quarter 2016

WILMINGTON, Del., Aug. 02, 2016 (GLOBE NEWSWIRE) -- InterDigital, Inc. (NASDAQ:IDCC), a mobile technology research and development company, today announced results for the second quarter ended June 30, 2016.

Second Quarter 2016 Financial Highlights

“The company delivered another very solid quarter,” commented William J. Merritt, President and CEO.  “While recurring revenue declined from first quarter, that decline was driven by expected seasonality in phone sales and has no impact on our confidence in our ability to drive the annual royalty platform for our core terminal unit licensing business to between $500 and $600 million.  We also continued our strong work around expenses this quarter, taking some significant steps to lower our tax burden and drive higher profitability.  Lastly, our engineers and scientists continued to drive substantial new innovation at the company, including making numerous contributions into the developing 5G standard. InterDigital was among the leaders in driving 3G and 4G innovation and we are working to drive a similar position for the company in 5G, where the opportunity to innovate is substantial and the technology needs are right in our wheelhouse.”

Additional Financial Highlights for Second Quarter 2016

Conference Call Information

InterDigital will host a conference call on Tuesday, August 2, 2016 at 10:00 a.m. Eastern Time to discuss its second quarter 2016 financial performance and other company matters. For a live Internet webcast of the conference call, visit and click on the link to the live webcast on the Investors page. The company encourages participants to take advantage of the Internet option.

For telephone access to the conference, call 888-768-6569 within the U.S. or +1 785-830-7992 from outside the U.S. Please call by 9:50 a.m. ET on August 2 and give the operator Conference ID number 4484566.

An Internet replay of the conference call will be available on InterDigital's website in the Investors section. In addition, a telephone replay will be available from 1:00 p.m. ET August 2 through 1:00 p.m. ET August 7. To access the recorded replay, call 888-203-1112 or +1 719-457-0820 and use the replay code 4484566.

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:

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 expectation that we will reach a conclusion in third quarter 2016 with respect to the revenue recognition treatment of the payments collected under an arbitration award and related patent license agreement in second quarter 2016 and (ii) our goal to drive the annual royalty platform for our core terminal unit licensing business to between $500 and $600 million.  Words such as "believe," "anticipate," "estimate," "expect," "project," "intend," "plan," "forecast," "goal," 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) the resolution of current legal or regulatory proceedings, including any awards or judgments relating to such proceedings, additional legal or regulatory proceedings, changes in the schedules or costs associated with legal or regulatory proceedings or adverse rulings in such legal or regulatory proceedings; (x) changes or inaccuracies in market projections; (xi) the timing and outcome of the accounting conclusions with respect to the payments collected under an arbitration award and related patent license agreement in second quarter 2016; 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.


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.

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.

(dollars in thousands except per share data)
  For the Three Months
Ended June 30,
 For the Six Months
Ended June 30,
  2016 2015 2016 2015
Per-unit royalty revenue $44,525  $55,989  $118,214  $131,572 
Fixed fee amortized royalty revenue 29,098  33,373  58,196  66,746 
Current patent royalties 73,623  89,362  176,410  198,318 
Past patent royalties 1,277  27,260  5,444  27,277 
Total patent licensing royalties 74,900  116,622  181,854  225,595 
Current technology solutions revenue 1,015  1,845  1,825  3,250 
Past technology solutions revenue   84    84 
  $75,915  $118,551  $183,679  $228,929 
Patent administration and licensing 28,285  31,212  55,452  62,837 
Development 14,609  18,326  34,878  36,317 
Selling, general and administrative 9,938  10,435  21,910  19,953 
  52,832  59,973  112,240  119,107 
Income from operations 23,083  58,578  71,439  109,822 
OTHER EXPENSE (NET) (706) (7,746) (7,843) (12,982)
Income before income taxes 22,377  50,832  63,596  96,840 
INCOME TAX BENEFIT (PROVISION) 16,652  (18,877) 2,584  (36,553)
NET INCOME $39,029  $31,955  $66,180  $60,287 
Net loss attributable to noncontrolling interest (965) (647) (1,885) (1,380)
NET INCOME ATTRIBUTABLE TO INTERDIGITAL, INC. $39,994  $32,602  $68,065  $61,667 
NET INCOME PER COMMON SHARE — BASIC $1.16  $0.91  $1.96  $1.69 
NET INCOME PER COMMON SHARE — DILUTED $1.14  $0.89  $1.94  $1.67 
 34,945  36,442  35,161  36,883 

(dollars in thousands)
  For the Three Months
Ended June 30,
 For the Six Months
Ended June 30,
  2016 2015 2016 2015
Income before income taxes $22,377  $50,832  $63,596  $96,840 
Taxes paid (37,862) (24,050) (52,285) (36,764)
Non-cash expenses 20,096  20,763  45,481  39,022 
Increase in deferred revenue 201,730  18,273  282,170  90,776 
Deferred revenue recognized (34,829) (41,865) (69,423) (86,022)
Increase (decrease) in operating working capital, deferred charges and other 19,922  1,342  (61,872) (76,786)
Capital spending and capitalized patent costs (8,978) (8,255) (18,634) (17,520)
FREE CASH FLOW 182,456  17,040  189,033  9,546 
Tax benefit from share-based compensation   624    2,163 
Payments on long-term debt     (230,000)  
Acquisition of patents     (4,500) (20,000)
Long term investments (2,000)    (2,000)  
Proceeds from noncontrolling interests   1,276    2,551 
Dividends paid (6,923) (7,232) (13,991) (14,665)
Share repurchases (18,596) (19,841) (58,995) (70,572)
Proceeds from other financing activities    4,500    4,500 
Proceeds from issuance of senior convertible 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 options 228  26  228  26 
Unrealized gain on short-term investments 39  21  415  16 
NET (DECREASE) INCREASE IN CASH AND SHORT-TERM INVESTMENTS $155,204  $(3,586) $(119,810) $203,667 

(dollars in thousands)
 JUNE 30,
Cash & short-term investments$813,898  $933,708 
Accounts receivable104,181  53,868 
Other current assets48,402  23,391 
Property & equipment and patents (net)286,434  289,727 
Other long-term assets (net)216,796  173,791 
TOTAL ASSETS$1,469,711  $1,474,485 
Current portion of long-term debt$  $227,174 
Accounts payable, accrued liabilities, taxes payable & dividends payable62,035  66,570 
Current deferred revenue, including customer advances309,340  106,229 
Long-term deferred revenue298,675  289,039 
Long-term debt & other long-term liabilities276,503  263,578 
TOTAL LIABILITIES946,553  952,590 
Noncontrolling interest9,491  11,376 
TOTAL EQUITY523,158  521,895 


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 June 30,
 For the Six Months
Ended June 30,
  2016 2015 2016 2015
Net cash provided by operating activities $191,434  $25,295  $207,667  $27,066 
Purchases of property, equipment, & technology licenses (672) (491) (2,266) (1,329)
Capitalized patent costs (8,306) (7,764) (16,368) (16,191)
Free cash flow $182,456  $17,040  $189,033  $9,546 


CONTACT: InterDigital, Inc.: 
Patrick Van de Wille 
+1 (858) 210-4814

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