SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 1-11152
INTERDIGITAL COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1882087
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
781 Third Avenue, King of Prussia, Pennsylvania 19406
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 610-878-7800
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, Par Value $.01 per Share
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act:
$2.50 Cumulative Convertible Preferred Stock, Par Value $2.50 per Share
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
On March 14, 1997, the aggregate market value of the Registrant's
Common Stock, $.01 par value, held by non-affiliates of the Registrant was
approximately $303,731,695.
On March 14, 1997, there were 48,115,912 shares of the Registrant's
Common Stock, $.01 par value outstanding.
Documents Incorporated by Reference
Not Applicable.
<PAGE>
Part III
Item 10. Directors and Executive Officers of the Registrant
Information concerning executive officers appears under the caption
"Item 1. Business-Executive Officers of the Company" in Part I of the Form 10-K.
The following individuals currently comprise the Board of Directors and
are identified by term of office:
Members of The Board of Directors
Having a Three Year Term Expiring at 2000 Annual Meeting
D. RIDGELY BOLGIANO, 65, has been a director of the Company since 1981.
He has been a Vice President and Chief Scientist of the Company since April
1984, and Acting President of InterDigital Patents Corporation ("IPC"), the
Company's wholly owned subsidiary since May 1996. He has been affiliated with
the Company in various capacities since 1974.
WILLIAM A. DOYLE, 47, became a director in May 1996, filling the
vacancy left by the resignation of William Burns. He has served as President of
the Company since November 1994. He was Executive Vice President, Chief
Administrative Officer, General Counsel and Secretary of the Company from
February 1994 to November 1994 and served as Vice President, General Counsel and
Secretary of the Company from March 1991 to February 1994.
Member of the Board of Directors Having a
Term Expiring at 1999 Annual Meeting
HARRY G. CAMPAGNA, 58, Chairman of the Board, has been a director of
the Company since April 1994. Mr. Campagna has been the President and Chairman
of the Board of Qualitex Co., a company co-owned by Mr. Campagna and his wife,
for more than the past five years. Qualitex is a manufacturer of press pads and
related items for the garment, apparel and textile industries.
Member of the Board of Directors Having a
Term Expiring at 1998 Annual Meeting
BARNEY J. CACIOPPO, 69, has been a director of the Company since
May 1995. He has been the owner and President of Harbor Engineering & Service
Co., an engineering and consulting firm, since February 1965. He was the owner
and President of Argon Electric Co., a company which provides electrical
construction services, for 25 years until his retirement in January 1993. He
is a registered professional engineer in the State of Illinois.
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<PAGE>
Compliance with Section 16(a) of
the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission and the American Stock Exchange initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Executive officers, directors and
greater than ten percent shareholders (collectively, "Reporting Persons") are
additionally required to furnish the Company with copies of all Section 16(a)
forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations of Reporting
Persons that no other reports were required with respect to fiscal 1996, all
Section 16(a) filing requirements applicable to the Reporting Persons were
complied with; except that each of Mr. Garrison, Mr. Lemmo and Mr. Harley Sims,
a deceased, former director of the Company, filed one report late relating to
one transaction.
Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth certain information concerning the
annual and long-term compensation paid to or for (i)the Company's Chief
Executive Officer during the fiscal year ended December 31, 1996 and (ii) the
Company's four other most highly compensated other executive officers whose
total annual salary and bonus exceeded $100,000 in 1996 (collectively, the
"Named Officers"), for services rendered to the Company and its subsidiaries
during fiscal years 1994, 1995 and 1996:
2
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Compensation
------------------------
Annual Compensation Awards
------------------------------------------ ------------------------
Other Securities All Other
Name and Annual Underlying Compen-
Principal Compensation Options/ sation
Position Year Salary Bonus(1) ($)(2) SARs (#) (3)
--------- ---- -------- --------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gregory E. Webb 1996 $ 53,977 $ 0 $ 40,743(4) 250,000 $ 390
Chief Executive Officer
(Since October 1996)
William J. Burns 1996 $ 83,333 $ 33,333 $ 30,289(5) 0 $169,397
Chief Executive 1995 $394,520(6) $100,000 $ 0 0 $ 16,790
Officer (from 1994 $ 15,151 $ 0 $ 0 250,000 $ 0
November 1994 to April
1996)
William A. Doyle 1996 $186,667 $ 0 $ 0 40,000 $ 800
President 1995 $170,000 $ 68,000 $ 0 0 $ 19,894
1994 $139,627 $ 0 $ 0 70,000 $ 2,805
Howard E. Goldberg 1996 $146,667 $ 0 $160,000(7) 30,000 $ 979
Executive Vice President 1995 $125,000 $ 50,000 $ 34,437(8) 50,000 $ 9,042
General Counsel and 1994 $104,268 $ 0 $ 23,854(9) 30,000 $ 1,933
Secretary
James W. Garrison 1996 $116,652 $ 0 $ 0 30,000 $ 255
VP-Finance, Chief 1995 $110,000 $ 44,000 $ 0 0 $ 9,745
Financial Officer, 1994 $ 84,267 $ 0 $ 0 57,000 $ 1,228
Treasurer
Mark Lemmo 1996 $140,000 $ 0 $ 75,000(10) 30,000 $ 211
Executive Vice President 1995 $125,942 $ 75,000 $ 0 1,500 $ 20,456
(Since May 1996) 1994 $113,923 $ 0 $ 0 32,500 $ 1,777
D. Ridgely Bolgiano 1996 $111,667 $ 0 $ 0 30,000 $ 2,294
Vice President and 1995 $105,000 $292,000(11) $ 0 0 $ 2,246
Chief Scientist, Acting 1994 $105,000 $ 0 $ 0 1,500 $ 2,246
President of InterDigital
Patents Corporation
</TABLE>
- ----------------------
(1) Amounts listed as bonuses for fiscal 1995 were accrued but not paid
until 1996 for each Named Officer. Amount listed as bonus for fiscal
1996 for Mr. Burns has been accrued but not paid.
(2) As permitted by rules established by the Commission, no
amounts are shown with respect to certain "perquisites" where
such amounts do not exceed the lesser of 10% of bonus plus
salary or $50,000.
(3) Amounts listed under "All Other Compensation" for 1996 represent the
dollar value of insurance premiums with respect to term life insurance
(Webb $390; Burns $2,730; Doyle $800; Goldberg $979; Garrison $255;
Lemmo $211; Bolgiano $2,293), and in the case of Mr. Burns $166,667 in
severance in connection with his resignation.
(4) In connection with his move to join the Company in October 1996, the
Company reimbursed Mr. Webb for certain relocation expenses in the
amount of $40,743.
(5) Includes $28,711 in buyout of car lease pursuant to Mr. Burns'
Separation Agreement with the Company.
(6) Includes the amount of $144,520 which was accrued in 1994.
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(7) Amount listed represents commissions related to a transaction completed
in 1996.
(8) Amount listed includes $33,187 in commissions related to certain
transactions completed in 1995.
(9) Amount listed represents commissions related to certain transactions
completed in 1994.
(10) Amount listed represents commissions related to a transaction completed
in 1996.
(11) A portion ($250,000) of Mr. Bolgiano's bonus was awarded in settlement
of all claims for payment under the IPC Executive Bonus Plan and in
consideration of any claims Mr. Bolgiano would otherwise have asserted
under such Plan which was terminated in 1995.
In conjunction with Mr. Burns' resignation as Chief Executive Officer,
Chairman of the Board and as a director of the Company, the Company and Mr.
Burns entered into a Separation and Confidentiality Agreement and Consulting
Agreement, each effective April 30, 1996. Pursuant to the Separation and
Confidentiality Agreement the Company paid Mr. Burns $100,000 as a bonus award
for fiscal 1995 under the Company's Executive Bonus Plan and agreed to pay,
among other things, $33,333 as a bonus award for his services as an executive in
fiscal 1996 which shall be paid no later than June 1, 1997, to continue medical
benefits or pay the cost of obtaining similar medial benefits until April 30,
1997, and to provide certain other benefits and payments which, have totalled
approximately $33,000. Under the Consulting Agreement, which has a one year
term, the Company agreed to pay Mr. Burns $20,833 per month for the term of the
Agreement.
Each of Messrs. Doyle, Garrison, Goldberg, Lemmo and Webb have entered
into employment agreements with the Company (the "Employment Agreements") that
provide severance pay benefits, among other things, in certain events of
termination of employment. Certain of these agreements generally provide for the
payment of severence up to a maximum of one year's salary (approximately one
million dollars aggregate at December 31, 1996) and up to a maximum of one
year's continuation of medical and dental benefits. In certain of these
agreements, in the event of a termination following a change of congtrol, which
is defined as the acquisition, including by merger or consolidation, or by the
issuance by the Company of its securities, by one or more persons in one
transaction or a series of related transactions, of more than fifty percent of
the voting power represented by the outstanding stock of the Company, the
employee would generally receive two years salary and the immediate vesting of
all stock options.
The Employment Agreements (executed between October 1996 and April,
1997) provide annual salaries of said Executive Officers as follows: Doyle
$220,000; Garrison $130,000; Goldberg $190,000; Lemmo $170,000 and Webb
$250,000.
4
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Pursuant to action by the Board Mr.Bolgiano is paid an annual salary
of $125,000. In addition, Bolgiano has entered a Severance Benefit Agreement
with the Company having eighteen month terms beginning April 1996 which provide
that if employment is terminated for any reason other than death, resignation,
disability or for cause, the Company will continue to pay salary and related
benefits as if he were still employed for the term of the Agreement. The
Agreement also provides that employment will be deemed constructively terminated
upon any significant adverse change in his authority resulting in a reduction of
base salary or any required geographic relocation.
Stock Option Grants, Exercises and Holdings
The following tables set forth certain information concerning stock
options granted to and exercised by the Named Officers during fiscal 1996 and
unexercised stock options held by them at the end of fiscal 1996.
5
<PAGE>
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------
Number of % of Total Potential Realizable Value
Securities Options/SARs at Assumed Annual Rates
Underlying Granted to of Stock Price
Options/ Employees in Exercise Appreciation for Option Term(1)
SARs Last Fiscal or Base Expiration ------------------------------
Name Granted (#) Year Price Date 5% 10%
---- ----------- ------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
William J. Burns 0 0 $ -- $- $0 $0
William A. Doyle 40,000 5% $7.69 10/05/06 $193,448 $490,235
Howard E. Goldberg 30,000 3.8% $7.69 10/05/06 $145,086 $367,676
James W. Garrison 30,000 3.8% $7.69 10/05/06 $145,086 $367,676
Mark Lemmo 30,000 3.8% $7.69 10/05/06 $145,086 $367,676
D. Ridgely Bolgiano 30,000 3.8% $7.69 10/05/06 $145,086 $367,676
Gregory E. Webb 100,000 12.8% $7.69 10/05/06 $483,620 $1,225,588
100,000 12.8% $9.23 10/05/06 $569,155 $1,824,861
50,000 6.3% $11.53 10/05/06 $362,558 $918,793
</TABLE>
- --------------
(1) The values of unexercised, in-the-money options are calculated by
subtracting the exercise price from the fair market value of the shares
of Common Stock underlying the options at December 31, 1997.
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<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying In-the-Money
Options/SARs Options/SARs at
Shares at FY-End (#) FY-End ($)(1)
Acquired On Value ---------------------------- ---------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gregory E. Webb ....... 0 $0 0 250,000 $0 $0
William J. Burns ...... 0 $0 298,500 0 $704,688 $0
William A. Doyle ...... 0 $0 156,667 41,667 $178,750 $22,918
Howard E. Goldberg .... 0 $0 148,333 46,667 $ 67,187 $13,438
James W. Garrison ..... 9,500 $66,500 60,200 35,300 $ 53,850 $26,525
Mark Lemmo ............ 15,000 $73,125 55,990 25,000 $0 $0
D. Ridgely Bolgiano ... 0 $0 60,800 0 $ 14,105 $0
</TABLE>
- ----------------------
(1) The values of unexercised, in-the-money options are calculated by
subtracting the exercise price from the fair market value of the shares of
Common Stock underlying the options at December 31, 1996.
Compensation of Directors
Under the terms of the Company's 1995 Stock Option Plan for Employees
and Outside Directors, each member of the Board who is not an officer or
employee of the Company ("Outside Director") receives an annual grant of
non-qualified stock options to purchase Common Stock at an exercise price equal
to the fair market value of the Common Stock at the date of grant. The non-
discretionary grant is made on July 1 of each year to Outside Directors who
served continuously from July 1 of the preceding year, and prorated option
grants are made for service for a partial year. The annual grant entitles each
Outside Director to purchase 12,000 shares of the Company's Common Stock, and
additional options were granted to Outside Directors to acquire 2,000 shares for
each committee of the Board on which the director served as chairperson. In
addition, each Outside Director who served as a member of any Board committee
(on which he does not also serve as chairman) will receive a non-discretionary
option grant to acquire 1,000 shares of Common Stock.
Commencing in 1996, the Company ceased to pay Outside Directors annual
director's fees or other fees for attending Board meetings, however, the Company
continues to reimburse directors for certain expenses incurred in attending
Board and committee meetings.
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<PAGE>
Compensation Committee Interlocks
and Insider Participation
During 1996 the following directors served on the Compensation and
Stock Option Committee of the Board: Mr. Sims and Mr. Campagna. Neither of the
aforementioned Committee members was an officer or employee of the Company or
any of its subsidiaries during 1996, or was formerly an officer of the Company
or any of its subsidiaries.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security Ownership Of
Certain Beneficial Owners
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of February 12, 1997, by each person
known to the Company to be the beneficial owner of more than 5% of any class of
the Company's outstanding Common Stock. This information is based solely upon
such shareholder's Schedule 13G, dated February 12, 1997, as filed with the
Securities and Exchange Commission. The shareholder listed possesses sole voting
and investment power with respect to the shares listed.
Amount and Percent of
Name and Address of Nature of Common Stock
Beneficial Owner Ownership(1) Outstanding
- ------------------- ------------ ------------
Heartland Advisors,Inc......... 5,988,100 12.5%
790 North Milwaukee Street
Milwaukee, WI 53202
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Security Ownership Of Management
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock, as of March 31, 1997, by each of the
Company's directors, by each of the Named Officers, and by all executive
officers and directors of the Company as a group. Unless otherwise indicated,
the shareholders listed possess sole voting and investment power with respect to
the shares listed.
<TABLE>
<CAPTION>
Percent of
Amount and Common Stock
Nature of Outstanding (if
Name of Beneficial Owner Ownership(1) greater than 1%)(2)
------------------------ ------------ -------------------
<S> <C> <C>
D. Ridgely Bolgiano............................... 243,055 -
William J. Burns ................................. 505,905(3) 1.1%
Barney J. Cacioppo ............................... 123,622(3) -
Harry G. Campagna ................................ 230,725(3) -
William A. Doyle.................................. 158,224 -
James W. Garrison................................. 60,200 -
Howard E. Goldberg................................ 151,200(3) -
Mark Lemmo........................................ 59,843 -
Gregory E. Webb .................................. 23,864 -
All directors and officers as a group (11 persons) 1,080,733(3)(4) 2.3%
</TABLE>
- --------------------
(1) Includes the following number of shares of Common Stock which may be
acquired by the persons and group identified in the table (or members of
the immediate family or other persons or entities affiliated with such
persons or members of such group), through the exercise of options or
warrants which were exercisable as of March 31, 1997 or will become
exercisable within 60 days of such date: Mr. Bolgiano, 173,050; Mr. Burns,
336,500; Mr. Cacioppo, 92,622; Mr. Campagna, 150,725; Mr. Doyle, 156,667;
Mr. Garrison, 60,200; Mr. Goldberg, 148,333; Mr. Lemmo, 55,990; Mr. Webb
16,667; all directors and executive officers as a group including Mr.
Gifford, an executive officer appointed April 28, 1997, whose beneficial
ownership is reflected as of such date, 884,254.
(2) Based upon 48,119,412 shares of Common Stock issued and outstanding at
March 31, 1997.
(3) Investment and voting power with respect to certain of such shares may
be shared with members of the immediate family or other persons or
entities affiliated with the listed person or members of the listed
group.
(4) Reflects beneficial ownership of all directors and officers as of March
31, 1997 except as to Joseph A. Gifford, an executive officer appointed
April 28, 1997, whose benficial ownership is reflected as of such date.
Item 13. Certain Relationships and Related Transactions
During 1996, the Company utilized as a consultant Michael W. Burns, the
son of William J. Burns, who was Chief Executive Officer and a member of
the Board of Directors. He was paid $72,000 for such services and was reimbursed
for certain traveling expenses.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
April 30, 1997 INTERDIGITAL COMMUNICATIONS CORPORATION
By: /s/ Gregory E. Webb
------------------------------------
Gregory E. Webb
Chief Executive Officer
By: /s/ James W. Garrison
------------------------------------
James W. Garrison
Vice President-Finance, Chief
Financial Officer and
Treasurer
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Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
Date: April 30, 1997 /s/ D. Ridgely Bolgiano
--------------------------------
D. Ridgely Bolgiano, Director
Date: April 30, 1997 /s/ Harry G. Campagna
--------------------------------
Harry G. Campagna, Director
Date: April 30, 1997 /s/ Barney J. Cacioppo
--------------------------------
Barney J. Cacioppo, Director
Date: April 30, 1997 /s/ William A. Doyle
--------------------------------
William A. Doyle, Director
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