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IDCC is "In Play"
InterDigital beats by $0.07, misses on revs Reports Q3 (Sep) earnings of $0.16 per share, excluding non-recurring items, $0.07 better than the First Call consensus of $0.09; revenues fell 2.6% year/year to $55.1 mln vs the $57.5 mln consensus.
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InterDigital beats by $0.07, misses on revs Reports Q3 (Sep) earnings of $0.16 per share, excluding non-recurring items, $0.07 better than the First Call consensus of $0.09; revenues fell 2.6% year/year to $55.1 mln vs the $57.5 mln consensus.
Briefing.com is the leading Internet provider of live market analysis for U.S. Stock, U.S. Bond, and world FX market participants.
Hey Romy,
I've been the one who has been deleting you!
McCain will attend debate, campaign says
Candidate previously said he wouldn't debate without bailout deal in place
BREAKING NEWS
updated 8 minutes ago
WASHINGTON - Republican John McCain is going to be at tonight's presidential debate, his campaign said Friday, even though Congress doesn't have a bailout deal in place.
Less than 10 hours before the debate was scheduled to start, the McCain campaign announced that the Arizona senator would travel to Mississippi to face off against Barack Obama. The campaign said he will fly back to Washington after the forum to continue working on the financial crisis.
"He is optimistic that there has been significant progress toward a bipartisan agreement," the campaign's statement said. E arlier in the week, McCain said he would delay the debate "until we have taken action to address this crisis."
Story continues below ↓
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McCain met briefly Friday morning with Senate Minority Leader Mitch McConnell, R-Ky., and House Minority Leader John Boehner, R-Ohio, before heading to his campaign headquarters. He had pledged to stay in Washington to work on a deal that would address the financial crisis, even if it meant postponing the debate.
But there were signs McCain was looking for a face-saving way to make the debate, even if a deal wasn't sealed. Sen. Lindsey Graham, R-S.C., McCain's representative in debate negotiations, suggested that McCain would find some way to make it to the event scheduled for 9 p.m. EDT at the University of Mississippi.
"What's more important than anything that when we go to Mississippi tonight, both candidates can say that the Congress is working, back in business, that we have an outline or proposal that will protect the taxpayer and save the country from financial Pearl Harbor, as Warren Buffet called it," Graham said on "Today" on NBC. "We are not there yet, but we will get there."
McCain spokesman Tucker Bounds said Friday morning "we are hopeful" McCain would be able to attend.
His rival, Democrat Barack Obama, was preparing to fly out of Washington late Friday morning. Obama said he and McCain should be able to handle the 90-minute forum and the financial crisis at the same time.
"Sen. McCain has no need to be fearful about a debate," Obama told reporters. "He's a person of strong opinions and he's been expressing them on the campaign trail."
Former Arkansas Gov. Mike Huckabee, a McCain supporter, said the Republican made a "huge mistake" by even discussing canceling the debate.
"You can't just say, 'World, stop for a moment. I'm going to cancel everything,'" Huckabee told reporters Thursday night in Alabama before attending a benefit for the University of Mobile. He said it's more important for voters to hear from the presidential candidates than for them to huddle with fellow senators in Washington.
Trip to D.C.
Both McCain and Obama had returned to Washington on Thursday at the urging of President Bush, who invited them to a meeting with congressional leaders at the White House. But a session aimed at showing unity in resolving the financial crisis broke up with conflicts in plain view.
McCain's campaign said the meeting "devolved into a contentious shouting match" and implied that Obama was at fault — on a day when McCain said he was putting politics aside to focus on the nation's financial problems.
Democrats differed, saying the refusal of McCain and other Republicans to support the plan worked out by congressional negotiators was creating a road block.
"The insertion of presidential politics has not been helpful," Senate Majority Leader Harry Reid, D-Nev., said Friday.
Meanwhile, debate preparations continued in Oxford, with streets blocked off and big TV screens set up on campus and near City Hall for large debate-watching parties.
Television network officials were left with the uncertainty of whether their Friday night programming would be the scheduled debate or something else arranged at the last minute. Pressed in an interview on the "CBS Evening News" about whether he would show, McCain responded: "I understand how important this debate is and I'm very hopeful, but I also have to put the country first."
Obama told NBC's "Nightly News. that, should the debate go on, he would raise the economy even though the focus was supposed to be foreign policy.
"It's one of the fundamental differences that I have with John McCain, and it's something that I think we need to explore in a debate format," Obama said. "We're only talking about 90 minutes here."
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
BREAKING NEWS: McCain asks that Friday debate be postponed to focus on financial crisis
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 34-58592 / September 18, 2008
EMERGENCY ORDER PURSUANT TO SECTION 12(k)(2) OF THE SECURITIES
EXCHANGE ACT OF 1934 TAKING TEMPORARY ACTION TO RESPOND TO
MARKET DEVELOPMENTS
The Commission is aware of the continued potential of sudden and excessive
fluctuations of securities prices and disruption in the functioning of the securities markets
that could threaten fair and orderly markets. In our recent publication of an emergency
order under Section 12(k) of the Exchange Act (the “Act”),1 for example, we were
concerned about the possible unnecessary or artificial price movements based on
unfounded rumors regarding the stability of financial institutions and other issuers
exacerbated by “naked” short selling. Our concerns, however, are no longer limited to
just the financial institutions that were the subject of the July Emergency Order. Recent
market conditions have made us concerned that short selling in the securities of a wider
range of financial institutions may be causing sudden and excessive fluctuations of the
prices of such securities in such a manner so as to threaten fair and orderly markets.
Given the importance of confidence in our financial markets as a whole, we have
become concerned about recent sudden declines in the prices of a wide range of
securities. Such price declines can give rise to questions about the underlying financial
condition of an issuer, which in turn can create a crisis of confidence, without a
fundamental underlying basis. This crisis of confidence can impair the liquidity and
1
See Exchange Act Release No. 58166 (July 15, 2008). See also Exchange Act
Release No. 58190 (July 18, 2008) (“Amended July Emergency Order”). See also
Exchange Act Release No. 58572 (September 17, 2008).
1
ultimate viability of an issuer, with potentially broad market consequences. Our concerns
are no longer limited to the financial institutions that were the subject of the July
Emergency Order.
As a result of these recent developments, the Commission has concluded that
there continues to exist the potential of sudden and excessive fluctuations of securities
prices generally and disruption in the functioning of the securities markets that could
threaten fair and orderly markets. Based on this conclusion, the Commission is
exercising its powers under Section 12(k)(2) of the Act.2 Pursuant to Section 12(k)(2), in
appropriate circumstances the Commission may issue summarily an order to alter,
supplement, suspend, or impose requirements or restrictions with respect to matters or
actions subject to regulation by the Commission if the Commission determines such an
order is necessary in the public interest and for the protection of investors to maintain or
restore fair and orderly securities markets.
In these unusual and extraordinary circumstances, we have concluded that, to
prevent substantial disruption in the securities markets, temporarily prohibiting any
person from effecting a short sale in the publicly traded securities of certain financial
firms, which entities are identified in Appendix A (“Included Financial Firms”), is in the
public interest and for the protection of investors to maintain or restore fair and orderly
securities markets.
2
This finding of an “emergency” is solely for purposes of Section 12(k)(2) of the
Exchange Act and is not intended to have any other effect or meaning or to confer
any right or impose any obligation other than set forth in this Order.
2
This emergency action should prevent short selling from being used to drive down
the share prices of issuers even where there is no fundamental basis for a price decline
other than general market conditions.
IT IS ORDERED that, pursuant to our Section 12(k)(2) powers, all persons are
prohibited from short selling3 any publicly traded securities of any Included Financial
Firm.
Similar to the Amended July Emergency Order, we are providing a limited
exception for certain bona fide market makers. We believe this narrow exception is
necessary because such market makers may need to facilitate customer orders in a fast
moving market without possible delays associated with complying with the requirements
of this Order.
IT IS THEREFORE ORDERED that, pursuant to our Section 12(k)(2) powers,
the following entities are excepted from the requirements of the Order: registered market
makers, block positioners, or other market makers obligated to quote in the over-the-
counter market, in each case that are selling short a publicly traded security of an
Included Financial Firm as part of bona fide market making in such security.
In addition, we are providing an exception to allow short sales that occur as a
result of automatic exercise or assignment of an equity option held prior to effectiveness
of this Order due to expiration of the option.
IT IS THEREFORE ORDERED that, pursuant to our Section 12(k)(2) powers,
the requirements of this Order shall not apply to any person that effects a short sale in any
3
The definition of “short sale” shall be the same definition used in Rule 200(a) of
Regulation SHO and the requirements for marking orders “long” or “short” shall
be the same as provided in Regulation SHO.
3
publicly traded security of any Included Financial Firm as a result of automatic exercise
or assignment of an equity option held prior to effectiveness of this Order due to
expiration of the option.
Finally, to facilitate the expiration of options on September 20th, options market
makers are excepted from the requirements of this Order until 11:59 p.m. on September
19th when selling short as part of bona fide market making and hedging activities related
directly to bona fide market making in derivatives on the publicly traded securities of any
Included Financial Firm.
IT IS THEREFORE ORDERED that, pursuant to our Section 12(k)(2) powers,
the requirements of this Order shall not apply, until 11:59 p.m. on September 19, 2008, to
any person that is a market maker that effects a short sale as part of a bona fide market
making and hedging activity related directly to bona fide market making in derivatives on
the publicly traded securities of any Included Financial Firm.
This Order shall be effective immediately and shall terminate at 11:59 p.m. EDT
on October 2, 2008, unless further extended by the Commission.
By the Commission.
Florence E. Harmon
Acting Secretary
4
Appendix A
This list, prepared on a best efforts basis, includes banks, insurance companies, and
securities firms identified by SICs 6000, 6011, 6020-22, 6025, 6030, 6035-36, 6111,
6140, 6144, 6200, 6210-11, 6231, 6282, 6305, 6310-11, 6320-21, 6324, 6330-31, 6350-
51, 6360-61, 6712, and 6719.
AAME ATLANTIC AMERICAN CORP
AANB ABIGAIL ADAMS NATL BANCORP
INC
ABBC ABINGTON BANCORP INC PA
ABCB AMERIS BANCORP
ABCW ANCHOR BANCORP WISCONSIN INC
ABK AMBAC FINANCIAL GROUP INC
ABNJ AMERICAN BANCORP OF NJ INC
ABVA ALLIANCE BANKSHARES CORP
ACAP AMERICAN PHYSICIANS CAPITAL
INC
ACBA AMERICAN COMMUNITY BNCSHRS
INC
ACE ACE LTD
ACFC ATLANTIC COAST FED CORP
ACGL ARCH CAPITAL GROUP LTD NEW
ADVNA ADVANTA CORP
ADVNB ADVANTA CORP
AEG AEGON N V
AEL AMERICAN EQUITY INVT LIFE HLDG
C
AET AETNA INC NEW
AF ASTORIA FINANCIAL CORP
AFFM AFFIRMATIVE INSURANCE HLDGS
INC
AFG AMERICAN FINANCIAL GROUP INC
NEW
AFL A F L A C INC
AGII ARGO GROUP INTL HLDGS LTD
AGO ASSURED GUARANTY LTD
AGP AMERIGROUP CORP
AGX ARGAN INC
AHD ATLAS PIPELINE HOLDINGS L P
AHL ASPEN INSURANCE HOLDINGS LTD
AIB ALLIED IRISH BANKS PLC
AIG AMERICAN INTERNATIONAL GROUP
5
INC
AINV APOLLO INVESTMENT CORP
AIZ ASSURANT INC
ALL ALLSTATE CORP
ALLB ALLIANCE BANCORP INC PA
ALNC ALLIANCE FINANCIAL CORP NY
AMCP AMCOMP INC NEW
AMFI AMCORE FINANCIAL INC
AMG AFFILIATED MANAGERS GROUP INC
AMIC AMERICAN INDEPENDENCE CORP
AMNB AMERICAN NATIONAL
BANKSHARES INC
AMP AMERIPRISE FINANCIAL INC
AMPH AMERICAN PHYSICIANS SVC GROUP
AMRB AMERICAN RIVER BANKSHARES
AMSF AMERISAFE INC
AMTD T D AMERITRADE HOLDING CORP
ANAT AMERICAN NATIONAL INS CO
ANNB ANNAPOLIS BANCORP INC
AOC AON CORP
APAB APPALACHIAN BANCSHARES INC
AROW ARROW FINANCIAL CORP
ASBI AMERIANA BANCORP
ASFI ASTA FUNDING INC
ASFN ATLANTIC SOUTHERN FINL GROUP
INC
ASRV AMERISERV FINANCIAL INC
ATBC ATLANTIC BANCGROUP INC
ATLO AMES NATL CORP
AUBN AUBURN NATIONAL BANCORP
AWBC AMERICAN WEST
BANCORPORATION
AWH ALLIED WORLD ASSUR CO HLDGS
LTD
AXA A X A UAP
AXG ATLAS ACQUISITION HOLDINGS
CORP
AXS AXIS CAPITAL HOLDINGS LTD
BAC BANK OF AMERICA CORP
BANF BANCFIRST CORP
BANR BANNER CORP
BARI BANCORP RHODE ISLAND INC
BAYN BAY NATIONAL CORP
BBNK BRIDGE CAPITAL HOLDINGS
BBT B B & T CORP
BBX BANKATLANTIC BANCORP INC
6
BCA CORPBANCA
BCAR BANK OF THE CAROLINAS CORP
BCBP B C B BANCORP INC
BCP BROOKE CAPITAL CORP
BCS BARCLAYS PLC
BCSB B C S B BANCORP INC
BDGE BRIDGE BANCORP INC
BEN FRANKLIN RESOURCES INC
BERK BERKSHIRE BANCORP INC DEL
BFF B F C FINANCIAL CORP
BFIN BANKFINACIAL CORP
BFNB BEACH FIRST NATL BANCSHARES
INC
BHB BAR HARBOR BANKSHARES
BHBC BEVERLY HILLS BANCORP INC
BHLB BERKSHIRE HILLS BANCORP INC
BK BANK OF NEW YORK MELLON CORP
BKBK BRITTON & KOONTZ CAPITAL CORP
BKMU BANK MUTUAL CORP NEW
BKOR OAK RIDGE FINANCIAL SERVICES
INC
BKSC BANK SOUTH CAROLINA CORP
BKUNA BANKUNITED FINANCIAL CORP
BLX BANCO LATINOAMERICANO DE EXP
SA
BMRC BANK OF MARIN BANCORP
BMTC BRYN MAWR BANK CORP
BNCL BENEFICIAL MUTUAL BANCORP INC
BNCN B N C BANCORP
BNS BANK OF NOVA SCOTIA
BNV BEVERLY NATIONAL CORP
BOCH BANK OF COMMERCE HOLDINGS
BOFI B OF I HOLDING INC
BOFL BANK OF FLORIDA CORP NAPLES
BOH BANK OF HAWAII CORP
BOKF B O K FINANCIAL CORP
BOMK BANK MCKENNEY VA
BOVA BANK OF VIRGINIA
BPFH BOSTON PRIVATE FINL HLDS INC
BPSG BROADPOINT SECURITIES GROUP
INC
BRK BERKSHIRE HATHAWAY INC DEL
BRK BERKSHIRE HATHAWAY INC DEL
BRKL BROOKLINE BANCORP INC
BSRR SIERRA BANCORP
BTFG BANCTRUST FINANCIAL GROUP INC
7
BUSE FIRST BUSEY CORP
BWINA BALDWIN & LYONS INC
BWINB BALDWIN & LYONS INC
BX BLACKSTONE GROUP L P
BXS BANCORPSOUTH INC
BYFC BROADWAY FINANCIAL CORP DEL
C CITIGROUP INC
CAC CAMDEN NATIONAL CORP
CACB CASCADE BANCORP
CADE CADENCE FINANCIAL CORP
CAFI CAMCO FINANCIAL CORP
CAPB CAPITALSOUTH BANCORP
CAPE CAPE FEAR BANK CORP
CART CAROLINA TRUST BANK
CARV CARVER BANCORP INC
CASB CASCADE FINANCIAL CORP
CASH META FINANCIAL GROUP INC
CATY CATHAY GENERAL BANCORP
CB CHUBB CORP
CBAN COLONY BANKCORP INC
CBBO COLUMBIA BANCORP ORE
CBC CAPITOL BANCORP LTD
CBIN COMMUNITY BANK SHRS INDIANA
INC
CBKN CAPITAL BANK CORP NEW
CBNK CHICOPEE BANCORP INC
CBON COMMUNITY BANCORP
CBU COMMUNITY BANK SYSTEM INC
CCBD COMMUNITY CENTRAL BANK CORP
CCBG CAPITAL CITY BANK GROUP
CCBP COMM BANCORP INC
CCFH C C F HOLDING COMPANY
CCNE C N B FINANCIAL CORP PA
CCOW CAPITAL CORP OF THE WEST
CEBK CENTRAL BANCORP INC
CFBK CENTRAL FEDERAL CORP
CFFC COMMUNITY FINANCIAL CORP
CFFI C & F FINANCIAL CORP
CFFN CAPITOL FEDERAL FINANCIAL
CFNL CARDINAL FINANCIAL CORP
CFR CULLEN FROST BANKERS INC
CHCO CITY HOLDING CO
CHEV CHEVIOT FINANCIAL CORP
CHFC CHEMICAL FINANCIAL CORP
CI C I G N A CORP
CIA CITIZENS INC
8
CINF CINCINNATI FINANCIAL CORP
CITZ C F S BANCORP INC
CIZN CITIZENS HOLDING CO
CJBK CENTRAL JERSEY BANCORP
CLBH CAROLINA BANK HOLDINGS INC
CLFC CENTER FINANCIAL CORP
CLMS CALAMOS ASSET MANAGEMENT
INC
CMA COMERICA INC
CME C M E GROUP INC
CMFB COMMERCEFIRST BANCORP INC
CMGI C M G I INC
CMSB C M S BANCORP INC
CNA C N A FINANCIAL CORP
CNAF COMMERCIAL NATIONAL FINL CORP
CNB COLONIAL BANCGROUP INC
CNBC CENTER BANCORP INC
CNBKA CENTURY BANCORP INC
CNC CENTENE CORP DEL
CNLA COMMUNITY NATL BANK LAKEWAY
AREA
CNO CONSECO INC
CNS COHEN & STEERS INC
COBH PENNSYLVANIA COMMERCE
BANCORP IN
COBZ COBIZ FINANCIAL INC
COLB COLUMBIA BANKING SYSTEM INC
COOP COOPERATIVE BANCSHARES INC
CORS CORUS BANKSHARES INC
COWN COWEN GROUP INC
CPBC COMMUNITY PARTNERS BANCORP
CPBK COMMUNITY CAPITAL CORP
CPF CENTRAL PACIFIC FINANCIAL CORP
CPHL CASTLEPOINT HOLDINGS LTD
CRBC CITIZENS REPUBLIC BANCORP INC
CRFN CRESCENT FINANCIAL CORP
CRMH C R M HOLDINGS LTD
CRRB CARROLLTON BANCORP
CRVL CORVEL CORP
CSBC CITIZENS SOUTH BANKING CORP
DEL
CSBK CLIFTON SAVINGS BANCORP INC
CSFL CENTERSTATE BANKS OF FLORIDA
INC
CSHB COMMUNITY SHORES BANK CORP
CSNT CRESCENT BANKING CO
9
CTBC CONNECTICUT BANK & TRUST CO
CTBI COMMUNITY TRUST BANCORP INC
CTBK CITYBANK LYNNWOOD
WASHINGTON
CTZN CITIZENS FIRST BANCORP INC
CVBF C V B FINANCIAL CORP
CVBK CENTRAL VIRGINIA BANKSHARES
INC
CVCY CENTRAL VALLEY COMM BANCORP
CVH COVENTRY HEALTH CARE INC
CVLL COMMUNITY VALLEY BANCORP
CVLY CODORUS VALLEY BANCORP INC
CWBC COMMUNITY WEST BANCSHARES
CWBS COMMONWEALTH BANKSHARES
INC
CWLZ COWLITZ BANCORPORATION
CZFC CITIZENS FIRST CORP
CZWI CITIZENS CMNTY BANCORP INC MD
DB DEUTSCHE BANK AG
DCOM DIME COMMUNITY BANCSHARES
DEAR DEARBORN BANCORP INC
DFG DELPHI FINANCIAL GROUP INC
DGICA DONEGAL GROUP INC
DGICB DONEGAL GROUP INC
DHIL DIAMOND HILL INVESTMENT GRP
INC
DLLR DOLLAR FINANCIAL CORP
DR DARWIN PROFESSIONAL
UNDERWRITERS
DSL DOWNEY FINANCIAL CORP
DUF DUFF & PHELPS CORP NEW
EBSB MERIDIAN INTERSTATE BANCORP
INC
EBTX ENCORE BANCSHRES INC
ECBE E C B BANCORP INC
EGBN EAGLE BANCORP INC
EIHI EASTERN INSURANCE HOLDINGS
INC
EII ENERGY INFRASTRUCTURE ACQUI
CORP
EMCI E M C INSURANCE GROUP INC
EMITF ELBIT IMAGING LTD
ENH ENDURANCE SPECIALTY HOLDINGS
LTD
ESBF E S B FINANCIAL CORP
ESBK ELMIRA SAVINGS BANK FSB NY
10
ESGR ENSTAR GROUP LTD
ETFC E TRADE FINANCIAL CORP
EV EATON VANCE CORP
EVBN EVANS BANCORP INC
EVBS EASTERN VIRGINIA BANKSHARES
INC
EVR EVERCORE PARTNERS INC
EWBC EAST WEST BANCORP INC
FABK FIRST ADVANTAGE BANCORP
FAC FIRST ACCEPTANCE CORP
FAF FIRST AMERICAN CORP CALIF
FBC FLAGSTAR BANCORP INC
FBCM F B R CAPITAL MARKETS CORP
FBIZ FIRST BUSINESS FINL SVCS INC
FBMI FIRSTBANK CORP
FBMS FIRST BANCSHARES INC MS
FBNC FIRST BANCORP NC
FBP FIRST BANCORP P R
FBSI FIRST BANCSHARES INC MO
FBSS FAUQUIER BANKSHARES INC
FBTC FIRST BANCTRUST
FCAL FIRST CALIFORNIA FINL GROUP INC
FCAP FIRST CAPITAL INC
FCBC FIRST COMMUNITY BANCSHARES
INC
FCCO FIRST COMMUNITY CORP SC
FCCY 1ST CONSTITUTION BANCORP
FCFL FIRST COMMUNITY BANK CORP
AMER
FCNCA FIRST CITIZENS BANCSHARES INC
NC
FCVA FIRST CAPITAL BANCORP INC VA
FCZA FIRST CITIZENS BANC CORP
FDEF FIRST DEFIANCE FINANCIAL CORP
FDT FEDERAL TRUST CORP
FED FIRSTFED FINANCIAL CORP
FFBC FIRST FINANCIAL BANCORP OHIO
FFBH FIRST FEDERAL BANCSHARES ARK
INC
FFCH FIRST FINANCIAL HOLDINGS INC
FFCO FEDFIRST FINANCIAL CORP
FFDF F F D FINANCIAL CORP
FFFD NORTH CENTRAL BANCSHARES INC
FFG F B L FINANCIAL GROUP INC
FFH FAIRFAX FINL HOLDINGS LTD
FFHS FIRST FRANKLIN CORP
11
FFIC FLUSHING FINANCIAL CORP
FFIN FIRST FINANCIAL BANKSHARES INC
FFKT FARMERS CAPITAL BANK CORP
FFKY FIRST FINANCIAL SERVICE CORP
FFNM FIRST FED NORTHN MI BANCORP
INC
FFNW FIRST FINANCIAL NORTHWEST INC
FFSX FIRST FEDERAL BANKSHARES INC
DEL
FHN FIRST HORIZON NATIONAL CORP
FIFG 1ST INDEPENDENCE FNL GROUP INC
FIG FORTRESS INVESTMENT GROUP L L
C
FII FEDERATED INVESTORS INC PA
FISI FINANCIAL INSTITUTIONS INC
FKFS FIRST KEYSTONE FINANCIAL INC
FLIC FIRST LONG ISLAND CORP
FMAR FIRST MARINER BANCORP
FMBI FIRST MIDWEST BANCORP DE
FMER FIRSTMERIT CORP
FMFC FIRST M & F CORP
FNB F N B CORP PA
FNBN F N B UNITED CORP
FNFG FIRST NIAGARA FINL GROUP INC
NEW
FNLC FIRST BANCORP INC ME
FNM FEDERAL NATIONAL MORTGAGE
ASSN
FNSC FIRST NATIONAL BANCSHARES INC
SC
FPBI F P B BANCORP INC
FPBN 1ST PACIFIC BANCORP CA
FPFC FIRST PLACE FINANCIAL CORP NM
FPIC F P I C INSURANCE GROUP INC
FPTB FIRST PACTRUST BANCORP INC
FRBK REPUBLIC FIRST BANCORP INC
FRE FEDERAL HOME LOAN MORTGAGE
CORP
FRGB FIRST REGIONAL BANCORP
FRME FIRST MERCHANTS CORP
FSBI FIDELITY BANCORP INC
FSBK FIRST SOUTH BANCORP INC
FSGI FIRST SECURITY GROUP INC
FSNM FIRST STATE BANCORPORATION
FTBK FRONTIER FINANCIAL CORP
FULT FULTON FINANCIAL CORP PA
12
FUNC FIRST UNITED CORP
FWV FIRST WEST VIRGINIA BANCORP INC
FXCB FOX CHASE BANCORP INC
GABC GERMAN AMERICAN BANCORP INC
GAN GAINSCO INC
GBCI GLACIER BANCORP INC NEW
GBH GREEN BUILDERS INC
GBL GAMCO INVESTORS INC
GBNK GUARANTY BANCORP
GBTS GATEWAY FINANCIAL HLDGS INC
GCA GLOBAL CASH ACCESS HOLDINGS
INC
GFED GUARANTY FEDERAL BANCSHARES
INC
GFIG G F I GROUP INC
GFLB GREAT FLORIDA BANK
GGAL GRUPO FINANCIERO GALICIA S A
GHL GREENHILL & CO INC
GIW WILBER CORP
GLBZ GLEN BURNIE BANCORP
GLRE GREENLIGHT CAPITAL RE LTD
GNW GENWORTH FINANCIAL INC
GOV GOUVERNEUR BANCORP INC
GRAN BANK GRANITE CORP
GRNB GREEN BANKSHARES INC
GROW U S GLOBAL INVESTORS INC
GS GOLDMAN SACHS GROUP INC
GSBC GREAT SOUTHERN BANCORP INC
GSLA G S FINANCIAL CORP
GTS TRIPLE S MANAGEMENT CORP
HABC HABERSHAM BANCORP INC
HAFC HANMI FINANCIAL CORP
HALL HALLMARK FINANCIAL SERVICES
INC
HARL HARLEYSVILLE SAVINGS FINAN
CORP
HAXS HEALTHAXIS INC
HBAN HUNTINGTON BANCSHARES INC
HBHC HANCOCK HOLDING CO
HBNK HAMPDEN BANCORP INC
HBOS HERITAGE FINANCIAL GROUP
HCBK HUDSON CITY BANCORP INC
HCC H C C INSURANCE HOLDINGS INC
HEOP HERITAGE OAKS BANCORP
HFBC HOPFED BANCORP INC
HFFC H F FINANCIAL CORP
13
HFWA HERITAGE FINANCIAL CORP WA
HGIC HARLEYSVILLE GROUP INC
HIFS HINGHAM INSTITUTION FOR SVGS
MA
HMN HORACE MANN EDUCATORS CORP
NEW
HMNF H M N FINANCIAL INC
HMPR HAMPTON ROADS BANKSHARES INC
HNBC HARLEYSVILLE NATIONAL CORP PA
HNT HEALTH NET INC
HOMB HOME BANCSHARES INC
HOME HOME FEDERAL BANCORP INC MD
HRZB HORIZON FINANCIAL CORP WASH
HS HEALTHSPRING INC
HTBK HERITAGE COMMERCE CORP
HTH HILLTOP HOLDINGS INC
HTLF HEARTLAND FINANCIAL USA INC
HUM HUMANA INC
HWBK HAWTHORN BANCSHARES INC
HWFG HARRINGTON WEST FINANCIAL GRP
IN
IAAC INTERNATIONAL ASSETS HLDG
CORP
IBCA INTERVEST BANCSHARES CORP
IBCP INDEPENDENT BANK CORP MICH
IBKC IBERIABANK CORP
IBKR INTERACTIVE BROKERS GROUP INC
IBNK INTEGRA BANK CORP
IBOC INTERNATIONAL BANCSHARES
CORP
ICE INTERCONTINENTALEXCHANGE INC
ICH INVESTORS CAPITAL HOLDINGS LTD
IFC IRWIN FINANCIAL CORP
IFSB INDEPENDENCE FEDERAL SAVINGS
BK
IHC INDEPENDENCE HOLDING CO NEW
IMP IMPERIAL CAPITAL BANCORP INC
INCB INDIANA COMMUNITY BANCORP
INDB INDEPENDENT BANK CORP MA
ING I N G GROEP N V
IPCC INFINITY PROPERTY & CASUALTY
COR
IPCR I P C HOLDINGS LTD
IRE IRELAND BANK
ITC I T C HOLDINGS CORP
ITG INVESTMENT TECHNOLOGY GP INC
14
NEW
ITIC INVESTORS TITLE CO
JAXB JACKSONVILLE BANCORP INC FL
JEF JEFFERIES GROUP INC NEW
JFBC JEFFERSONVILLE BANCORP
JFBI JEFFERSON BANCSHARES INC TENN
JLI JESUP & LAMONT INC
JMP J M P GROUP INC
JNS JANUS CAP GROUP INC
JPM JPMORGAN CHASE & CO
JXSB JACKSONVILLE BANCORP INC
KCLI KANSAS CITY LIFE INS CO
KENT KENT FINANCIAL SERVICES INC
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24
It was a hicup.eom
Form 4
InterDigital, Inc. - N/A
Filed: September 03, 2008 (period: August 29, 2008)
Statement of changes in beneficial ownership of securities
Table of Contents
EX-24.4_255300 (POA DOCUMENT)
FORM 4
¨ Check this box if no longer subject to Section 16, Form 4 or Form 5 obligations may continue. See Instruction 1(b).
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES
Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
OMB APPROVAL
OMB Number: 3235-0287
Expires: February 28, 2011
Estimated average burden hours per response... 0.5
1. Name and Address of Reporting Person *
Isaacs Gary D
2. Issuer Name and Ticker or Trading Symbol
InterDigital, Inc. (IDCC)
5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
_____ Director _____ 10% Owner
__X__ Officer (give _____ Other (specify
title below) below)
Chief Administrative Officer /
(Last) (First) (Middle)
781 THIRD AVENUE
3. Date of Earliest Transaction (Month/Day/Year)
08/29/2008
(Street)
KING OF PRUSSIA PA 19406
4. If Amendment, Date Original Filed (Month/Day/Year)
6. Individual or Join/Group Filing(Check Applicable Line)
_X_ Form filed by One Reporting Person
___ Form filed by More than One Reporting Person
(City) (State) (Zip)
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3)
2. Transaction Date (Month / Day / Year)
2A. Deemed Execution Date, if any (Month / Day / Year)
3. Transaction Code
(Instr. 8)
4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5)
5. Amount of Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 3 and 4)
6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)
7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code
V
Amount
(A) or (D)
Price
Common Stock
08/29/2008
M(1)
10,000
A
$ 3.75
19,731
D
Common Stock
08/29/2008
S(1)
4,840
D
$ 26.56 (2)
14,891
D
Common Stock
2,414 (3)
I
By 401(k) Plan
Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
( e.g. , puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 3)
2. Conversion or Exercise Price of Derivative Security
3. Transaction Date (Month / Day / Year)
3A. Deemed Execution Date, if any (Month / Day / Year)
4. Transaction Code
(Instr. 8)
5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)
6. Date Exercisable and Expiration Date
(Month / Day / Year)
7. Title and Amount of Underlying Securities
(Instr. 3 and 4)
8. Price of Derivative Security
(Instr. 5)
9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 4)
10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)
11. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code
V
(A)
(D)
Date Exercisable
Expiration Date
Title
Amount or Number of Shares
Options (Right-to-Buy)
$ 3.75
08/29/2008
M
10,000
09/08/1998(4)
09/07/2008
Common Stock
10,000
$ 0
0
D
Explanation of Responses:
1. The transactions reported in this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by the Reporting Person on May 27, 2008.
2. The price reported is the weighted average sale price for the transactions reported. The sale prices ranged from $26.53 to $26.96. Full information about the transactions reported will be provided upon request.
3. As of the most recently published account statement, the Reporting Person beneficially owned this number of whole shares of Common Stock pursuant to the InterDigital Savings and Protection Plan.
4. A grant of 25,000 options that vested in one installment of 2,000 and five installments of 4,600 beginning on the date specified.
/s/ Jannie K. Lau, Attorney-In-Fact for Gary D. Isaacs
09/03/2008
** Signature of Reporting Person
Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.
POWER OF ATTORNEY
For Executing Forms 3, 4 and 5
of the
United States Securities and Exchange Commission
KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and appoints
each of Steven W. Sprecher, Bruce S. Pailet, Amy A. Miraglia and Jannie K. Lau
signing singly as my true and lawful attorney-in-fact to:
(1) execute and file for and on behalf of the undersigned, in the undersigned's
capacity as an executive officer of InterDigital, Inc. (the "company") Forms 3,
4 and 5 in accordance with Section 16(a) of the Securities Exchange Act of 1934
and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which
may be necessary or desirable to complete and execute any such Form 3, 4 or 5
and timely file such form with the United States Securities and Exchange
Commission and any stock exchange or similar authority; and
(3) take any other action of any type whatsoever in connection with the
foregoing which, in the opinion of such attorney-in-fact, may be of benefit to,
in the interest of, or legally required by, the undersigned, it being understood
that the documents executed by such attorney-in-fact on behalf of the
undersigned pursuant to this power of attorney shall be in such form and shall
contain such terms and conditions as such attorney-in-fact may approve in his or
her discretion.
The undersigned hereby grants to each such attorney-in-fact full power and
authority to do and perform each and every act and thing whatsoever requisite,
necessary or proper to be done in the exercise of any of the rights and powers
herein granted, as fully to all intents and purposes as the undersigned might or
could do if personally present, with full power of substitution or revocation,
hereby ratifying and confirming all that such attorney-in-fact, or his or her
substitute or substitutes, shall lawfully do or cause to be done by virtue of
this power of attorney and the rights and powers herein granted. The
undersigned acknowledges that the foregoing attorneys-in-fact, in serving in
such capacity at the request of the undersigned, are not assuming, nor is the
company assuming, any of the undersigned's responsibilities to comply with
Section 16 of the Securities Exchange Act of 1934 or shall be liable or
accountable in respect for any act or omission undertaken in good faith and not
in reckless disregard of the obligations assumed hereunder.
This power of attorney shall become effective immediately, and shall remain in
full force and effect until the undersigned is no longer required to file Forms
3, 4 and 5, with respect to the undersigned's holdings of and transactions in
securities issued by the company, unless earlier revoked by the undersigned in a
signed writing delivered to the foregoing attorneys-in-fact.
EXECUTED this 28th day of August, 2008.
/s/ Gary D. Isaacs
Gary D. Isaacs
ACKNOWLEDGEMENT
Commonwealth of Pennsylvania :
: SS:
County of MONTGOMERY :
ON THIS, the 28th day of August 2008, before me a notary public the undersigned
executive officer, personally appeared Gary D. Isaacs, known to me (or
satisfactorily proven) to be the person whose name is subscribed to within the
power of attorney, and acknowledged that he/she executed the same for the
purposes therein contained, and desired that it be recorded as such.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Rebecca G. Swavely
Notary Public
My Commission Expires: October 19, 2009
_______________________________________________
Created by 10KWizard www.10KWizard.comSource: InterDigital, Inc., 4, September 03, 2008
Apple launches iPhone 2.0.2 update
By Aidan Malley
Published: 05:15 PM EST
In a quick turnaround from 2.0.1, Apple on Monday evening released version 2.0.2 firmware for iPhone and iPod touch.
The 248.7MB update is available only through iTunes and comes just two weeks after version 2.0.1.
In traditional Apple form, no specific issues are identified in the current release notes, which only indicate "bug fixes" for the mobile operating system.
Past claims by alleged insiders and users have suggested that the update may fix connectivity problems causing dropped calls and unintended switches from 3G to the 2G EDGE network. AppleInsider will update if this or other new features are confirmed with the release.
Notes on the release follow:
No new settings appear to have been included.
Some users report faster browsing, though this may be due to cleared cache.
Typing lag may be reduced.
Apps don't require updates; NetShare still works.
Transition from music list to Coverflow has changed.
Inside the iPhone 3G dropped call complaints
By Prince McLean
Published: 09:45 AM EST
Experts and analysts of all stripes are trying to explain what's wrong with the iPhone 3G, but their answers are frequently supported by bad science, outlandish claims, and pure speculation. Here's what's wrong in the reports, and why a simple firmware update is likely to solve the current issues.
While nobody has formally studied the problem, lots of iPhone 3G users are complaining that they can't find 3G service, can't maintain 3G service in areas where other 3G phones can, witness wildly fluctuating signal strength bars on the phone, or conversely can't use 3G because it consumes battery life too rapidly.
Many articles on the subject are referencing Apple's support forums, where some discussions have gotten so long that forum moderators have had to lock the original thread and create a new overflow discussion.
Clearly, there's real problems. How widespread and common those problems are is more difficult to pinpoint. Apple said it sold a million iPhone 3G units on its opening weekend, and Piper Jaffray analyst Gene Munster reported that each of the company's US retail stores are now selling an average of 95 iPhone 3G sales per day. He expects the company to sell 4.47 million this quarter. That indicates that well over two million iPhone 3G units have already been sold to users.
Even if the 3G issues were only affecting one percent of the phones sold, that would leave twenty thousand users with problems. If only a tenth of those users posted comments online, that would easily account for the two thousand messages on Apple's discussion boards.
Blame the provider?
In the US, AT&T has been fingered in the iPhone 3G's reception problems due to the telco's relatively new and limited service coverage of its 3G network. Even in urban areas where AT&T's service maps indicate there should be 3G service, the iPhone 3G frequently fails to find it or maintain a strong enough signal to complete a call.
Compared to Sprint and Verizon Wireless, which both have wider 3G service coverage in their more mature 3G EVDO networks, AT&T is building out its 3G network using UMTS, a worldwide standard. AT&T is also forced to use different radio frequencies than other UMTS providers, which results in less technical maturity for AT&T's 3G network than those overseas.
AT&T primarily uses the 1900MHz band in the US, but is working to expand its use of its 850MHz band, a lower frequency that allows radio signals to spread farther and penetrate walls easier. Europe uses the even higher 2100MHz band for 3G, but there is also more dense network coverage there.
While AT&T's network is still experiencing some growing pains, the iPhone 3G's reception issues are also being reported in other countries too, even in Europe where 3G UMTS networks have been built out for some time. In those locations, the iPhone's dual band 3G radio uses the standard UMTS frequencies, making it hard to blame AT&T for more than just its limited coverage.
Dropped calls by provider
An article on the iPhone 3G by BusinessWeek cited unnamed sources to report, "the problem is affecting 2% to 3% of iPhone traffic, the people say. That compares with a dropped-call rate of around 1% for all traffic for AT&T." A source for the dropped call rate at AT&T wasn't given.
Studies on dropped calls are difficult because users don't report their dropped calls, and providers would be challenged to know whether phones on their networks ended a call on purpose or not. Further, calls may be dropped for a number of reasons, from poor service coverage or intermittent signal interference to phone set problems to users walking into a elevator or bank vault.
A study on dropped calls published by mindWireless in February 2007 ranked US providers on dropped calls by analyzing 80 million calls on 130,000 wireless accounts over a the first six months of 2006. It defined a dropped call as any two calls placed to the same destination within two minutes, without a call in the middle. This would not identify dropped calls where the user did not call their party back immediately, or where they were called back by the dropped party. It also excluded voicemail calls.
The company reported that Sprint had a dropped call rate of 5.4%, AT&T Wireless 5.7%, Verizon 8.0%, Cingular 11.3%, T-Mobile as 13.8, and Nextel at 14.6% (not including push to talk calls). AT&T Wireless was bought by Cingular in 2004, but the company was still in the process of merging its networks when the study was underway; that merger combined the GSM towers operated by both, strengthening Cingular's signal. Over the next year, Cingular subsequently rebranded itself as AT&T. Sprint has also since merged with Nextel, although those two companies operated incompatible networks (CDMA and iDEN) that couldn't help each other in terms of signal.
Those numbers indicate that the reported "2 to 3%" dropped call rate on the iPhone 3G, as well as the 1% drop rate for "all traffic on AT&T" are not likely to be anywhere close to reality. They are also not the product of any scientific study, since the iPhone 3G as only been out for a month and during that time the firmware has been updated.
Incidentally, Sprint and AT&T began fighting over the ad line "fewest dropped calls" last year, and AT&T was separately sued by subscribers over its claim as false advertising. AT&T no longer makes that claim, but now advertises "more bars in more places." That promise hasn't solved iPhone 3G reception issues however.
Blame the components?
Nomura analyst Richard Windsor kicked off the iPhone 3G panic when he published a research note suggesting that the iPhone's problems were due to a faulty industrial design using Infineon chips, and suggested that Apple might have to recall the faulty units.
The problem is that Windsor isn't a technical expert; he's a financial analyst. More problematically, this isn't the first time he's described a speculative hardware problem and sounded a false alarm for a possible recall based upon erroneous guesswork. Last year, he claimed that the original iPhone was plagued a faulty design for a film on its screen that used "a chemical deposition to provide touch sensitivity based on heat."
Windsor wrote that the design had failed in earlier attempts to make it work after just a few months, and suggested Apple might have to accommodate a massive recall after iPhones suddenly stopped working in the first three to six months. That never happened, but more importantly the iPhone also never used a heat sensitive film. It has always used an entirely different multitouch technology based on sensing magnetic capacitance that lays under the iPhone's glass screen, not on top of it.
The chips used in the iPhone 3G are similarly not unique nor the likely subject of a massive recall. Guenther Gaugler of Infineon told BusinessWeek, "Our 3G chips are, for example, used in Samsung handsets and we are not aware of such problems there."
Blame the production?
Some have blamed Apple's phone manufacturing instead. NyTeknik ("New Technology"), a Swedish publication, said that problems associated with the iPhone 3G may be due to problems in high production manufacturing, and notes that similar "normal childhood illnesses" have affected phones from Samsung, LG, Sony Ericsson and Nokia.
Testing each iPhone during manufacturing would cost more than its actual components cost, according to Claes Beckman, a professor of microwave technology at the University of Calcutta. The site performed its own testing on an iPhone 3G and found results for nominal sensitivity of 3G radio signals that were below the minimums set by the ETSI standards body. However, it also noted the iPhone 3G design has passed the CE mark, which means that it originally met the ETSI standards in testing. This led the group to believe that the problems cropped up in manufacturing after production accelerated.
Users reporting problems with their iPhones have been asked by Apple to provide their "build week," represented in the fourth and fifth digits of the unit's serial number. This could mean that Apple is tracking problems with phones manufactured between specific dates; the company has been swapping out phones for users with complaints.
The number of faulty devices may fluctuate slightly during manufacturing, but there is yet no clear suggestion that problems have accelerated with new production. Some users report having exchanged out several new iPhones without seeing any difference in exchanged models between different build weeks.
Blame the firmware?
The two sources cited by BusinessWeek indicated confidence that Apple would be able to address reception issues in the upcoming iPhone 2.1 software update, expected next month in September. Earlier in the month, Apple released 2.0.1, a bug fix that also included updates to the iPhone 3G's baseband firmware. That update had some impact on the signal strength display that users were seeing, but no details were provided on what the release actually fixed.
Earlier this year, Apple released a 1.1.4 update which also addressed a problem with dropped calls that some users were experiencing at the time on the original GSM iPhone. It too was only described as being a bug fix without offering any specifics. The iPhone 3G's UMTS technology is more computationally complex than the original iPhone's GSM radio. While its chipsets are also used in phones by other makers, the firmware Apple is using to drive the its hardware is unique and has plenty of room for maturity and optimization.
The good news is that Apple is selling millions of iPhone 3G units all of the same design; other manufacturers, such as Motorola, Samsung, HTC, and others not only sell fewer smartphones than Apple but also offer a range of different models, ensuring that each model gets less focus. All of Apple's attention is going into optimizing the iPhone 3G. RIM, which sold twice as many smartphones as Apple last fall, and Nokia, which sold just over 8 times as many, similarly split their development resources across a wide number of different models.
Credit iPhone 2.1?
When it arrives, the iPhone 2.1 software is expected to combine firmware optimizations with higher level software updates, including tools to enable developers to work with more accurate GPS data for turn-by-turn directions, as well as the notifications system for third party apps that Apple described at WWDC. The notification feature was reported missing from the fourth iPhone 2.1 beta released to certain iPhone developers just days ago.
Features are frequently added or removed during beta build testing, but the removal of the notifications system from the 2.1 build may relate to an effort to deliver its anticipated low level firmware updates as soon as possible and perhaps sooner than planned, leaving the notification service to be distributed as part of a separate release.
Apple has not publicly connected the notification system with the iPhone 2.1 release; it delivered the details of both under a non disclosure agreement intended to prevent speculation and panic as changes occur in its deployment schedule.
http://www.appleinsider.com/articles/08/08/18/inside_the_iphone_3g_dropped_call_complaints.html
nice volume. eom
I've never had a problem, it works great.eom
LITIGATION AND LEGAL PROCEEDINGS:
Samsung and Nokia United States International Trade Commission (“USITC” or the “Commission”) Proceedings and Related Delaware District Court Proceedings
In March 2007, InterDigital, Inc.’s wholly-owned subsidiaries InterDigital Communications, LLC (“IDC”) and InterDigital Technology Corporation (“ITC”) (collectively, for purposes of the Samsung and Nokia United States International Trade Commission Proceedings and Related Delaware District Court Proceedings described herein, “InterDigital,” “we,” or “our”) filed a Complaint against Samsung Electronics Co. Ltd. and certain of its affiliates (collectively, “Samsung”) in the USITC alleging that Samsung engages in unfair trade practices by selling for importation into the United States, importing into the United States, and selling after importation into the United States certain 3G handsets and components that infringe three of InterDigital’s patents. In May 2007 and December 2007, a fourth patent and fifth patent, respectively, were added to our Complaint against Samsung. The Complaint against Samsung seeks an exclusion order barring from entry into the United States infringing 3G WCDMA handsets and components that are imported by or on behalf of Samsung. Our Complaint also seeks a cease-and-desist order to bar sales of infringing Samsung products that have already been imported into the United States.
In addition, on the same date as our filing of the Samsung USITC action referenced above, we also filed a Complaint in the United States District Court for the District of Delaware (“Delaware District Court”) alleging that Samsung’s 3G WCDMA handsets infringe the same three InterDigital patents identified in the original Samsung USITC Complaint. The U.S. trade laws provide for a mandatory stay of parallel district court proceedings at the request of a respondent. In June 2007, the Delaware District Court entered a Stipulated Order staying this Delaware District Court proceeding against Samsung. The Stipulated Order was agreed to by the parties. The Stipulated Order stays the proceeding until the USITC’s determination in this matter becomes final. The Delaware District Court permitted InterDigital to add the fourth and fifth patents asserted against Samsung in the USITC action to this stayed Delaware action.
In August 2007, we filed a USITC Complaint against Nokia Corporation and Nokia, Inc. (collectively, “Nokia”) alleging that Nokia engaged in an unfair trade practice by selling for importation into the United States, importing into the United States, and selling after importation into the United States certain 3G mobile handsets and components that infringe two of InterDigital’s patents. In November 2007 and December 2007, a third patent and fourth patent, respectively, were added to our Complaint against Nokia. The Complaint against Nokia seeks an exclusion order barring from entry into the United States infringing 3G mobile handsets and components that are imported by or on behalf of
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Nokia. Our Complaint also seeks a cease-and-desist order to bar further sales of infringing Nokia products that have already been imported into the United States.
In addition, on the same date as our filing of the Nokia USITC action referenced above, we also filed a Complaint in the Delaware District Court alleging that Nokia’s 3G mobile handsets and components infringe the same two InterDigital patents identified in the original Nokia USITC Complaint. This Delaware action was also stayed on January 10, 2008, pursuant to the mandatory, statutory stay of parallel district court proceedings at the request of a respondent in a USITC investigation. Thus, this Delaware action is stayed until the USITC’s determination in this matter becomes final. The Delaware District Court permitted InterDigital to add the third and fourth patents asserted against Nokia in the USITC action to this stayed Delaware action.
Nokia, joined by Samsung, moved to consolidate the Samsung and Nokia USITC proceedings. On October 24, 2007, the Honorable Paul J. Luckern, the Administrative Law Judge overseeing the two USITC proceedings against Samsung and Nokia, respectively, issued an Order to consolidate the two pending investigations. Pursuant to the Order, the schedules for both investigations were revised to consolidate proceedings and set a unified evidentiary hearing on April 21-28, 2008, the filing of a single initial determination by Judge Luckern by July 11, 2008, and a target date for the consolidated investigations of November 12, 2008, by which date the USITC should issue its final determination (the “Target Date”).
On December 4, 2007, Nokia moved for an order terminating or, alternatively, staying the USITC investigation as to Nokia, on the ground that Nokia and InterDigital must first arbitrate a dispute as to whether Nokia is licensed under the patents asserted by InterDigital against Nokia in the USITC investigation. On January 8, 2008, Judge Luckern issued an order denying Nokia’s motion and holding that Nokia has waived its arbitration defense by instituting and participating in the investigation and other legal proceedings. On February 13, 2008, Nokia filed an action in the U.S. District Court for the Southern District of New York, seeking to preliminarily enjoin InterDigital from proceeding with the USITC action with respect to Nokia, in spite of Judge Luckern’s ruling denying Nokia’s motion to terminate the investigation. Nokia raised in this preliminary injunction action the same arguments it raised in its motion to terminate the USITC investigation, namely that InterDigital allegedly must first arbitrate its alleged license dispute with Nokia and that Nokia has not waived arbitration of this defense.
On February 8, 2008, Nokia filed a motion for summary determination in the USITC that InterDigital cannot show that a domestic industry exists in the United States as required to obtain relief. Samsung joined this motion. InterDigital opposed this motion. On February 14, 2008, InterDigital filed a motion for summary determination that InterDigital satisfies the domestic industry requirement based on its licensing activities. On February 26, 2008, InterDigital filed a motion for summary determination that it has separately satisfied the so-called “economic prong” for establishing that a domestic industry exists based on InterDigital’s chipset product that practices the asserted patents. Samsung and Nokia opposed these motions. On March 17, 2008, Samsung and Nokia filed a motion to strike any evidence concerning InterDigital’s product and to preclude InterDigital from introducing any such evidence in relation to domestic industry at the evidentiary hearing. On March 26, 2008, the Administrative Law Judge granted InterDigital’s motion for summary determination that it has satisfied the so-called “economic prong” for establishing that a domestic industry exists based on InterDigital’s chipset product that practices the asserted patents and denied Samsung’s motion to strike and preclude introduction of evidence concerning InterDigital’s domestic industry product.
On February 27, 2008, Nokia filed a motion to extend the Target Date in the USITC proceeding. Samsung joined Nokia’s motion. InterDigital opposed this motion. On March 11, 2008, the Administrative Law Judge denied Nokia’s motion to extend the Target Date.
On March 15, 2008, Samsung moved for summary determination of invalidity with respect to Claim 7 of U.S. Patent No. 6,674,791 on the grounds that the claimed invention was anticipated. On April 22, 2008, the Administrative Law Judge granted Samsung’s summary determination motion that Claim 7 (the only asserted claim) of the ’791 patent was invalid and issued an Initial Determination to that effect, finding no violation by Samsung as to this ’791 patent. On April 29, 2008, InterDigital filed a Petition to have the full Commission review the Administrative Law Judge’s Initial Determination. InterDigital asked the Commission to reverse the Initial Determination as being based on a legal error in construing the asserted claim. Samsung opposed InterDigital’s Petition. The ’791 patent was asserted against only Samsung, and the resolution of this issue has no bearing on the case against Nokia. On May 30, 2008, the Commission issued a notice reversing and remanding the Administrative Law Judge’s Initial Determination of invalidity of Claim 7 of the ’791 patent.
On March 17, 2008, Samsung moved for summary determination on its defense of equitable estoppel, and Samsung and Nokia jointly moved for summary determination that U.S. Patent No. 6,693,579, which is asserted against both Samsung and Nokia, is invalid. InterDigital opposed these motions. On April 14, 2008, the Administrative Law Judge denied Samsung’s motion for summary determination of Samsung’s defense of equitable estoppel, and also denied Samsung and Nokia’s joint motion for summary determination that the ’579 patent is invalid.
On March 20, 2008, the U.S. District Court for the Southern District of New York, ruling from the bench, decided that Nokia is likely to prevail on the issue of whether Nokia’s alleged entitlement to a license is arbitrable. The Court did not consider or rule on whether Nokia is entitled to such a license. As a result, the Court ordered InterDigital to participate in arbitration of the license issue. The Court also entered a preliminary injunction requiring InterDigital to cease participation in the USITC proceeding by April 11, 2008, but only with respect to Nokia. The Court further ordered Nokia to post a $500,000 bond by March 28, 2008. InterDigital promptly filed a request for a stay of the preliminary injunction and for an expedited appeal with the U.S. Court of Appeals for the Federal Circuit, which transferred the appeal to the U.S. Court of Appeals for the Second Circuit. The preliminary injunction became
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effective on April 11, 2008, and, in accordance with the Court’s order, InterDigital filed a motion with the Administrative Law Judge to stay the USITC proceeding against Nokia pending InterDigital’s appeal of the District Court’s decision or, if that appeal is unsuccessful, pending the Nokia TDD Arbitration (described below). On April 14, 2008, the Administrative Law Judge ordered that the date for the commencement of the evidentiary hearing, originally scheduled for April 21, 2008, is suspended until further notice from the Administrative Law Judge. The Administrative Law Judge did not at that point change the scheduled date of July 11, 2008 for his initial determination in the investigation or the scheduled Target Date of November 12, 2008 for a decision by the USITC. InterDigital’s motion for a stay of the preliminary injunction and for an expedited appeal was considered by a panel of the Second Circuit on April 15, 2008. On April 16, 2008, the Second Circuit denied the motion for stay but set an expedited briefing schedule for resolving InterDigital’s appeal on the merits of whether the District Court’s order granting the preliminary injunction should be reversed.
On April 17, 2008, InterDigital filed a motion with the USITC to separate the currently consolidated investigations against Nokia and Samsung in order for the investigation to continue against Samsung pending the expedited appeal or, if the appeal is unsuccessful, pending the Nokia TDD Arbitration. Samsung and Nokia opposed InterDigital’s motion.
On May 16, 2008, the Administrative Law Judge deconsolidated the investigations against Samsung and Nokia and set an evidentiary hearing date in the investigation against Samsung (337-TA-601) to begin on July 8, 2008. On May 20, 2008, the Administrative Law Judge denied without prejudice all pending motions in the consolidated investigation (337-TA-613). On May 22, 2008, the Administrative Law Judge reset the Target Date for the USITC’s Final Determination in the Samsung investigation (337-TA-601) to March 25, 2009, requiring a final Initial Determination by the Administrative Law Judge to be entered no later than November 25, 2008.
On June 17, 2008, a panel of the U.S. Court of Appeals for the Second Circuit heard oral argument on InterDigital’s appeal from the Order of the U.S. District Court for the Southern District of New York preliminarily enjoining InterDigital from proceeding against Nokia in the consolidated investigation. On July 31, 2008, the Second Circuit reversed the preliminary injunction, finding that Nokia’s litigation conduct resulted in a waiver of any right to arbitrate its license dispute. InterDigital promptly notified the Administrative Law Judge in the Nokia investigation (337-TA-613) of the Second Circuit’s decision. Nokia’s deadline for petitioning for a rehearing is August 14, 2008, and the Second Circuit’s mandate will issue seven days after this deadline or, if a petition is filed, seven days after any denial of such a petition. After issuance of the mandate, the preliminary injunction will be removed and InterDigital anticipates that the Nokia investigation will move forward.
On June 24, 2008, the Administrative Law Judge entered summary determination on InterDigital’s motion that InterDigital has satisfied the domestic industry requirement based on its licensing activities. Samsung requested review of this decision by the full Commission. On July 25, 2008, the full Commission issued a notice that it would not review the Administrative Law Judge’s Initial Determination that a licensing-based domestic industry exists. As a result, the Administrative Law Judge’s Initial Determination of this issue has become the decision of the full Commission.
The evidentiary hearing in the Samsung investigation (337-TA-601) commenced on July 8, 2008 and concluded on July 15, 2008. As a result of the USITC’s decision on the ’791 patent, the hearing involved all five of the patents asserted against Samsung. In opening statements InterDigital reiterated its position that Samsung has violated Section 337 by engaging in unfair trade practices by selling for importation, importing into the United States, and selling after importation certain 3G handsets and components that infringe five of InterDigital’s patents. As anticipated, Samsung argued that no exclusion order should be entered against Samsung’s 3G WCDMA handsets or components. Based on a statement filed prior to the hearing, the Commission Staff (Staff) supported InterDigital on some issues and Samsung on others but ultimately recommended a finding of no Section 337 violation. The Staff recommendation is not binding on either the Administrative Law Judge or on the USITC. Typically, the ALJ’s final determination does not fully align with that of the Staff. In this case, as in other cases, the Staff position on certain key issues has not been adopted by the ALJ and the USITC. The final Initial Determination of the Administrative Law Judge is expected by November 25, 2008, and the Final Determination of the USITC is expected by March 25, 2009.
On July 10, 2008, the Administrative Law Judge reset the Target Date for the USITC’s Final Determination in the Nokia investigation (337-TA-613) to February 11, 2009 requiring a final Initial Determination by the Administrative Law Judge to be entered no later than October 14, 2008, although InterDigital anticipates that these dates may be reset again based on the July 31, 2008 decision of the U.S. Court of Appeals for the Second Circuit noted above.
Nokia TDD Arbitration
On April 1, 2008, Nokia Corporation filed a Request for Arbitration with the International Chamber of Commerce against InterDigital, Inc., IDC and ITC, seeking a declaration that Nokia is licensed under the patents asserted by InterDigital against Nokia in the USITC investigation pursuant to the parties’ TDD Development Agreement. InterDigital believes that Nokia’s request for declaratory relief in the TDD Arbitration is meritless.
On May 9, 2008, InterDigital filed an Answer to Nokia’s Request for Arbitration, requesting, inter alia: (i) that the arbitration be dismissed because the dispute is not arbitrable and, even if arbitrable, Nokia waived its right to arbitration; and, in the alternative, (ii) a declaration that Nokia is not licensed to the patents at issue in the USITC investigation pursuant to the parties’ TDD Development Agreement.
On July 17, 2008, the arbitral tribunal was constituted.
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On July 31, 2008, as discussed above, the United States Court of Appeals for the Second Circuit reversed the district court’s grant of a preliminary injunction requiring InterDigital to submit the TDD issue to arbitration, finding that Nokia waived any right to arbitrate the issue. InterDigital believes that Nokia should not be permitted to continue to pursue this arbitration in light of the Second Circuit’s finding of waiver. Nokia has not yet indicated whether it will continue to pursue the arbitration following the Second Circuit’s decision, and no schedule has yet been set in the arbitration.
Nokia UKII and UKIII Actions
In July 2005, Nokia filed a claim in the English High Court of Justice, Chancery Division, Patents Court (“English High Court”) against ITC seeking a Declaration that thirty-one of ITC’s UMTS European Patents registered in the United Kingdom are not essential IPR for the 3GPP Standard (“UKII”).
On December 21, 2007, the English High Court issued a judgment finding that European Patent (UK) 0,515,610, owned by ITC, is essential to the 3G UMTS WCDMA European standard promulgated by the European Telecommunications Standards Institute (ETSI) and that this patented invention is infringed by carrying out the method described in the standard. The ’610 patent relates to open loop power control, a fundamental aspect of 3G technology. Foreign counterparts having identical or similar claim language to the ’610 patent have been issued in many parts of the world, including the United States, Canada, Germany, France, Spain, Italy, and Sweden. The judicial determination of essentiality is in addition to Nokia’s withdrawal of its challenge to the essentiality of another patent, European Patent (UK) 0,515,675 relating to pilot codes, effectively conceding that that patent is essential as well.
In the judgment, the English High Court ruled that one claim of the ’610 patent was essential. The English High Court ruled that a second claim of the ’610 patent, as well as three additional patents, were not essential. A declaration of non-essentiality is not a finding that a particular third party product does not infringe an InterDigital patent, and no products were in issue in these proceedings.
During the UKII proceedings, Nokia made statements to the English High Court that it was not licensed under any InterDigital patents. After judgment, Nokia claimed to be licensed to an undetermined number of InterDigital patents. On April 3, 2008, InterDigital applied to re-open the English High Court’s judgment on the issue of discretion, and the hearing of this application was scheduled for September 15, 2008.
In December 2006, ITC filed a claim in the English High Court against Nokia seeking a Declaration that thirty-four of Nokia’s UMTS European Patents and one UMTS GB national patent all registered in the United Kingdom are not essential for the 3GPP Standard (“UKIII”). Nokia admitted in the proceedings that six of those patents are not essential for the 3GPP Standard. After the proceedings began, an additional five of the patents were transferred to Nokia Siemens Networks Oy, which was joined to the action as a second defendant and which admitted that one of the five transferred patents is not essential.
On March 14, 2008, Nokia applied to the English High Court to stay the UKIII action with respect to six Nokia patents that are subject to opposition proceedings brought by a third party before the European Patent Office. InterDigital opposed Nokia’s application for a stay. On April 8, 2008, the Court denied Nokia’s application for a stay.
The Court had scheduled a preliminary hearing for June 30, 2008 with respect to whether the Judge should exercise his discretion to issue the declaration being sought by InterDigital. Trial in the action was scheduled to begin in the fourth quarter of 2008.
The UKII and UKIII actions, relating to the essentiality of both InterDigital and Nokia patents registered in the United Kingdom, were brought to an end on July 2, 2008, pursuant to a confidential agreement between the parties. The UKIII preliminary hearing scheduled for June 30, 2008 did not commence before the action was ended.
During first half 2008, we reduced our accrual for the potential reimbursement of Nokia’s attorney’s fees associated with the UKII action from $7.8 million, which was accrued in 2007, to $6.6 million. As a result of the resolutions of the UKII and UKIII actions, we will recognize a $2.6 million one-time reduction to expenses in third quarter 2008.
Nokia Delaware Proceeding
In January 2005, Nokia filed a Complaint in the United States District Court for the District of Delaware (“Delaware District Court”) against InterDigital Communications Corporation (now IDC) and ITC (for purposes of the Nokia Delaware Proceeding described herein, IDC and ITC are collectively referred to as “InterDigital,” “we,” or “our”), alleging that we have used false or misleading descriptions or representations regarding our patents’ scope, validity, and applicability to products built to comply with 3G wireless phone Standards (“Nokia Delaware Proceeding”). We subsequently filed counterclaims based on Nokia’s licensing activities as well as Nokia’s false or misleading descriptions or representations regarding Nokia’s 3G patents and Nokia’s undisclosed funding and direction of an allegedly independent study of the essentiality of 3G patents.
On December 10, 2007, pursuant to a joint request by the parties, the Delaware District Court entered an Order staying the proceedings pending the full and final resolution of the Company’s USITC investigation against Nokia and Samsung. Specifically, the full and final resolution of the USITC investigation includes any initial or final determinations of the Administrative Law Judge overseeing the proceeding, the USITC, and any appeals therefrom. Pursuant to the Order, the parties and their affiliates are generally prohibited from initiating against the other parties, in any forum, any claims or counterclaims that are the same as the claims and counterclaims pending in the Nokia Delaware Proceeding, and should any of the same or similar claims or counterclaims be initiated by a party, the other parties may seek dissolution of the stay.
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Except for the Nokia Delaware Proceeding and the Nokia Arbitration Concerning Presentations (described below), the Order does not affect any of the other legal proceedings between the parties, including the USITC investigations involving InterDigital, Nokia, and Samsung, or the parallel Delaware District Court proceedings also brought by InterDigital against Nokia and Samsung.
Nokia Arbitration Concerning Presentations
In November 2006, InterDigital Communications Corporation (now IDC) and ITC filed a Request for Arbitration with the International Chamber of Commerce against Nokia (“Nokia Arbitration Concerning Presentations”), claiming that certain presentations Nokia has attempted to use in support of its claims in the Nokia Delaware Proceeding are confidential and, as a result, may not be used in the Nokia Delaware Proceeding pursuant to the parties’ agreement.
The December 10, 2007 Order entered by the Delaware District Court to stay the Nokia Delaware Proceeding (described above) also stayed the Nokia Arbitration Concerning Presentations pending the full and final resolution of the USITC investigation against Nokia and Samsung as described above.
Samsung Delaware Proceeding
In March 2007, Samsung Telecommunications America LLP (“Samsung Telecom”) and Samsung Electronics Co., Ltd. (“Samsung Electronics”) filed an action against InterDigital Communications Corporation (now IDC), ITC and another affiliate, Tantivy Communications, Inc. (collectively, for purposes of the Samsung Delaware Proceeding described herein, “InterDigital” or “our”), in the Delaware District Court, alleging that InterDigital has refused to comply with its alleged contractual obligations to be prepared to license our patents on fair, reasonable, and non-discriminatory (“FRAND”) terms and that InterDigital has allegedly engaged in unfair business practices. By their original Complaint in the action, the Samsung entities sought damages and declaratory relief, including declarations that: (i) InterDigital’s patents and patent applications allegedly promoted to standards bodies are unenforceable, (ii) the Samsung entities have a right to practice InterDigital’s intellectual property as a result of an alleged license from QUALCOMM Incorporated, (iii) nine specified InterDigital patents are invalid and/or not infringed by the Samsung entities, and (iv) InterDigital must offer the Samsung entities a license on FRAND terms.
In September 2007, Samsung Electronics filed a First Amended Complaint (“Amended Complaint”) in its proceeding in the Delaware District Court against InterDigital. The Amended Complaint includes Samsung’s originally pled claims concerning InterDigital’s alleged behavior with respect to standards bodies and licensing practices, but omits all of Samsung’s previously asserted claims for declaratory judgment that nine specified InterDigital patents are invalid and/or not infringed. The Amended Complaint was filed only on behalf of Samsung Electronics and, unlike the original Complaint, does not identify Samsung Telecom as a co-plaintiff.
InterDigital intends to defend itself vigorously against Samsung’s allegations in this matter. In November 2007, InterDigital filed its Answer to the Amended Complaint, disputing Samsung’s allegations and asserting counterclaims of infringement of two InterDigital patents. InterDigital simultaneously filed a partial motion to dismiss Samsung’s claim alleging violation of California’s Unfair Competition Law. No ruling has been made on InterDigital’s motion to dismiss, and no scheduling order has been issued in the case. The Court has not yet set this matter for an initial Case Management Conference, and discovery has not yet begun.
Samsung 2nd Arbitration and Related Confirmation Proceeding
In August 2006, an arbitral tribunal (“Tribunal”) operating under the auspices of the International Court of Arbitration of the International Chamber of Commerce issued a final award (“Award”) in an arbitration proceeding between InterDigital Communications Corporation (now IDC) and ITC (collectively, for purposes of the Samsung 2nd Arbitration and Related Confirmation Proceeding described herein, “InterDigital”) and Samsung Electronics. In its Award, the Tribunal ordered Samsung Electronics to pay to InterDigital, pursuant to the parties’ 1996 patent license agreement (“Samsung Agreement”), approximately $134 million in past royalties, plus interest on Samsung’s sale of single mode 2G GSM/TDMA and 2.5G GSM/GPRS/EDGE terminal units through 2005 (“Award”). The Tribunal also established the royalty rates to be applied to Samsung’s sales of covered products in 2006.
In September 2006, InterDigital filed an action seeking to enforce the arbitral Award in the U.S. District Court for the Southern District of New York (“Enforcement Action”). Subsequent to that filing, in September 2006 Samsung Electronics filed an opposition to the enforcement action, including filing a cross-petition to vacate or modify the Award and to stay the Award. Oral arguments were held in November 2007.
On December 10, 2007, the Honorable Richard J. Sullivan, the Judge in the Enforcement Action, confirmed the Award in its entirety and directed that Samsung pay InterDigital $150.25 million, comprised of $134 million in royalties plus interest less an approximate $6 million prepayment credit for sales of 2G terminal units through 2005, plus pre-judgment interest calculated at a rate of 5% per annum. The Order of Judgment denied all of Samsung’s petitions and motions and does not include a specified amount for royalties owed for 2006 under the arbitration award.
On December 18, 2007, Samsung filed an appeal with the United States Court of Appeals for the Second Circuit, and posted an appeal bond in the amount of approximately $166.7 million, with the New York District Court. By posting the appeal bond, Samsung has stayed execution of the Order of Judgment pending the appeal.
On February 25, 2008, Samsung filed a motion to stay its appeal and vacate the current briefing schedule pending the outcome of
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the Samsung 3rd Arbitration (described below). Samsung and InterDigital subsequently submitted briefing on the merits of Samsung’s appeal.
On May 14, 2008, the U.S. Court of Appeals for the Second Circuit granted Samsung’s motion to stay the appeal pending a decision in the Samsung 3rd Arbitration on whether Samsung is entitled to elect and have its royalties determined by reference to the April 2006 Nokia Settlement, which implemented a June 2005 Nokia arbitration Award (the “Nokia Settlement”), but the Court further provided that in the event there was not a decision in the Samsung 3rd Arbitration by July 1, 2008, any party may move to vacate the stay. On July 2, 2008, InterDigital filed a motion to vacate the stay. On July 14, 2008, Samsung filed an opposition to InterDigital’s motion to vacate the stay.
On July 16, 2008, as discussed below, InterDigital received notice that the arbitral tribunal in the Samsung 3rd Arbitration issued a Partial Final Award finding, inter alia, that Samsung is not entitled to any new royalty rate adjustment based on the Nokia Settlement. Following the issuance of the Partial Final Award, Samsung submitted a letter to the U.S. Court of Appeals for the Second Circuit advising the Court that the Samsung 3rd Arbitration does not moot its appeal and that it no longer opposes InterDigital’s motion to vacate the stay. The Court has not yet rendered a decision on InterDigital’s motion to vacate the stay, and no date has been set for oral argument on the merits of Samsung’s appeal.
Samsung 3rd Arbitration
In October 2006, Samsung Electronics filed a Request for Arbitration with the International Chamber of Commerce (“Samsung 3rd Arbitration”) against InterDigital Communications Corporation (now IDC) and ITC (collectively, for purposes of the Samsung 3rd Arbitration described herein, “InterDigital,” “we” or “us”) relating to the ongoing patent royalty dispute between Samsung and InterDigital. In the Samsung 3rd Arbitration, Samsung Electronics seeks to have a new arbitration panel determine new royalty rates for Samsung’s 2G/2.5G GSM/GPRS/EDGE product sales based on the Nokia Settlement. Samsung has purported to have elected the Nokia Settlement under the most favored licensee (“MFL”) clause in the Samsung Agreement. Samsung contends that it has the right to have a new rate, based on the Nokia Settlement, applied to its sales in the period from January 1, 2002 through December 31, 2006 in lieu of the royalty rates that have been determined by the Tribunal in the Samsung 2nd Arbitration for that period. In addition to seeking relief based on the Nokia Settlement, Samsung has expressly reserved a purported right to make an MFL election of another specified license agreement between InterDigital and a third party, and to add claims relating to that agreement. In the Samsung 3rd Arbitration proceeding, we have denied that Samsung is entitled to receive any new royalty rate adjustment based on the Nokia Settlement or the specified third party license agreement. We have also counterclaimed, seeking an Award of the royalties Samsung owes for its 2G/2.5G sales in 2006 at the royalty rate specified in the August 2006 Award in the Samsung 2nd Arbitration.
In February 2008, the arbitral tribunal heard oral argument on the issue of whether Samsung is entitled to elect the Nokia Settlement. On July 16, 2008, InterDigital received notice that the arbitral tribunal issued a Partial Final Award finding that Samsung is not entitled to an adjustment of its royalty obligations based on the Nokia Settlement. In light of this decision, the arbitral tribunal ordered the parties to report within 45 days following issuance of the Partial Final Award whether an agreement has been reached regarding the amount of royalties Samsung owes for its 2G/2.5G sales in 2006. If the parties are able to reach an agreement, the tribunal will order payment of the stipulated amount. If the parties are unable to reach an agreement on the amount of royalties Samsung owes for its 2G/2.5G sales in 2006, the parties will need to present evidence and/or argument in a further phase of this arbitration.
Federal
In May 2007, the Arbitrator in the arbitration proceeding between InterDigital Communications Corporation (now IDC) and ITC (collectively, for purposes of the Federal arbitration described herein, “InterDigital,” “we,” or “our”) and Federal Insurance Company (“Federal”), and relating to a Litigation Expense and Reimbursement Agreement signed in February 2000 by the parties (“Reimbursement Agreement”), refused to award the full amount of Federal’s claim, which was in excess of $33 million. The Arbitrator did award Federal approximately $13 million, pursuant to a formula set forth in the Reimbursement Agreement, for reimbursement of attorney’s fees and expenses previously paid to or on behalf of InterDigital by Federal, plus approximately $2 million in interest. As additional reimbursement of attorney’s fees and expenses, the Arbitrator awarded $5 million, without interest, as Federal’s share under the Reimbursement Agreement of “additional value” of the 2003 settlement between InterDigital and Ericsson Inc. Further, the Arbitrator ruled that InterDigital must pay Federal 10% of any additional payments InterDigital may receive as a result of an audit of Sony Ericsson’s sales. In June 2007, we notified Federal that we had received $2 million from Sony Ericsson to resolve Sony Ericsson’s payment obligations following an audit. The approximately $13 million portion of the Award represents a percentage of the amounts InterDigital has received since March 2003 from Telefonaktiebolaget LM Ericsson and Ericsson Inc. and Sony Ericsson Mobile Communications AB under their respective patent license agreements.
In June 2007, Federal moved to confirm the Award in the United States District Court for the Eastern District of Pennsylvania. Also in June 2007, we filed an opposition to Federal’s motion to confirm the arbitration Award and a cross motion to vacate a portion of the Award, totaling approximately $14.5 million, on the ground that the Arbitrator exceeded the scope of her authority. We also moved the Court to stay confirmation of the Award pending adjudication of our recoupment defense whereby we are seeking to recoup the full amount of the Award based on Federal’s bad faith breach of its contractual and fiduciary duties to us. In July 2007, the Court heard oral arguments on Federal’s motion to confirm the Award, our opposition thereto, and our cross motion to vacate the
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Award and to stay confirmation pending adjudication of our recoupment defense.
On March 24, 2008, the Court: (i) granted Federal’s motion to confirm the arbitration award; and (ii) denied InterDigital’s motion to stay confirmation of the arbitration award pending adjudication of InterDigital’s claim for recoupment based on Federal’s bad faith breach of its duties as InterDigital’s insurer. On April 1, 2008, InterDigital filed a notice of appeal to the United States Court of Appeals for the Third Circuit. In order to stay execution on Federal’s judgment pending appeal, InterDigital deposited $23 million with the Clerk of the Court, an amount sufficient to secure Federal’s judgment and anticipated interest until decision by the Court of Appeals. On April 10, 2008, the Court extended Federal’s deadline for seeking costs and fees until after conclusion of the appeal.
On May 6, 2008, the Court of Appeals assigned the matter for mediation in the Court of Appeals mediation program. The mediation program concluded without any settlement. Consequently, InterDigital and Federal have commenced briefing the appeal.
On July 7, 2008, the Company filed its opening brief, seeking reversal of the District Court’s refusal to hear InterDigital’s recoupment claim and remand to the District Court for adjudication of such claim as a set-off to Federal’s arbitration award. Federal’s brief was filed on August 6, 2008, and the Company’s reply is due on August 20, 2008. After completion of briefing, the Court of Appeals will decide whether and when to hear oral argument.
At the time of judgment we recorded an expense of approximately $16.6 million, which represents the total amount of the Award through the third quarter of 2007, less the amount of a previously accrued liability of $3.4 million. We have also accrued post-judgment interest of $1.2 million ($0.5 million during first half 2008) and reported such interest expense within the interest and investment income, net, line item of our Statement of Operations.
Other
We have filed patent applications in the United States and in numerous foreign countries. In the ordinary course of business, we currently are, and expect from time to time to be, subject to challenges with respect to the validity of our patents and with respect to our patent applications. We intend to continue to defend vigorously the validity of our patents and defend against any such challenges. However, if certain key patents are revoked or patent applications are denied, our patent licensing opportunities could be materially and adversely affected.
In addition to disputes associated with enforcement and licensing activities regarding our intellectual property, including the litigation and other proceedings described above, we are a party to other disputes and legal actions not related to our intellectual property, but arising in the ordinary course of our business. Based upon information presently available to us, we do not believe these matters, even if adversely adjudicated or settled, would have a material adverse effect on our financial condition, results of operations or cash flows.
10-Q
INTERDIGITAL, INC. filed this Form 10-Q on 08/08/08
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-11152
INTERDIGITAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
PENNSYLVANIA 23-1882087
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer
Identification No.)
781 Third Avenue, King of Prussia, PA 19406-1409
(Address of Principal Executive Offices and Zip Code)
(610) 878-7800
(Registrant’s Telephone Number, Including Area Code)
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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yeso No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, par value $.01 per share 44,734,008
Title of Class Outstanding at July 31, 2008
INTERDIGITAL, INC. AND SUBSIDIARIES
INDEX
PAGES
Part I — Financial Information:
Item 1 Condensed Consolidated Financial Statements (unaudited):
5
Condensed Consolidated Balance Sheets — June 30, 2008 and December 31, 2007
5
Condensed Consolidated Statements of Operations — Three and Six Months Ended June 30, 2008 and 2007
6
Condensed Consolidated Statements of Cash Flows — Six Months Ended June 30, 2008 and 2007
7
Notes to Condensed Consolidated Financial Statements
8
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations
18
Item 3 Quantitative and Qualitative Disclosures About Market Risk
27
Item 4 Controls and Procedures
27
Part II — Other Information:
Item 1 Legal Proceedings
27
Item 1A Risk Factors
27
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
28
Item 4 Submission of Matters to a Vote of Security Holders
Item 6 Exhibits
28
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350
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InterDigital® is a registered trademark and SlimChipTM is a trademark of InterDigital, Inc. All other trademarks, service marks and/or trade names appearing in this Form 10-Q are the property of their respective holders.
GLOSSARY OF TERMS
2G
“Second Generation.” A generic term usually used in reference to voice-oriented digital wireless products, primarily mobile handsets that provide basic voice services.
2.5G
A generic term usually used in reference to fully integrated voice and data digital wireless devices offering higher data rate services and features compared to 2G.
3G
“Third Generation.” A generic term usually used in reference to the generation of digital mobile devices and networks after 2G and 2.5G, which provide high speed data communications capability along with voice services.
3GPP
“3G Partnership Project.” A partnership of worldwide accredited Standards organizations, the purpose of which is to draft specifications for Third Generation mobile telephony.
Bandwidth
A range of frequencies that can carry a signal on a transmission medium, measured in Hertz and computed by subtracting the lower frequency limit from the upper frequency limit.
CDMA
“Code Division Multiple Access.” A method of digital spread spectrum technology wireless transmission that allows a large number of users to share access to a single radio channel by assigning unique code sequences to each user.
Chip
An electronic circuit that consists of many individual circuit elements integrated onto a single substrate.
Circuit
The connection of channels, conductors and equipment between two given points through which an electric current may be established.
Digital
Information transmission where the data is represented in discrete numerical form.
Digital Cellular
A cellular communications system that uses over-the-air digital transmission.
EDGE
“Enhanced Data rates for GSM Evolution.” Technology designed to deliver data at rates up to 473.6 Kbps, triple the data rate of GSM wireless services, and built on the existing GSM Standard and core network infrastructure. EDGE systems built in Europe are considered a 2.5G technology.
FDMA
“Frequency Division Multiple Access.” A technique in which the available transmission of bandwidth of a channel is divided by frequencies into narrower bands over fixed time intervals, resulting in more efficient voice or data transmissions over a single channel.
Frequency
The rate at which an electrical current or signal alternates, usually measured in Hertz.
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GPRS
“General Packet Radio Systems.” A packet-based wireless communications service that enables high-speed wireless Internet and other data communications via GSM networks.
GSM
“Global System for Mobile Communications.” A digital cellular Standard, based on TDMA technology, specifically developed to provide system compatibility across country boundaries.
Hertz
The unit of measuring radio frequency (one cycle per second).
Internet
A network comprised of numerous interconnected commercial, academic and governmental networks in over 100 countries.
IPR
“Intellectual Property Right.”
Kbps
“Kilobits per Second.” A measure of information-carrying capacity (i.e., the data transfer rate) of a circuit, in thousands of bits.
Mbps
“Megabits per Second.” A measure of information-carrying capacity of a circuit, in millions of bits.
Modem
A combination of the words modulator and demodulator, referring to a device that modifies a signal (such as sound or digital data) to allow it to be carried over a medium such as wire or radio.
Multiple Access
A methodology (e.g., FDMA, TDMA, CDMA) by which multiple users share access to a transmission channel. Most modern systems accomplish this through “demand assignment,” where the specific parameter (frequency, time slot or code) is automatically assigned when a subscriber requires it.
Standards
Specifications that reflect agreements on products, practices or operations by nationally or internationally accredited industrial and professional associations or governmental bodies in order to allow for interoperability.
TDMA
“Time Division Multiple Access.” A method of digital wireless transmission that allows a multiplicity of users to share access (in a time-ordered sequence) to a single channel without interference by assigning unique time segments to each user within the channel.
Terminal/Terminal Unit
Equipment at the end of a communications path. Often referred to as an end-user device or handset. Terminal units include mobile phone handsets, personal digital assistants, computer laptops and telephones.
WCDMA
“Wideband Code Division Multiple Access” or “Wideband CDMA.” The next generation of CDMA technology optimized for high speed packet-switched data and high capacity circuit-switched capabilities. A 3G technology.
Wideband
A communications channel with a user data rate higher than a voice-grade channel; usually 64Kbps to 2Mbps.
Wireless
Radio-based systems that allow transmission of information without a physical connection such as copper wire or optical fiber.
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INTERDIGITAL, INC. AND SUBSIDIARIES
PART I — FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
JUNE 30, DECEMBER 31,
2008 2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$ 132,077 $ 92,018
Short-term investments
106,118 85,449
Accounts receivable
35,715 130,880
Deferred tax assets
43,734 43,734
Prepaid and other current assets
12,416 19,332
Total current assets
330,060 371,413
PROPERTY AND EQUIPMENT, NET
22,567 24,594
PATENTS, NET
95,712 87,092
DEFERRED TAX ASSETS
14,834 14,834
OTHER NON-CURRENT ASSETS, NET
35,834 36,952
168,947 163,472
TOTAL ASSETS
$ 499,007 $ 534,885
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt
$ 274 $ 1,311
Accounts payable
17,763 40,850
Accrued compensation and related expenses
18,269 10,476
Deferred revenue
81,585 78,899
Taxes payable
— 15,675
Other accrued expenses
10,696 9,973
Total current liabilities
128,587 157,184
LONG-TERM DEBT
2,264 2,406
LONG-TERM DEFERRED REVENUE
245,698 224,545
OTHER LONG-TERM LIABILITIES
6,774 13,683
TOTAL LIABILITIES
383,323 397,818
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred Stock, $.10 par value, 14,399 shares authorized 0 shares issued and outstanding
— —
Common Stock, $.01 par value, 100,000 shares authorized, 65,689 and 65,292 shares issued and 45,113 and 46,497 shares outstanding
657 653
Additional paid-in capital
467,082 465,599
Retained Earnings
146,477 133,308
Accumulated other comprehensive income
193 206
614,409 599,766
Treasury stock, 20,576 and 18,795 shares of common held at cost
498,725 462,699
Total shareholders’ equity
115,684 137,067
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$ 499,007 $ 534,885
The accompanying notes are an integral part of these statements.
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INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2008 2007 2008 2007
REVENUES
$ 58,706 $ 55,006 $ 114,733 $ 122,824
OPERATING EXPENSES:
Sales and marketing
2,049 1,879 4,437 3,975
General and administrative
5,705 6,126 11,380 12,670
Patents administration and licensing
20,436 18,075 35,487 31,280
Development
22,677 21,193 45,879 42,977
Arbitration and litigation contingencies
— 16,612 (1,200 ) 16,612
50,867 63,885 95,983 107,514
Income (loss) from operations
7,839 (8,879 ) 18,750 15,310
OTHER INCOME:
Interest and investment income, net
1,231 2,272 1,669 4,905
Income (loss) before income taxes
9,070 (6,607 ) 20,419 20,215
INCOME TAX (PROVISION) BENEFIT
(3,218 ) 2,201 (7,250 ) (6,952 )
NET INCOME (LOSS) APPLICABLE TO COMMON SHAREHOLDERS
$ 5,852 $ (4,406 ) $ 13,169 $ 13,263
NET INCOME (LOSS) PER COMMON SHARE — BASIC
$ 0.13 $ (0.09 ) $ 0.29 $ 0.27
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC
45,358 46,957 45,892 48,362
NET INCOME (LOSS) PER COMMON SHARE — DILUTED
$ 0.13 $ (0.09 ) $ 0.28 $ 0.26
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — DILUTED
46,450 46,957 46,886 50,379
The accompanying notes are an integral part of these statements.
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INTERDIGITAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
FOR THE SIX MONTHS
ENDED JUNE 30,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$ 13,169 $ 13,263
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
13,698 9,890
Deferred revenue recognized
(58,625 ) (58,185 )
Increase in deferred revenue
82,464 116,516
Deferred income taxes
— (16,466 )
Share-based compensation
2,885 4,583
Investment Write-down
745 —
Other
(248 ) 15
Decrease (increase) in assets:
Receivables
95,165 26,341
Deferred charges
117 1,092
Other current assets
7,643 (2,166 )
(Decrease) increase in liabilities:
Accounts payable
(22,590 ) 17,319
Accrued compensation
(1,968 ) (2,027 )
Accrued taxes payable
(15,675 ) 10,619
Other accrued expenses
723 109
Net cash provided by operating activities
117,503 120,903
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments
(102,049 ) (78,562 )
Sales of short-term investments
81,452 92,763
Purchases of property and equipment
(3,063 ) (10,826 )
Capitalized patent costs
(15,608 ) (11,440 )
Capitalized technology license costs
(1,220 ) (7,800 )
Long-term investments
(651 ) (5,000 )
Net cash used by investing activities
(41,139 ) (20,865 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from exercise of stock options and employee stock purchase plan
956 3,741
Payments on long-term debt, including capital lease obligations
(1,179 ) (184 )
Repurchase of Common Stock
(36,580 ) (165,356 )
Tax benefit from share-based compensation
498 3,330
Net cash used by financing activities
(36,305 ) (158,469 )
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
40,059 (58,431 )
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
92,018 166,385
CASH AND CASH EQUIVALENTS, END OF PERIOD
$ 132,077 $ 107,954
The accompanying notes are an integral part of these statements.
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INTERDIGITAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008
(unaudited)
1. BASIS OF PRESENTATION:
In the opinion of management, the accompanying unaudited, condensed, consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial position of InterDigital, Inc. (collectively with its subsidiaries referred to as “InterDigital,” the “Company,” “we,” “us” or “our”) as of June 30, 2008, the results of our operations for the three and six months ended June 30, 2008 and 2007 and our cash flows for the six months ended June 30, 2008 and 2007. The accompanying unaudited, condensed, consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and, accordingly, do not include all of the detailed schedules, information and notes necessary to state fairly the financial condition, results of operations and cash flows in conformity with generally accepted accounting principles. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s latest Annual Report on Form 10-K for the fiscal year ended December 31, 2007 (“2007 Form 10-K”) as filed with the Securities and Exchange Commission (“SEC”) on February 29, 2008. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year. We have one reportable segment.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
There have been no material changes in our existing accounting policies from the disclosures included in our 2007 Form 10-K, except as discussed below.
New Accounting Pronouncements
SFAS No. 157
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. For financial assets and liabilities, SFAS No. 157 was effective for us beginning January 1, 2008. In February 2008, the FASB deferred the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) until January 1, 2009. The adoption of SFAS No. 157 for financial assets and liabilities did not have an effect on the Company’s financial condition or results of operations, see Note 11. The Company is currently evaluating the effect, if any, of the adoption of SFAS No. 157 for non-financial assets and liabilities on its financial condition and results of operations.
SFAS No. 159
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which provides companies with an option to report selected financial assets and liabilities at fair value in an attempt to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS No. 159 was effective for us beginning January 1, 2008. The Company’s adoption of SFAS No. 159 on January 1, 2008 did not materially affect its financial position or results of operations, as the Company did not elect the option to report selected financial assets and liabilities at fair value.
SFAS No. 141-R
In December 2007, the FASB issued SFAS No. 141-R, Business Combinations, which revised SFAS No. 141, Business Combinations. SFAS No. 141-R is effective for us beginning January 1, 2009. Under SFAS No. 141, organizations utilized the announcement date as the measurement date for the purchase price of the acquired entity. SFAS No. 141-R requires measurement at the date the acquirer obtains control of the acquiree, generally referred to as the acquisition date. SFAS No. 141-R will have a significant impact on the accounting for transaction costs and restructuring costs, as well as the initial recognition of contingent assets and liabilities assumed during a business combination. Under SFAS No. 141-R, adjustments to the acquired entity’s deferred tax assets and uncertain tax position balances occurring outside the measurement period are recorded as a component of the income tax expense, rather than goodwill. The Company expects to adopt this statement on January 1, 2009. SFAS No. 141-R’s impact on accounting for business combinations is dependent upon acquisitions, if any, made on or after that time.
FSP No. EITF 03-6-1
In June 2008, the FASB issued Staff Position (“FSP”) No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, Earnings Per Share. Under the guidance in FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two class method. FSP EITF 03-6-1 is effective for fiscal periods beginning after December 15, 2008. All prior-period earnings per share data presented shall be adjusted retrospectively. Early application is not permitted. We are currently evaluating the potential impact of the adoption of this FSP to our Consolidated Income Statements.
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2. LEGAL ENTITY REORGANIZATION:
On July 2, 2007, for the purpose of reorganizing into a holding company structure, InterDigital Communications Corporation executed a Plan of Reorganization and an Agreement and Plan of Merger (“Merger”) with InterDigital, Inc., a newly formed Pennsylvania corporation, and another newly formed Pennsylvania corporation owned 100% by InterDigital, Inc. As a result of the Merger, InterDigital Communications Corporation became a wholly-owned subsidiary of InterDigital, Inc. These transactions are herein referred to collectively as the “Reorganization.” As a result of the Reorganization, neither the business conducted by InterDigital, Inc. and InterDigital Communications Corporation in the aggregate, nor the consolidated assets and liabilities of InterDigital, Inc. and InterDigital Communications Corporation in the aggregate, has changed.
By virtue of the Merger, each share of InterDigital Communications Corporation’s outstanding common stock has been converted, on a share-for-share basis, into a share of common stock of InterDigital, Inc. As a result, each shareholder of InterDigital Communications Corporation has become the owner of an identical number of shares of common stock of InterDigital, Inc.
Further, each outstanding stock option and restricted stock unit (“RSU”) with respect to the acquisition of shares of InterDigital Communications Corporation’s common stock now represents a stock option or RSU, as the case may be, with respect to the acquisition of an identical number of shares of InterDigital, Inc.’s common stock, upon the same terms and conditions as the original stock option or RSU.
Immediately following the Merger, the provisions of the articles of incorporation and bylaws of InterDigital, Inc. are the same as those of InterDigital Communications Corporation prior to the Merger. Immediately following the Merger, the authorized capital stock of InterDigital, Inc., the designations, rights, powers and preferences of such capital stock and the qualifications, limitations and restrictions thereof are also the same as the capital stock of InterDigital Communications Corporation immediately prior to the Merger. Immediately following the Merger, the directors and executive officers of InterDigital, Inc. are the same individuals who were directors and executive officers, respectively, of InterDigital Communications Corporation immediately prior to the Merger.
3. TECHNOLOGY SOLUTIONS AGREEMENTS:
We account for portions of our technology solutions agreements using the proportional performance method. During second quarter 2008, we recognized related revenue of approximately $1.8 million using the proportional performance method. During first half 2008 and 2007, we recognized related revenue of approximately $3.3 million and $0.6 million, respectively, using the proportional performance method. Our accounts receivable at June 30, 2008 and December 31, 2007 included unbilled amounts of $3.3 million and $0.3 million, respectively. We expect to bill and collect such amounts within twelve months of each respective balance sheet date.
4. INCOME TAXES:
In first half 2008, our effective tax rate was approximately 35.5% based on the statutory federal tax rate net of permanent differences. During first half 2007, our effective tax rate was 34.4% based on the statutory federal tax rate net of permanent differences, including a research and development credit associated with our 2007 development activity.
During first half 2008, we paid approximately $15.9 million of foreign withholding tax. We previously established a corresponding deferred tax asset related to foreign tax credits that we expect to utilize to offset future U.S. federal income taxes.
Our future book tax expense may also be affected by charges associated with any share-based tax shortfalls that may occur under SFAS No. 123(R). However, we cannot predict if, when or to what extent this will affect our future tax expense. If, in the course of future tax planning, we identify tax saving opportunities that entail amending prior year returns in order to avail ourselves fully of credits that we previously considered unavailable to us, we will recognize the benefit of the credits in the period in which they are both identified and quantified, thereby reducing the book tax expense in that period.
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5. NET INCOME (LOSS) PER SHARE:
The following table sets forth a reconciliation of the shares used in the basic and diluted net income (loss) per share computations:
(In thousands, except per share data)
Three Months Ended June 30, 2008 Three Months Ended June 30, 2007
Income Shares Per-Share Income (loss) Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Net income (loss) per share — basic:
Net income (loss) available to Common Shareholders
$ 5,852 45,358 $ 0.13 $ (4,406 ) 46,957 $ (0.09 )
Effect of dilutive options, warrants and RSUs
— 1,092 — — — —
Net income(loss) per share — diluted:
Net income (loss) available to Common Shareholders + dilutive effects of options, warrants and RSUs
$ 5,852 46,450 $ 0.13 $ (4,406 ) 46,957 $ (0.09 )
Six Months Ended June 30, 2008 Six Months Ended June 30, 2007
Income Shares Per-Share Income Shares Per-Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
Net income per share — basic:
Net income available to Common Shareholders
$ 13,169 45,892 $ 0.29 $ 13,263 48,362 $ 0.27
Effect of dilutive options, warrants and RSUs
— 994 (0.01 ) — 2,017 (0.01 )
Net income per share — diluted:
Net income available to Common Shareholders + dilutive effects of options, warrants and RSUs
$ 13,169 46,886 $ 0.28 $ 13,263 50,379 $ 0.26
For the three and six months ended June 30, 2008, options to purchase approximately 0.8 million shares and 0.9 million shares, respectively, of common stock were excluded from the computation of diluted earnings per share because the exercise prices of these options were greater than the weighted-average market price of our common stock during this period and, therefore, their effect would have been anti-dilutive.
For the three months ended June 30, 2007, the effects of all options and RSU’s were excluded from the computation of diluted earnings per share as a result of a net loss reported in the period. For the six months ended June 30, 2007, options to purchase approximately 0.5 million shares of common stock were excluded from the computation of diluted earnings per share because the exercise prices of these options were greater than the weighted-average market price of our common stock during this period and, therefore, their effect would have been anti-dilutive.
6. LITIGATION AND LEGAL PROCEEDINGS:
Samsung and Nokia United States International Trade Commission (“USITC” or the “Commission”) Proceedings and Related Delaware District Court Proceedings
In March 2007, InterDigital, Inc.’s wholly-owned subsidiaries InterDigital Communications, LLC (“IDC”) and InterDigital Technology Corporation (“ITC”) (collectively, for purposes of the Samsung and Nokia United States International Trade Commission Proceedings and Related Delaware District Court Proceedings described herein, “InterDigital,” “we,” or “our”) filed a Complaint against Samsung Electronics Co. Ltd. and certain of its affiliates (collectively, “Samsung”) in the USITC alleging that Samsung engages in unfair trade practices by selling for importation into the United States, importing into the United States, and selling after importation into the United States certain 3G handsets and components that infringe three of InterDigital’s patents. In May 2007 and December 2007, a fourth patent and fifth patent, respectively, were added to our Complaint against Samsung. The Complaint against Samsung seeks an exclusion order barring from entry into the United States infringing 3G WCDMA handsets and components that are imported by or on behalf of Samsung. Our Complaint also seeks a cease-and-desist order to bar sales of infringing Samsung products that have already been imported into the United States.
In addition, on the same date as our filing of the Samsung USITC action referenced above, we also filed a Complaint in the United States District Court for the District of Delaware (“Delaware District Court”) alleging that Samsung’s 3G WCDMA handsets infringe the same three InterDigital patents identified in the original Samsung USITC Complaint. The U.S. trade laws provide for a mandatory stay of parallel district court proceedings at the request of a respondent. In June 2007, the Delaware District Court entered a Stipulated Order staying this Delaware District Court proceeding against Samsung. The Stipulated Order was agreed to by the parties. The Stipulated Order stays the proceeding until the USITC’s determination in this matter becomes final. The Delaware District Court permitted InterDigital to add the fourth and fifth patents asserted against Samsung in the USITC action to this stayed Delaware action.
In August 2007, we filed a USITC Complaint against Nokia Corporation and Nokia, Inc. (collectively, “Nokia”) alleging that Nokia engaged in an unfair trade practice by selling for importation into the United States, importing into the United States, and selling after importation into the United States certain 3G mobile handsets and components that infringe two of InterDigital’s patents. In November 2007 and December 2007, a third patent and fourth patent, respectively, were added to our Complaint against Nokia. The Complaint against Nokia seeks an exclusion order barring from entry into the United States infringing 3G mobile handsets and components that are imported by or on behalf of
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Nokia. Our Complaint also seeks a cease-and-desist order to bar further sales of infringing Nokia products that have already been imported into the United States.
In addition, on the same date as our filing of the Nokia USITC action referenced above, we also filed a Complaint in the Delaware District Court alleging that Nokia’s 3G mobile handsets and components infringe the same two InterDigital patents identified in the original Nokia USITC Complaint. This Delaware action was also stayed on January 10, 2008, pursuant to the mandatory, statutory stay of parallel district court proceedings at the request of a respondent in a USITC investigation. Thus, this Delaware action is stayed until the USITC’s determination in this matter becomes final. The Delaware District Court permitted InterDigital to add the third and fourth patents asserted against Nokia in the USITC action to this stayed Delaware action.
Nokia, joined by Samsung, moved to consolidate the Samsung and Nokia USITC proceedings. On October 24, 2007, the Honorable Paul J. Luckern, the Administrative Law Judge overseeing the two USITC proceedings against Samsung and Nokia, respectively, issued an Order to consolidate the two pending investigations. Pursuant to the Order, the schedules for both investigations were revised to consolidate proceedings and set a unified evidentiary hearing on April 21-28, 2008, the filing of a single initial determination by Judge Luckern by July 11, 2008, and a target date for the consolidated investigations of November 12, 2008, by which date the USITC should issue its final determination (the “Target Date”).
On December 4, 2007, Nokia moved for an order terminating or, alternatively, staying the USITC investigation as to Nokia, on the ground that Nokia and InterDigital must first arbitrate a dispute as to whether Nokia is licensed under the patents asserted by InterDigital against Nokia in the USITC investigation. On January 8, 2008, Judge Luckern issued an order denying Nokia’s motion and holding that Nokia has waived its arbitration defense by instituting and participating in the investigation and other legal proceedings. On February 13, 2008, Nokia filed an action in the U.S. District Court for the Southern District of New York, seeking to preliminarily enjoin InterDigital from proceeding with the USITC action with respect to Nokia, in spite of Judge Luckern’s ruling denying Nokia’s motion to terminate the investigation. Nokia raised in this preliminary injunction action the same arguments it raised in its motion to terminate the USITC investigation, namely that InterDigital allegedly must first arbitrate its alleged license dispute with Nokia and that Nokia has not waived arbitration of this defense.
On February 8, 2008, Nokia filed a motion for summary determination in the USITC that InterDigital cannot show that a domestic industry exists in the United States as required to obtain relief. Samsung joined this motion. InterDigital opposed this motion. On February 14, 2008, InterDigital filed a motion for summary determination that InterDigital satisfies the domestic industry requirement based on its licensing activities. On February 26, 2008, InterDigital filed a motion for summary determination that it has separately satisfied the so-called “economic prong” for establishing that a domestic industry exists based on InterDigital’s chipset product that practices the asserted patents. Samsung and Nokia opposed these motions. On March 17, 2008, Samsung and Nokia filed a motion to strike any evidence concerning InterDigital’s product and to preclude InterDigital from introducing any such evidence in relation to domestic industry at the evidentiary hearing. On March 26, 2008, the Administrative Law Judge granted InterDigital’s motion for summary determination that it has satisfied the so-called “economic prong” for establishing that a domestic industry exists based on InterDigital’s chipset product that practices the asserted patents and denied Samsung’s motion to strike and preclude introduction of evidence concerning InterDigital’s domestic industry product.
On February 27, 2008, Nokia filed a motion to extend the Target Date in the USITC proceeding. Samsung joined Nokia’s motion. InterDigital opposed this motion. On March 11, 2008, the Administrative Law Judge denied Nokia’s motion to extend the Target Date.
On March 15, 2008, Samsung moved for summary determination of invalidity with respect to Claim 7 of U.S. Patent No. 6,674,791 on the grounds that the claimed invention was anticipated. On April 22, 2008, the Administrative Law Judge granted Samsung’s summary determination motion that Claim 7 (the only asserted claim) of the ’791 patent was invalid and issued an Initial Determination to that effect, finding no violation by Samsung as to this ’791 patent. On April 29, 2008, InterDigital filed a Petition to have the full Commission review the Administrative Law Judge’s Initial Determination. InterDigital asked the Commission to reverse the Initial Determination as being based on a legal error in construing the asserted claim. Samsung opposed InterDigital’s Petition. The ’791 patent was asserted against only Samsung, and the resolution of this issue has no bearing on the case against Nokia. On May 30, 2008, the Commission issued a notice reversing and remanding the Administrative Law Judge’s Initial Determination of invalidity of Claim 7 of the ’791 patent.
On March 17, 2008, Samsung moved for summary determination on its defense of equitable estoppel, and Samsung and Nokia jointly moved for summary determination that U.S. Patent No. 6,693,579, which is asserted against both Samsung and Nokia, is invalid. InterDigital opposed these motions. On April 14, 2008, the Administrative Law Judge denied Samsung’s motion for summary determination of Samsung’s defense of equitable estoppel, and also denied Samsung and Nokia’s joint motion for summary determination that the ’579 patent is invalid.
On March 20, 2008, the U.S. District Court for the Southern District of New York, ruling from the bench, decided that Nokia is likely to prevail on the issue of whether Nokia’s alleged entitlement to a license is arbitrable. The Court did not consider or rule on whether Nokia is entitled to such a license. As a result, the Court ordered InterDigital to participate in arbitration of the license issue. The Court also entered a preliminary injunction requiring InterDigital to cease participation in the USITC proceeding by April 11, 2008, but only with respect to Nokia. The Court further ordered Nokia to post a $500,000 bond by March 28, 2008. InterDigital promptly filed a request for a stay of the preliminary injunction and for an expedited appeal with the U.S. Court of Appeals for the Federal Circuit, which transferred the appeal to the U.S. Court of Appeals for the Second Circuit. The preliminary injunction became
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effective on April 11, 2008, and, in accordance with the Court’s order, InterDigital filed a motion with the Administrative Law Judge to stay the USITC proceeding against Nokia pending InterDigital’s appeal of the District Court’s decision or, if that appeal is unsuccessful, pending the Nokia TDD Arbitration (described below). On April 14, 2008, the Administrative Law Judge ordered that the date for the commencement of the evidentiary hearing, originally scheduled for April 21, 2008, is suspended until further notice from the Administrative Law Judge. The Administrative Law Judge did not at that point change the scheduled date of July 11, 2008 for his initial determination in the investigation or the scheduled Target Date of November 12, 2008 for a decision by the USITC. InterDigital’s motion for a stay of the preliminary injunction and for an expedited appeal was considered by a panel of the Second Circuit on April 15, 2008. On April 16, 2008, the Second Circuit denied the motion for stay but set an expedited briefing schedule for resolving InterDigital’s appeal on the merits of whether the District Court’s order granting the preliminary injunction should be reversed.
On April 17, 2008, InterDigital filed a motion with the USITC to separate the currently consolidated investigations against Nokia and Samsung in order for the investigation to continue against Samsung pending the expedited appeal or, if the appeal is unsuccessful, pending the Nokia TDD Arbitration. Samsung and Nokia opposed InterDigital’s motion.
On May 16, 2008, the Administrative Law Judge deconsolidated the investigations against Samsung and Nokia and set an evidentiary hearing date in the investigation against Samsung (337-TA-601) to begin on July 8, 2008. On May 20, 2008, the Administrative Law Judge denied without prejudice all pending motions in the consolidated investigation (337-TA-613). On May 22, 2008, the Administrative Law Judge reset the Target Date for the USITC’s Final Determination in the Samsung investigation (337-TA-601) to March 25, 2009, requiring a final Initial Determination by the Administrative Law Judge to be entered no later than November 25, 2008.
On June 17, 2008, a panel of the U.S. Court of Appeals for the Second Circuit heard oral argument on InterDigital’s appeal from the Order of the U.S. District Court for the Southern District of New York preliminarily enjoining InterDigital from proceeding against Nokia in the consolidated investigation. On July 31, 2008, the Second Circuit reversed the preliminary injunction, finding that Nokia’s litigation conduct resulted in a waiver of any right to arbitrate its license dispute. InterDigital promptly notified the Administrative Law Judge in the Nokia investigation (337-TA-613) of the Second Circuit’s decision. Nokia’s deadline for petitioning for a rehearing is August 14, 2008, and the Second Circuit’s mandate will issue seven days after this deadline or, if a petition is filed, seven days after any denial of such a petition. After issuance of the mandate, the preliminary injunction will be removed and InterDigital anticipates that the Nokia investigation will move forward.
On June 24, 2008, the Administrative Law Judge entered summary determination on InterDigital’s motion that InterDigital has satisfied the domestic industry requirement based on its licensing activities. Samsung requested review of this decision by the full Commission. On July 25, 2008, the full Commission issued a notice that it would not review the Administrative Law Judge’s Initial Determination that a licensing-based domestic industry exists. As a result, the Administrative Law Judge’s Initial Determination of this issue has become the decision of the full Commission.
The evidentiary hearing in the Samsung investigation (337-TA-601) commenced on July 8, 2008 and concluded on July 15, 2008. As a result of the USITC’s decision on the ’791 patent, the hearing involved all five of the patents asserted against Samsung. In opening statements InterDigital reiterated its position that Samsung has violated Section 337 by engaging in unfair trade practices by selling for importation, importing into the United States, and selling after importation certain 3G handsets and components that infringe five of InterDigital’s patents. As anticipated, Samsung argued that no exclusion order should be entered against Samsung’s 3G WCDMA handsets or components. Based on a statement filed prior to the hearing, the Commission Staff (Staff) supported InterDigital on some issues and Samsung on others but ultimately recommended a finding of no Section 337 violation. The Staff recommendation is not binding on either the Administrative Law Judge or on the USITC. Typically, the ALJ’s final determination does not fully align with that of the Staff. In this case, as in other cases, the Staff position on certain key issues has not been adopted by the ALJ and the USITC. The final Initial Determination of the Administrative Law Judge is expected by November 25, 2008, and the Final Determination of the USITC is expected by March 25, 2009.
On July 10, 2008, the Administrative Law Judge reset the Target Date for the USITC’s Final Determination in the Nokia investigation (337-TA-613) to February 11, 2009 requiring a final Initial Determination by the Administrative Law Judge to be entered no later than October 14, 2008, although InterDigital anticipates that these dates may be reset again based on the July 31, 2008 decision of the U.S. Court of Appeals for the Second Circuit noted above.
Nokia TDD Arbitration
On April 1, 2008, Nokia Corporation filed a Request for Arbitration with the International Chamber of Commerce against InterDigital, Inc., IDC and ITC, seeking a declaration that Nokia is licensed under the patents asserted by InterDigital against Nokia in the USITC investigation pursuant to the parties’ TDD Development Agreement. InterDigital believes that Nokia’s request for declaratory relief in the TDD Arbitration is meritless.
On May 9, 2008, InterDigital filed an Answer to Nokia’s Request for Arbitration, requesting, inter alia: (i) that the arbitration be dismissed because the dispute is not arbitrable and, even if arbitrable, Nokia waived its right to arbitration; and, in the alternative, (ii) a declaration that Nokia is not licensed to the patents at issue in the USITC investigation pursuant to the parties’ TDD Development Agreement.
On July 17, 2008, the arbitral tribunal was constituted.
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On July 31, 2008, as discussed above, the United States Court of Appeals for the Second Circuit reversed the district court’s grant of a preliminary injunction requiring InterDigital to submit the TDD issue to arbitration, finding that Nokia waived any right to arbitrate the issue. InterDigital believes that Nokia should not be permitted to continue to pursue this arbitration in light of the Second Circuit’s finding of waiver. Nokia has not yet indicated whether it will continue to pursue the arbitration following the Second Circuit’s decision, and no schedule has yet been set in the arbitration.
Nokia UKII and UKIII Actions
In July 2005, Nokia filed a claim in the English High Court of Justice, Chancery Division, Patents Court (“English High Court”) against ITC seeking a Declaration that thirty-one of ITC’s UMTS European Patents registered in the United Kingdom are not essential IPR for the 3GPP Standard (“UKII”).
On December 21, 2007, the English High Court issued a judgment finding that European Patent (UK) 0,515,610, owned by ITC, is essential to the 3G UMTS WCDMA European standard promulgated by the European Telecommunications Standards Institute (ETSI) and that this patented invention is infringed by carrying out the method described in the standard. The ’610 patent relates to open loop power control, a fundamental aspect of 3G technology. Foreign counterparts having identical or similar claim language to the ’610 patent have been issued in many parts of the world, including the United States, Canada, Germany, France, Spain, Italy, and Sweden. The judicial determination of essentiality is in addition to Nokia’s withdrawal of its challenge to the essentiality of another patent, European Patent (UK) 0,515,675 relating to pilot codes, effectively conceding that that patent is essential as well.
In the judgment, the English High Court ruled that one claim of the ’610 patent was essential. The English High Court ruled that a second claim of the ’610 patent, as well as three additional patents, were not essential. A declaration of non-essentiality is not a finding that a particular third party product does not infringe an InterDigital patent, and no products were in issue in these proceedings.
During the UKII proceedings, Nokia made statements to the English High Court that it was not licensed under any InterDigital patents. After judgment, Nokia claimed to be licensed to an undetermined number of InterDigital patents. On April 3, 2008, InterDigital applied to re-open the English High Court’s judgment on the issue of discretion, and the hearing of this application was scheduled for September 15, 2008.
In December 2006, ITC filed a claim in the English High Court against Nokia seeking a Declaration that thirty-four of Nokia’s UMTS European Patents and one UMTS GB national patent all registered in the United Kingdom are not essential for the 3GPP Standard (“UKIII”). Nokia admitted in the proceedings that six of those patents are not essential for the 3GPP Standard. After the proceedings began, an additional five of the patents were transferred to Nokia Siemens Networks Oy, which was joined to the action as a second defendant and which admitted that one of the five transferred patents is not essential.
On March 14, 2008, Nokia applied to the English High Court to stay the UKIII action with respect to six Nokia patents that are subject to opposition proceedings brought by a third party before the European Patent Office. InterDigital opposed Nokia’s application for a stay. On April 8, 2008, the Court denied Nokia’s application for a stay.
The Court had scheduled a preliminary hearing for June 30, 2008 with respect to whether the Judge should exercise his discretion to issue the declaration being sought by InterDigital. Trial in the action was scheduled to begin in the fourth quarter of 2008.
The UKII and UKIII actions, relating to the essentiality of both InterDigital and Nokia patents registered in the United Kingdom, were brought to an end on July 2, 2008, pursuant to a confidential agreement between the parties. The UKIII preliminary hearing scheduled for June 30, 2008 did not commence before the action was ended.
During first half 2008, we reduced our accrual for the potential reimbursement of Nokia’s attorney’s fees associated with the UKII action from $7.8 million, which was accrued in 2007, to $6.6 million. As a result of the resolutions of the UKII and UKIII actions, we will recognize a $2.6 million one-time reduction to expenses in third quarter 2008.
Nokia Delaware Proceeding
In January 2005, Nokia filed a Complaint in the United States District Court for the District of Delaware (“Delaware District Court”) against InterDigital Communications Corporation (now IDC) and ITC (for purposes of the Nokia Delaware Proceeding described herein, IDC and ITC are collectively referred to as “InterDigital,” “we,” or “our”), alleging that we have used false or misleading descriptions or representations regarding our patents’ scope, validity, and applicability to products built to comply with 3G wireless phone Standards (“Nokia Delaware Proceeding”). We subsequently filed counterclaims based on Nokia’s licensing activities as well as Nokia’s false or misleading descriptions or representations regarding Nokia’s 3G patents and Nokia’s undisclosed funding and direction of an allegedly independent study of the essentiality of 3G patents.
On December 10, 2007, pursuant to a joint request by the parties, the Delaware District Court entered an Order staying the proceedings pending the full and final resolution of the Company’s USITC investigation against Nokia and Samsung. Specifically, the full and final resolution of the USITC investigation includes any initial or final determinations of the Administrative Law Judge overseeing the proceeding, the USITC, and any appeals therefrom. Pursuant to the Order, the parties and their affiliates are generally prohibited from initiating against the other parties, in any forum, any claims or counterclaims that are the same as the claims and counterclaims pending in the Nokia Delaware Proceeding, and should any of the same or similar claims or counterclaims be initiated by a party, the other parties may seek dissolution of the stay.
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Except for the Nokia Delaware Proceeding and the Nokia Arbitration Concerning Presentations (described below), the Order does not affect any of the other legal proceedings between the parties, including the USITC investigations involving InterDigital, Nokia, and Samsung, or the parallel Delaware District Court proceedings also brought by InterDigital against Nokia and Samsung.
Nokia Arbitration Concerning Presentations
In November 2006, InterDigital Communications Corporation (now IDC) and ITC filed a Request for Arbitration with the International Chamber of Commerce against Nokia (“Nokia Arbitration Concerning Presentations”), claiming that certain presentations Nokia has attempted to use in support of its claims in the Nokia Delaware Proceeding are confidential and, as a result, may not be used in the Nokia Delaware Proceeding pursuant to the parties’ agreement.
The December 10, 2007 Order entered by the Delaware District Court to stay the Nokia Delaware Proceeding (described above) also stayed the Nokia Arbitration Concerning Presentations pending the full and final resolution of the USITC investigation against Nokia and Samsung as described above.
Samsung Delaware Proceeding
In March 2007, Samsung Telecommunications America LLP (“Samsung Telecom”) and Samsung Electronics Co., Ltd. (“Samsung Electronics”) filed an action against InterDigital Communications Corporation (now IDC), ITC and another affiliate, Tantivy Communications, Inc. (collectively, for purposes of the Samsung Delaware Proceeding described herein, “InterDigital” or “our”), in the Delaware District Court, alleging that InterDigital has refused to comply with its alleged contractual obligations to be prepared to license our patents on fair, reasonable, and non-discriminatory (“FRAND”) terms and that InterDigital has allegedly engaged in unfair business practices. By their original Complaint in the action, the Samsung entities sought damages and declaratory relief, including declarations that: (i) InterDigital’s patents and patent applications allegedly promoted to standards bodies are unenforceable, (ii) the Samsung entities have a right to practice InterDigital’s intellectual property as a result of an alleged license from QUALCOMM Incorporated, (iii) nine specified InterDigital patents are invalid and/or not infringed by the Samsung entities, and (iv) InterDigital must offer the Samsung entities a license on FRAND terms.
In September 2007, Samsung Electronics filed a First Amended Complaint (“Amended Complaint”) in its proceeding in the Delaware District Court against InterDigital. The Amended Complaint includes Samsung’s originally pled claims concerning InterDigital’s alleged behavior with respect to standards bodies and licensing practices, but omits all of Samsung’s previously asserted claims for declaratory judgment that nine specified InterDigital patents are invalid and/or not infringed. The Amended Complaint was filed only on behalf of Samsung Electronics and, unlike the original Complaint, does not identify Samsung Telecom as a co-plaintiff.
InterDigital intends to defend itself vigorously against Samsung’s allegations in this matter. In November 2007, InterDigital filed its Answer to the Amended Complaint, disputing Samsung’s allegations and asserting counterclaims of infringement of two InterDigital patents. InterDigital simultaneously filed a partial motion to dismiss Samsung’s claim alleging violation of California’s Unfair Competition Law. No ruling has been made on InterDigital’s motion to dismiss, and no scheduling order has been issued in the case. The Court has not yet set this matter for an initial Case Management Conference, and discovery has not yet begun.
Samsung 2nd Arbitration and Related Confirmation Proceeding
In August 2006, an arbitral tribunal (“Tribunal”) operating under the auspices of the International Court of Arbitration of the International Chamber of Commerce issued a final award (“Award”) in an arbitration proceeding between InterDigital Communications Corporation (now IDC) and ITC (collectively, for purposes of the Samsung 2nd Arbitration and Related Confirmation Proceeding described herein, “InterDigital”) and Samsung Electronics. In its Award, the Tribunal ordered Samsung Electronics to pay to InterDigital, pursuant to the parties’ 1996 patent license agreement (“Samsung Agreement”), approximately $134 million in past royalties, plus interest on Samsung’s sale of single mode 2G GSM/TDMA and 2.5G GSM/GPRS/EDGE terminal units through 2005 (“Award”). The Tribunal also established the royalty rates to be applied to Samsung’s sales of covered products in 2006.
In September 2006, InterDigital filed an action seeking to enforce the arbitral Award in the U.S. District Court for the Southern District of New York (“Enforcement Action”). Subsequent to that filing, in September 2006 Samsung Electronics filed an opposition to the enforcement action, including filing a cross-petition to vacate or modify the Award and to stay the Award. Oral arguments were held in November 2007.
On December 10, 2007, the Honorable Richard J. Sullivan, the Judge in the Enforcement Action, confirmed the Award in its entirety and directed that Samsung pay InterDigital $150.25 million, comprised of $134 million in royalties plus interest less an approximate $6 million prepayment credit for sales of 2G terminal units through 2005, plus pre-judgment interest calculated at a rate of 5% per annum. The Order of Judgment denied all of Samsung’s petitions and motions and does not include a specified amount for royalties owed for 2006 under the arbitration award.
On December 18, 2007, Samsung filed an appeal with the United States Court of Appeals for the Second Circuit, and posted an appeal bond in the amount of approximately $166.7 million, with the New York District Court. By posting the appeal bond, Samsung has stayed execution of the Order of Judgment pending the appeal.
On February 25, 2008, Samsung filed a motion to stay its appeal and vacate the current briefing schedule pending the outcome of
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the Samsung 3rd Arbitration (described below). Samsung and InterDigital subsequently submitted briefing on the merits of Samsung’s appeal.
On May 14, 2008, the U.S. Court of Appeals for the Second Circuit granted Samsung’s motion to stay the appeal pending a decision in the Samsung 3rd Arbitration on whether Samsung is entitled to elect and have its royalties determined by reference to the April 2006 Nokia Settlement, which implemented a June 2005 Nokia arbitration Award (the “Nokia Settlement”), but the Court further provided that in the event there was not a decision in the Samsung 3rd Arbitration by July 1, 2008, any party may move to vacate the stay. On July 2, 2008, InterDigital filed a motion to vacate the stay. On July 14, 2008, Samsung filed an opposition to InterDigital’s motion to vacate the stay.
On July 16, 2008, as discussed below, InterDigital received notice that the arbitral tribunal in the Samsung 3rd Arbitration issued a Partial Final Award finding, inter alia, that Samsung is not entitled to any new royalty rate adjustment based on the Nokia Settlement. Following the issuance of the Partial Final Award, Samsung submitted a letter to the U.S. Court of Appeals for the Second Circuit advising the Court that the Samsung 3rd Arbitration does not moot its appeal and that it no longer opposes InterDigital’s motion to vacate the stay. The Court has not yet rendered a decision on InterDigital’s motion to vacate the stay, and no date has been set for oral argument on the merits of Samsung’s appeal.
Samsung 3rd Arbitration
In October 2006, Samsung Electronics filed a Request for Arbitration with the International Chamber of Commerce (“Samsung 3rd Arbitration”) against InterDigital Communications Corporation (now IDC) and ITC (collectively, for purposes of the Samsung 3rd Arbitration described herein, “InterDigital,” “we” or “us”) relating to the ongoing patent royalty dispute between Samsung and InterDigital. In the Samsung 3rd Arbitration, Samsung Electronics seeks to have a new arbitration panel determine new royalty rates for Samsung’s 2G/2.5G GSM/GPRS/EDGE product sales based on the Nokia Settlement. Samsung has purported to have elected the Nokia Settlement under the most favored licensee (“MFL”) clause in the Samsung Agreement. Samsung contends that it has the right to have a new rate, based on the Nokia Settlement, applied to its sales in the period from January 1, 2002 through December 31, 2006 in lieu of the royalty rates that have been determined by the Tribunal in the Samsung 2nd Arbitration for that period. In addition to seeking relief based on the Nokia Settlement, Samsung has expressly reserved a purported right to make an MFL election of another specified license agreement between InterDigital and a third party, and to add claims relating to that agreement. In the Samsung 3rd Arbitration proceeding, we have denied that Samsung is entitled to receive any new royalty rate adjustment based on the Nokia Settlement or the specified third party license agreement. We have also counterclaimed, seeking an Award of the royalties Samsung owes for its 2G/2.5G sales in 2006 at the royalty rate specified in the August 2006 Award in the Samsung 2nd Arbitration.
In February 2008, the arbitral tribunal heard oral argument on the issue of whether Samsung is entitled to elect the Nokia Settlement. On July 16, 2008, InterDigital received notice that the arbitral tribunal issued a Partial Final Award finding that Samsung is not entitled to an adjustment of its royalty obligations based on the Nokia Settlement. In light of this decision, the arbitral tribunal ordered the parties to report within 45 days following issuance of the Partial Final Award whether an agreement has been reached regarding the amount of royalties Samsung owes for its 2G/2.5G sales in 2006. If the parties are able to reach an agreement, the tribunal will order payment of the stipulated amount. If the parties are unable to reach an agreement on the amount of royalties Samsung owes for its 2G/2.5G sales in 2006, the parties will need to present evidence and/or argument in a further phase of this arbitration.
Federal
In May 2007, the Arbitrator in the arbitration proceeding between InterDigital Communications Corporation (now IDC) and ITC (collectively, for purposes of the Federal arbitration described herein, “InterDigital,” “we,” or “our”) and Federal Insurance Company (“Federal”), and relating to a Litigation Expense and Reimbursement Agreement signed in February 2000 by the parties (“Reimbursement Agreement”), refused to award the full amount of Federal’s claim, which was in excess of $33 million. The Arbitrator did award Federal approximately $13 million, pursuant to a formula set forth in the Reimbursement Agreement, for reimbursement of attorney’s fees and expenses previously paid to or on behalf of InterDigital by Federal, plus approximately $2 million in interest. As additional reimbursement of attorney’s fees and expenses, the Arbitrator awarded $5 million, without interest, as Federal’s share under the Reimbursement Agreement of “additional value” of the 2003 settlement between InterDigital and Ericsson Inc. Further, the Arbitrator ruled that InterDigital must pay Federal 10% of any additional payments InterDigital may receive as a result of an audit of Sony Ericsson’s sales. In June 2007, we notified Federal that we had received $2 million from Sony Ericsson to resolve Sony Ericsson’s payment obligations following an audit. The approximately $13 million portion of the Award represents a percentage of the amounts InterDigital has received since March 2003 from Telefonaktiebolaget LM Ericsson and Ericsson Inc. and Sony Ericsson Mobile Communications AB under their respective patent license agreements.
In June 2007, Federal moved to confirm the Award in the United States District Court for the Eastern District of Pennsylvania. Also in June 2007, we filed an opposition to Federal’s motion to confirm the arbitration Award and a cross motion to vacate a portion of the Award, totaling approximately $14.5 million, on the ground that the Arbitrator exceeded the scope of her authority. We also moved the Court to stay confirmation of the Award pending adjudication of our recoupment defense whereby we are seeking to recoup the full amount of the Award based on Federal’s bad faith breach of its contractual and fiduciary duties to us. In July 2007, the Court heard oral arguments on Federal’s motion to confirm the Award, our opposition thereto, and our cross motion to vacate the
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Award and to stay confirmation pending adjudication of our recoupment defense.
On March 24, 2008, the Court: (i) granted Federal’s motion to confirm the arbitration award; and (ii) denied InterDigital’s motion to stay confirmation of the arbitration award pending adjudication of InterDigital’s claim for recoupment based on Federal’s bad faith breach of its duties as InterDigital’s insurer. On April 1, 2008, InterDigital filed a notice of appeal to the United States Court of Appeals for the Third Circuit. In order to stay execution on Federal’s judgment pending appeal, InterDigital deposited $23 million with the Clerk of the Court, an amount sufficient to secure Federal’s judgment and anticipated interest until decision by the Court of Appeals. On April 10, 2008, the Court extended Federal’s deadline for seeking costs and fees until after conclusion of the appeal.
On May 6, 2008, the Court of Appeals assigned the matter for mediation in the Court of Appeals mediation program. The mediation program concluded without any settlement. Consequently, InterDigital and Federal have commenced briefing the appeal.
On July 7, 2008, the Company filed its opening brief, seeking reversal of the District Court’s refusal to hear InterDigital’s recoupment claim and remand to the District Court for adjudication of such claim as a set-off to Federal’s arbitration award. Federal’s brief was filed on August 6, 2008, and the Company’s reply is due on August 20, 2008. After completion of briefing, the Court of Appeals will decide whether and when to hear oral argument.
At the time of judgment we recorded an expense of approximately $16.6 million, which represents the total amount of the Award through the third quarter of 2007, less the amount of a previously accrued liability of $3.4 million. We have also accrued post-judgment interest of $1.2 million ($0.5 million during first half 2008) and reported such interest expense within the interest and investment income, net, line item of our Statement of Operations.
Other
We have filed patent applications in the United States and in numerous foreign countries. In the ordinary course of business, we currently are, and expect from time to time to be, subject to challenges with respect to the validity of our patents and with respect to our patent applications. We intend to continue to defend vigorously the validity of our patents and defend against any such challenges. However, if certain key patents are revoked or patent applications are denied, our patent licensing opportunities could be materially and adversely affected.
In addition to disputes associated with enforcement and licensing activities regarding our intellectual property, including the litigation and other proceedings described above, we are a party to other disputes and legal actions not related to our intellectual property, but arising in the ordinary course of our business. Based upon information presently available to us, we do not believe these matters, even if adversely adjudicated or settled, would have a material adverse effect on our financial condition, results of operations or cash flows.
7. REPURCHASE OF COMMON STOCK:
In 2006, our Board of Directors authorized the repurchase of up to $350.0 million of our outstanding common stock. In October 2007, our Board of Directors authorized a new $100.0 million share repurchase program. The Company may repurchase shares under the program through open market purchases, pre-arranged trading plans or privately negotiated purchases. During first half 2007, we completed the $350.0 million program authorized in 2006 through the repurchase of 4.8 million shares of common stock for $157.7 million. During first half 2008, we repurchased approximately 1.8 million shares for $36.0 million under the October 2007 repurchase program for a total of 2.7 million shares repurchased for $54.5 million since the inception of the October 2007 repurchase program. At June 30, 2008 and December 31, 2007, we accrued approximately $0.2 million and $0.8 million, respectively, associated with our obligation to settle repurchases made late in the quarters ended on such dates.
From July 1, 2008 through July 31, 2008, we repurchased an additional 0.4 million shares for $7.5 million, to bring the cumulative repurchase totals to 3.1 million shares at a cost of $62.1 million under the $100 million October 2007 authorization.
8. COMPREHENSIVE INCOME (LOSS):
The following table summarizes comprehensive income (loss) for the periods presented (in thousands):
For the Three Months
Ended June 30,
2008 2007
Net income (loss)
$ 5,852 $ (4,406 )
Unrealized (loss) on investments
(226 ) (30 )
Total comprehensive income (loss)
$ 5,626 $ (4,436 )
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For the Six Months
Ended June 30,
2008 2007
Net income
$ 13,169 $ 13,263
Unrealized (loss) gain on investments
(13 ) 2
Total comprehensive income
$ 13,156 $ 13,265
9. INVESTMENTS IN OTHER ENTITIES:
In first half 2007, we made a $5.0 million investment for a non-controlling interest in Kineto Wireless (“Kineto”). We do not have significant influence over Kineto and are accounting for this investment using the cost method of accounting. Under the cost method, we will not adjust our investment balance when the investee reports profit or loss but will monitor the investment for an other-than-temporary decline in value. When assessing whether an other-than-temporary decline in value has occurred, we will consider such factors as the valuation placed on the investee in subsequent rounds of financing, the performance of the investee relative to its own performance targets and business plan, and the investee’s revenue and cost trends, liquidity and cash position, including its cash burn rate, and updated forecasts.
In first half 2008, we wrote-down this investment $0.7 million based on a lower valuation of Kineto by its investors. Early in second quarter 2008, we participated in a new round of financing that included several other investors, investing an additional $0.7 million in Kineto. This second investment both maintained our ownership position and preserved certain liquidation preferences.
10. INSURANCE REIMBURSEMENT:
In first half 2008 and 2007, we received payments from insurance providers of $6.9 million and $1.7 million, respectively, to reimburse us for portions of our defense costs in certain litigation with Nokia. These amounts reduced our patent administration and licensing expenses in first half 2008 and 2007.
11. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES:
Effective January 1, 2008, we adopted the provisions of SFAS No. 157 that relate to our financial assets and financial liabilities, as discussed in Note 1. SFAS No. 157 establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques (market approach, income approach and cost approach). The levels of the hierarchy are described below:
• Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities
• Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active
• Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions
Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and financial liabilities and their placement within the fair value hierarchy. We use quoted market prices for similar assets to estimate the fair value of our Level 2 investments. Our financial assets that are accounted for at fair value on a recurring basis are presented in the table below (in thousands):
Fair value as of June 30, 2008
Level 1 Level 2 Level 3 Total
Assets:
Commercial paper*
$ — $ 46,467 $ — $ 46,467
U.S. government agency instruments
61,582 — — 61,582
Corporate bonds
— 12,297 — 12,297
$ 61,582 $ 58,764 $ — $ 120,346
* Includes $14.2 million of commercial paper that is included within cash and cash equivalents.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OVERVIEW
The following discussion should be read in conjunction with the unaudited, condensed consolidated financial statements and notes thereto contained elsewhere in this document, in addition to our 2007 Form 10-K as filed with the SEC on February 29, 2008, other reports filed with the SEC and the Statement Pursuant to the Private Securities Litigation Reform Act of 1995 — Forward-Looking Statements below. Please refer to the Glossary of Terms for a list and detailed description of the various technical, industry and other defined terms that are used in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.
Patent Licensing
In the second quarter 2008, our recurring patent licensing royalties of $55.9 million improved by $2.6 million over first quarter 2008 due to increased royalties from our Japanese licensees and $1.3 million of one-time, incremental revenue associated with one of our licensees transitioning from per-unit royalties to a mix of per-unit and fixed-fee royalties.
We signed two 2G and 3G patent licenses with manufacturers in Taiwan in second quarter 2008 and recognized $0.3 million of past infringement associated with these agreements. We also continued our dialogue with unlicensed manufacturers throughout the quarter.
SlimChip
In second quarter 2008, we recognized approximately $1.6 million of technology solutions revenue associated with engineering services provided under a license for our SlimChip 3G modem IP, and we also secured the first design win for our SlimChip baseband IC and reference platform. We continue to hold active discussions with additional prospects for our SlimChip offerings and have made substantial progress in pre-certification and network inter-operability testing of the modem.
Litigation and Arbitration
Please see Note 6, “Litigation and Legal Proceedings,” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for a full discussion of the following matters:
USITC
In March 2007, we filed a complaint against Samsung in the USITC seeking an exclusion order barring Samsung from importing certain unlicensed 3G handsets into the United States. In August 2007, we filed a complaint against Nokia in the USITC seeking an exclusion order barring Nokia from importing certain unlicensed 3G handsets into the United States. Subsequently, Nokia successfully sought to consolidate the two actions in the USITC.
Nokia then unsuccessfully sought to terminate or stay the USITC proceeding against it on the ground that Nokia and InterDigital must first arbitrate a dispute as to whether Nokia is licensed under the patents asserted by InterDigital against Nokia in the USITC investigation. After that effort failed, Nokia sought and obtained a preliminary injunction in the U.S. District Court for the Southern District of New York preventing us from proceeding in the USITC against Nokia. On July 31, 2008, the Second Circuit reversed the preliminary injunction. Notwithstanding any effort by Nokia to obtain a rehearing, InterDigital anticipates that the Nokia USITC investigation will move forward.
The evidentiary hearing for the Samsung USITC investigation took place between July 8, 2008 and July 15, 2008. The final Initial Determination of the Administrative Law Judge for the Samsung investigation is expected by November 25, 2008, and the Final Determination of the USITC is expected by March 25, 2009.
Both Samsung and Nokia continue to vigorously contest the USITC proceedings against them, and we have been, and will continue to be, required to expend substantial amounts to continue these and related proceedings. The timing and magnitude of these expenditures remain unpredictable.
Samsung 3rd Arbitration
On July 16, 2008, InterDigital received notice that an arbitral tribunal issued a Partial Final Award finding that Samsung is not entitled to an adjustment
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of its royalty obligations to us based on the Nokia Settlement. We believe the resolution of this dispute is an important step in collecting from Samsung a previously issued arbitration award that has grown to approximately $153 million, including interest, plus additional amounts for royalties on Samsung’s sales of licensed products in 2006.
Nokia UKII and UKIII
On July 2, 2008, the UKII and UKIII actions, relating to the essentiality of both InterDigital and Nokia patents registered in the United Kingdom, were brought to an end pursuant to a confidential agreement between the parties. During first half 2008, we reduced our accrual for the potential reimbursement of Nokia’s attorney’s fees associated with the UKII action from $7.8 million, which was accrued in 2007, to $6.6 million. As a result of the resolutions of the UKII and UKIII actions, we will recognize a $2.6 million one-time reduction to expenses in third quarter 2008.
Comparability of Financial Results
When comparing second quarter 2008 financial results against other periods, the following items should be taken into consideration:
• Our second quarter 2008 revenue included $0.3 million related to past infringement and $1.3 million of one-time, incremental revenue associated with one of our licensees transitioning from per-unit royalties to a mix of per-unit and fixed-fee royalties.
When comparing second quarter 2007 financial results against other periods, the following items should be taken into consideration:
• Our second quarter 2007 revenue included $1.8 million related to non-recurring royalties.
• Our second quarter 2007 operating expense included a $16.6 million charge for an arbitration award associated with our dispute with Federal.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in our 2007 Form 10-K. A discussion of our critical accounting policies, and the estimates related to them, are included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2007 Form 10-K. There have been no material changes in our existing accounting policies from the disclosures included in our 2007 Form 10-K, except as discussed below.
NEW ACCOUNTING PRONOUNCEMENTS
SFAS No. 157
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS No. 157 does not require any new fair value measurements but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information. For financial assets and liabilities, SFAS No. 157 was effective for us beginning January 1, 2008. In February 2008, the FASB deferred the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) until January 1, 2009. The adoption of SFAS No. 157 for financial assets and liabilities did not have an effect on the Company’s financial condition or results of operations. The Company is currently evaluating the effect, if any, of the adoption of SFAS No. 157 for non-financial assets and liabilities on its financial condition and results of operations.
SFAS No. 159
In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, which provides companies with an option to report selected financial assets and liabilities at fair value in an attempt to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS No. 159 is effective for us beginning January 1, 2008. The Company’s adoption of SFAS No. 159 on January 1,
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2008 did not materially affect its financial position or results of operations, as the Company did not elect the option to report selected financial assets and liabilities at fair value.
SFAS No. 141-R
In December 2007, the FASB issued SFAS No. 141-R, Business Combinations which revised SFAS No. 141, Business Combinations. SFAS No. 141-R is effective for us beginning January 1, 2009. Under SFAS No. 141, organizations utilized the announcement date as the measurement date for the purchase price of the acquired entity. SFAS No. 141-R requires measurement at the date the acquirer obtains control of the acquiree, generally referred to as the acquisition date. SFAS No. 141-R will have a significant impact on the accounting for transaction costs and restructuring costs, as well as the initial recognition of contingent assets and liabilities assumed during a business combination. Under SFAS No. 141-R, adjustments to the acquired entity’s deferred tax assets and uncertain tax position balances occurring outside the measurement period are recorded as a component of the income tax expense, rather than goodwill. The Company expects to adopt this statement on January 1, 2009. SFAS No. 141-R’s impact on accounting for business combinations is dependent upon acquisitions, if any, made on or after that time.
FSP No. EITF 03-6-1
In June 2008, the FASB issued Staff Position (“FSP”) No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, Earnings Per Share. Under the guidance in FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two class method. FSP EITF 03-6-1 is effective for fiscal periods beginning after December 15, 2008. All prior-period earnings per share data presented shall be adjusted retrospectively. Early application is not permitted. We are currently evaluating the potential impact of the adoption of this FSP to our Consolidated Income Statements.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL REQUIREMENTS
We generated positive cash flow from operating activities of $117.5 million in first half 2008 compared to $120.9 million in first half 2007. The positive operating cash flow in first half 2008 arose principally from receipts of approximately $230.0 million related to 2G and 3G patent licensing agreements. These receipts included the third of three $95.0 million payments from LG Electronics (“LG”), a new prepayment of $29.6 million from an existing licensee, and $51.4 million of prepayments and $54.0 million of current royalty payments from other existing licensees. These receipts were partially offset by cash operating expenses (operating expenses less depreciation of fixed assets, amortization of intangible assets and share-based compensation) of $79.4 million, cash payments for foreign source withholding taxes of $15.7 million, payment of $23.0 million to post a bond for the Federal arbitration award and changes in working capital during first half 2008. The positive operating cash flow in first half 2007 arose principally from receipts of approximately $206.2 million related to 2G and 3G patent licensing agreements. These receipts included the second of three $95.0 million payments from LG, a new prepayment of $23.5 million from an existing licensee, and $21.2 million of prepayments and $66.5 million of current royalty payments from other existing licensees. These receipts were partially offset by cash operating expenses (operating expenses less depreciation of fixed assets, amortization of intangible assets and non-cash compensation) of $93.0 million, cash payments for foreign source withholding taxes of $16.0 million and changes in working capital during first half 2007.
Our combined short-term and long-term deferred revenue balance at June 30, 2008 was $327.3 million, a $23.8 million increase from December 31, 2007. In first half 2008, we recorded gross increases in deferred revenue of $82.5 million. This amount consisted of $81.7 million related to the recognition of new fixed-fee payments and prepayments from 6 existing licensees and increases in deferred revenue related to technology solutions payments. These increases were offset, in part, by first half 2008 deferred revenue recognition of $41.2 million related to the amortization of fixed-fee royalty payments, $17.0 million related to per-unit exhaustion of prepaid royalties (based upon royalty reports provided by our licensees), and the recognition of deferred revenue related to technology solutions agreements. We have no material obligations associated with our deferred revenue balances.
Based on current agreements, we expect the amortization of fixed-fee royalty payments and the recognition of deferred technology solutions revenue to reduce our June 30, 2008 deferred revenue balance of $327.3 million by $81.6 million over the next twelve months. Additional reductions to deferred revenue will be dependent upon the level of per-unit royalties our licensees report against remaining prepaid balances.
In first half 2008, we used $41.1 million in investing activities compared to $20.9 million in first half 2007. We purchased $20.6 million of short-term marketable securities, net of sales, in first half 2008. We sold $14.2 million of short-term marketable securities, net of purchases, in first half 2007. This change resulted primarily from the need to fund higher share repurchases in first half 2007. Purchases of property and equipment decreased to $3.1 million in first half 2008 from $10.8 million in first half 2007 due to significant investments in both development tools and engineering-related network infrastructure and systems in the prior year to complete our SlimChip product family offering. We paid $1.2 million in first half 2008 toward technology licenses necessary to complete our SlimChip product family, as compared to $7.8 million in first half 2007. We also made equity investments of $0.7 million in Kineto in first half 2008 and $5.0 million in first half 2007. Investment costs associated with patents increased from $11.4 million in first half 2007 to $15.6 million in first half 2008. This increase reflects a higher level of patent prosecution activity over the past several years, combined with the delay between filing an initial patent application and the incurrence of costs to issue the patent in both the U.S. and foreign jurisdictions.
Net cash used in financing activities in first half 2008 was $36.3 million compared to $158.5 million in first half 2007. The use of cash in financing activities in both first half 2008 and first half 2007 was primarily due to our respective investments of $36.6 million and $165.4 million to repurchase outstanding shares of our common stock in each period. We received proceeds from option exercises of $1.0 million and $3.7 million in first half 2008 and 2007, respectively. In first half 2008 and 2007, we recorded tax benefits of $0.5 million and $3.3 million, respectively, related to share-based compensation. Financing costs associated with long-term debt and capital leases increased $1.0 million due to payments on new capital leases.
We had 2.8 million and 2.9 million options outstanding at June 30, 2008 and December 31, 2007, respectively, that had exercise
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prices less than the fair market value of the Company’s stock at each balance sheet date. These options would have generated $33.6 million and $33.1 million of cash proceeds to the Company if they had been fully exercised.
In December 2007, we entered into a Second Amendment to Credit Agreement resulting in the continuation of our Credit Agreement through December 2009. Under the Second Amendment, borrowings under the Credit Agreement will, at the Company’s option, bear interest at either (1) LIBOR plus 65 basis points or (2) the higher of the prime rate or 50 basis points above the federal funds rate. The customary restrictive financial and operating covenants under the Credit Agreement continue in full force and effect and include, among other things, that the Company is required to (1) maintain certain minimum cash and short-term investment levels, (2) maintain minimum financial performance requirements as measured by the Company’s income or loss before taxes with certain adjustments, and (3) limit or prohibit the incurrence of certain indebtedness and liens, judgments above a threshold amount for which a reserve is not maintained and certain other activities outside of the ordinary course of business. Borrowings under the Credit Agreement can be used for general corporate purposes, including capital expenditures, working capital, letters of credit, certain permitted acquisitions and investments, cash dividends and stock repurchases. We have not borrowed against the Credit Agreement during this renewal term. Accordingly, as of June 30, 2008, the Company did not have any amounts outstanding under the Credit Agreement.
Consistent with our strategy to focus our resources on the development and commercialization of advanced wireless technology products, we expect to see modest growth in operating cash needs related to the continued evolution of our SlimChip product family and continued investments in enabling capital assets over the balance of 2008. We are capable of supporting these and other operating cash requirements for the near future through cash and short-term investments on hand, other operating funds such as patent license royalty payments or the Credit Agreement, as amended. At present, we do not anticipate the need to seek additional financing through additional bank facilities or the sale of debt or equity securities.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended.
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RESULTS OF OPERATIONS
Second Quarter 2008 Compared to Second Quarter 2007
Revenues
The following table compares second quarter 2008 revenues to revenues in the comparable period from the prior year (in millions):
Second Second
Quarter Quarter
2008 2007
Per-unit royalty revenue
$ 35.4 $ 34.0
Fixed-fee and amortized royalty revenue
20.5 18.6
Recurring patent licensing royalties
55.9 52.6
Past infringement and other non-recurring royalties
0.3 1.8
Total patent licensing royalties
56.2 54.4
Technology solution revenue
2.5 0.6
Total Revenue
$ 58.7 $ 55.0
Revenues in second quarter 2008 were $58.7 million, compared to $55.0 million in second quarter 2007.
Recurring patent licensing royalties in second quarter 2008 were $55.9 million, compared to $52.6 million in second quarter 2007. The increase in recurring patent licensing royalties was driven primarily by increases from new and amended licenses with Apple and RIM, respectively. In addition, during second quarter 2008 we amended a license with an existing licensee that resulted in the licensee transitioning from per-unit royalties to a mix of fixed-fee and per-unit royalties. This transition resulted in the one-time recognition of an incremental $1.3 million of revenue in second quarter 2008.
Technology solutions revenue increased to $2.5 million in second quarter 2008 from $0.6 million in second quarter 2007. The increase in technology solutions revenue is primarily due to activity associated with a first half 2008 license of InterDigital’s SlimChip mobile broadband 3G modem IP to an Asian fabless semiconductor company.
During second quarter 2008, 56% of our recurring revenue, or $32.5 million, was from licensees that accounted for 10% or more of our recurring revenue and included LG (25%), Sharp Corporation of Japan (18%) and NEC Corporation of Japan (13%).
Operating Expenses
Excluding a $16.6 million charge in 2007 related to an arbitration award associated with our dispute with Federal, operating expenses increased 8% to $50.9 million in second quarter 2008 from $47.3 million in second quarter 2007. The $3.6 million increase was due to the following net changes in expenses (in millions):
Increase/
(Decrease)
Patent litigation and arbitration
$ 2.7
Depreciation and amortization
1.9
Personnel related costs
1.8
Patent maintenance
(1.0 )
Share-based compensation
(1.0 )
Consulting services
(0.9 )
Other
0.1
$ 3.6
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Patent litigation and arbitration increased primarily due to our USITC proceedings against Samsung and Nokia, as well as increased activity in other disputes with Nokia. Patent amortization increased due to heightened levels of internal inventive activity in recent years resulting in the expansion of our patent portfolio. Other depreciation and amortization increased primarily due to the 2007 acquisition of tools and technology licenses to develop our SlimChip product family. Personnel related costs increased in second quarter 2008 primarily due to the addition of internal resources added in 2007 for the development of our SlimChip product family and annual wage increases. The decrease in patent maintenance costs was due to a decline from the high levels of patent reviews performed in second quarter 2007. Share-based compensation decreased primarily due to a decline from the high levels of RSUs outstanding in 2007 corresponding to overlapping RSU cycles. Consulting services decreased primarily due to reduced levels of foundry design support associated with the development of our SlimChip product family.
The following table summarizes the change in operating expenses by category (in millions):
Second Quarter Second Quarter
2008 2007 Increase (Decrease)
Sales and marketing
$ 2.0 $ 1.9 $ 0.1 5 %
General and administrative
5.7 6.1 (0.4 ) (7 )
Patent administration and licensing
20.5 18.1 2.4 13
Development
22.7 21.2 1.5 7
Arbitration and litigation contingencies
— 16.6 (16.6 ) (100 )
Total Operating Expense
$ 50.9 $ 63.9 $ (13.0 ) (20 )%
Sales and Marketing Expense: The increase in sales and marketing expense was primarily due to commission expense associated with the first design win for our SlimChip baseband IC and reference platform.
General and Administrative Expense: The decrease in general and administrative expense in second quarter 2008 was primarily due to cutbacks in the high levels of legal services, consulting services and temporary personnel costs required to assist with our legal entity reorganization in second quarter 2007.
Patent Administration and Licensing Expense: Patent administration and licensing expense increased primarily due to increased patent litigation and arbitration ($2.7 million) and amortization costs ($0.6 million). These increases were partially offset by decreases in patent maintenance ($1.0 million).
Development Expense: The increase in development expense was primarily attributable to the development of our SlimChip product family, including increased depreciation and amortization ($1.3 million) and personnel-related costs ($0.8 million). These increases were partially offset by reduced consulting services ($0.7 million) driven by the high levels of foundry design support costs we incurred in second quarter 2007.
Arbitration and Litigation Contingencies: In 2007, we accrued non-recurring charges of $16.6 million to our contingent obligations to reimburse Federal under an insurance reimbursement agreement.
Interest and Investment Income, Net
Net interest and investment income of $1.2 million in second quarter 2008 decreased $1.1 million, or 46%, from $2.3 million in second quarter 2007. The decrease primarily resulted from lower rates of return in second quarter 2008.
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First Half 2008 Compared to First Half 2007
Revenues
The following table compares first half 2008 revenues to revenues in the comparable period from the prior year (in millions):
First Half First Half
2008 2007
Per-unit royalty revenue
$ 68.1 $ 72.7
Fixed-fee and amortized royalty revenue
41.2 37.3
Recurring patent licensing royalties
109.3 110.0
Past infringement and other non-recurring royalties
0.8 11.2
Total patent licensing royalties
110.1 121.2
Technology solution revenue
4.6 1.6
Total Revenue
$ 114.7 $ 122.8
Revenues were $114.7 million in first half 2008, compared to $122.8 million in first half 2007. First half 2007 revenues included $11.2 million of non-recurring revenue associated with prior period sales of Sony Ericsson’s covered 2G products identified during a routine audit.
Recurring patent license royalties were $109.3 million in first half 2008, down from $110.0 million in first half 2007. The decline in recurring patent licensing royalties was driven by the absence of recurring 2G revenues from Ericsson. This loss was partially offset by an $8.0 million increase in recurring revenue from all other new and existing licensees, including Apple and RIM.
Technology solutions revenue increased to $4.6 million in first half 2008, compared to $1.6 million in first half 2007. The increase in technology solutions revenue is primarily due to activity associated with a first half 2008 license of InterDigital’s SlimChip mobile broadband 3G modem IP to an Asian fabless semiconductor company.
During first half 2008, 55% of our recurring revenue, or $62.9 million, was from licensees that accounted for 10% or more of our recurring revenue and included LG (25%), Sharp Corporation of Japan (18%) and NEC Corporation of Japan (12%).
Operating Expenses
Excluding an adjustment in 2008 to reduce a litigation contingency associated with the ongoing UKII case by $1.2 million and a $16.6 million charge in 2007 related to an arbitration award associated with our dispute with Federal, operating expenses increased 7% to $97.2 million in first half 2008 from $90.9 million in first half 2007. The $6.3 million increase was due to the following net changes in expenses (in millions):
Increase/
(Decrease)
Patent litigation and arbitration
$ 9.4
Depreciation and amortization
4.0
Personnel related costs
2.8
Long-term cash incentives
2.0
Insurance reimbursement
(5.2 )
Consulting services
(3.5 )
Share-based compensation
(1.8 )
Patent maintenance
(1.0 )
Other
(0.4 )
$ 6.3
Patent litigation and arbitration increased primarily due to our USITC proceedings against Samsung and Nokia, as well as increased activity in other disputes with Nokia. Patent amortization increased due to heightened levels of internal inventive activity in
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recent years resulting in the expansion of our patent portfolio. Other depreciation and amortization increased due primarily to the 2007 acquisition of tools and technology licenses to develop our SlimChip product family. Personnel-related costs increased in 2008 primarily due to the addition of internal resources added in 2007 for the development of our SlimChip product family and annual wage increases. The increase in long-term cash incentives (“Cash LTIP”) costs resulted from overlapping Cash LTIP cycles under our Long-Term Compensation Plan (“LTCP”), while share-based compensation decreased due to a decline from the high levels of RSUs outstanding in 2007 corresponding to overlapping RSU cycles under the LTCP. These increases in operating expenses were partially offset by a $6.9 million insurance receipt to reimburse us for a portion of our defense costs in certain litigation with Nokia. This reimbursement was $5.2 million greater than a related reimbursement recorded in first half 2007. The decrease in consulting services resulted from reduced levels of foundry design support associated with the development of our SlimChip product family and legal entity reorganization costs incurred in first half 2007 that were not repeated in first half 2008. The decrease in patent maintenance costs was due to a decline from the high levels of patent reviews performed in first half 2007.
The following table summarizes the change in operating expenses by category (in millions):
First Half First Half Increase
2008 2007 (Decrease)
Sales and marketing
$ 4.4 $ 4.0 $ 0.4 12 %
General and administrative
11.4 12.6 (1.2 ) (10 )
Patent administration and licensing
35.5 31.3 4.2 13
Development
45.9 43.0 2.9 7
Arbitration and litigation contingencies
(1.2 ) 16.6 (17.8 ) (107 )
Total Operating Expense
$ 96.0 $ 107.5 $ (11.5 ) (11) %
Sales and Marketing Expense: The increase in sales and marketing expense was primarily due to commission expense associated with the first design win for our SlimChip baseband IC and reference platform, as well as other personnel costs.
General and Administrative Expense: The decrease in general and administrative expense in first half 2008 was primarily due to cutbacks in the high levels of legal services, consulting services and temporary personnel costs required to assist with our legal entity reorganization in first half 2007.
Patent Administration and Licensing Expense: Patent administration and licensing expense increased primarily due to increased patent litigation and arbitration ($9.4 million) and amortization costs ($1.3 million). These increases were partially offset by the $5.2 million increase in insurance reimbursements related to our defense costs in certain litigations with Nokia and a $2.2 million reduction in consulting services and patent maintenance.
Development Expense: The increase in development expense was primarily attributable to the development of our SlimChip product family, including increased depreciation and amortization ($2.7 million) and personnel-related costs ($2.2 million). These increases were partially offset by reduced consulting services ($2.4 million) driven by the high levels of foundry design support costs we incurred in second quarter 2007.
Arbitration and Litigation Contingencies: In 2007, we accrued non-recurring charges of $16.6 and $7.8 million associated with respective contingent obligations to reimburse Federal under an insurance reimbursement agreement and for potential reimbursement to Nokia of a portion of its attorney’s fees associated with the UKII case. In first half 2008, we recognized a credit of $1.2 million associated with the reduction of our contingent obligation to reimburse Nokia based on new information about Nokia’s attorney’s fees incurred in the case. See Note 6, “Litigation and Legal Proceedings,” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Interest and Investment Income, Net
Net interest and investment income of $1.7 million in first half 2008 decreased $3.2 million, or 66%, from $4.9 million in first half 2007. The decrease primarily resulted from a $0.7 million write-down of our investment in Kineto and lower rates of return in first half 2008.
Expected Trends
As we move closer to full commercialization of our SlimChip product, we expect that development spending related to new product and customer activities will drive an 8%-12% sequential increase in third quarter operating expenses, excluding arbitration and litigation. Also in the third quarter 2008, we will recognize a $2.6 million one-time reduction in expenses related to the recent resolution of the United Kingdom legal actions with Nokia. Lastly, our book tax rate for the second half of the year is expected to approximate 35%.
25
Table of Contents
STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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 “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information regarding our current beliefs, plans and expectations, including without limitation the matters set forth below. Words such as “will,” “expect,” “anticipate” “continue to,” “likely” or similar expressions are intended to identify such forward-looking statements. Forward-looking statements in this Quarterly Report on Form 10-Q include, without limitation, statements regarding:
• The potential effects of new accounting standards on our financial statements or results of operations, if any;
• Our amortization of fixed-fee royalty payments and recognition of deferred technology solutions revenue over the next twelve months to reduce our June 30, 2008 deferred revenue balance;
• Our future tax expense and changes to our reserves for uncertain tax positions;
• The timing and outcome of our various litigation and administrative matters;
• Continuing repurchases under our most recent $100 million share repurchase program;
• The valuation of our investment in Kineto;
• Our expectation for modest growth in operating cash needs related to the continued evolution of our SlimChip product family;
• Our expectation that we will not need additional financing beyond that available under the Credit Agreement; and
• Third quarter 2008 operating expenses (excluding patent arbitration and litigation costs), patent arbitration and litigation costs and our book tax rate for second half 2008.
Forward-looking statements concerning our business, results of operations and financial condition are inherently subject to risks and uncertainties that could cause actual results, and actual events that occur, to differ materially from results contemplated by the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks and uncertainties outlined in greater detail in Part I, Item 1A of our 2007 Form 10-K. We undertake no obligation to revise or publicly update any forward-looking statement for any reason, except as otherwise required by law.
26
Table of Contents
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in quantitative and qualitative market risk from the disclosures included in our 2007 Form 10-K.
Item 4. CONTROLS AND PROCEDURES.
The Company’s principal executive officer and principal financial officer, with the assistance of other members of management, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective in their design to ensure that the information required to be disclosed by us in the reports that we file under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities and Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2008 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
The information required by this Item is incorporated by reference to Note 6, “Litigation and Legal Proceedings,” to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 1A. RISK FACTORS.
In addition to factors set forth in “Statement Pursuant to the Private Securities Litigation Reform Act of 1995 – Forward-Looking Statements” in Part I, Item 2 of this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A of our 2007 Form 10-K, which could materially affect our business, financial condition or future results. The risks described in this Quarterly Report on Form 10-Q and in our 2007 Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
27
Table of Contents
Item 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
The following table provides information regarding the Company’s purchases of its Common Stock, $0.01 par value, during second quarter 2008:
Maximum Number (or
Total Number of Shares Approximate Dollar
(or Units) Purchased as Value) of Shares (or Units)
Part of Publicly that May Yet Be
Total Number of Announced Plans or Purchased Under the
Shares (or Units) Average Price Paid Programs Plans or Programs
Period Purchased per Share (or Unit) (1) (2)
April 1, 2008 – April 30, 2008
572,446 $ 19.67 572,446 $ 52,697,487
May 1, 2008 – May 31, 2008
280,799 $ 23.00 280,799 $ 46,240,221
June 1, 2008 – June 30, 2008
31,200 $ 24.88 31,200 $ 45,463,980
Total
884,445 $ 20.91 884,445 $ 45,463,980
(1) Shares were repurchased under a $100 million share repurchase program, authorized by the Board of Directors on October 29, 2007 with no expiration date. The Company may repurchase shares under the 2007 $100 million share repurchase program through open market purchases, pre-arranged trading plans or privately negotiated purchases.
(2) Amounts shown in this column reflect amounts remaining under the 2007 $100 million share repurchase program referenced in Note 1 above.
From July 1, 2008 through July 31, 2008, we repurchased an additional 0.4 million shares for $7.5 million, to bring the cumulative repurchase totals to 3.1 million shares at a cost of $62.1 million under our 2007 $100 million share repurchase program.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At our 2008 Annual Meeting of Shareholders (the “Meeting”) held on June 5, 2008, our Shareholders elected Messrs. Harry G. Campagna, Steven T. Clontz and Edward B. Kamins as directors of the Company and ratified the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accountants for the year ending December 31, 2008. Our Shareholders elected Mr. Campagna as a director by a vote of 31,434,218 shares in favor and 9,717,152 shares withheld. Our Shareholders elected Mr. Clontz as a director by a vote of 35,758,902 shares in favor and 5,392,468 shares withheld. Our Shareholders elected Mr. Kamins as a director by a vote of 35,821,943 shares in favor and 5,329,427 shares withheld. Messrs. D. Ridgely Bolgiano, William J. Merritt, Robert S. Roath and Robert W. Shaner also continue to serve their terms as directors of the Company. The vote ratifying the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accountants for the year ending December 31, 2008 was 40,563,873 shares in favor, 537,977 shares against, 49,520 shares abstaining and no broker non-votes.
Item 6. EXHIBITS.
The following is a list of Exhibits filed as part of this Quarterly Report on Form 10-Q:
Exhibit
Number Exhibit Description
*Exhibit 3.1
Articles of Incorporation of InterDigital, Inc. (Exhibit 3.1 to InterDigital’s Quarterly Report on Form 10-Q dated August 9, 2007)
*Exhibit 3.2
Bylaws of InterDigital, Inc. (Exhibit 3.2 to InterDigital’s Quarterly Report on Form 10-Q dated August 9, 2007)
Exhibit 31.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
Exhibit 31.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
Exhibit 32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350
Exhibit 32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350
* Incorporated by reference to the previous filing indicated.
28
Table of Contents
SIGNATURES
Pursuant to the requirements 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.
INTERDIGITAL, INC.
Date: August 8, 2008
/s/ WILLIAM J. MERRITT
William J. Merritt
President and Chief Executive Officer
Date: August 8, 2008
/s/ SCOTT A. MCQUILKIN
Scott A. McQuilkin
Chief Financial Officer
Date: August 8, 2008
/s/ RICHARD J. BREZSKI
Richard J. Brezski
Chief Accounting Officer
EXHIBIT INDEX
*Exhibit 3.1
Articles of Incorporation of InterDigital, Inc. (Exhibit 3.1 to InterDigital’s Quarterly Report on Form 10-Q dated August 9, 2007)
*Exhibit 3.2
Bylaws of InterDigital, Inc. (Exhibit 3.2 to InterDigital’s Quarterly Report on Form 10-Q dated August 9, 2007)
Exhibit 31.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
Exhibit 31.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended
Exhibit 32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350
Exhibit 32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350
* Incorporated by reference to the previous filing indicated.
29
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO EXCHANGE ACT RULE 13a-14(a)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES OXLEY-ACT OF 2002
I, William J. Merritt, President and Chief Executive Officer of InterDigital, Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of InterDigital, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 8, 2008
/s/ WILLIAM J. MERRITT
William J. Merritt
President and Chief Executive Officer
30
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULE 13a-14(a)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES OXLEY-ACT OF 2002
I, Scott A. McQuilkin, Chief Financial Officer of InterDigital, Inc., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of InterDigital, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 8, 2008
/s/ SCOTT A. MCQUILKIN
Scott A. McQuilkin
Chief Financial Officer
31
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report on Form 10-Q of InterDigital, Inc. (the “Company”) for the quarter ended June 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William J. Merritt, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 8, 2008
/s/ WILLIAM J. MERRITT
William J. Merritt
President and Chief Executive Officer
32
EXHIBIT 32.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the accompanying Quarterly Report on Form 10-Q of InterDigital, Inc. (the “Company”) for the quarter ended June 30, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott A. McQuilkin, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 8, 2008
/s/ SCOTT A. MCQUILKIN
Scott A. McQuilkin
Chief Financial Officer
33
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Daniel Nieves
Microsoft 10K warns of iPhone, Mac threats as iPhone nears 1.1% share
By Aidan Malley
Published: 10:55 AM EST
A Microsoft filing with the US government reveals a newfound worry that the Windows developer's traditional stance of selling software alone won't work against an increasingly profitable Apple -- a concern that may magnify as iPhone 3G pushes Apple's cellular market share past one percent worldwide.
The 10-K submission to the US Securities and Exchange Commission for fiscal year 2008 dances around mentioning Apple or its products by name but makes it clear that the smaller company's practice of building both iPhones, iPods and Macs, as well as the software that drives them, has become a concern that wasn't present in the fiscal year that came before.
"A competing vertically-integrated model, in which a single firm controls both the software and hardware elements of a product, has been successful with certain consumer products such as personal computers, mobile phones and digital music players," Microsoft says in the filing.
The Redmond, Washington-based company notes that it already has some vertically-integrated products, including its Xbox 360 game console and Zune line of portable media players, but that jumping any deeper into that business model may "increase [its] cost of sales" and "reduce operating margins."
As a company involved in developing PCs only through software, Microsoft has typically had relatively little manufacturing overhead, with most of the cost behind software such as Office or Windows centering around research and development rather than the cost of goods. Both software platforms continue to form the backbone of the firm's business even as it expands into hardware.
While suggestive of a potential major shift in Microsoft's strategy, company CEO Steve Ballmer has already made clear in a leaked internal memo not just that Apple is a threat but also that Microsoft intends to fight back primarily by working more closely with third-party PC builders to create a more Mac-like union between hardware and software. A similar effort is also planned for Windows Mobile to improve its standing against the iPhone.
It's that last effort in the mobile arena that Microsoft may need to focus on the most, based on a new report by Strategy Analytics.
The research group notes that Apple's plummet in market share to 0.2 percent during the spring, when a premature sellout of original iPhones led the electronics company to sell just 700,000 devices, is a temporary blip that is already certain to change during the summer quarter. Taking advantage of a healthy cellphone market which appears to be avoiding economic gloom elsewhere, Apple's launch of iPhone 3G for a wider range of countries should push it to 1.1 percent worldwide market share in summer sales.
The figure is still just a fraction of what the top five phone manufacturers have claimed in the spring but would stand in sharp contrast to the relatively sluggish changes in market share for those companies over the spring. LG, Nokia, and Sony Ericsson all grew at considerably smaller rates, while Motorola and Samsung -- both of whom depend on Windows Mobile for smartphones -- slipped during the three-month period.
When shortages weren't a factor in Apple's first-generation iPhone sales, the company was already cited as the third-largest smartphone vendor and was only outsold by Nokia and BlackBerry maker Research in Motion, neither of which uses a Microsoft operating system for their handsets.
Apple already building iPhones at rate of 40 million a year?
By Slash Lane
Published: 10:00 AM EST
Apple is reportedly testing the limits of its overseas manufacturing facilities in order to keep up with demand for the new iPhone 3G, with production already cranked nearly sevenfold compared to the first-generation model.
Foxconn, the company's Taiwanese handset and iPod manufacturer, has recently ramped production of the new iPhone to 800,000 units per week, says TechCrunch, citing a person "close to Apple with direct knowledge of the numbers."
The build rate is said to be "above current full capacity" for the Foxconn facilities alloted to Apple's handset business, which has led to concerns that quality control may suffer. At the current rate, Apple stands to produce more than 40 million iPhone 3Gs over the course of twelve months.
That paces well ahead of analysts' estimates (1, 2, 3) and early reports that suggested Apple's initial iPhone 3G orders spanned only 25 million units through the expected lifespan of the product.
TechCrunch believes Apple's initial order was actually 40 million units over the course of the first twelve months, but is now hearing that "those numbers are being revised upwards sharply."
Apple said it sold 1 million iPhones in the first 72 hours the new iPhone 3G was put on sale, but has not provided an updated sales tally since. The iPhone is currently on sale in 23 countries, with 20 more expected to be added on August 22nd, and another 30 by the end of the calendar year.
http://www.appleinsider.com/articles/08/08/04/apple_already_building_iphones_at_rate_of_40_million_a_year.html
Lets enjoy the moment guys.
Gio,
Thanks for everything that you do for this board.
Court Overturns Injunction In Nokia-InterDigital DisputeFont size: A | A | A
12:16 PM ET 7/31/08 | Dow Jones
RELATED QUOTES
12:18 PM ET 7/31/08
Symbol Last % Chg
IDCC
23.26 11.83%
NOK
27.30 -1.52%
Real time quote.
By Chad Bray
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--A federal appeals court on Thursday overturned a district judge's preliminary injunction ordering arbitration in a patent dispute between InterDigital Inc. (NMS) and Nokia Corp. (NOK) and barring InterDigital from pursuing a separate action before the International Trade Commission.
In an order Thursday, the 2nd Circuit Court of Appeals said the lower court abused its discretion in granting injunctive relief because Finland's Nokia had waived its right to arbitrate disputes involving its license rights to InterDigital's third-generation mobile handset and component patents.
The appellate court noted Nokia sued InterDigital in Delaware in 2005, moved to stay the Delaware litigation in October pending the ITC action and only requested arbitration in December when it asked to terminate or stay the ITC action.
"We conclude, therefore, that Nokia has waived its right to arbitrate through its repeated, intentional invocation of judicial process to resolve questions about the scope of the patents at issue and the applicability of the licenses established by the agreement to these patents," the circuit found. "Because Nokia has waived its right to arbitrate these questions, it has failed to show a likelihood of success on the merits of its underlying action to enforce the arbitration agreement."
In March, U.S. District Judge Deborah A. Batts in Manhattan ordered arbitration in the matter and blocked InterDigital, a King of Prussia, Pa., wireless-technology developer, from taking action in the ITC proceeding against Nokia for patent infringement.
The judge, at the time, ordered InterDigital to either request a stay of the ITC proceeding or to terminate its action if the stay wasn't granted.
In September, the ITC voted to being an investigation after InterDigital filed a complaint with the commission alleging unfair trade practices and patent infringement by Nokia.
On Thursday, the appellate court ordered the case remanded to the district court for further proceedings.
Earlier this month, Nokia and an InterDigital unit settled two separate patent-infringement cases in the U.K.
A lawyer for Nokia and a company spokeswoman didn't immediately return phone calls seeking comment Thursday.
-bY Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com
Interdigital Inc Pa (IDCC) newly added by Oshaughnessy Asset Management Llc
By: DEBORAH COLLINS Approving Editor: RICHARD JACKSON
LONG BEACH (Mffais.com) - Oshaughnessy Asset Management Llc added the Interdigital Inc Pa (IDCC) company to their portfolio, by buying 14,546 shares as shown by filings made public on 2008-07-24.
The stock is currently owned by 217 funds/institutions with a total activity score of 0.01. With 42.85 % of owning funds reported recently buying shares, 14.28 % maintaining existing share level and 42.85 % selling shares. Full details for Interdigital Inc Pa (IDCC) available at http://www.mffais.com/idcc.html
I'm so sorry for this tragic news, may he rest in peace.
Form 4
InterDigital, Inc. - N/A
Filed: July 03, 2008 (period: July 01, 2008)
Statement of changes in beneficial ownership of securities
Table of Contents
FORM 4
¨ Check this box if no longer subject to Section 16, Form 4 or Form 5 obligations may continue. See Instruction 1(b).
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES
Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
OMB APPROVAL
OMB Number: 3235-0287
Expires: February 28, 2011
Estimated average burden hours per response... 0.5
1. Name and Address of Reporting Person *
BOLGIANO D RIDGELY
2. Issuer Name and Ticker or Trading Symbol
InterDigital, Inc. (IDCC)
5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
__X__ Director _____ 10% Owner
_____ Officer (give _____ Other (specify
title below) below)
(Last) (First) (Middle)
781 THIRD AVENUE
3. Date of Earliest Transaction (Month/Day/Year)
07/01/2008
(Street)
KING OF PRUSSIA PA 19406
4. If Amendment, Date Original Filed (Month/Day/Year)
6. Individual or Join/Group Filing(Check Applicable Line)
_X_ Form filed by One Reporting Person
___ Form filed by More than One Reporting Person
(City) (State) (Zip)
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3)
2. Transaction Date (Month / Day / Year)
2A. Deemed Execution Date, if any (Month / Day / Year)
3. Transaction Code
(Instr. 8)
4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5)
5. Amount of Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 3 and 4)
6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)
7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code
V
Amount
(A) or (D)
Price
Common Stock
07/01/2008
A
1,863
A
45,629
D
Common Stock
07/01/2008
F(2)
277
D
$ 24.37
45,352
D
Common Stock
503 (3)
I
By 401(k) Plan
Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
( e.g. , puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 3)
2. Conversion or Exercise Price of Derivative Security
3. Transaction Date (Month / Day / Year)
3A. Deemed Execution Date, if any (Month / Day / Year)
4. Transaction Code
(Instr. 8)
5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)
6. Date Exercisable and Expiration Date
(Month / Day / Year)
7. Title and Amount of Underlying Securities
(Instr. 3 and 4)
8. Price of Derivative Security
(Instr. 5)
9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 4)
10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)
11. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code
V
(A)
(D)
Date Exercisable
Expiration Date
Title
Amount or Number of Shares
Explanation of Responses:
1. Granted pursuant to the InterDigital, Inc. 1999 Restricted Stock Plan in accordance with the Issuer's Compensation Program for Outside Directors.
2. The transaction reported in this Form 4 reflects the withholding of restricted stock units (RSUs) in satisfaction of the Reporting Person's tax liability. The RSUs were a pro-rated portion of an award made to the Reporting Person pursuant to the Company's 1999 Restricted Stock Plan.
3. As of the most recently published account statement, the Reporting Person beneficially owned this number of whole shares of Common Stock pursuant to the InterDigital Savings and Protection Plan.
/s/ Steven W. Sprecher, Attorney-In-Fact for D. Ridgely Bolgiano
07/03/2008
** Signature of Reporting Person
Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.
_______________________________________________
Created by 10KWizard www.10KWizard.comSource: InterDigital, Inc., 4, July 03, 2008
Form 4
InterDigital, Inc. - N/A
Filed: June 25, 2008 (period: June 23, 2008)
Statement of changes in beneficial ownership of securities
Table of Contents
EX-24.4_247052 (POA DOCUMENT)
FORM 4
¨ Check this box if no longer subject to Section 16, Form 4 or Form 5 obligations may continue. See Instruction 1(b).
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES
Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
OMB APPROVAL
OMB Number: 3235-0287
Expires: February 28, 2011
Estimated average burden hours per response... 0.5
1. Name and Address of Reporting Person *
BOLGIANO D RIDGELY
2. Issuer Name and Ticker or Trading Symbol
InterDigital, Inc. (IDCC)
5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
__X__ Director _____ 10% Owner
__X__ Officer (give _____ Other (specify
title below) below)
Chief Scientist /
(Last) (First) (Middle)
781 THIRD AVENUE
3. Date of Earliest Transaction (Month/Day/Year)
06/23/2008
(Street)
KING OF PRUSSIA PA 19406
4. If Amendment, Date Original Filed (Month/Day/Year)
6. Individual or Join/Group Filing(Check Applicable Line)
_X_ Form filed by One Reporting Person
___ Form filed by More than One Reporting Person
(City) (State) (Zip)
Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1.Title of Security
(Instr. 3)
2. Transaction Date (Month / Day / Year)
2A. Deemed Execution Date, if any (Month / Day / Year)
3. Transaction Code
(Instr. 8)
4. Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4 and 5)
5. Amount of Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 3 and 4)
6. Ownership Form: Direct (D) or Indirect (I)
(Instr. 4)
7. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code
V
Amount
(A) or (D)
Price
Common Stock
06/23/2008
M
1,500
A
$ 4.375
43,766
D
Common Stock
503 (1)
I
By 401(k) Plan
Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
( e.g. , puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 3)
2. Conversion or Exercise Price of Derivative Security
3. Transaction Date (Month / Day / Year)
3A. Deemed Execution Date, if any (Month / Day / Year)
4. Transaction Code
(Instr. 8)
5. Number of Derivative Securities Acquired (A) or Disposed of (D)
(Instr. 3, 4, and 5)
6. Date Exercisable and Expiration Date
(Month / Day / Year)
7. Title and Amount of Underlying Securities
(Instr. 3 and 4)
8. Price of Derivative Security
(Instr. 5)
9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s)
(Instr. 4)
10. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 4)
11. Nature of Indirect Beneficial Ownership
(Instr. 4)
Code
V
(A)
(D)
Date Exercisable
Expiration Date
Title
Amount or Number of Shares
Options (Right-to-Buy)
$ 4.375
06/23/2008
M
1,500
06/02/1999(2)
06/01/2009
Common Stock
1,500
$ 0
0
D
Explanation of Responses:
1. As of the most recently published account statement, the Reporting Person beneficially owned this number of whole shares of Common Stock pursuant to the InterDigital Savings and Protection Plan.
2. A grant of 1,500 options pursuant to the InterDigital 1995 Stock Option Plan for Employees and Outside Directors, which vested in full on 06/02/1999.
/s/ Steven W. Sprecher, Attorney-In-Fact for D. Ridgely Bolgiano
06/25/2008
** Signature of Reporting Person
Date
Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.
* If the form is filed by more than one reporting person, see Instruction 4(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, see Instruction 6 for procedure.
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB Number.
POWER OF ATTORNEY
For Executing Forms 3, 4 and 5
of the
United States Securities and Exchange Commission
KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and appoints
each of Steven W. Sprecher, Bruce S. Pailet and Amy A. Miraglia signing singly
as my true and lawful attorney-in-fact to:
(1) execute and file for and on behalf of the undersigned, in the undersigned's
capacity as an executive officer of InterDigital, Inc. (the "company") Forms 3,
4 and 5 in accordance with Section 16(a) of the Securities Exchange Act of 1934
and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned which
may be necessary or desirable to complete and execute any such Form 3, 4 or 5
and timely file such form with the United States Securities and Exchange
Commission and any stock exchange or similar authority; and
(3) take any other action of any type whatsoever in connection with the
foregoing which, in the opinion of such attorney-in-fact, may be of benefit to,
in the interest of, or legally required by, the undersigned, it being understood
that the documents executed by such attorney-in-fact on behalf of the
undersigned pursuant to this power of attorney shall be in such form and shall
contain such terms and conditions as such attorney-in-fact may approve in his or
her discretion.
The undersigned hereby grants to each such attorney-in-fact full power and
authority to do and perform each and every act and thing whatsoever requisite,
necessary or proper to be done in the exercise of any of the rights and powers
herein granted, as fully to all intents and purposes as the undersigned might or
could do if personally present, with full power of substitution or revocation,
hereby ratifying and confirming all that such attorney-in-fact, or his or her
substitute or substitutes, shall lawfully do or cause to be done by virtue of
this power of attorney and the rights and powers herein granted. The
undersigned acknowledges that the foregoing attorneys-in-fact, in serving in
such capacity at the request of the undersigned, are not assuming, nor is the
company assuming, any of the undersigned's responsibilities to comply with
Section 16 of the Securities Exchange Act of 1934 or shall be liable or
accountable in respect for any act or omission undertaken in good faith and not
in reckless disregard of the obligations assumed hereunder.
This power of attorney shall become effective immediately, and shall remain in
full force and effect until the undersigned is no longer required to file Forms
3, 4 and 5, with respect to the undersigned's holdings of and transactions in
securities issued by the company, unless earlier revoked by the undersigned in a
signed writing delivered to the foregoing attorneys-in-fact.
EXECUTED this 20th day of March, 2008.
/s/ D. Ridgely Bolgiano
ACKNOWLEDGEMENT
Commonwealth of Pennsylvania :
: SS:
County of MONTGOMERY :
ON THIS, the 20th day of March 2008, before me a notary public the undersigned
executive officer, personally appeared D. Ridgely Bolgiano, known to me (or
satisfactorily proven) to be the person whose name is subscribed to within the
power of attorney, and acknowledged that he/she executed the same for the
purposes therein contained, and desired that it be recorded as such.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
/s/ Rebecca G. Swavely
Notary Public
My Commission Expires: October 19, 2009
_______________________________________________
Created by 10KWizard www.10KWizard.comSource: InterDigital, Inc., 4, June 25, 2008
iPhone 3G component suppliers revealed by Chinese paper?
By Sam Oliver
Published: 10:00 AM EST
Infineon, Broadcom, and Foxconn Electronics are amongst the big winners when it comes to component suppliers for Apple's soon-to-arrive iPhone 3G mobile handset, according to the Commercial Times.
The Chinese-language newspaper cited its own sources in saying that Foxconn -- not Quanta as some earlier reports had erroneously suggested -- will be piecing the device together at its Taiwanese facilities and also manufacturing its enclosure.
True to expectations, Infineon is said to be supplying a new systems solution handset chip that will likely include a digital baseband controller, power management unit (PMU), and radio frequency (RF) module. Meanwhile, it's alleged that Broadcom will indeed be serving up the GPS module.
Also inside will be touch-screen panels from Sharp, camera modules from Altus Technology and Primax Electronics, camera lenses from Largan Precision and Genius Electronics Optical, integrated circuit packaging from Siliconware Precision Industries, and circuit boards from Unimicron Technology, Nanya PCB, and Compeq Manufacturing.
For the most part, the suppliers are similar to those identified as playing roles in the original iPhone, though Catcher Technology appears to have lost its seat as the provider of the phone's enclosure due to a shift away from metal casings and towards plastic ones with the new model, a move aimed at improving the handset's wireless transmissions.
Although the Commercial Times did not specify which firm would be supplying the phone's primary system-on-a-chip (SoC), it's widely expected that South Korea-based Samsung has again secured that slot.
http://www.appleinsider.com/articles/08/06/19/iphone_3g_component_suppliers_revealed_by_chinese_paper.html
very sad indeed.
InterDigital mentioned:
What adding 3G means for the iPhone
For iPhone 3G newbies and for Apple, the benefits look clear
Apple's iPhone: finally worth buying now it's 3G?
Zoom
Apple CEO Steve Jobs has finally admitted what we’ve known all along: that 3G is where’s it at when it comes to mobile browsing and web surfing on the iPhone.
Ironically it was Jobs himself who explained the difference. He compared the web surfing experience on the old GPRS / EDGE iPhone and the new 3G version during his WWDC 2008 keynote today.
Over EDGE, browsing proved to be a painfully slow and frustrating experience, while the 3G version just flew.
Apple claims the 3G iPhone is twice as fast its predecessor when it comes to serving up web pages and accessing emails, and boasts 'best in class' performance when set against rivals like the Nokia N95.
It's about time.
iPhone excuses?
Jobs has previously argued that Apple didn’t include 3G in the original iPhone, because of concerns over battery life, and because many users preferred to Wi-Fi for surfing when in reach of an access point.
These arguments always looked spurious, and were conspicuous by their absence today.
That’s no doubt due to the fact that the iPhone 3G actually boasts much better talktime than its predecessor on 2G networks (up from 8 to 10 hours).
iPhone 3G talktime and web-browsing have been pegged at five to six hours apiece, so why offer 3G belatedly now?
iPhone 3G: a change of heart
The iPhone 3G introduction today can partly be explained by the launch of new generation of 3G chips (fromBroadcom, InterDigital, etc,) that are simply more efficient than previously. This enables the iPhone to do more, more quickly.
But it's likely also due to the fact that Apple has stepped outside of its reality distortion field and faced up to facts:
That 3G is seen as essential in Europe and many other territories; and
That Apple was actively harming the iPhone's chances of success by leaving it out
So is 3G on the iPhone a good thing? On paper, absolutely. But you’ll know for sure when we finally get our hands on a UK review sample.
By Rob Mead
http://www.techradar.com/news/computing/apple/what-adding-3g-means-for-the-iphone-388140
Daniel Nieves
"Today w'ere introducing the iPhone 3G.
Apple To Allow Operator Subsidies Of iPhone In US And UK?
Monday, June 9, 2008; 7:00 AM
Apple ( NSDQ: AAPL) is expected to debut its 3G iPhone later today, and this time around, the handset may be considerably cheaper than its first version. The Financial Times citing "people familiar with the matter" said that Apple has "bowed to pressure" from networks to allow them to subsidize handsets to boost sales, basically admitting that their previous selling strategy was not cutting it. The hope, of course, is that the subsidy will help boost sales and enable Apple to hit its goal of 10 million iPhones sold by the end of the year. So far, its sold 1.7 million of them. Analysts are speculating that AT&T ( NYSE: T) may offer a subsidy of $200 on the phone, meaning that it could be priced at $299 when it hits the market. The FT is also reporting that Apple has relented a bit on its revenue share deal and will actually give up an unspecified portion of the cut?which analysts had estimated to be as high as 30 percent of user revenues.
AT&T boosts 3G speeds by 20% ahead of 3G iPhone launch
By Katie Marsal
Published: 10:00 AM EST
AT&T announced Wednesday a more than 20 percent increase to the typical download speeds across its 3G wireless network and a 50 percent increase to typical upload speeds.
The mobile operator and exclusive provider for Apple's iPhone in the US said the upgrades are results of recent network enhancements, including the deployment of High Speed Uplink Packet Access (HSUPA) technology across all existing 3G markets that is expected to be completed by the end of the month.
Customers on the network should now achieved download speeds between 700 Kbps (kilobits per second) and 1.7 Mbps (megabits per second), up from 600 Kbps to 1.4 Mbps. Meanwhile, upload speeds should jump to the 500 Kbps - 1.2 Mbps range, up from 500 to 800 Kbps.
The announcement comes just days before Apple is expected to take the wraps off its next-generation iPhone handset which is widely expected to leverage 3G networks worldwide.
AT&T says its 3G mobile network is available in more than 275 major U.S. metropolitan areas, adding that later this month it will become the first U.S. carrier to have fully deployed High Speed Packet Access (HSPA) technology across its entire 3G network.
By year-end, the company plans to offer 3G service in nearly 350 major metropolitan U.S. areas.
http://www.appleinsider.com/articles/08/06/04/att_boosts_3g_speeds_by_20_ahead_of_3g_iphone_launch.html
Apple files patent for solar iPhone technology
May 28, 2008 01:40 PM CDT
By FRANCINE HARDAWAY / earth911.org
Do you leave your iPhone or iPod out in the sun to charge it up? Soon you might, according to several sources who know that Apple has filed a patent for a technology to insert a layer of solar cells under a touch-sensitive screen.
If this patent is accepted, it could make the iPhone a truly portable device, useful especially in countries with limited access to electricity.
There isn’t room for solar panels on portable devices, once space taken up by the screen and keypad is taken into account - a fact that has plagued previous attempts to alternatively power MP3 players and mobile phones.
But putting the solar cells under the screen might allow the full 2.4 by 4.5 inch glass face of the iPhone to be a solar panel.
AT&T says 3G network to be completed by June
By Slash Lane
Published: 01:20 PM EST
AT&T said Wednesday it plans to have completed deployment of its vast 3G wireless infrastructure by next month, around the same time Apple is expected to begin selling a an updated iPhone that will take advantage of the faster wireless technology.
"By the end of June, connecting to AT&T's 3G mobile broadband service will be as speedy as logging onto the high speed Internet service that many consumers enjoy at home," the carrier said in a statement.
AT&T note that its final step in the process is to deploy High Speed Uplink Packet Access (HSUPA) technology in six remaining markets covered by its 3G network, which will boost uploads speeds to the 500 - 800 Kbps range.
The new upload speeds will complement AT&T's existing 3G download capabilities, which offer speeds up to 1.4 Mbps thanks to previous deployments of its HSDPA (High Speed Downlink Packet Access) technology.
Once completed, AT&T will be the only U.S. carrier to have fully deployed HSPA technology in its 3G network, with availability in more than 275 markets. The carrier said it will then work on scaling the technology to nearly 350 markets by year's end, at which time it will have spent a combined $20 billion over the past four years in improvements and upgrades.
"Equally as important as the network is the device through which a customer experiences it," the carrier said. "AT&T's handset portfolio in company-owned stores is more than 75 percent 3G-capable — and will be even more enticing with the addition of more 3G-enabled smartphones in the summer and fall of 2008."
Earlier this month, AppleInsider reported on AT&T's long-term roadmap for its 3G network, which includes boosting speeds to the 7.2 Mbps range sometime later this year or early next, and eventually hit speeds of 20 Mbps sometime in 2009.
Beyond that, the the carrier says it has "a clear and logical path" to 700MHz 4G access via the Long Term Evolution (LTE) standard in the 2010 timeframe that could increase speeds to nearly 100 Mbps.
http://www.appleinsider.com/articles/08/05/21/att_says_3g_network_to_be_completed_by_june.html
Form 8-K
InterDigital, Inc. - N/A
Filed: May 21, 2008 (period: May 21, 2008)
Report of unscheduled material events or corporate changes.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): May 21, 2008
______________
InterDigital, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania
1-11152
23-1882087
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No)
781 Third Avenue, King of Prussia, Pennsylvania
19406-1409
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: 610-878-7800
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
(a) On May 21, 2008, InterDigital, Inc. issued a press release announcing its financial guidance for the quarter ending June 30, 2008. A copy of the press release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(c)
Exhibits
99.1 Press release dated May 21, 2008.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
INTERDIGITAL, INC.
By:
/s/ Steven W. Sprecher
Steven W. Sprecher
General Counsel and Government Affairs Officer
Dated:
May 21, 2008
EXHIBIT INDEX
Exhibit No.
Description
99.1
Press release dated May 21, 2008
Exhibit 99.1
InterDigital® Announces Financial Guidance for Second Quarter 2008
KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--InterDigital, Inc. (NASDAQ:IDCC) today announced financial guidance for second quarter 2008. The company expects second quarter 2008 revenue to be in the range of approximately $58.5 million to $59.5 million. This range does not include any potential impact from additional new agreements that may be signed during second quarter 2008 or additional royalties identified in audits regularly conducted by the company.
Expected revenues for second quarter 2008 include the following approximate amounts;
$56.2 million to $56.7 million of recurring patent licensing revenue;
$0.3 million of patent license revenue related to sales from prior periods; and,
$2.0 million to $2.5 million of technology solutions revenue.
“We are pleased with the solid level of recurring patent license royalty revenue including the contributions from licensees signed earlier this quarter,” said Scott McQuilkin, InterDigital's Chief Financial Officer.
About InterDigital
InterDigital designs, develops and provides advanced wireless technologies and products that drive voice and data communications. InterDigital is a leading contributor to the global wireless standards and holds a strong portfolio of patented technologies which it licenses to manufacturers of 2G, 2.5G, 3G, and 802 products worldwide. Additionally, the company offers a family of SlimChip™ high performance mobile broadband modem solutions, consisting of Baseband ICs, Modem IP and Reference Platforms. InterDigital's differentiated technology and product solutions deliver time-to-market, performance and cost benefits.
For more information, visit: www.interdigital.com
This press release contains forward-looking statements regarding current beliefs, plans, and expectations as to the company’s second quarter 2008 recurring and non-recurring revenue. Words such as "expects," “range” 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, but not limited to: (i) the unanticipated acceleration in the execution of additional patent license or technology solution agreements, or amendments to existing patent license or technology solution agreements, on acceptable terms during second quarter 2008; (ii) the accuracy of market sales projections of our licensees, and timely receipt and final reviews of quarterly royalty reports from our licensees and related matters; and (iii) amounts of royalties payable following routine audits, if any, and the timely receipt of such amounts during second quarter 2008.
InterDigital is a registered trademark and SlimChip is a trademark of InterDigital, Inc.
CONTACT:
InterDigital, Inc.
Media Contact:
Jack Indekeu, +1 610-878-7800
Email: jack.indekeu@interdigital.com
or
Investor Contact:
Janet Point, +1 610-878-7800
Email: janet.point@interdigital.com
_______________________________________________
Created by 10KWizard www.10KWizard.comSource: InterDigital, Inc., 8-K, May 21, 2008
Wed May 21 10:27:23 2008 IDCC is "In Play"
Interdigital Co issues in-line guidance for Q2 (Jun), sees Q2 (Jun) revs of $58.5-59.5 mln vs. $57.79 mln First Call consensus. This range does not include any potential impact from additional new agreements that may be signed during second quarter 2008 or additional royalties identified in audits regularly conducted by the company.
Report puts 3G iPhone on store shelves by mid-June
By Sam Oliver
Published: 11:00 AM EST
Consumers holding out for the next-generation of Apple Inc.'s iPhone won't have to wait till the end of June to call one their own, according to a new report which places widespread availability closer to the middle of the month.
Citing a "reliable source" familiar with the matter, popular gadget size Gizmodo is now throwing its weight behind the obvious, saying it's now a certainty that Apple will take the wraps off a so-called 3G iPhone during the start of its annual developers conference on June 9th.
More relevant, however, is the site's claim that Spaniards will be able to purchase the device during the grand opening of Telefonica's megastore in Spain a little over a week later on Wednesday, June 18th. As such, stateside availability is expected to be similar, if not preceding the Spanish launch.
Gizmodo cites the same unidentified source as saying that beginning with the arrival of a 3G model, the Apple handset will longer be available at a fixed price point in some countries
"[Its] launch will also bring new sales policies, although these have not been completely specified yet," the report states. "This most probably means the new 3G iPhone will be integrated in the usual marketing systems of carriers, with point-based trade-ups, discounts for carrier switchers, and other service-based subvention packages."
In a recent press release, Apple said chief executive Steve Jobs along with other members of the company's management would use Jobs' opening keynote address at the June developers conference to showcase the Mac OS X Leopard and iPhone development platforms, but in traditional fashion abstained from alluding to any planned major product launches.
Nevertheless, confidence in the keynote serving as a launch pad for the next-gen iPhone saw a boost earlier this month when Apple stopped taking online orders for its existing iPhone models, leading to an almost immediate sellout of company's developers conference for the first time in history.
http://www.appleinsider.com/articles/08/05/20/report_puts_3g_iphone_on_store_shelves_by_mid_june.html
It happened @ about 9:56. eom
O2 fuels 3G iPhone frenzy as Bharti says deal signed for India
By Sam Oliver
Published: 01:00 PM EST
Telefonica's O2 subsidiary, the exclusive provider of Apple's iPhone to the UK and Ireland, has stoked anticipation of a 3G model with fresh comments Wednesday. Meanwhile, Bharti Airtel has signed a deal that will make it the second iPhone provider in India.
Speaking to analysts and members of the media during a quarterly conference call, O2 Europe chief executive Matthew Key said Telefonica and Apple would make a joint statement in "the coming weeks" but declined to specifically say whether it would regard the much hyped 3G iPhone.
"It is broadly known we are now out of stock of the 8 gigabyte and we have got some 16 gigabytes left," he would later tell Reuters in an interview.
Apple has also let its inventory of iPhones run uncharacteristically lean in recent weeks. Both its online stores in the US and UK have stopped taking orders for the device, and recent polls of the company's brick and mortar locations have turned up spotty availability at best.
At present, the Cupertino-based company and its wireless partners appear to be avoiding talk of a next-generation, 3G model strictly as a matter of policy. Always a showman, Apple chief executive Steve Jobs is likely to have planned a gala introduction for the handset at or before the company's annual developers conference set to kick off on June 9th.
Nevertheless, countless media reports and findings within resources of Apple's developmental iPhone software have revealed that the new phone should at they very least include 3G wireless and GPS capabilities.
For Apple, the stakes appear particularly high in India, where it along with Vodafone and just-announced partner Bharti Airtel will reportedly market the new handset through a staggering 250,000 Vodafone and Airtel retail outlets, including franchisee-owned shops.
It's reported that the rollout will be the largest in the world, handily dwarfing Apple's stateside plans that will see the device available in only about 7,000 A&T and Apple retail locations pending any further developments.
http://www.appleinsider.com/articles/08/05/14/o2_fuels_3g_iphone_frenzy_as_bharti_says_deal_signed_for_india.html
AT&T to boost 3G speeds more than fivefold by 2009
By Katie Marsal
Published: 11:20 AM EST
AT&T said Wednesday it plans to boost the speed of its 3G wireless network to speeds of 20 megabits per second in 2009, paving the way for over-the-air downloads that are more than five times faster than what customers can achieve today.
Speaking at the Morgan Stanley's annual Communications Conference, the company's mobility chief Ralph de la Vega said engineers already have a version of its HSPA (High Speed Packet Access) 3G network up and running in the labs at speeds of 7.2 megabits per second, or approximately double the theoretical throughput of its existing network.
"It's clear to us that we are in the very early stages of what I would call a wireless date revolution," he said.
AT&T plans to transition to HSPA release 7 sometime in 2009, which will deliver even bigger speeds "exceeding 20 megabits per second," according to the executive. He said the upgrade will require few if any hardware modifications to the company's infrastructure and will instead be a smooth transition achieved largely through a software upgrade to its electronics.
De la Vega also said that his firm has "a clear and logical path" to 700MHz 4G access via the Long Term Evolution (LTE) standard in the 2010 timeframe which should again increase speeds fivefold to nearly 100 megabits per second.
"[The] steps to get there are very logical and they're all building on the same GSM technology that we've been using for a while," he explained. "LTE will allow for backwards compatibility to GSM and HSPA, which is a great benefit to customers. And our path forward to LTE allows us to get there step-by-step, with interim steps that will deliver more and more speeds everyday."
De la Vega was similarly excited about AT&T's growth opportunities in the smart phone market given upcoming handsets from Apple and BlackBerry maker Research In Motion, noting that just 16 percent of the company's postpaid customers currently own integrated devices.
"So upside on further penetration is substantial," he said.
http://www.appleinsider.com/articles/08/05/14/att_to_boost_3g_speeds_more_than_fivefold_by_2009.html
Swiss iPhone announcement raises eyebrows given rumors
By AppleInsider Staff
Published: 09:00 AM EST
Swisscom on Wednesday confirmed it will begin selling Apple's iPhone in Switzerland this year, possibly bolstering a recent report on the matter which also stated that the handset would arrive with video conferencing and other fresh features.
"The iPhone will be available later this year," the Swiss carrier wrote on a section of its website where customers can sign up to receive details at a later date. "We will inform you personally as soon as we have more news."
The announcement comes just one day after Swiss newspaper Le Matin reported that a deal between Apple and Swisscom had been finalized. However, the same report stated the agreement between the two parties was regarding a 3G iPhone that would offer two-way video chats, mobile TV, and GPS navigation.
Le Matin added that Swisscom plans call for the use of "attractive" incentives to lure new iPhone subscribers to its service, and that it will offer a high-end plan for pairing with mobile video and other live services.
Switzerland is the fifth new addition to Apple's European iPhone roster, joining the Greece, Portugal, Czech Republic and Italy, which saw their own iPhone deals made public a bit earlier this month.
http://www.appleinsider.com/articles/08/05/14/swiss_iphone_announcement_raises_eyebrows_given_rumors.html
Steve Jobs to showcase OS X, iPhone platforms at WWDC
By AppleInsider Staff
Published: 08:35 AM EST
Apple announced Tuesday that a team of Apple executives, led by CEO Steve Jobs, will kick off the company's annual Worldwide Developers Conference (WWDC) with a keynote address beginning at 10:00 a.m. on Monday, June 9, 2008 at San Francisco's Moscone West.
This year's WWDC will showcase two revolutionary development platforms, the ground-breaking innovations of OS X Leopard and OS X iPhone, the company said in a statement.
The five-day event, which runs from June 9 to June 13, will feature the first ever iPhone track for mobile developers with in-depth sessions and hands-on labs to fully explore the capabilities of the OS X iPhone 2.0 software, including the iPhone SDK and the App Store, a new way for developers to wirelessly deliver their applications to iPhone and iPod touch users.
The iPhone track will also enable mobile developers to work side by side with Apple engineers to create fresh applications that leverage iPhone's groundbreaking Multi-Touch user interface, animation technology, rich set of APIs, including programming interfaces for Core OS, Core Services, Media and Cocoa Touch technologies, built-in three axis accelerometer and geographical location technology to deliver truly innovative mobile applications.
Meanwhile, this year's Mac track is being organized to give newcomers and seasoned veterans alike the technical foundation and techniques needed to develop world-class OS X Leopard applications with sessions that discuss every level of the system, including interface design and implementation, application frameworks, security, localization and networking.
In total, WWDC 2008 will offer over 150 information-rich sessions and labs where Apple engineers will go in-depth on the innovative technologies that power OS X iPhone and OS X Leopard, the company said. Developers are encouraged to bring their own code to the labs and work one-to-one with Apple engineers, applying development methods and best-practices gained from sessions to enhance their applications.
Other activities at Apple's WWDC 2008 include:
presentation sessions led by engineers that provide an in-depth look at OS X iPhone, OS X Leopard and innovative tools and technologies such as the iPhone SDK, Cocoa Touch, Interface Builder, Xcode and more;
practical hands-on sessions where attendees can learn Apple's own coding strategies and techniques;
technology labs where attendees can work one-to-one with Apple engineers; and
special events, including the Welcome Reception, Apple Design Awards, Lunchtime Speakers and Stump the Experts.
http://www.appleinsider.com/articles/08/05/13/steve_jobs_to_showcase_os_x_iphone_platforms_at_wwdc.html