InterDigital Inc (IDCC)

[olddog967]

Corp_Buyer/rmarchma: Corp, in your reply to Ron you stated that “With respect to NOL, we agree that using NOL will benefit the CF”. Frankly, in regard to taxes, as Ron stated it is very complicated, and I am not exactly sure what Ron stated.

In the third quarter of 2004, IDCC decided to use a portion of their NOL. As stated in the 10-K, approximately $17 million was recognized as income in the P&L statement. However, if I am reading the cash flow statement correctly, rather than increasing i.e benefiting cash flow, the NOL related amount was reported as a credit or reduction in cash flow. Is this correct? From the 10-K:


“During 2004, we determined that our recent operating performance coupled with our current expectations to generate future taxable income indicated that it was more likely than not that we would utilize a portion of our deferred tax assets. Accordingly, in third quarter 2004, we recognized an increase in the value of our deferred tax assets of approximately $27 million through a partial reversal of the valuation allowance. Of the $27 million benefit, approximately $17 million was recognized as income in the statement of operations and approximately $10 million was credited directly to additional paid-in-capital.”


Consolidated Statements of Cash Flows

“Recognition of deferred income tax benefits (17,064)”