Replies to post #401129 on InterDigital Inc (IDCC)

[olddog967]

Jim: As I have written before, Nokia had established a Provision i.e, contingent liability account for IP claims. The account amounts were only estimates for reporting purposes. NO CASH WAS SPECIFICALLY SET ASIDE.

[Rakitno]

Note that a contingent liability provision is an expense which decreases income and negatively affects a company's reported EPS. Nokia was recognizing the estimated lawsuit loss expenses all the while decreasing their reported EPS.

These contingent liabilities are usually reviewed quarterly and annually and adjusted to reflect the current best estimated cost. Therefore, if it is no longer probable that these payments are to be required, the provision would be reversed and income would be recognized by the company.

Meaning IF Nokia/Microsoft estimated that it is no longer probable that the legal obligation is owed regarding a lawsuit, the provision would be reversed and they would be recognizing income as a result.