Replies to post #10089 on InterDigital Inc (IDCC)

[mschere]

From IDCC 10K--3/2002...

For example, our patent
license agreement with Nokia, provided that, in exchange for a payment of $31.5
million, Nokia's royalty obligation to ITC had been paid-up generally with
respect to certain 2G and certain 3G covered products through the end of 2001.
This agreement provides that the parties will agree to the royalty payments to
be made thereafter. In the absence of agreement on royalty rates between the
parties, the MFL provision provides that Nokia's royalty obligations will be
defined by and subject to certain risks and uncertainties of the relevant
licensing terms applicable to certain other leading manufacturers of wireless
telecommunications equipment, none of whom are yet licensed by ITC. Nokia also
has the option to elect to apply the relevant licensing terms applicable to
certain other manufacturers, but has not yet done so. The license agreement
provides that until such time as the royalty rate is determined, royalties for
the period commencing in 2002 will accrue.

[TFWG]

VG, From a pure accounting stand point, Nokia has been accruing a royalties payable to IDCC since January 01, 2002 (per FAS 5). This accrual is probably buried in their COGS and the rate being used is a well guarded secret. I’ll bet only their Controller and above know what that entry is!

With regard to the payment, the CFO of IDCC has stated this royalty will be booked in a "lump sum" as soon as a rate is established. Therefore, no payment installments....unless IDCC and Nokia renegotiate (which might be a fairly painless concession to Nokia --as an additional incentive-- in exchange for a rate).

BTW, Samsung should be in the same boat as the aforementioned. IDCC is going to recieve a huge lump sum of cash, which goes right to our bottom line, very, very, very soon.

Regards,

Bob