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TheStreet Open House

InterDigital's CEO Hosts Investor Conference (Transcript)

Stocks in this article: IDCC

Scott McQuilkin

Thanks Bill. In the agreement InterDigital will be selling Intel portfolio of approximately 1700 patents and patent applications leading primarily to 3G, 4G LTE, and 802.11 technology. Transaction is valued at 375 million and net amount will be paid in cash once the transaction is completed which we expect in the third quarter of 2012.

The portfolio in this transaction includes approximately 1200 granted worldwide patents and the balance in applications. The U.S. patents in this transaction include approximately 160 issued patents and roughly 40 patent applications, none of the patents included in this deal are included in any of our ongoing litigations.

In terms of the percentage of our portfolio that the deal represents, let me provide you some numbers. We currently have a portfolio of approximately 20,000 patents and patent applications. Given that this transaction represents approximately 8% of our overall portfolio. Also given that our R&D team continues to develop new innovations every day, we expect the continued monetization parts of our intellectual property portfolio to be an ongoing element of our strategy going forward. The added financial strength generated by the sale of these patents it also enabled us to pursue our licensing efforts and expansion of our strong patent portfolio even more aggressively.

From a financial perspective although we are still working to finalize the accounting for this transaction, we expect that a significant portion of the 375 million from the sale will be recognized as revenue in the period in which the transaction closes. It has anticipated to be the third quarter of 2012.

After taking into account taxes, the transaction is expected to generate approximately 250 million in cash. We also expect to record a related charge of approximately 3 million in second quarter 2012 to increase our accrual for the company’s long-term compensation program cycle ending December 31, 2012. You may recall we managed our performance incentives on rolling three cycles. So, this adjustment includes 10 quarters worth of an accumulated accrual.

Read the rest of this transcript for free on seekingalpha.com

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