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These forward-looking statements are made only as of the date hereof, and except as required by law, we undertake no obligation to update or revise any of them, whether as a result of new information, future events or otherwise.Finally, please note that we have also posted some supplemental information on our website in connection with this call this morning which you can access in the events and presentation section of the investor relations portion of our website www.interdigital.com. With that I would like to turn the call over to Scott. Scott McQuilkin Thanks, Janet, and good morning to everyone. I’m pleased to report that our second quarter 2010 results were very strong. Year-over-year revenue increased $16.2 million or 22% and drove net income of 32% to $35 million. Diluted EPS was $0.78 in second quarter 2010 up from $0.59 in second quarter 2009. Free cash flow was positive $67 million in first half 2010 and was a results cash and short term investments increased to $486 million at the end of first half 2010 up from $410 million at year end 2009. In addition to the $100 million received from Samsung in first half 2010, we also received patent royalty payments of $71 million and other cash payments of $10 million from Technology Solutions Customers. Revenue for second quarter 2010 was $91.2 million and consists of three components. Current patent royalties, add sales royalties and technology solutions revenues. Current patent royalties were $80.2 million in second quarter 2010 up $9.8 million or 14% over second quarter 2009. The increase was driven by a combination of higher sales by nearly all of our per unit license fees and new patent licenses added since second quarter 2009, With Casio, Amtech, Centurion and Enfora. From a sequential basis, current patent royalties increased to 80.2 million from $78.1 million in first quarter 2010. It’s worth noting that current patent royalties have increased in each sequential quarter since first quarter 2009 due primarily to higher 3G unit sales volume and the addition of new or renewed license agreements.
Add sales royalties were $4.9 million in second quarter 2010 compared to $2.3 million second quarter 2009. Add sales royalties in second quarter 2010 were due to the renewal of an agreement with one of our licensees and covered the six months between the explorations with the previous agreement in the beginning of the licensee's new reporting period.Technology solutions revenues was $6.1 million, up $3.9 million and more than double the level in second quarter 2009. The significant increase is due to growth in per-unit royalties related to licensing of our SlimChip modem core as well as $3.1 million of revenue from addition to customers for our SlimChip modern core. The same communications and capital semiconductor. Consistent with past practice, we will provide guidance on our revenue expectations for third quarter 2010, after we received the relevant royalty reports. Turning to the expense side, second quarter 2010 operating expenses were $38.1 million, up from $34.7 million in the second quarter 2009. Second quarter 2010 expenses included cumulative charge of $49 million to increase the accrual rate for a performance based cash incentive under our long-term compensation program. In addition, second quarter 2010 expenses reflect an increase of $1.3 million for third party sub-license fees and other non-personnel expenses to support the technology transfer supporting the Beceem and CapiSemi relationships. Importantly, these expenses were more than offset by the contribution of $3.1 million of revenue from these customers. Second quarter 2010 expenses also include an increase in due diligence costs associated with Patent acquisition opportunities. These increases were offset by a decrease in intellectual property enforcement cost to $2.4 million in the second quarter 2010 from $5.6 million in the second quarter of 2009. On a sequential basis, second quarter 2010 expenses decreased $3.4 million from first quarter 2010. The decrease is due to $4.2 million decreases in intellectual property enforcement cost and a $2.6 million decrease in personnel expense. These decreases were partially offset by $1.3 million increases in non-personnel expenses associated with the Beceem and CapiSemi relationship and in increase in due diligent cost associated with patent acquisition opportunities. Both of which I mentioned earlier. Read the rest of this transcript for free on seekingalpha.com