Good day, everyone and welcome to the InterDigital First Quarter 2011 Conference Call. As a reminder, today's call is being recorded. At this time I'd like to turn the call over to Ms. Janet Point. Please go ahead.

All right. Thank you, Dana. And good morning, everyone and welcome to InterDigital's first quarter 2011 earnings conference call. With me this morning are Bill Merritt, our President and Chief Executive Officer, and Scott McQuilkin, our CFO. Consistent with last quarter's call we will offer some highlights about the quarter and the company and then open up the call for questions. Before I begin our remarks, I need to remind you that in this call we will make forward-looking statements regarding our current beliefs, plans and expectations, which are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results and events to differ materially from results and events contemplated by such forward-looking statements. These risks and uncertainties include those set forth in our earnings press release published yesterday as well as detailed in our annual report filed on Form 10-K/A for the year ended December 31st, 2010 and from time to time in our other filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof and as 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. In addition, today's presentation contains references to free cash flow, a non-GAAP financial measure. A schedule setting out a reconciliation of free cash flow to net cash provided by operating activities, the most directly comparable GAAP financial measure, is included at the back of our earnings release that we issued yesterday. This release has also been posted in the Investor Relations section of our website at interdigital.com. So with that taken care of, I will now turn the call over to Bill.

Thank you, Janet. And good morning to everyone. As you saw in last night's release, we delivered a solid first quarter. While our total revenue was down sequentially that was driven by the absence of any current revenue from LG. As I will discuss later, discussions on renewing that agreement continue. Other than that, we actually saw strong growth with our per-unit royalties, which grew 11% quarter-over-quarter and 32% year-over-year. So the core business is in very good shape. With that, I want to focus on three things. First is a bit more detail on our licensing discussions. Second, I wanted to address our recent capital raise. And third, I want to talk about how we believe the added capital can help drive our core terminal unit licensing business. First, on licensing, we continue to have a deep pipeline of discussions, falling basically into three groups. The first would be the discussions with the top unlicensed manufacturers like LG. The second group contains other unlicensed terminal unit manufacturers. The scope of the discussions being discussed in both of these groups are generally the same – multiyear deals covering 2G, 3G and LTE technologies and all types of connective devices, whether they're handsets, laptops, tablets or other consumer electronic devices. The third type of discussions we're having are with existing customers for 2G and 3G, which now need to upgrade to LTE, some of whom may also need to extend their license terms. In these discussions we are leveraging our 2G portfolio, our deepening 3G portfolio, as well as our LTE portfolio. We highlight a broad range of inventions covered by patents, issued and patent applications filed all over the world. Based on the quality and quantity of the patents discussed, as well as our continuing pipeline of inventions, we leave…

Thanks, Bill. I'm pleased to report solid results for first quarter 2011. Revenue totaled $78.5 million, net income was $23.3 million and diluted EPS was $0.51. While these results represent a decline from the previous quarter, as Bill mentioned we believe that this is a temporary issue driven by the timing of getting new agreements and renewals in place. As we have said before, the value in building a successful licensing business is recognized over a longer time and it is necessary to continue negotiations until the appropriate value’s obtained. Our revenue consists of three components, current patent royalties, past sales royalties and Technology Solutions revenue. Current patent royalties were $74.6 million in first quarter 2011 down $3.4 million from first quarter 2010. The decrease was due to the absence of $14.4 million of revenue from LG Electronics, which became subject to renewal at the end of last year. Excluding the impact of LG, our current patent royalties increased by $11 million or 17% from first quarter 2010 to first quarter 2011. On a sequential basis, our current patent royalties without LG increased 5%. Per unit patent royalties accounted for $39.5 million or 53% of current patent royalties in first quarter 2011 and increased $9.5 million or 32% from first quarter 2010. This increase was driven primarily by growth in customer smartphone product sales. Our fixed fee patent royalties revenue was $35.2 million or 47% of current patent royalties in first quarter 2011. Excluding LG, fixed fee royalty revenue increased by $1.5 million due to the addition of a new customer in second quarter 2010. As you may expect, we have received a number of inquiries about the impact of the Japanese earthquake and tsunami. The full extent of the impact is still unknown, but early evidence indicates that it…

All right. Thank you, Scott. Before we open up to questions, I'd just request that folks ask one question and then hop back in the queue, so that we can accommodate as many folks as possible. So, with that operator, if you want to open up the call for questions.

Thank you. (Operator Instructions) And we'll take our first question from Amir Rozwadowski. Amir Rozwadowski – Barclays Capital: Thank you very much. And good morning, Bill, Scott and Janet.

Hey, Good morning.

Good morning. Amir Rozwadowski – Barclays Capital: Bill, you talked a bit about the renewal process right now with LG and highlighted that oftentimes a lot of your renewal processes or what goes on with one licensee can impact what happens with another. I was wondering if you could talk to us about sort of the characterization of the LG renewal and whether or not they themselves are waiting to see certain resolution that maybe occurring with your discussions with other licensees or potential litigation. And if that could ultimately impact the overall economic value of the LG deal?

Sure. And obviously the licensee never tells us everything that's going on inside their head? What I can tell you though is that I think that if you look at the overall mix of sort of top tier licensees we're dealing with them, right. What I like in terms of those discussions I think that they're focused on the right issues. We're operating at the right level within those organizations. So, you're not sort of buried down in the weeds in the organizations, you're up at the right levels. I think our presentations in terms of patents, is very strong. I went through the LTE presentation actually and it's very strong in terms of what we have, in terms of issue patents. And so, I think all of that's very positive. I think that folks probably, as I've said before, are observing the Nokia situation. Whether they're waiting for that decision or not, it's hard to say, because I think that's sort of a double-edged sword. If it's a positive decision in our favor, we continue to believe we should win that case. That certainly can have an economic effect on the customer. The reverse of that is, we're already in a situation where we've lost below, so we actually don't view a negative decision as changing the economics that we've offered to folks. But the other side could think that. And so, I think you have a lot of things going on out there – what people look at. You're right that also, in terms of these discussion, it's – they need to look at the cumulative effect of what a deal with us can mean in terms of other deals that deal with others and then how that translates into their competitive positioning with other folks. So, I…

Sure. To break the assets down to two components, you have 3G assets and the LTE assets. They already took the license for 3G. And so, I think they validated that when they took that license last time. Now, what will go on in these discussions, because it's what patent lawyers do, is they will continue to take shots at assets, which is fine, because we're able to respond very well to that and it actually helps us build our case against them to the extent if we're able to provide that very high-quality response. So, there's – that will always go on. But on 3G I think it's already been validated by the prior agreement. LTE obviously is new technology and so there, with all the customers, we're needing to go through the presentation. And I think they're – there's two components of what we can pitch. It's the very detailed claim charts and showing how our patents map directly to the standard and I think that is, as I've mentioned before, a very compelling presentation. And we do get feedback from licensees on that and actually that feedback is very useful for us, because to the extent they do spot any issues, because of the way we manage our portfolio. We can then address those issues and typically the patents end up being stronger as a result of that process. We can also, though, point to the external reports on the portfolio. We're very careful. We don't endorse those reports, because then we don't know exactly how the evaluations were done. But there hasn't been a report put out by a third party that says that InterDigital is other than on – in the top class on LTE patents. So, I think that's also very helpful for a prospective licensee, because ultimately they've got to take the economic proposal up to their senior management. And if you can show very specifically on certain patents, how you read on the standard and then generally how the industry views the portfolio, I think you've got a pretty good case for getting that economic proposal approved. Amir Rozwadowski – Barclays Capital: Great. Thank you very much for the incremental color.

All right. Thank you.

We'll go next to Charlie Anderson with Dougherty & Company. Charlie Anderson – Dougherty & Company: Good morning, everyone. Thanks for taking my questions, or question, I should say. So, Japan. I'm curious – you obviously have a number of licensees there, like Sharp and NEC, et cetera, who don't sell all of their phones inside of Japan. I wonder if you can maybe help us quantify, how much of that is domestic sales and that being sort of the piece, we should really pay attention to, as we kind of see what the demand situation shakes out as?

Yeah, Charlie. I would say – I mean, the key licensees we have over there are Sharp, NEC, Panasonic, Kyocera, in terms of per unit licensees and with the possible exception of Kyocera I'd say most – vast majority of their sales are in Japan. Charlie Anderson – Dougherty & Company: Got it. And then for everybody else, your few other per unit licensees – have you been able to determine sort of their Japanese exposure yet?

We haven't looked at that specifically. I would say for the others, their sales are very much global in nature. Japan represents a fairly small percentage of the – certainly of the 3G market overall. Charlie Anderson – Dougherty & Company: Great. I'll hop back in. Thanks.

And we'll go next to Michael Cohen with MDC Financial Research. Michael Cohen – MDC Financial Research: Good morning. To date I believe I've just seen two licenses on 4G. I believe it was Pantech and Acer. I was wondering if you can confirm if that's the total amount that you have currently licensed in 4G or is there anybody else?

No. Those are the two. Michael Cohen – MDC Financial Research: Okay. Next question is, you’ve seem like you're very positioned to acquire more patents that weren't internally developed. Are you looking at any areas outside your core focus area, 2G, 3G and 4G? Would you be open to potentially synergistic areas or other areas?

Yes, we would. Michael Cohen – MDC Financial Research: And my final question is, could you describe some of the areas that you might consider asset purchases?

I don't want to get into too much detail, but I would tell you that generally the types of things that would be attractive to us. One would be – it would be, I think, useful for us to expand our coverage on the device, right? The handset, so we have a lot of focus in terms of the modem technology, the 3G modem technology. But there's a lot of other connection technology and a lot of other just high-value property on that device. So, to the extent, I think if we could expand into other parts of the device, I think that would be a good plus in terms of the licensing program. I think the second is, areas where there can be synergy between the development we do on the wireless side and whatever that other technology may be. And it could be that we understand, for example, the radio link very well. And our understanding of that link allows us to enhance the performance of some other feature on the device, in a way that ultimately enhances the performance of the device. And so, not only it is giving us greater coverage but it's allowing us to leverage, sort of, our historical skills. And I think there's some good assets in both of those categories in the market. Michael Cohen – MDC Financial Research: Is it fair to say that you wouldn't focus on any technology that might bring you to additional types of licensees? It would still be your core target based license?

I think it – we'd like to do both, right? So, I think if you can find assets that, one, drive the core terminal unit licensing business, but then had an extension into an adjacent space and I'll just use an example. For example, a Bluetooth technology or some other connection technology. Obviously very resonant on handsets, but Wi-Fi technology is also pervasive in lots of other devices too, so you could – it could allow us to begin that expansion of the licensing program into those adjacent markets while also driving the core business. Michael Cohen – MDC Financial Research: Okay. Great. And good luck on your upcoming CAFC decision.

All right. Thank you.

And we'll take our next question from Ron Shuttleworth with M Partners.

Hi, folks. How are you?

Good. Thanks, very well. Ron Shuttleworth – M Partners: Good day. I guess I'm going to ask my one question. I've got a bunch, but I've got to pick one, I guess. So, let's talk about the Acer license. You announced it in the first quarter. When do you – when will we start seeing the impact of that license showing up in performance and is it going to be a license that will eventually hit the 10% mark?

Well, I think since we signed it in the first quarter, what you would have seen in the first quarter is any past sales associated with that agreement and then the per unit revenues will begin to hit in the second quarter as they report. And we'll see how they do in terms of sales. Ron Shuttleworth – M Partners: It's for – just to confirm, that's for 2G, 3G and 4G?

Yes. It was all three technologies. Ron Shuttleworth – M Partners: Okay. And that's related to tablets as well as their netbooks and laptops, correct? It's all of their hardware?

I don't know what we disclosed in terms of the actual connective devices there. But we'd have to go back and look at the press release and see what we actually disclosed. I know we disclosed the technologies. Ron Shuttleworth – M Partners: Is Seiko a 4G licensee, or is it just 3G?

Seiko was initially just a 2G and 3G licensee because that was their current product mix at the time, we negotiated that deal. So, they would fall into the category of customers where, as they move to LTE, they need to be upgraded. Ron Shuttleworth – M Partners: Okay. All right. Thanks and I'll jump back in the queue.

Okay. Thanks.

And we'll go next to Jonathan Skeels with Davenport. Jonathan Skeels – Davenport: Hi. A two-part question on acquisitions. First, just what is your buying power right now, I guess, with the cash and the convert and how much cash do you want to keep on the balance sheet? And then secondly, on the acquisition front you mentioned partnership opportunities. Are these primarily just with other patent entities or also with operating companies where you could jointly acquire portfolios? Thanks.

I'll take the second part. Later, Scott can handle the first part. On the second part, in terms of partnerships, it would be both. Certainly there are patent acquisition companies out there that could make attractive partners for acquisition opportunities for us. But we also see the benefit of partnering with strategics – operating companies out there, because it could be that the patent acquisition can be part of a larger relationship between the parties. So, we actually would include both types of companies in terms of potential partners.

Yes. On the capacity, we finished up the quarter with, I think, close to $530 million in cash. The net cash we brought in from the financing was a little over $210 million, so I think we got $740 million if you put those two numbers together. We're happy with that number. We think that provides us capacity to pursue opportunities, both immediate and potential. I would say that that cash is not all discretionary cash. We've kind of laid out before that some of that is cash that we keep on the balance sheet just to make sure we have a strong and flexible position. We think that's important in terms of executing on our licensing program. But still, I think that provides us with a significant amount of discretionary cash. The other thing I would point to is, to the extent that we wanted to use stock in a transaction, if it were something other than cash, we have that as an option, although given the kind of cost to capital that you see on the convert deal, we think that's a very cost-effective and I'll say shareholder-friendly way to finance an acquisition. So, I think basically we're in good shape. We're happy with that. We have no immediate plans to raise additional capital. Jonathan Skeels – Davenport: Thanks.

And we'll go next to Brett Simpson with Arete Research. Brett Simpson – Arete Research: Yes. Thanks very much. Bill, just – I’ve got a question on HTC. When I look at the 10-K filing back in 2009, for example, I see that InterDigital booked about $15 million from Taiwan and HTC was almost all of this, so – back half with them shipping over $12 million on a quarter adjusted basis, it's about $1.25 per unit or so. When I look at the December quarter just gone, HTC shipments were about $9 million – just over $9.5 million and you've booked $8 million from them, so translates to about $0.85 with these guys and just like to understand why this sort of deflation is happening in some of the key OEMs and – yes, maybe you can – I've got a quick followup.

In a way, I think – I'd have to go back and check your number, because that – your last statement that there's deflation happening at the key OEMs – I'm not sure that that's correct. And I think you got there by making some calculation on the front end which I'm not sure is correct either.

Okay. Okay.

So, I think you'd have to go back and check your math there. Generally, we're very happy with how HTC is performing as well as RIM. I think the returns we're seeing there are very solid from those companies, obviously driving good revenue for us. And so, again, I'm not sure if that’s the way your starting foot for your analysis was, so we can certainly follow up with you on that, if it makes sense. Brett Simpson – Arete Research: Well, maybe just to turn it around a little bit. You said in your prepared remarks that as the business gets bigger, you can get higher rates going forward and maybe you can just sort of pinpoint where we might be seeing that in the business today? What sort of indications as you're comparing sort of 3G to 2G on a like-for-like basis, where the rates are specifically going up in your favor?

Well, to date on LTE, for example, we've seen – we've been able to secure higher rates, okay? So, obviously LTE shipments are not large in quantity right now. So they're not going to show up in – be meaningful in the revenue line yet. 3G, we've actually been holding our program there. Obviously, the royalties are a result of two things, all right? I mean, royalties are a result of both the rate and the selling price. And so, to the extent the selling prices decline on a certain vendor, then even with the same rate, the per unit will come down, right. Brett Simpson – Arete Research: Okay. Thanks very much.

(Operator instructions). We'll go next to Charlie Anderson with Dougherty & Company. Charlie Anderson – Dougherty & Company: Thanks for allowing the followup here. I know and it sounds like, Scott, you want to sort of wait to the cue on sort of the impact of the deal, but I wonder if you could just share a little bit on sort of diluted impacts there – sort of, cost of the hedge and how that impacts things and maybe tax rate as well? That would be helpful.

Sure. Yeah, on the – the accounting is a little bit complicated, but fundamentally what you do is you take the $230 million, split it between a straight debt component and an equity component. And you recognize interest expense for book purposes on the debt component at an arm's length rate. So, for book purposes we will probably end up with $170 – $187 million of debt. We're applying a 7% market rate to that. And that gives us interest expense of about $3.6 million pretax per quarter. And we will tax effect that expense. There will be no increase in shares on a fully diluted basis, if and until our price goes up above the, I think $66 that Bill referenced. Charlie Anderson – Dougherty & Company: And then what about the cost of the hedge? Will there be an income statement impact there, maybe amortizing some of that?

Yeah. Yes and no. I mean, basically the – all the transaction costs are reflected in the discount on the debt and therefore we essentially amortize those straight line over the five-year length of the debt. And that is included in the $3.6 million that I referenced. Charlie Anderson – Dougherty & Company: In that 7%. Got it. Okay. And then just a real quick followup on the balance sheet. I just noticed just some new and different revenue. You added some here. Could you just tell us kind of total cash receipts, what they were in the quarter and if you could put that in the bucket of fixed fee and per unit that would be helpful?

Sure. Yes. The kind of simple math to get from revenue to cash receipts, you start with $78.5 million of revenue, deduct the deferred revenue component of that, which was $61.5 million and this will all be laid out in the 10-Q. Add increases in deferred revenue, which should basically be cash that we've received from customers. And then add any decrease in receivables. So, it ends up being about $45 million or so of cash receipt from customers. In terms of per unit and this is – it is a revenue number. It's about 53%, is per unit and 47% is fixed. And I would say because that fixed amount includes a substantial amount of Samsung, which isn't associated with cash we received in the first quarter, I would say the vast majority of that cash we received was per unit based. Charlie Anderson – Dougherty & Company: Great. Thanks very much for the color.

Yes.

And we'll take our next question from Ron Shuttleworth with M Partners. Ron Shuttleworth – M Partners: Hi. Thanks again for the – taking the second call. I just want to talk a little bit about the video compression technology. I have a couple of questions around that. I understand that you now – do you have it in market testing yet?

We are working with a couple potential customers out there, so – and things continue to go pretty well. We had very successful demos both at CES and Mobile World Congress and certainly the environment out there in terms of the challenges that network operators and others – and it's not just wireless. It can be wireline as well, are facing, certainly creates the right environment. So, we're engaged with some folks and we'll see how it all goes. Ron Shuttleworth – M Partners: And do you have any sense yet of how you're going to monetize this?

Yes. It's a good question, because there are companies out there that provide compression technology. There are certain ways that they get compensated. I think at the end of the day, we need to compare our solution to what other folks have brought into the market. Right now, what we see is, we have a – we think we have a far superior offering and so certainly, we would want to secure compensation well above what other folks are getting in the space. And part of that, I think, can be justified in terms of, if we can demonstrate some very strong savings for the operators in terms of their CapEx and OpEx, certainly opens the door, we think, to – so, a solid deal for us, so, still early in the process, but certainly, still very encouraging. Ron Shuttleworth – M Partners: So, what we're saying is would it be – so, in terms of monetization, would it be – it would be slightly different than a typical royalty license? It would be more of a – would it be like a transaction license? Would it be a – some sort of right of use license? How would you think that would work out?

I think we're looking at all those different approaches. At the end of the day, typically with us, we don't get too tied up into structure and more focus on value. It's a market that, while we have some pretty good information in, we're still – have some learning to do and so you may need to adapt your offering into what is sort of standard fare for that market. So, we're all working through all that stuff. And again, while we're early in the game, the opportunity we think is moving pretty well for us and we'll see how it translates ultimately to the bottom line. Ron Shuttleworth – M Partners: Okay. And can you disclose the percentage of the patents that you recently announced. 150 US patents, and I forget what it was, 1200 international patents in 2010. Can you disclose the ratio – how many of those are 3G, 4G, or LTE, percentage-wise?

Yes. A little hard to do, sitting here, what that number was. But generally it's going to track the R&D work in the company, particularly the filing – the US filings for the year will track the work. The issuance for the years will be a lag right. That could be a many, many-year lag. I would say generally it's still a very healthy component of 3G patents, because there continues to be a lot of work in terms of upgrading those networks. Obviously there's a big component in there of LTE. And so, those two technologies probably dominate the landscape in terms of patent issuances and filings. But these other areas that we've worked on in terms of compression technologies, security technologies and the higher-level stuff we've been doing in terms of network and networks is probably a good amount in that too. Ron Shuttleworth – M Partners: Can you – is it 30/30/30, or what's the – what do you think the ratio is?

As I said, sitting here today, it'd be a little hard to give me – give you anything more – Ron Shuttleworth – M Partners: Okay. I'll follow up later.

That's perfect. Great. Ron Shuttleworth – M Partners: Thanks.

And we'll go next to Jonathan Skeels with Davenport. Jonathan Skeels – Davenport: All right. Just a quick one on Nokia. Can you just remind me where – what the next steps are, I guess, depending on what the outcome is at the appellate court?

Sure. So, the next event from a litigation standpoint would be the CAFC's decision, right. And if that is favorable for us, then absent any petition for rehearing or petition for certiorari, which we – Nokia could make but we don't think would go anywhere, then the case would go back to the ITC for further proceedings there. And back there it either could be handled by – directly by the Commission, or they could take it back to the judge and have him basically make a new recommendation based upon the direction that came from the Federal Circuit and then that would go back up to the Commission. If there – if it's not in our favor, then we obviously have an opportunity for petition for rehearing or certiorari on that; but other than that, that particular case would be over. Jonathan Skeels – Davenport: Okay. Thanks.

And we'll go next to Michael Cohen with MDC Financial Research. Michael Cohen – MDC Financial Research: Yeah. I also have a question about the Nokia situation. In the original claims construction that you got from the ALJ on code, signal and increased – I guess, increased power level, what you received from the ALJ – was that against what you were hoping to get at the lower investigation? And what you're seeking now from the CAFC? Is that consistent with what you were hoping to get for claims construction all along?

I think the answer to both is yes. I think it was against what we had proposed from a claim construction standpoint. With respect to the judge and what we've asked the CAFC to do, is basically adopt our claim construction. Michael Cohen – MDC Financial Research: The same claims construction you were originally seeking out the – before the ALJ?

Yes. I believe that that's correct. Michael Cohen – MDC Financial Research: Okay. Excellent. Thank you.

And with no further questions in the queue, I'd like to turn the conference back for any additional closing remarks.

All right. Well, thank you very much for tuning into our call. I'm certainly available for any additional followup questions and we'll talk to you all again soon. Thank you very much.

Thank you. And that does conclude today's presentation. We thank you for your participation.