Good day, ladies and gentlemen, and welcome to the InterDigital Second Quarter Earnings Conference. Just a reminder that today's call is being recorded. At this time, I would like to turn the conference over to Ms. Janet Point. Please go ahead, ma'am.

All right. Thank you very much and good evening to everyone and welcome to InterDigital's second quarter 2012 earnings conference call. With me this evening on the call are Bill Merritt, our President and CEO; Scott McQuilkin, our Senior EVP of Strategy and Finance; and Rich Brezski, our Chief Financial Officer. Consistent with last quarter's call, we'll offer some highlights about the quarter and the company and then open up the call for questions. Before we begin our remarks, I need to remind you that in this call we will be making 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 today as well as those detailed in our Annual Report on Form 10-K for the year ended December 31, 2011, and from time to time in our other filings with the Securities and Exchange Commission. These forward-looking statements are made of 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. In addition, today's presentation may contain references to free cash flow, a non-GAAP financial measure. A schedule setting out a reconciliation of free cash flow to net cash used in operating activities, the most directly comparable GAAP financial measure is included at the back of our earnings release issued earlier today, which also has been posted in the Investor Relations section of our website at www.interdigital.com. So with that taken care of, I will turn the call over to Bill.

Thanks and good evening, everyone. Typical with these calls, I thought I would spend my time this evening updating everyone on our market, our strategic direction, our patent sales initiatives, a very important new component of our strategy, and our licensing discussions and ongoing litigations, which will then provide some additional insight on the quarter. As you all know, we announced earlier this year the expansion of our strategy to include the monetization of those portions of our patent portfolio not necessary to drive our core terminal unit licensing business. The patent assets that could be included in this program are infrastructure-related patents, terminal unit related patents, and patents covering other technologies like security in Wi-Fi. In the second quarter, the company signed two different patent sales agreements for a total of $384 million. One deal is closed, and the deal with Intel is expected to close in the third quarter of this year. I cannot emphasize enough the importance of these transactions. First, they are very high-value deals. When viewed on a price per US-issued patent basis, which is what we believe is the best way to measure the value of patent transactions using public data, each of these transactions was very strong for InterDigital in comparison to other recent patent transactions. Looking at these two transactions, the average price per US patent paid is approximately $2.3 million. This compares to a median price of $1.4 million per US patent paid in four comparable patent deals over the past 12 months. We believe our transactions are also very solid for the buyers as they're acquiring some very strong patent from an extremely capable R&D team. The price that these parties pay for the patents after extensive diligence confirms how strong the R&D teams are and how well the patents…

Thank you, Bill. As you saw on our press release, we reported second quarter 2012 revenue of $71.9 million, operating expenses of $54.3 million, and net income of $9.7 million or $0.22 per diluted share. Revenue of $71.9 million, which included $9 million related to a patent sale, increased $2 million from second quarter 2011. Not including the patent sale, our revenue decreased $7 million year over year due to a $7.6 million decline in per unit royalty revenues, resulting primarily from lower shipments by HTC and RIM. Revenue from the current patent royalties was $61.2 million in second quarter 2012 compared to $68.2 million in second quarter 2011. Current patent royalties from per unit agreements totaled $27.4 million or 45% of our total current patent royalties, and decreased $7.6 million or 22% from second quarter 2011. Per unit royalties associated with our Japanese licensees represented 16% of total revenues in second quarter 2012 compared to 20% of total revenues in second quarter 2011. Current patent royalties from fixed fee agreements totaled $33.8 million and accounted for 55% of total current patent royalties. Revenue from fixed fee agreements increased $0.6 million from $33.2 million in second quarter 2011. On a sequential basis, current patent royalties decreased by $6.9 million from $68.1 million in first quarter 2012, again primarily due to declines in per unit royalties from a number of our licensees. Per unit royalties associated with our Japanese licensees represented 17% of total revenues in first quarter 2012. Technology solutions revenue was $0.5 million in second quarter 2012 compared to $1.3 million in second quarter 2011. The decrease is primarily due to lower royalties recognized in connection with our modem IP business. On a sequential basis, technology solutions revenue remained relatively flat compared to $0.7 million in first quarter 2012.…

All right. Thank you, Rich. We will ask the operator to give the instructions for folks to ask questions. And we do request that if you have multiple questions, you just ask one at a time and hop back in the queue. Thanks.

[Operator Instructions] We'll take our first question from Charlie Anderson, Dougherty & Company. Charlie Anderson – Dougherty & Co.: Good evening and thanks for taking my questions. So, I wanted to start with the 3,000 patents that you're looking at selling. I wondered if you could give us some commentary on how they compare to the 1,700 that you sold to Intel in terms of the quality and potential value relative to what you sold to Intel. Thanks.

Sure, I can give, you know, at a high level, the patents that we would put up for sale or looking to secure good value, so we're going to put good-value patents into the market. They originate from a very strong R&D team. Generally I think that the priority dates, meaning sort of the vintage of the patents are probably in the same rough areas as the patents that had been sold to date. And typical with our portfolio, I think there's a fairly heavy emphasis on 3G and LTE technologies in the portfolios as well. Charlie Anderson – Dougherty & Co.: Thanks so much.

Next we'll take a question from Daniel Bretthauer, MDC Financial Research. Daniel Bretthauer – MDC Financial Research: Hi. Thanks for taking my question. We saw that in your appeal at the Court of Appeals for the Federal Circuit, you had requested confirmation of the status of the appeal? Have you gotten any response back from the court?

I'm not aware of any response, and it would not be typical for the court to write back. I think we're just trying to make sure that the court is aware of the time for long it had held this case. So it's more of a, I would say, a one-way communication. Daniel Bretthauer – MDC Financial Research: Okay. Thank you.

Next up is Ron Shuttleworth, M Partners. Ron Shuttleworth – M Partners: I just wanted to get maybe some, I guess, some color on the status of some of your renewals that are coming up such as Samsung and RIM.

So, typical with the folks that would be in this status, you can be sure that we have a lot of contact with them. Obviously there are two companies in -- on currently different trajectories, and that can certainly affect the discussions. So, and with each company, because they are at somewhat different point in their lives, what we bring to companies in that situation can be different in terms of our offering. So in the instance of a company that's got certain opportunities, we can bring certain technology offerings to bear, where they may not be relevant to somebody else. So we're spending a good amount of time with them as you would expect us to. We, certainly with respect to Samsung, absolutely understand the importance of getting that transaction done correctly. So we'll see how it proceeds between now and the end of the year. And then if it extends thereafter, how they're affected by things like the ITC decision and things like that. So we'll see how it moves forward. But again we're, I think we're in a very good position with both of those companies both in terms of the technology and the depth of the patent portfolio that we bring to discussions. So, ultimately we continue to believe that we can drive very strong deals with both of those companies. Ron Shuttleworth – M Partners: Are you going to pile on LTE licensing onto the Samsung renewal or are you going to renew 3G first?

My guess is that we'd bundle them all into one. So, certainly LTE is a big part of Samsung's, maybe not in terms of volumes, but certainly in terms of their, you know, top-of-the-line products. We have a big LTE portfolio to bring to bear. So I wouldn't see us, Ron, separating those two issues, we'd probably do them together. Ron Shuttleworth – M Partners: Okay. And are you looking at somewhat of a similar size renewal? And with that, I'll pass the line.

In terms of the size of the renewal, obviously it would be driven by the duration of the renewal and also driven by whether it's a fixed amount for that period or whether it's a running royalty deal or some variation thereof. Obviously, Samsung's market position has grown since we did the deal in 2009 with them, and that would be reflected in any renewal. The market itself has grown, and that will be reflected in the renewal. And the portfolio that we bring to bear in that negotiation has also grown substantially since then. So I think those are all positive factors for us and I think for that reason it's a very high value and very important transaction and we're going to make sure we do it right. Ron Shuttleworth – M Partners: Thank you.

Charlie Anderson, Dougherty & Company, is up next. Charlie Anderson – Dougherty & Co.: I just have a few housekeeping ones for Rich here. You mentioned the tech solutions deal. I wonder what the impact on royalties are going to be next quarter, and then also maybe costs to, if there's some elevated R&D as a result. And then also if maybe you could help quantify some of the transaction costs in Intel and what we should be thinking about modeling there. Thanks.

Yeah, in -- to each aspect of your question though, the revenue and the expenses that we'd expect in third quarter on the new agreement as well as the transaction costs on Intel, we'll be providing guidance on that in the coming weeks. Charlie Anderson – Dougherty & Co.: Okay, fair enough. I also just wanted to see if I could get some more color on the $13 million of patents that you've bought, you said non-modem. I wonder if you could provide a little extra color beyond that in terms of technologies covered, how you might bring these to bear, that'd be helpful.

It's non-modem but what I'd tell you is it still is technology that is resident on handsets, it's consistent with our strategy to diversify the touch points that we have on handsets. I think the -- it also takes us to some degree beyond a sort of straight -- or the licensing approach we've had so far and starts to build the opportunity for us in terms of content delivery, it's been an important part of our strategy, so we think that's where a lot of the value of the business is moving. So I don’t -- we're not fully there yet in terms of that portfolio, but certainly these acquisitions begin to drive us towards that point. And those are particularly important, you know, with respect to some of the customers out there who happened to be both handset manufacturers and content deliverers, we're trying to build positions with respect to both aspects of their business. And so far we've been pretty successful in identifying some good assets out there. And in terms of bringing -- and what I'd tell you is we are bringing them into license negotiations as quickly as we can. Charlie Anderson – Dougherty & Co.: Got it. Thanks so much.

Next up from Davenport is Jonathon Skeels. Jonathon Skeels – Davenport & Co.: Hi. Just a follow-up question on that -- on the last one there. So, some of the acquisitions you've either made or will be focused on, are they revenue -- is the revenue-generating potential day one on closing the acquisition or is there going to be R&D investment necessary to kind of bring that technology to market?

I think there's an opportunity on day one. I'd put it this way, I think that because these technologies can be bundled with the current -- into the current licensing discussions and sort of broaden those discussions and make those discussions higher value, I think they can pretty quickly begin to contribute to licensing success. In some of these areas, there will also be continuing R&D, if not directly related to the acquired inventions, at least in the same space. So, as an example, if we were to acquire some compression-related patent, we have other compression-related activities underway that would complement the technology we acquired, so. But we are trying to find assets that we can deploy immediately and can have immediate impact in our licensing discussions. Jonathon Skeels – Davenport & Co.: Okay. And then on the sale of the 3,000 patents, you talked a little bit about how that may be segmented, but generally, should we think about a potential sale being multiple transactions or simply one transaction like we saw with Intel? How do you kind of think about that? And is there a benefit to doing multiple sales over just one large sale?

So we're exploring a range of opportunities, some smaller, some larger. Some are, I would say, kind of a straightforward sale transaction, others involve monetization of the patents through other types of vehicles, joint venture being one example. So I don’t think we have a bias towards one type of transaction or another; it all comes down to the nature of the opportunity and the value that the transaction generates. So I don’t know if that answers your question or not. Jonathon Skeels – Davenport & Co.: No, that's helpful. And then you made a comment early in the call on the price per patent of sales that you've made. Can you just segment that out? So the Intel sale on a price per patent was, what, like a little over $200,000 and then the other sale was the about the $9 million transaction that showed up in revenues this quarter? And what was the price per patent in that sale?

The number we gave in the text was $2.3 million per US patent. And the reason we focus on US patent, because actually we've seen other calculations in the market and in the press, is that what you want to avoid when you do these calculations is distorting the number based upon the filing strategy of the company that held the patent, right? So the best way to do it, but it's not publicly-available information, is to say, what is the price per patent family? And patent family is basically the original patent application and then all the children that come from that patent application, whether they're US or non-US based. Companies don't tend to publish their patent families. So the next-best proxy for that is US patents, or if you were a non-US company, if you were a Japanese company, it would be Japanese patents. So it's not particular to US, it just we happened to be a US company. So that's the number we used in calculating the $2.3 million. And given that the Intel transaction was the much larger of the two transactions, the average for both are going to be, you know, that'll drive the number. And just to illustrate the point in terms of why using -- not using the total number of patents in calculating the average, why using that doesn’t make sense, is you had, let's talk about two different patent applications that were filed by one company and the second patent application by a second company, and the second company happened to file that same patent around the world. Company 1 got one patent, Company 2 got ten patents, both based upon the same, you know, one innovation, and they both sold their patents for $10 million. In the one instance, if you did the math based upon total patents, the one company got $1 million per US patent -- $1 million per patent and the other company got $10 million. Well, that's not really apples to apples; the best way to do it is look at the US-issued patents, and on that basis, both companies would have roughly gotten $10 million per US patent. So we're trying to sort of make people understand the best way to measure these things. It's obviously something that we're involved very heavily in patents and patent licensing and patent sales now, and I think we have a pretty good understanding how to value them. So we're just trying to get some sort of better data on that. Jonathon Skeels – Davenport & Co.: Okay. And then I guess just lastly, can you just refresh on the, maybe the exact dates on the ITC with both the evidentiary hearing, initial determination, and then final determination in that case?

Yeah, the evidentiary hearing is last week of October and the first week of November. The initial decision by the judge is I think February 28. And the commission's decision is in June next year. Jonathon Skeels – Davenport & Co.: Right. Thanks.

Your next question, from Paulson, is Andrew Klaber. Sheru Chowdhry – Paulson & Co.: Hi, it's Sheru Chowdhry from Paulson. Good evening, gentlemen.

Good evening. Sheru Chowdhry – Paulson & Co.: First of all, congratulations on the Intel deal. I just had one question. Do you have an updated status on when you expect the judge to rule on the Nokia litigation?

Well, obviously the Federal Circuit, they don't give an indication as to when they're going to rule. That case is getting pretty long in the tubes in the Federal Circuit. And the best thing we could tell people is, you know, at this point it really can be any day. And that we're sort of as frustrated by the length of time it's taken the Federal Circuit a decision, as everyone else. Sheru Chowdhry – Paulson & Co.: Got you. Thank you.

Our next question comes from Tim Quillin, Stephens Inc. Tim Quillin – Stephens Inc.: Hi, good afternoon. Just to confirm your math on the per patent price, when we talk about the Intel portfolio, I think as I recall, it's 160 issued patents and 40 pending. Are you doing the $375 million divided by 200 or 375 divided by 160?

The latter, 375 divided by 160. Tim Quillin – Stephens Inc.: Okay, great. And then secondly, are you focused on renewing Samsung precisely on time, or do you want flexibility in that negotiation, so you're not -- don't have an artificial date that you're working towards? And if there were a gap in licensing revenue there, would you try to adjust your cost structure at all? Thank you.

So, in terms of the renewal, obviously the best situation is to renew it at the end of the year. That said, we don't want to create an artificial deadline in terms of when we need to get it done, because that typically can get used against you by the licensee. That said, if we extend past the end of the year, we can also start to charge additional amounts for the extension in terms of -- because typically what we will do is allow folks to prepay, and if they're not paying kind of on a prepayment basis but they're paying in arrears, then as one item, that type of discount is not available. So there's opportunities for us to create incentives for them to move faster as well. In terms of the cost structure of the business, it's not directly related to revenue, it's really related to, in terms of the patent production that we believe is necessary to really drive the long-term value of the business, and so it's not something we would adjust just because the licensing opportunity with Samsung were to slip by some amount of time. Also, as you know, with respect to patent licensing, even if it does slip, you recapture those sales in any agreement that you do, and so you pick up that lost revenue. So we understand certainly the importance of the transaction. It is, given their market position, it's a very important transaction. And we're bringing everything to bear with Samsung with regard to that renewal. Tim Quillin – Stephens Inc.: Thank you.

Next up is Ron Shuttleworth, M Partners. Ron Shuttleworth – M Partners: Hi. Thanks for taking my follow-up call. I may have been daydreaming, but I didn’t catch, of the 3,000 patents, did you disclose what percentage of those are US-based patents?

It's -- I think approximately 200 of those are issued US patents. Ron Shuttleworth – M Partners: Okay. Okay, that sounds good. The last question is relating to the LG relationship. Is that done or is there an opportunity to extract some type of licensing royalty from that relationship?

Absolutely there's an opportunity, and we think a very strong opportunity to collect licensing revenue from LG. We disagree vehemently with their position that their license extended beyond the end of 2010. It's directly contradictory to what the agreement actually says. So we think they have a very weak case. We think they, you know, I don’t make the decisions for them. Like many other folks, they saw an opportunity to kick the can down the road and they got lucky and they were able to do it. But sometimes you got to be careful what you wish for, because now they are no longer in the case, they no longer have an opportunity to present their position, and if we are successful in that case, you can be sure that we will leverage our success against them. So, absolutely they remain in our sights. And we will proceed through the necessary steps of arbitration, although we think we have an extremely strong case in that arbitration. And we do continue to speak with LG because I think they also understand that, while they may have gotten a temporary reprieve from the ITC case, they by no means have avoided the licensing issues with us. Ron Shuttleworth – M Partners: Okay. Now, the other elephant in the room is related to Apple. Now I think that you've proven recently that you have the ability of licensing from the LTE patents independent of a renewal on your 3G licenses. You did that with CR wireless, for example. Is there a status that you can give us as it relates to Apple? And are you -- clearly you're going to say that you've been working to come up with an agreement on Apple, but can you give us maybe some color on the status might be there?

Yeah, you're right, that we're working on coming up with an agreement with Apple. The color I can give you is that we are approaching it from many different -- the best way to put that, a number of different directions. It's, as I mentioned before, some of the patent acquisition opportunities we're looking at are directly related to that, can be -- or impactful on that renewal. So, like Samsung, we understand the importance of it; it's not -- it's an area where anything we can do to drive it to closure sooner and also drive it to closure at much higher value obviously than what it is today, we are going to do that, so. And I think we're in a good position. One thing you mentioned, certainly the LTE portfolio is very strong. And that's certainly an opportunity with them, among other opportunities. Ron Shuttleworth – M Partners: Okay. Just last question, just as it relates to your network and network strategy and some of the IP that you're developing in that area. Can you give us some color on maybe some of the new types of licensing relationships you can or are pursuing right now with sort of non-handset people?

I'll give you this, because actually it's -- the technologies are useful both in the context of handset licensing relationships and outside that. So we're finding that, depending upon the handset manufacturers, there's interest in different aspects of either the network and networks technology and whether that's the SAM, Smart Access Manager, or whether it's machine-to-machine. It all depends upon the particular business strategy of that handset manufacturer. So we're leveraging our capability into those patent licensing relationships and looking at structures where, you know, on exchange for the patent license and other compensation, we also provide a few services to them. So I think it can be a big value-add there in terms of driving license relationships. On the other technologies, there's opportunities indirectly to the operators, so that we are working indirectly -- working directly with some folks who then sell in to operators for things like, you know, Smart Access Manager. So it's not a direct relationship but an indirect relationship. I'd say that the video compression areas, still probably at a state where they need some further development to develop some really strong commercial relationships. But certainly doing a lot of work there to create those opportunities. Ron Shuttleworth – M Partners: Okay, thanks.

And everyone, at this time, there are no further questions. I'd like to turn the conference back to Janet Point for any additional or closing remarks.

All right. Well, thank you, everyone, for joining on this call. As always, I'm available afterwards if you have any follow-up questions. Thank you. Take care. Bye-bye.

And once again, ladies and gentlemen, that does conclude today's conference. Thank you all for your participation.