Good day and welcome to the InterDigital First Quarter Earnings Conference Call. Today’s conference is being recorded. At this time I would like to turn the conference over to Mr. Patrick Van de Wille. Please go ahead, sir.

Good morning everybody and welcome to InterDigital’s first quarter 2013 earnings conference call. With me this morning are Bill Merritt, our President and CEO and Rich Brezski our CFO. Consistent with last quarter’s calls we will offer some highlights about the quarter and the company and then open the call up for questions. Before we 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 release published today as well as those detailed in our Annual Report on Form 10-K for the year ended December 31, 2012, 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 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 issued today, which is also been posted in the Investor section of our website at www.interdigitial.com. And with that I will now turn the call over to Rich Brezski, Chief Financial Officer.

Thank you, Patrick. There is been a lot of activities since we last spoke. Some of that activity including the cost of litigation and arbitrations and the contributions of revenue and cash flow from new and renewed license agreements is reflected in our first quarter financial results. On the other hand subsequent to quarter end we received a $30 million Arbitration Award from one of our patent licensees that is not reflected in our financial results and will not be until collectibility is reasonably assured. For accounting purposes we generally expect that to occur either one we receive the cash or our licensee expresses an intention to comply with the award. To be clear the recent Arbitration Award relates to a patent license agreement. For several quarters we’ve discussed an arbitration related to a technology solutions agreement with a different party. We have not yet received the decision in that arbitration although we expect one could come at any time. Through March 31, 2013 we have deferred approximately $48 million of revenue nearly all of which has been collected related to the underlying technology solutions agreement. Putting aside the arbitration result we’re pleased to report strong free cash flow and revenue and operating expense excluding litigation and repositioning that were in line with the expectations we communicated back in February. For the first quarter of 2013 our revenue was $47.4 million, our net loss was $12.3 million or $0.30 per diluted share or $0.21 per share after excluding a non-cash investment impairment and our free cash flow was $71 million. Moreover we are pleased that our voluntary retirement program enabled us to lower the trajectory of our spending and make room for new investments including development services to our Convida Wireless joint venture with Sony. Because of the related party…

Thanks Rich and good morning to everyone. As we reported in the earnings release this morning the quarter came in as expected. We generated cash, but there will be impact of the Samsung rollout on the revenue side, but not as much given the new license with Sony. We also saw the benefit of the restructuring on the expense side, but also made a significant investment in litigation which overall drove the expenses up. We also made some strong moves in terms of our enhanced strategy, but did not sign any large patent license agreements though progress was made. So well I’m happy with the quarter strategically, I also understand that a loss is a loss, but that’s not something we’re looking to repeat. Let me start with my more detailed remarks by talking about litigation given the – high level of investment there. The quarter thought us involved in an extraordinary level of litigation activity including the evidentiary hearing for our ITC case involving Nokia, Huawei and ZTE, hearing in our federal circuit appeal the ITC’s decision relating to LG. The filing and substantial kick-off of our new ITC case against Huawei and Samsung, ZTE and Nokia, the ramp up of the federal district court cases related to that new ITC case as the defendants chose not to stay those cases. Hearing in an arbitration involving the scope of – on one of our patent license agreements and miscellaneous other arbitrations seeking to collect money odd. And successful some of the cases can drive immediate and substantial revenue as well as ongoing revenue, others can drive new renewed license agreements all in they can drive the business substantially this year, which is why we’re making such a significant investment. Let me begin with our arbitration since they tend to…

Thanks, Bill. And now, Zack, if I could ask you to open the question now?

(Operator Instructions) We’ll take our first question from Anil Doradla with William Blair. Please go ahead.

Hey, guys. Can you give us a little bit more color on the 800 patents that you acquired what was the cost metric per patent and what are the areas that you focus on with these?

So, a couple of things on the portfolio. It had the very strong category which is important for us in terms of where the patents came from and as a well managed asset. It believed it’s terminally in it but it’s technology that is different than what we have somewhat different than we’ve focused on before. I think it gives us immediate use in licensing programs and beyond also there is a assets in there that we can further develop. In terms of price for patent those numbers sort of down a little bit but what I tell you is I think looking at the market metrics we think it would be negotiated very strong for a very strong set of patents. So very happy with that, that was all.

Was it a one source acquisition or was it made up across several customers?

Yeah it’s one source.

And on the Sony from if I recall that was $120 deal, can you guys walk us through the impact from the P&L how much of the free cash flow was impacted by that?

Yeah so first I’ll tell you that if you look in our 10-Q which we actually filed this morning we list Sony as one of our 10% licensee. So that can help you get a way that the amount of revenue that was recognized as for the cash flow we have started to collect under that agreement which is a fixed-fee agreement that on that we disclosed this specific sum of cash that we’ve collected.

Okay. And finally I know it’s tough to answer Bill you gave out a detail the list of arbitration and litigation issues what when – when we as investors look at you see your story say in the next to 6 to 8 months kind of near-term what do you think we should be focusing on?

I think it’s a couple of things right, certainly the ITC case that is set for a decision in June as a near-term item you know typical with those things that can create some settlement pressure so you know that looks and then obviously the decision itself can be very meaningful. So I think that the nearest-term thing and I think in terms of other opportunity is coming out of the litigation side you know I think the arbitrations I shouldn’t talk about that first because they actually do have some pretty meaningful impact that can come out of that those things and it can come relatively soon. Next I would say the litigation side you know we continue to have good discussions on with patent licensees so they’re harder to predict because unlike an ITC case which as I said base we don’t know when the licensee when we’re done but you know certainly if I were you I’d be looking first to produce license agreements over the next 6 months. And you know with regard to those license agreements I think it would more necessary I think it would be a real plus if you saw the solutions group participate in some of more of those on a more of those agreements but I think it will validate the strategy in using that group to kind of fill economic gaps to create taking a new relationship. So yeah it’s a busy year, we got a lot going on we think it’s a great – year in terms of opportunity for us and if we execute well we can – we can come out of the year real strong, I appreciate we got a lot of them in place.

Great. Thanks a lot guys and best of luck.

And we’ll take our next question from Charlie Anderson with Dougherty and Company. Please go ahead.

Good morning, thanks for taking my questions. I want to start off with HTC just got the disclosure on the Q it was up pretty substantially year-over-year the royalties from HTC, had a look at their results in their fourth quarter it was substantially down so I'm wondering was there a change in rate or coverage in HTC?

No, no change in rate or coverage I don’t believe they met the 10% qualification this quarter so we didn’t provide this specific amount I would say that is less than 10% of our revenue.

I'm saying 20% actually in the Q.

I then perhaps I misspoke.

Charlie that is without getting into HTC specifically you know the way royalties can move around inside an agreement should be different by a couple of factors one of which could be whether parties choose to prepay or not because prepaying will be pretty significant so that can move things probably more so than typically than what you see in terms of different rates under that agreement. So.

And Charlie you’re correct and it was 20% for the quarter.

Okay, so I mean I would think of this as you’re taking the unit sold in the quarter before and I mean it’s at the that pretty by the book thing and sounds like there could be timing issues around those with I'm just trying to understand – are you taking that more months of units or something here is it’s kind of confusing to me?

No there a per unit licensee so as you alluded to our first quarter revenue is based on their first -- fourth quarter sales.

Yeah. A question on Pegatron so you know they manufacture a lot of things, they manufacture for some really big names what is – what kind of devices are covered by the arbitration that you did with them, does it extend out to some of the name brands stuff or is it more of the you know white-label type goods?

The license agreement with Pegatron is a broad license agreement covering basically all types of terminal units that would be sold. The issue in the arbitration was dealt with a particular class of products, very happy with that result because I think the result basically confirms our view that anything produced by Pegatron that's not – they will do result and they’re sort or - they’re selling to a unless that product somehow otherwise license without getting into the details of the agreement so. So I think it's a, and a solid result plus one of the reasons why we think it can contribute to future revenue as well.

Lets say they make a iPhone or iPad that's covered by it could Apple go back and say we already paid because of that?

I think and we get into the details of who can say what but I think we've certainly cleared up what was claimed to be some – ambiguity under that agreement which we’d ever believe there was. And so I think we've got a very solid position now with respect to that agreement and royalties that are rolled on a product that is not licensed by any other - to any of the party. So what people can claim and other things they can say there is no lack of imagination out there in terms of as you can from some of the arbitration now but I think it was a very, very solid result in terms of making that agreement very clear in terms of what they should be paying on.

Got it. And then the charge that you guys took on the quarter I am just trying to think of things that you’ve invested and could that be maybe like the Pantech equity just say in more detail and that would be helpful?

Yeah that exactly is the only investment that really even fits that magnitude back in 2008 or 2009 we received a stock as part of the compensation for the license agreement with Pantech. I think is over $90 million of cash associated with that deal as well and we've collected over half of that at this point in time. The stock was initially valued at $21 million and we've carried it at that level up until this adjustment.

Got it. And then I noticed share based comp jumped in the quarter relative to what I’ve been seeing previous quarters was there any reason for that one-time jump?

Yeah related to a shift in some of the long term plans from more cash base to equity base comp.

Got it. So that will be the running sort of base going forward?

Subject to the changes in the whole rate.

Got it, okay thanks Scott.

Thanks.

And we’ll take our next question from Mark McKechnie with Evercore Partners. Please go ahead.

Great, thanks for taking the question. So, one question I wanted to ask how do you decide to sell versus license your patents kind of what’s your thought process on that?

Sure. So a very large portfolio I think we’re back at 20,000 plus patents. And there is only so much you can actually show to the licensee where you get to the point where the incremental patents you’re showing them or not adding any impact on the discussion. And so those incremental patents become one of the classes of patents that we can seek to sell because you’re not getting any value on them to the licensing program module, seek value some place else out if you look at the Intel transaction that's what we do there. So that’s one set of patents second asset set of assets that we have are the infrastructure patents which we have not had an infrastructure licensing program inside the company for a variety of reasons. So, those couldn’t be sold or partnered with folks that create incremental value without impacting at all the terminal unit programs and so that that's what we’re do in there as well. And then third there is like class of assets which don’t relate to ,terminals don’t relate the infrastructure may relate to other aspects of wireless networks where we may not have suspicion depth to run a full scale licensing program and we may not be producing new assets in that area and so that we have what we’re going to have and in that situation we make find people that have those assets and they want to buy them, by a set from us because now they got critical mass or you can partner with them so. The bottom line in any - any sale is the first question we had but (indiscernible), will it have any negative effect on the terminal licensing program and with the assets we’ve identified we could if we can answer that question, absolutely no.

That’s okay. It’s a good answer, I appreciate it. And then second is kind of do the change in control like if a company that you’re licensed to get spot for instance I'm assuming IP got access with a licensee you’ve talked about them on the smartphone space a bit I mean would Cisco buying them does that change your license agreement with them or perhaps give you an a door in to Cisco how does that work out?

Okay. So what – they were not a licensee and but this I can tell you generally how the acquisition costs were – we don’t compare that they’re highly negotiated provisions in agreement. And it – it will depend a little bit on is it a running roughly payment at the date of agreement things like that but typically what we do is provide if the company post acquisition basically remains intact to the operators of fully-owned subsidiary of the acquiring company then the license agreement will pretty much stay intact. If the asset the company gets merged into the larger company let me have a roll-off provision which because at some point you really can’t identify what were the previous assets and what’s the result for the acquisition so there is we have some sort of roll-off provision. So – and the roll-off provision then does give you the opportunity to assess the products opportunity to some product might give you an opportunity and how the deal would be required to sort of put a broader license agreement in place. So ultimately what you don’t want to happen although you can’t guarantee this that have an acquisition cut off valuable licensing stream, so…

That’s it. Okay, great. Thanks guys.

Thanks, Mark.

(Operator Instructions). We’ll take our next question from Ron Shuttleworth with M Partners. Please go ahead.

Hi, good morning. Thanks for taking my call. Just as it relates to Sony was that a 36 month contract?

Yeah, it’s a three year patent license agreement.

Okay, thanks. I’d like to maybe spend little more time on the patent sale for this it sounds like the market has offend and the expectations of those at least the first 3000 patents you originally talked about the last couple of call do you see those selling over a period of multiple quarters and small lots basically maybe over a couple more than one year.

Yeah I’ll tell you Ron sort of on two tracks right. We’ve been marketing smaller portfolios and actually have interest. And in terms of the metrics in terms of price for patent sale license with that they would be solid but and so we continue to make sure those opportunities. I couldn’t really give you a timeframe in terms that we open backup I don’t think we would sell off the 3000 patents that way I think that’s a long process I'm not sure it’s a very valuable process this I think at some point the level of efforts going to so their manageable sales is pretty high. So I think there is some opportunities for smaller sales I think particularly with respect to infrastructure portfolio which I pointed out in the prepared remarks. I think there is a bigger opportunity for both loop. In naked eye there would be an outright sale it can be some sort of enter with somebody else it can be as a variety a couple of other things where the asset moves out of InterDigital’s control but we get the benefit of the revenue derived from that licensing activity. So it’s hard to predict where these things go but I might as I - my guess is you could have a couple of smaller sales but then you’ll probably maybe see a more of a bigger loop on the sale of patents.

Okay. Are you – I was willing to say for example some of the – some of the folks that you have, have perspective licensers coming up whereas like Nokia for example. Is there an opportunity to use some of those patents that you have up for sale is horse-trading, is that sort of the idea that it have around in your partnership business?

It certainly can be, I think they are useful in those discussions, the patents from both sides frankly are useful because they - if you are effective that licensing patents as we are – us getting patents in exchange for as partial consideration is fine and the same is true for partnering side if there is a depth of licensing they’ll view these patents as valuable. So you can so swaps, you can do ventures, I think in those instances you are dealing with mid-size to larger portfolios where we are sort of partnering again I think on the sales side at least what we’re seeing right now you’re dealing in smaller lots.

Okay. And the last thing about Nokia how are you tying or can you just describe to us how you might be tying for example the six year long litigation herein right now with them against the sort of 3G litigation that you have that named in with the other two parties. Can you just talk about how one affects the other and if it has what the impact would be?

There is – there is some linkage between the cases in terms of patent families that are being inserted. And so we had very good success with power ramp-up patents in the first Nokia case as a result of Federal Circuit Appeal those patents from that family in a subsequent case with them. So I think it was halo effect from the first case there. There is I think there is – we tend to be pretty consistent in terms of our licensing position, our FRAND positions and without pointing at any one party I think there has been a lot of inconsistency on the other side and so you can exploit that right between the cases as appropriate so there is that opportunity. So and I think there is a lot of – the third thing I think is sort of a - it’s a cumulative impact kind of approach, you have – when you have three cases against one party I think the opportunities or settlement rise because it’s not – well it’s in our view it’s never really related to any one case, with any one case only involved in a very small portion of our patent. Even from a timing perspective it’s not all about one case because you got three cases happening right in a row and so that’s a lot of hurdles to clear. So we don’t like to have to approach things as they, we would rather just have dialogs like we had with Sony and do something productive, you need the other party to engage to do that.

Okay. The last clarification HTC, is that current license include 4G LTE?

I think that the minimum products that are LTE based that include a 3G backwards compatible technology which they all do, there would be royalties loaded on that product side, I don’t remember those I believe - I don’t believe the scope of the patents extended to LTE.

Okay, alright, thanks. I’ll go back in line.

And we’ll take our next question from (indiscernible) with Stephens Inc. Please go ahead.

Good morning. This is (indiscernible) standing in for Tim Quillin. Thank you for taking my question. Can you please talk a little bit about your pipeline of potential patent sales and the likelihood of another patent sale this year?

Sure. So this - I come back to it, I think that the opportunities break down into two different types, right. So there is a smaller sales right and I’d say there are some meeting the level of opportunity there I wouldn’t say it is a real deep pipeline there I think it reflects the softening in the market I think the other side is more of the sort of patent partnership, patent swap or otherwise moving a set of patent assets outside the company I think there the pipeline of opportunity is a little deeper, but even if it’s not deeper I think is a lot more valuable. So working hard to put something in place something we’re being measured internally on our ability to do that so we are very intended to get that done. So as I said in the script probably in the next in the coming months. We will work to get something in place obviously though making sure and get making sure it’s the right deal.

Okay, great. Thank you.

We’ll take our second question from Nicholas Rodelli with CFRA Research. Please go ahead.

Thanks. Good morning. Apart from the litigation InterDigital is directly involved then which hopefully and discussed earlier in the Q&A. Are there other lawsuits involving third-parties for example some of the major smartphone litigation in cases working their way through the system that you’re paying particular attention to? Thank you.

Yeah. Well there is a bunch of cases out there that we and the rest of the industry are watching and I would say that the, the general nature of that case is all the same at all involve us friends their regional numbers coming to our and what is means and what remedies are available to focus that, that patents that are considered to be essential. So I would say it is basically three high level venues that we are watching and so we were interested in the space I would watch if I need too. Certainly the ITC has got a couple of cases that moving through there, there is case coming up for decision at the end of May involving Samsung and Apple which this issue in terms of what lease is available for with respect to standards and so patents seems to be becoming a pretty important issue in that case and there is others in the I think the ITC pipeline including ours that will be with that issue. There is a separate case in district courts going on there is one out in Seattle involving I think Microsoft and Motorola. One of the judge I think is working to set a found rate and so there is some interesting in watching that it’s a different I think it’s a different standard but I think that see how we sort of do it about that because it’s a complicated process and sure how that all works up but it certainly interesting for us to watch. And then the world is bigger than the U.S so there is a lot of opportunity, there is lot of things going on overseas and in particular there is cases going on in Germany involving Motorola and other folks addressing the same issues. So it’s an area well there is certain market innovators and folks it’s changing a lot each day and wakes up every morning win new case. So with those and certainly I think that will watching outside of our own cases.

Okay. Great. That’s it. Thanks. That’s helpful. But a quick follow-up if I could to that is that is the kind of the this wall of litigation in the smartphones base it’s working it’s way through the system is that had an impact on negotiations around that asking just perhaps the desire for folks to kind of see how things shake out for making major commitments?. Thank you.

Yeah but I think it has I think it’s one of the things the impact is partly dependent and so there are people that negotiate to respect of that all because the economic litigation to that party don’t make any sense. And so you will see all the licensees through and they probably observe what’s going on in the bid but it doesn’t really motivate them. I think then when the states in litigation get higher then the litigation environment becomes a factor for folks. But I don’t think it’s a determining factor. So, as an example we were able to include a very nice deal with Sony bundling the patents with from technology and deal I think is great for both sides. So there are there is probably a group of people that the uncertainty causes them to sort of freeze in their tracks. And most people though I think the important thing to remember and all that is the uncertainties on both sides. And so well there is uncertainty on both sides most the business people don’t most of them and majority of this don’t like uncertainty and when the uncertainty on both sides you try to work out something that remove uncertainty from both sides. So we are seen a little bit of all kinds of behavior right there.

We’ll take our next question from Ron Shuttleworth with M Partners. Please go ahead.

Hi folks. Just quickly I forgot to ask Sony I’m just trying to find out. Is it a fixed or per unit license?

That’s a fixed license.

Okay, thank you.

And we have no further questions at this time.

Okay. Well thanks very much Zack and thanks to all our investors and analysts who are joining us on the call today. As a note we will be sending a number of Investor Events in the next couple of months as well as hosting our own Analyst Day. So we would like you to keep an eye out for some announcements regarding that and also look forward to some invitations. And we are looking forward to meeting some of you in person. Thanks and have a great day.

Okay. That concludes today’s conference. You may now disconnect and have a wonderful day.