IDC being Investigated? InterDigital Provides Update On Revenue<br>
Recognition<p>
KING OF PRUSSIA, Pa.--(BUSINESS WIRE)--June 29, 2000--InterDigital Communications Corporation (Nasdaq: IDCC<br>
- news), a leading wireless technology provider, today announced that it has concluded its analysis in response to the Securities<br>
and Exchange Commission (SEC) Staff Accounting Bulletin No. 101 ``Revenue Recognition in Financial Statements'' (SAB<br>
101). <p>
On May 4, 2000, the Company announced its plans to modify its revenue recognition policy in response to SAB 101 in the<br>
second quarter of 2000. With SAB 101, the SEC staff provided further clarification on its view of accounting for up front,<br>
non-refundable fees received in connection with licensing agreements. Historically, up-front fees received by the Company in<br>
connection with licensing agreements and any related expenses were recognized in the income statement upon the signing of the<br>
applicable licensing agreement. Effective January 1, 2000, the Company will recognize revenue and related expenses from<br>
these types of agreements as the royalty pre-payments are exhausted through product sales by the licensees. <p>
Although the SEC has recently deferred the required implementation date of SAB 101, the Company will reflect the net<br>
after-tax cumulative impact of previously recognized up-front payments in the second quarter of 2000 as a cumulative effect of<br>
change in accounting principle of $30.5 million or approximately $0.55 per diluted share. This amount is in line with the<br>
previously stated range of $19 to $31 million. This one-time non-cash charge effectively defers previously recognized net<br>
up-front royalty pre-payments. Thereafter, the Company will generally recognize the revenue and net earnings associated with<br>
the deferred amounts as licensee product sales occur. <p>
According to Richard Fagan, Chief Financial Officer of InterDigital, ``It is important to note that our historical financial<br>
statements were and are in accordance with Generally Accepted Accounting Principles and this policy change will have no<br>
effect on previously reported results. While the $30.5 million non-cash change will have a negative effect on 2000 financial<br>
results, we will record this amount as earnings in the future as our licensees sell product. We also believe this modification will<br>
help to reduce some of the variability in our revenue flow and help produce a more normalized and predictable earnings stream<br>
over time. In fact, we anticipate recording approximately $2.5 million additional earnings for the first half of 2000 related to this<br>
change in accounting principle.'' <p>
InterDigital is creating innovative solutions for mainstream wireless applications which deliver cost and time-to-market<br>
advantages for its customers. By leveraging its technology and intellectual property into third generation standards and<br>
products, it is maximizing its long-term revenue and earnings opportunities. The Company has a strong portfolio of patented<br>
TDMA and CDMA inventions which it licenses worldwide. For more information, please visit InterDigital's web site:<br>
www.interdigital.com. <p>
This press release contains forward-looking statements regarding InterDigital's current beliefs and expectations as to the<br>
cumulative effect of change in accounting principle for the second quarter 2000, the amount of additional earnings to be<br>
recorded for the first half of 2000, and the impact of SAB 101. Such statements are subject to risks and uncertainties. Actual<br>
outcomes could differ materially from those expressed in any such forward-looking statement due to a variety of factors<br>
including, but not limited to: the continued guidance from the SEC staff on SAB 101; the timing or accuracy of reports and<br>
guidance provided by licensees; and shifts in licensees' sales. InterDigital undertakes no duty to publicly update any<br>
forward-looking statements, whether as a result of new information, future events or otherwise. <p>
Contact: <p>
InterDigital Communications Corporation<br>
Susan Sutton (Media)<br>
susan.sutton@interdigital.com<br>
or<br>
Janet Point (Investor)<br>
janet.point@interdigital.com<br>
610/878-7800 |
