InterDigital Announces Second Quarter 2008 Financial Results

Revenues were $114.7 million in first half 2008 compared to $122.8 million in first half 2007. First half 2007 revenues included $11.2 million of non-recurring revenue associated with prior period sales of Sony Ericssons covered 2G products as well as $8.7 million of revenue related to current period sales of Sony Ericssons covered 2G products. First half 2008 included $0.8 million of revenue from past infringement. Excluding revenue from the Sony Ericsson as well as other non-recurring revenue, recurring patent license royalties from continuing licensees were $109.3 million in first half 2008, an $8.0 million or 8% increase over first half 2007. In addition, first half 2008 revenues included technology solutions revenue of $4.6 million, which increased $3.0 million over first half 2007.

During first half 2008, the company generated $97.6 million of free cash flow2, compared to $90.8 million of free cash flow in first half 2007. First half 2008 free cash flow included the third of three patent license payments from LG totaling $95.0 million, offset in part by (i) $15.9 million of federal and foreign withholding tax payments, (ii) litigation and arbitration costs, (iii) patent related costs and (iv) investments in product development initiatives.

Excluding a first half 2007 charge of $16.6 million relating to the Federal arbitration, first half 2008 operating expenses of $96.0 million increased $5.1 million from first half 2007 due primarily to a $4.2 million increase in litigation and arbitration expenses, net of insurance reimbursements.

Net interest and investment income of $1.7 million in first half 2008 decreased $3.2 million from $4.9 million in first half 2007 due primarily to a $0.7 million investment write-down and lower rates of return.

The companys first half 2008 tax expense was $7.3 million, compared with first half 2007 tax expense of $7.0 million. The first half 2008 effective tax rate was approximately 35%. The first half 2007 effective tax rate was approximately 34%, including the effect of estimated future tax credits related to 2007 research and development activity.

Expected Trends

Scott McQuilkin, Chief Financial Officer, commented, Our second quarter was strong, with a sequential increase in royalty revenue from several of our licensees combined with a decrease in our core operating expenses as well as a decrease in litigation and arbitration costs. As we move closer to full commercialization of our SlimChip product, we expect that development spending related to new product and customer activities will drive an 8%-12% sequential increase in third quarter operating expenses, excluding arbitration and litigation. Also in the third quarter 2008, we will recognize a $2.6 million one-time reduction in expenses related to the recent resolution of the United Kingdom legal actions with Nokia. Lastly, our book tax rate for the second half of the year is expected to approximate 35%.

As is our practice, we will provide an update on our expectation for third quarter 2008 revenue after we receive and review the applicable royalty reports and update our forecasts on anticipated revenue from work associated with technology solution agreements, Mr. McQuilkin added.

About InterDigital

InterDigital designs, develops and provides advanced wireless technologies and products that drive voice and data communications. InterDigital is a leading contributor to the global wireless standards and holds a strong portfolio of patented technologies, which it licenses to manufacturers of 2G, 2.5G, 3G, and 802 products worldwide. Additionally, the company offers a family of SlimChip high performance mobile broadband modem solutions, consisting of Baseband ICs, Modem IP and Reference Platforms. InterDigital's differentiated technology and product solutions deliver time-to-market, performance and cost benefits. For more information, visit:

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include the information under the heading Expected Trends and other information regarding our current beliefs, plans and expectations, including, without limitation, with respect to: (i) growing our base of 3G licensees; (ii) the outcome of the USITC action against Samsung; (iii) the effects of the arbitral tribunals award and the Second Circuits ruling; (iv) the continued development of the companys SlimChip product family; (v) third quarter 2008 operating expenses, excluding patent arbitration/litigation expense; (vi) third quarter 2008 patent arbitration/litigation expense; and (vii) our estimated book tax rate for second half 2008. Words such as believe, will, expect or similar expressions are intended to identify such forward-looking statements.

Forward-looking statements are subject to risks and uncertainties. Actual outcomes could differ materially from those expressed in or anticipated by such forward-looking statements due to a variety of factors, including, but not limited to, those identified in this press release as well as the following: (i) unanticipated delays, difficulties or acceleration in the execution of patent license agreements; (ii) our ability to leverage our strategic relationships and secure new patent licensing and technology solutions agreements on acceptable terms; (iii) changes in the market share and sales performance of our primary licensees, delays in product shipments of our licensees and timely receipt and final reviews of quarterly royalty reports from our licensees and related matters ; (iv) unanticipated product development expenses and the timing of such expenses; (v) unanticipated difficulties or delays in the production or delivery of our integrated circuit engineering samples; (vi) changes in the technology preferences, needs, availability and pricing of competitive technologies and product offerings; (vii) the resolution of current legal proceedings, including any awards or judgments relating to such proceedings, additional legal proceedings, changes in the schedules or costs associated with legal proceedings or adverse rulings in such legal proceedings; and (viii) changes in our expectations of the amount and composition of full-year taxable income, Congressional approval of a 2008 U.S. federal research and experimental credit, changes in foreign and domestic tax laws or treatises or changes in our tax planning strategies. We undertake no duty to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority.

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