I emailed the following question(s) to IDCC and got a response from Janet Point:
Dear Ms. Point:
I have a question on the referenced 8-K filing reported today September 1, 2009:
Receipt of Prepayment Under Existing Patent License Agreement. Under the terms of an existing patent license agreement, on August 31, 2009, InterDigital, Inc.'s patent licensing subsidiaries received a prepayment of royalties in the approximate amount of $105 million to cover expected sales over a defined period of time.
It is nice to know that IDCC is receiving continued cash flows from some licensees, however, the details are lacking from whom the prepayment is from and what the defined period of time covers.
Likewise, in the second quarter, 2009 conference call, it was ALSO mentioned that IDCC received approximately $70 million as a prepayment from another licensee.
The 8-K (and the conference call) did NOT specify which of the Licensee(s) prepaid the amounts nor did it state the period(s) that the prepayments cover.
It frustrates me (and other shareholders as well) that IDCC is so secretive as to the specifics of these payments. Why does IDCC not provide clear and precise information as to where these funds are coming from; are they based on fixed licenses? are they one-time payments? are they adjustments to other prepayments from sales recorded versus sales estimated?
Thank you for your clarification on the questions presented.
Her response was as follows:
Thanks for your note. While the fact that we do not name licensees in a number of our disclosures seems to be frustrating to you, we must honor the terms of the agreements which have very restrictive terms on the disclosure of information relative to a specific licensee. This type of agreement is not unique to InterDigital. A number of other companies with license agreements may refer to their licensee by a general description or geographical focus rather than the name.
In general, prepayments would cover an estimated time for sales in the future. Again, those sales may take place over a number of years and/or months, but the specifics are not disclosed.