SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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Form 8-K
Current Report
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 28, 2001
INTERDIGITAL COMMUNICATIONS CORPORATION
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(Exact name of registrant as specified in charter)
PENNSYLVANIA 1-11152 23-1882087
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) file number) Identification
Number)
781 Third Avenue, King of Prussia, Pennsylvania 19406-1409
(Address of principal executive offices)
(610) 878-7800
(Registrant's telephone number, including area code)
Item 5. Other Events.
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In the second quarter of 2000, we modified our revenue recognition
policy in response to Staff Accounting Bulletin (SAB) No. 101, "Revenue
Recognition in Financial Statements" that was issued by the Securities and
Exchange Commission (SEC) in December 1999. SAB No. 101 expresses the views of
the SEC Staff in applying generally accepted accounting principles to certain
transactions, including licensing agreements with non-refundable, up-front
payments. Historically, we have recorded such fees as revenue upon the signing
of the applicable license agreement because we had delivered the license and had
no remaining obligations. Following SAB No. 101 guidance, we reflected in our
results for the six months ended June 30, 2000, a net after-tax cumulative
effect of change in accounting principle of $30.5 million to defer the net
portion of upfront royalty payments that represented amounts which had not been
exhausted through product sales by licensees as of January 1, 2000. We then
recognize revenue related to these amounts as licensee product sales occur.
Since the second quarter of 2000, there have been refinements and clarifications
of interpretations by the SEC and the accounting profession regarding payments
related to SAB No. 101. As a result of these refinements and clarifications, we
revised our cumulative effect of change in accounting policy adjustment in the
fourth quarter ended December 31, 2000 by $23.4 million, bringing the total full
year SAB No. 101 adjustment to $53.9 million. The additional adjustment was to
defer revenue as of January 1, 2000 related to fully paid-up licenses in which
the licensee makes a single payment for a perpetual patent license. Such
payments are now being recognized as revenue over a period of years, based on
the life of the products and patents licensed. Based on the overall SAB No. 101
accounting changes, we recognized during the year ended December 31, 2000
approximately $12.5 million and $10.4 million of revenue and earnings,
respectively, related to amortization of SAB No. 101 deferred revenue.
[Remainder of page intentionally left blank.]
The following table reconciles our previously reported quarterly
results of operations for the impact of the SAB No. 101 adjustments:
(In thousands, except per share figures, unaudited.)
Quarter Ended Quarter Ended Quarter Ended
March 31, 2000 June 30, 2000 (1) September 30, 2000 (1)
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Revenues:
As reported on Form 10Q $ 12,206 $ 11,632 $ 11,486
Impact of the Initial SAB 101 adjustment 1,638 -- --
Impact of fourth quarter SAB No. 101 revision 1,357 1,356 1,357
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Adjusted report $ 15,201 $ 12,988 $ 12,843
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Net Income (loss) applicable to common shareholders
before cumulative effect of change in accounting
principle:
As reported on Form 10Q $ 417 $ (1,104) $ 60
Impact of the Initial SAB 101 adjustment 1,348 -- --
Impact of fourth quarter SAB No. 101 revision 1,137 1,138 1,139
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Adjusted report $ 2,902 $ 34 $ 1,199
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Earnings (loss) per share before cumulative effect of
cumulative effect of change in accounting principle -
diluted:
As reported on Form 10Q $ 0.01 $ (0.02) $ --
Impact of the Initial SAB 101 adjustment 0.02 -- --
Impact of fourth quarter SAB No. 101 revision 0.03 0.02 0.02
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Adjusted report $ 0.05 $ -- $ 0.02
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(1) Results of operation in Form 10-Q for the quarters ended June 30, 2000 and
September 30, 2000 reflect the Impact of the Initial SAB No. 101
adjustment, which resulted in additional revenue and operating income of
$1.6 million and $1.3 million, respectively, in the quarter ended June 30,
2000 and additional revenue and operating income of $2.5 million and $2.0
million, respectively, in the quarter ended September 30, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
INTERDIGITAL COMMUNICATIONS CORPORATION
Date: February 28, 2001 By: /s/ Howard E. Goldberg
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Howard E. Goldberg
Chief Executive Officer