KING OF PRUSSIA, Pa.—(BUSINESS WIRE)—February 28, 2007— InterDigital Communications Corporation (NASDAQ: IDCC) today announced results for the fourth quarter and twelve months ended December 31, 2006.

Highlights: Fourth Quarter 2006

-- Revenue of $65.1 million, including $50.2 million of recurring revenue

-- Net income of $20.3 million, or $0.37 per diluted share

-- Repurchase of 1.3 million shares of the company's common stock for $42.4 million

Highlights: Full Year 2006

-- Revenue of $480.5 million, including $213.1 million of recurring revenue

-- Net income of $225.2 million, or $4.04 per diluted share

-- Repurchase of 6.5 million shares of the company's common stock for $192.5 million

-- Free cash flow(1) of $282.2 million

-- Ending cash and short-term investments totaling $264.0 million

William J. Merritt, President and Chief Executive Officer, stated, "2006 was a very successful year for InterDigital. Highlights included signing a new 2G/3G agreement with a leading handset producer, LG Electronics Inc. (LG), and our transition from providing portions of 3G IP to delivering a full 2G/3G dual-mode modem ASIC and platform. We also continued our technology leadership as evidenced by our agreement with SK Telecom to develop advanced mobility technology. At the same time, we used our substantial free cash flow to support investments in attractive business opportunities and to repurchase our own stock. Finally, we favorably resolved a dispute involving a patent license agreement with Nokia and received a very beneficial ruling in the Samsung arbitration."

Mr. Merritt added, "In 2007, we expect to build on the successes of 2006 and further enhance shareholder value. This year, we anticipate growing our base of 3G patent licensees and completing a dual-mode 2G/3G HSDPA/HSUPA modem ASIC on schedule which will position us for a design win and initial product sales in 2008. We will also continue our successful contributions to the evolving wireless standards, including Long-Term Evolution. Finally, we will take measured steps toward optimizing our capital structure and continue our share repurchase program. We have already made additional share repurchases of 2.0 million shares for $68.0 million in 2007. This brings our total repurchases as of February 27, 2007 to 8.5 million shares, for a total cost of approximately $260.5 million."

Fourth Quarter Summary

Revenue in fourth quarter 2006 increased to $65.1 million from $40.5 million in fourth quarter 2005. Fourth quarter 2006 revenue included $50.2 million of recurring patent license royalties and technology solution sales, $12.5 million related to Nokia, and $2.4 million associated with past sales for both a new and existing licensee. Recurring patent license royalties in fourth quarter 2006 increased 33 percent to $48.2 million from $36.2 million in fourth quarter 2005 due largely to a new agreement signed in early 2006 with LG. Technology solution revenue decreased to $2.0 million in fourth quarter 2006 from $4.3 million in fourth quarter 2005 due to the completion in first quarter 2006 of deliverables under an agreement with General Dynamics supporting a program for the U.S. military. Licensees that accounted for 10 percent or more of the $50.2 million of recurring patent license royalties and technology solution sales were LG (29 percent), Sharp Corporation of Japan (17 percent), and NEC Corporation of Japan (15 percent).

The company's net income in fourth quarter 2006 was $20.3 million, or $0.37 per diluted share. Included in fourth quarter 2006 net income is approximately $8.1 million after tax, or $0.15 per diluted share, related to the resolution of patent licensing matters with Nokia. Fourth quarter 2005 net income of $45.0 million, or $0.80 per diluted share, included a non-recurring income tax benefit of approximately $43.7 million, or $0.76 per diluted share, mainly related to the reversal of the company's valuation allowance against its federal deferred tax assets.

Fourth quarter 2006 operating expenses of $38.4 million decreased 1 percent when compared to fourth quarter 2005. This decrease primarily resulted from lower long-term compensation program costs offset, in part, by increases in fourth quarter 2006 costs related to product development initiatives and arbitration and litigation matters. The company's long-term compensation costs in fourth quarter 2006 decreased $4.8 million from fourth quarter 2005, reflecting the absence of overlapping cycles. Patent litigation and arbitration costs increased to $8.5 million in fourth quarter 2006 from $7.5 million in fourth quarter 2005 due to an increase in activity levels. In addition, the company recognized $0.6 million of repositioning charges in fourth quarter 2005.

Net interest and investment income of $3.7 million in fourth quarter 2006 increased $2.8 million over fourth quarter 2005 due to both higher investment balances and higher rates of return in fourth quarter 2006.

The company's fourth quarter 2006 tax expense included a 35 percent provision and tax credit adjustments. The company's fourth quarter 2005 tax provision included the $43.7 million of non-recurring income tax benefits offset, in part, by $1.1 million of federal income taxes and non-U.S. withholding taxes.

During fourth quarter 2006, the company used $12.4 million of free cash flow due largely to investments in product and patent related initiatives, offset in part by cash collections related to patent license agreements.

Twelve Months Summary

For the full year 2006, revenues were $480.5 million compared to $163.1 million in 2005. This increase was driven by $253.0 million and $12.0 million related to the resolution of matters with Nokia and Panasonic, respectively, a new agreement signed in early 2006 with LG, and higher contributions from other existing patent licensees, including Panasonic.

Net income for the full year 2006 increased to $225.2 million, or $4.04 per diluted share, from $54.7 million, or $0.96 per diluted share, for the full year 2005. Approximately $170.3 million or $3.05 per diluted share of the 2006 net income is related to the resolution of patent licensing matters with Nokia and Panasonic. Included in full year 2005 net income is a non-recurring income tax benefit of approximately $43.7 million, or $0.76 per diluted share, mainly related to the reversal of the company's valuation allowance against its federal deferred tax assets.

Operating expenses of $144.1 million in 2006 decreased 1 percent versus 2005. This decrease is primarily related to lower costs associated with patent litigation and arbitration ($21.4 million in 2006 compared to $27.3 million in 2005), long-term compensation, and executive severance and repositioning activities offset, in part, by higher costs associated with product development initiatives, patent maintenance and amortization costs, and commissions.

In 2006, net interest and investment income of $13.2 million increased $10.0 million over 2005 due to both higher investment balances and higher rates of return in 2006.

The company's full year 2006 tax expense consisted of an approximately 35 percent provision for federal income taxes plus $2.2 million of non-U.S. withholding taxes. The full year 2005 tax provision included the $43.7 million of non-recurring income tax benefits offset, in part, by $7.2 million of federal income tax and alternative minimum tax and $2.1 million of non-U.S. source withholding tax.

In 2006, the company generated $282.2 million of free cash flow. This free cash flow was driven, in large part, by patent license payments from Nokia and LG totaling $319.7 million, net of source withholding taxes, offset, in part, by estimated federal tax payments and investments in product and patent related initiatives.

First Quarter 2007 Outlook

Rich Fagan, Chief Financial Officer commented, "In first quarter 2007, we expect to report recurring revenues from existing agreements of $53 million to $55 million. We currently expect sequential percentage growth in first quarter 2007 expenses to be in the mid-teens, excluding patent arbitration and litigation costs. The majority of this increase is structural in nature, reflecting normal wage inflation, seasonality related to vacation accruals and other personnel costs, and the effect of overlapping long-term compensation program RSU cycles. In addition, we anticipate modest increases related to investments directed toward meeting our schedule to have engineering samples of our 2G/3G ASIC by late summer 2007. We also currently expect that our patent arbitration and litigation costs in first quarter 2007 will be between $6 million and $8 million as we continue to invest appropriately in this critical activity. Lastly, we expect that our book tax rate for the first quarter of 2007 will approximate 35 percent to 37 percent."

About InterDigital

InterDigital Communications Corporation 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 baseband product solutions and protocol software for 3G multimode terminals and converged devices. InterDigital's differentiated technology and product solutions deliver time-to-market, performance and cost benefits. For more information, please visit InterDigital's web site: www.interdigital.com. InterDigital is a registered trademark of InterDigital.