IDCC » Topics » Operating Expenses

This excerpt taken from the IDCC 10-Q filed Nov 6, 2007.

Operating Expenses

Excluding a $16.6 million charge related to an arbitration award associated with our dispute with Federal, operating expenses increased 30% to $137.0 million in first nine months 2007 from $105.6 million in first nine months 2006. The $31.4 million increase was due to the following net changes in expenses (in millions):

 

     Increase/
(Decrease)
 

Patent litigation and arbitration

   $ 13.0  

Consulting services

     7.7  

Depreciation and amortization

     5.0  

Personnel related costs

     3.3  

Patent maintenance

     2.9  

Share-based compensation

     1.1  

Other legal counsel

     0.6  

Commissions

     (3.5 )

Other

     1.3  
        

Total Increase in Operating Expense

   $ 31.4  
        

Patent litigation and arbitration increased primarily due to our U.S. International Trade Commission proceedings against Samsung and Nokia, respectively, as well as, increased activity in other disputes with Nokia. Consulting services and personnel related costs increased primarily due to the need for additional internal and external resources to complete the development of our 2G/3G dual mode modem ASIC offering. Patent amortization and patent maintenance costs both increased due to heightened levels of internal inventive activity in recent years resulting in the expansion of our patent portfolio. Other depreciation and amortization costs increased due to the recent acquisition of tools and technology licenses to develop or complete a 2G/3G dual mode modem ASIC offering. The increase in share based compensation costs resulted from increased LTCP costs related to the effect of overlapping RSU cycles in 2007 and was partly offset by a decrease resulting from a non-recurring charge of $1.1 million in third quarter 2006 that related to share-based grants in 1998. Legal fees unrelated to patent litigation and arbitration increased due to both our 2007 legal entity reorganization and insurance disputes. These increases in operating expenses were partly offset by a $3.5 million decrease in commission expense.

The following table summarizes the change in operating expenses by category (in millions):

 

    

First

Nine Months

2007

   First
Nine Months
2006
   Increase  

Sales and marketing

   $ 5.8    $ 5.1    $ 0.7    14 %

General and administrative

     18.1      15.7      2.4    15  

Patent administration and licensing

     49.3      36.1      13.2    37  

Development

     63.8      48.7      15.1    31  

Arbitration award

     16.6      —        16.6    n/a  
                           

Total Operating Expense

   $ 153.6    $ 105.6    $ 48.0    45 %
                           

 

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Sales and Marketing Expense: The increase in sales and marketing expense was due to increased travel and consulting costs ($0.4 million) primarily associated with the advanced marketing of our 2G/3G dual mode modem ASIC offering and overlapping RSU cycles ($0.3 million).

General and Administrative Expense: The increase in general and administrative expense was primarily due to increased legal and consulting services primarily associated with our legal entity reorganization ($1.1 million) personnel costs ($0.6 million) associated with wage inflation and temporary personnel and overlapping RSU cycles ($0.4 million).

Patent Administration and Licensing Expense: Patent administration and licensing expenses increased due to increases in patent litigation and arbitration ($13.0 million), patent maintenance costs ($2.9 million) and increased amortization costs ($0.9 million). These increases were partly offset by a $3.5 million decrease in commission expense.

Development Expense: The increase in development expense was primarily attributable to the development of our 2G/3G dual mode modem ASIC offering, including increased consulting services ($7.0 million) and depreciation and amortization of development tools and technology licenses ($4.1 million). Overlapping RSU cycles and other personnel costs also contributed $3.2 million to this increase.

This excerpt taken from the IDCC 10-Q filed Aug 9, 2007.

Operating Expenses

Excluding a $16.6 million charge related to an arbitration award associated with our dispute with Federal, operating expenses increased 32% to $90.9 million in first half 2007 from $68.8 million in first half 2006. The $22.1 million increase was due to the following net changes in expenses (in millions):

 

     Increase/(Decrease)  

Patent litigation and arbitration

   $ 7.6  

Consulting services

     6.9  

Depreciation and amortization

     3.0  

Patent maintenance

     2.4  

Personnel related costs

     2.1  

Long term compensation

     1.8  

Commissions

     (2.7 )

Other

     1.0  
        

Total Increase in Operating Expense

   $ 22.1  
        

Patent litigation and arbitration increased primarily due to our U.S. International Trade Commission action against Samsung and increased activity in our disputes with Nokia. Consulting services and other personnel costs increased primarily due to the need for additional internal and external resources to complete the development of our 2G/3G dual mode modem ASIC offering. Patent amortization and patent maintenance costs both increased due to heightened levels of internal inventive activity in recent years resulting in the expansion of our patent portfolio. Depreciation and amortization increased due to the recent acquisition of tools and technology licenses to develop or complete a 2G/3G dual mode modem ASIC offering. Long-term compensation increased primarily due to the effect of overlapping RSU cycles in 2007. These increases to operating expenses were partly offset by a $2.7 million decrease in commission expense.

 

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Table of Contents

The following table summarizes the change in operating expenses by category (in millions):

 

     First Half
2007
  

First Half

2006

   Increase  

Sales and marketing

   $ 4.0    $ 3.4    $ 0.6    17 %

General and administrative

     12.6      10.7      1.9    18  

Patents administration and licensing

     31.3      22.8      8.5    37  

Development

     43.0      31.9      11.1    35  

Arbitration award

     16.6      —        16.6    n/a  
                           

Total Operating Expense

   $ 107.5    $ 68.8    $ 38.7    56 %
                           

Sales and Marketing Expense: The increase in sales and marketing expense was due to increased travel and consulting costs ($0.3 million) primarily associated with the advanced marketing of our 2G/3G dual mode modem ASIC offering and overlapping RSU cycles ($0.2 million).

General and Administrative Expense: The increase in general and administrative expense was primarily due to increased legal and consulting services primarily associated with our legal entity reorganization ($0.9 million) and personnel costs ($0.9 million) associated with wage inflation, overlapping RSU cycles and temporary personnel.

Patents Administration and Licensing Expense: Patent administration and license costs increased due to increases in patent litigation and arbitration ($7.6 million), patent maintenance costs ($2.4 million) and increased amortization costs ($0.5 million). These increases were partly offset by a $2.7 million decrease in commission expense.

Development Expense: The increase in development expense was primarily attributable to the development of our 2G/3G dual mode modem ASIC offering, including increased consulting services ($5.9 million) and depreciation and amortization of development tools and technology licenses ($2.5 million). Overlapping RSU cycles and other personnel costs also contributed $2.1 million to this increase.

EXCERPTS ON THIS PAGE:

10-Q
Nov 6, 2007
10-Q
Aug 9, 2007
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