10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to _________

Commission File Number 1-11152

INTERDIGITAL COMMUNICATIONS CORPORATION

(Exact name of registrant as specified in its charter)

  PENNSYLVANIA  
(State or other jurisdiction of
incorporation or organization)

  23-1882087  
(I.R.S. Employer
IdentificationNo.)

  781 Third Avenue, King of Prussia, PA 19406-1409  
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code (610) 878-7800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes xNo o

Indicate by check mark whether registrant is an accelerated filer (as defined by Rule 12b-2 of the Securities Exchange Act of 1934).

Yes xNo o

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

Common Stock, par value $.01 per share	56,482,476
Class	Outstanding at August 7, 2003

INTERDIGITAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES

TABLE OF CONTENTS

			PAGES
Part I	Financial Information
	Item 1.	Condensed Consolidated Financial Statements (Unaudited):	1
		Condensed Consolidated Balance Sheets - June 30, 2003 and December 31, 2002	1
		Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2003 and 2002	2
		Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2003 and 2002	3
		Notes to Condensed Consolidated Financial Statements	4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
	Item 3.	Quantitative and Qualitative Disclosure About Market Risk	15
	Item 4.	Controls and Procedures	15
Part II	Other Information:
	Item 1.	Legal Proceedings	16
	Item 4.	Submission of Matters to a Vote of Security Holders	16
	Item 6.	Exhibits and Reports on Form 8-K	16

Signatures	18
Exhibit 10.59
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

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InterDigital® is a trademark of InterDigital Communications Corporation. All other trademarks, service marks, and/or trade names appearing in this Form 10-Q are the property of their respective owners.

GLOSSARY OF TERMS

CDMA

“Code Division Multiple Access”. A method of digital spread spectrum technology wireless transmission that allows a large number of users to share access to a single radio channel by assigning unique code sequences to each user.

CDMA2000

A standard, as amended, which evolved from narrowband CDMA technologies (i.e. IS-95 and cdmaOne) and includes, without limitation, CDMA2000 1X, CDMA 1X EV-DO, CDMA-2000 1X EV-DV and CDMA2000 3X. Although CDMA2000 1X is included under the 1MT-2000 family of 3G standards, it is functionally similar to 2.5G technologies.

Chip

An electronic circuit that consists of many individual circuit elements integrated onto a single substrate.

Chip Rate

The rate at which information signal bits are transmitted as a sequence of chips. The Chip Rate is usually several times the information bit rate.

Digital

Information transmission where the data is represented in discrete numerical form.

Duplex

A characteristic of data transmission; either full duplex or half duplex. Full duplex permits simultaneous transmission in both directions of a communications channel. Half duplex means only one transmission at a time.

802.11

A family of WLAN standards designated 802.11x and developed by the IEEE, which provides technical solutions for wireless high speed local area data.

Frequency

The rate at which an electrical current or signal alternates, usually measured in Hertz.

GSM

“Global System for Mobile Communications”. A digital cellular standard, based on TDMA technology, specifically developed to provide system compatibility across country boundaries.

GPRS

“General Packet Radio Systems”. A packet-based wireless communications service that enables high speed wireless Internet and other data communications via GSM networks.

Hertz

The unit of measuring radio frequency (one cycle per second).

IEEE

"Institute of Electrical and Electronics Engineers". A membership organization of engineers that, among other activities, produces data communications standards.

ITC

“InterDigital Technology Corporation”, our wholly-owned Delaware subsidiary.

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LAN

“Local Area Network”. A private data communications network linking a variety of data services all located in the same geographic area, and which may include a dedicated file server or computer that provides a centralized source of shared files and programs.

Narrowband

A communications channel capable of handling voice, fax, slow-scan, video images and data transmissions; usually less than 64 kpbs.

PDC

“Personal Digital Cellular”. The standard developed in Japan for TDMA digital wireless mobile radio communications systems.

PHS

“Personal Handyphone System”. A digital cordless telephone system and digital network based on TDMA. This low-mobility microcell standard was developed in Japan. Commonly known as PAS in China.

Smart Antenna

Antennas utilizing multiple antenna elements with signal processing capabilities which enhance desired or reduce undesired transmissions to or from wireless products.

Standards

Specifications that reflect agreements on products, practices, or operations by nationally or internationally accredited industrial and professional associations or governmental bodies.

Technology Platform

The base technology of a system’s hardware and software that defines how the system is operated and determines other kinds of software that can be used.

TDD

“Time Division Duplexing”. A duplex operation using a single frequency, divided by time, for transmission and reception.

TDMA

“Time Division Multiple Access”. A method of digital wireless transmission that allows a multiplicity of users to share access (in a time ordered sequence) to a single channel without interference by assigning unique time segments to each user within the channel.

3G

“Third Generation”. A generic term usually used in reference to the next generation digital mobile devices and network, which provide high speed data communications capability along with voice services.

2G

“Second Generation”. A generic term usually used in reference to voice-oriented digital wireless products, primarily mobile handsets which provide basic voice services.

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2.5G

A generic term usually used in reference to fully integrated voice and data digital wireless devices offering higher data rate services compared to 2G and enhanced Internet access.

UMTS

“Universal Mobile Telecommunications System”. 3G wideband wireless multimedia technology.

WCDMA

“Wideband Code Division Multiple Access” or “Wideband CDMA”. The next generation of CDMA technology optimized for high speed packet-switched data and high capacity circuit switched capabilities. A 3G technology.

Wideband

A communications channel with a user data rate higher than a voice-grade channel; usually 64kpbs to 2mbps.

Wireless

Radio-based systems that allow transmission of information without a physical connection, such as copper wire or optical fiber.

WLAN

“Wireless Local Area Network”. A local area network that uses high frequency radio waves rather than wires to communicate between nodes.

WTDD

“Wideband TDD” or “Wideband Time Division Duplex”. A form of TDD utilizing a high Chip Rate.

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PART I – FINANCIAL INFORMATION

Item 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

INTERDIGITAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

	(Unaudited) JUNE30, 2003			DECEMBER31, 2002
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	40,450		$	22,337
Short-term investments		87,469			65,229
Accounts receivable		84,459			53,486
Prepaid and other current assets		6,481			7,627
Total current assets		218,859			148,679
PROPERTY AND EQUIPMENT, NET		12,224			14,091
PATENTS, NET		16,915			15,016
OTHER NON-CURRENT ASSETS		14,187			13,392
		43,326			42,499
TOTAL ASSETS	$	262,185		$	191,178
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	196		$	189
Accounts payable		3,561			5,412
Accrued compensation and related expenses		5,167			5,886
Deferred revenue		22,381			17,087
Foreign and domestic taxes payable		5,063			5,434
Other accrued expenses		2,726			2,826
Total current liabilities		39,094			36,834
LONG-TERM DEBT		1,870			1,970
LONG-TERM DEFERRED REVENUE		94,405			73,583
OTHER LONG-TERM LIABILITIES		1,620			—
TOTAL LIABILITIES		136,989			112,387
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Preferred Stock, $.10 par value, 14,399 shares authorized-$2.50 Convertible Preferred, 53 shares issued and outstanding, liquidation value of $1,375		5			5
Common Stock, $.01 par value, 100,000 shares authorized, 58,140 shares and 56,267 shares issued and outstanding		581			563
Additional paid-in capital		302,763			285,869
Accumulated deficit		(169,127	)		(198,945	)
Accumulated other comprehensive income		(23	)		210
Unearned compensation		(930	)		(838	)
		133,269			86,864
Treasury stock, 1,500 shares of Common Stock held at cost		8,073			8,073
Total shareholders’ equity		125,196			78,791
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	262,185		$	191,178

The accompanying notes are an integral part of these statements.

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INTERDIGITAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)

	FORTHETHREEMONTHS ENDEDJUNE30,						FORTHESIXMONTHS ENDEDJUNE30,
	2003			2002			2003			2002
REVENUES	$	25,777		$	25,149		$	63,101		$	46,098
OPERATING EXPENSES:
Sales and marketing		933			1,282			2,143			2,372
General and administrative		4,621			4,069			8,738			7,763
Patents administration and licensing		3,936			3,465			7,075			6,320
Development		11,413			11,816			22,801			23,631
		20,903			20,632			40,757			40,086
Income from operations		4,874			4,517			22,344			6,012
OTHER INCOME (EXPENSE):
Other income		—			—			10,580			—
Interest income		534			582			1,009			1,167
Interest and financing expenses		(60	)		(27	)		(116	)		(112	)
Income before income taxes		5,348			5,072			33,817			7,067
INCOME TAX PROVISION		(2,190	)		(2,594	)		(3,932	)		(4,539	)
Net income		3,158			2,478			29,885			2,528
PREFERRED STOCK DIVIDENDS		(33	)		(34	)		(67	)		(68	)
NET INCOME APPLICABLE TO COMMON SHAREHOLDERS	$	3,125		$	2,444		$	29,818		$	2,460
NET INCOME PER COMMON SHARE - BASIC	$	0.06		$	0.04		$	0.54		$	0.05
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		55,895			54,358			55,253			54,163
NET INCOME PER COMMON SHARE - DILUTED	$	0.05		$	0.04		$	0.49		$	0.04
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		61,293			57,535			60,239			57,207

The accompanying notes are an integral part of these statements.

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INTERDIGITAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

	FORTHESIXMONTHS ENDEDJUNE30,
	2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income before Preferred Stock dividends	$	29,885		$	2,528
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,737			4,109
Deferred revenue recognized		(28,372	)		(28,706	)
Increase in deferred revenue		54,488			59,250
Amortization of unearned compensation		517			1,450
(Increase) decrease in deferred charges		(837	)		(3,255	)
(Increase) decrease in other long-term assets		(120	)		44
(Increase) decrease in assets:
Receivables		(30,973	)		(27,124	)
Other current assets		2,559			337
(Decrease) increase in liabilities:
Accounts payable		(1,851	)		(1,939	)
Accrued compensation		(719	)		(474	)
Other accrued expenses		1,148			3,623
Net cash provided by operating activities		30,462			9,843
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments		(74,993	)		(65,430	)
Sales of short-term investments		52,520			53,291
Purchases of property and equipment		(1,389	)		(3,736	)
Patent costs		(3,380	)		(1,423	)
Increase in notes receivable		(1,250	)		—
Net cash used by investing activities		(28,492	)		(17,298	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from exercise of stock options and warrants and employee stock purchase plan		16,278			3,260
Payments on long-term debt, including capital lease obligations		(93	)		(201	)
Dividends on Preferred Stock		(42	)		(48	)
Net cash provided by financing activities		16,143			3,011
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		18,113			(4,444	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		22,337			17,892
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	40,450		$	13,448
SUPPLEMENTAL CASH FLOW INFORMATION:
Leased asset additions and related obligation	$	—		$	195
Interest paid	$	95		$	111
Income taxes paid, including foreign withholding taxes	$	4,335		$	4,127
Non-cash dividends on Preferred Stock	$	25		$	20

The accompanying notes are an integral part of these statements.

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INTERDIGITAL COMMUNICATIONS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
(UNAUDITED)

1. BASIS OF PRESENTATION:

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the financial position of InterDigital Communications Corporation (collectively with its subsidiaries referred to as InterDigital, the Company, we, us and our) as of June 30, 2003, and the results of operations for the three and six month periods ended June 30, 2003 and 2002, and cash flows for the six months ended June 30, 2003 and 2002. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and accordingly do not include all of the detailed schedules, information and notes necessary to present fairly the financial condition, results of operations and cash flows in conformity with generally accepted accounting principles. Therefore, these financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s latest Annual Report on Form 10-K for the fiscal year ended December 31, 2002 as filed with the Securities and Exchange Commission (SEC) on March 31, 2003. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company accounts for stock-based employee compensation under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted have an exercise price equal to the market value of the underlying Common Stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Financial Accounting Standards Board (FASB) Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation:

	FORTHETHREEMONTHS ENDEDJUNE30,						FORTHESIXMONTHS ENDEDJUNE30,
	2003			2002			2003			2002
Net income applicable to Common Shareholders – as reported	$	3,125		$	2,444		$	29,818		$	2,460
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards (a)		(3,403	)		(5,900	)		(5,780	)		(12,440	)
Net (loss) income applicable to Common Shareholders – pro forma	$	(278	)	$	(3,456	)	$	24,038		$	(9,980	)
Net income per share – as reported – basic		0.06			0.04			0.54			0.05
Net income per share – as reported – diluted		0.05			0.04			0.49			0.04
Net (loss) income per share – pro forma – basic		0.00			(0.06	)		0.44			(0.18	)
Net (loss) income per share – pro forma – diluted		0.00			(0.06	)		0.40			(0.18	)

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a) No tax benefit has been recognized for the stock-based employee compensation expense since the Company is in an NOL carryforward position and the realization of such benefit cannot be assured.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

	FORTHETHREEMONTHS ENDEDJUNE30,						FORTHESIXMONTHS ENDEDJUNE30,
	2003			2002			2003			2002
Expected option life (in years)		4.50			4.55			4.50			4.55
Risk-free interest rate		2.55	%		3.83	%		2.70	%		3.83	%
Volatility		107	%		72	%		107	%		72	%
Dividend yield		—			—			—			—
Weighted average fair value	$	20.80		$	7.71		$	19.09		$	7.24

Equity instruments issued to non-employees for services are accounted for at fair value and are marked to market until service is complete.

2. CUSTOMER AGREEMENTS:

Ericsson and Sony Ericsson

In March 2003, we entered into separate worldwide license agreements with Telefonaktiebolaget LM Ericsson and Ericsson, Inc. (together, Ericsson) and Sony Ericsson Mobile Communications AB (Sony Ericsson) for sales of terminal units and infrastructure products compliant with 2G GSM/TDMA and 2.5G GSM/GPRS/TDMA standards. Concurrent with these agreements, we resolved a patent infringement lawsuit with Ericsson that was scheduled for trial in May 2003. We also were granted an option for a Reference Design License and Support Agreement for Ericsson’s GSM/GPRS/UMTS Technology Platform.

We are due to receive aggregate payments of approximately $34.3 million from Ericsson and Sony Ericsson related to sales of terminal and infrastructure products through December 31, 2002. These payments are due over four quarters, of which $7.8 million was received in second quarter 2003, an additional $7.8 million is due over the balance of 2003, and $18.6 million is due in 2004. Of the $34.3 million, we recognized $20.3 million, that portion of the payments related to Sony Ericsson, as revenue in first quarter 2003. We recognized the remaining $14.0 million, net of an estimated $3.4 million associated with a claim under an insurance reimbursement agreement, as other income in first quarter 2003, as this amount represents the settlement of our litigation with Ericsson. The $3.4 million represents a loss contingency and was accrued in accordance with Financial Interpretation (FIN) 14 Reasonable Estimation of the Amount of Loss, an interpretation of FASB Statement No. 5 Accounting for Contingencies.

Subsequent to filing our Form 10-Q for the quarter ended March 31, 2003, we were informed by our insurance provider that it believes, based on the expected value to the Company resulting from the Ericsson settlement, that the insurance reimbursement agreement requires us to reimburse it approximately $27.8 million for legal fees it claims were paid under the terms of the insurance reimbursement agreement. Neither party has requested any dispute resolution process and we strongly disagree with this initial position taken by our insurance provider.

For the period January 1, 2003 through December 31, 2006, Sony Ericsson is obligated to pay us a royalty on each licensed product sold. In return for advance royalty payments related to projected sales of covered products for discrete twenty-four month periods, Sony Ericsson will receive certain prepayment discounts and credits. In May 2003, we received approximately $21.0 million of the $26.2 million advance royalty payments for the first twenty-four month period. We received the remaining $5.2 million in July 2003. Once the initial prepayments are exhausted, Sony Ericsson will have the option to make additional advance royalty payments (net of related prepayment discounts and any applicable credits) or pay royalties on an ongoing basis at undiscounted base royalty rates. The advance royalty payments will be recorded as deferred revenue and recognized as revenue in the periods in which Sony Ericsson

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exhausts such prepayments through the sale of covered product. As of June 30, 2003, Sony Ericsson has exhausted approximately $6.2 million of their prepayment through sales of covered products.

Ericsson is obligated to pay us an annual license fee of $6.0 million per year for sales of covered infrastructure products for each of the years 2003 through 2006. The first payment of $6.0 million is due in February 2004 and the remaining payments are due in quarterly installments of $1.5 million beginning in May 2004. We are recognizing the related revenue on a straight-line basis from first quarter 2003 through fourth quarter 2006.

Nokia and Samsung

We believe the license agreements with Ericsson and Sony Ericsson establish the financial terms necessary to define the royalty obligations of Nokia Corporation (Nokia) and Samsung Electronics Co. Ltd. (Samsung) on sales of 2G GSM/TDMA and 2.5G GSM/GPRS/TDMA products under their existing patent license agreements with us. Under the most favored licensee (MFL) provisions applicable to their respective patent license agreements, we believe both companies are obligated to pay royalties to us on sales of covered products from January 1, 2002 by reference to the terms of the Ericsson (as for infrastructure products) and Sony Ericsson (as for terminal unit products) license agreements. The MFL provisions include terms for a period of review, negotiation, and dispute resolution with regard to the determination of the royalty obligations of both Nokia and Samsung.

In July 2003, Nokia requested binding arbitration regarding Nokia’s royalty payment obligations for its worldwide sales of 2G and 2.5G products under our existing patent license agreement. Pursuant to the dispute resolution provisions of the patent license agreement, Nokia’s request for arbitration was filed in the International Court of Arbitration of the International Chamber of Commerce.

Nokia’s arbitration request relates to our claim that the patent license agreements we signed with Ericsson and Sony Ericsson in March 2003 defined the financial terms under which Nokia would be required to pay royalties on its worldwide sale of 2G and 2.5G products commencing January 1, 2002. Nokia is seeking a determination that their obligation under our existing patent license agreement is not defined by our license agreements with Ericsson and Sony Ericsson. Alternatively, Nokia is seeking an order requiring access to various documents related to previous litigations, negotiations, and arbitrations with other parties. Pending access to the requested documents, Nokia is seeking to prevent the commencement of arbitration proceedings that would determine royalty amounts owed to us for the period starting January 1, 2002. As part of our response, we intend to file a counterclaim seeking a determination of and award for royalties owed to us by Nokia.

Separately, Nokia has filed an action in Federal Court to gain access to documents previously sealed by the Court related to the now-settled Ericsson litigation. We intend to oppose Nokia’s actions.

We have not and will not record revenue associated with the Nokia and Samsung license agreements related to sales of covered products during any period subsequent to January 1, 2002, until all elements required for revenue recognition are met.

3. INCOME TAXES:

As of June 30, 2003, we had NOL carryforwards of approximately $130 million for which no deferred tax asset has been recorded. We expect that we will continue to pay source withholding taxes to non-U.S. countries related to royalties, local and state income taxes, and alternative minimum taxes (AMT) when applicable. We do not expect to pay federal income tax (other than AMT) until these NOL’s are fully utilized.

At June 30, 2003 approximately $90 million of benefits associated with the exercise of non-qualified stock options are included in the net operating loss carryforward. However, these benefits have been deferred because the Company is in a net operating loss position. Such benefits will be credited to additional paid in capital in the year in which the benefits are realized.

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4. INCOME PER SHARE:

The following table sets forth a reconciliation of the shares used in the basic and diluted net income per share computations:

(In thousands, except per share data)

	Three Months Ended June 30, 2003						Three Months Ended June 30, 2002
	Income (Numerator)		Shares (Denominator)	Per-Share Amount			Loss (Numerator)		Shares (Denominator)	Per-Share Amount
Income (loss) per share-basic: Income (loss) available to Common Shareholders	$	3,125	55,895	$	0.06		$	2,444	54,358	$	0.04
Effect of dilutive options and Warrants		—	5,398		(0.01	)		—	3,177		—
Income (loss) per share-diluted: Income available to Common Shareholders + dilutive effects of options and warrants	$	3,125	61,293	$	0.05		$	2,444	57,535	$	0.04
	Six Months Ended June 30, 2003						Six Months Ended June 30, 2002
	Income (Numerator)		Shares (Denominator)	Per-Share Amount			Income (Numerator)		Shares (Denominator)	Per-Share Amount
Income (loss) per share-basic: Income (loss) available to Common Shareholders	$	29,818	55,253	$	0.54		$	2,460	54,163	$	0.05
Effect of dilutive options and Warrants		—	4,986		(0.05	)		—	3,044		(0.01	)
Income per share-diluted: Income available to Common Shareholders + dilutive effects of options and warrants	$	29,818	60,239	$	0.49		$	2,460	57,207	$	0.04

For the three and six months ended June 30, 2003, options and warrants to purchase approximately 0.9 million and 1.0 million shares of Common Stock, respectively, were excluded from the computation of diluted earnings per share because the exercise prices of the options and warrants were greater than the weighted average market price of our Common Stock during the periods and, therefore, their effect would have been anti-dilutive.

For the three and six months ended June 30, 2002, options and warrants to purchase approximately 3.2 million and 4.1 million shares of Common Stock, respectively, were excluded from the computation of diluted earnings per share because the exercise prices of the options and warrants were greater than the weighted average market price of our Common Stock during the periods and, therefore, their effect would have been anti-dilutive.

5. ACQUISITION:

On July 30, 2003, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Tantivy Communications, Inc. (Tantivy), pursuant to which we acquired substantially all the assets of Tantivy. Included in the acquisition are patents, patent applications, know-how, state-of-the art laboratory facilities, and other technologies related to CDMA2000, Smart Antenna, wireless LAN and other wireless

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communications technologies, including patents and patent applications to which we had previously acquired rights under a patent license agreement.

The purchase price for the acquisition was $11.5 million, consisting of approximately $10.0 million in cash and cancellation of approximately $1.5 million in outstanding indebtedness owed to us by Tantivy. In addition, for approximately five years, Tantivy will be entitled to receive 1% and 4%, respectively, of amounts we receive from the licensing or sale of Smart Antenna and 802.11 intellectual property acquired from Tantivy in the acquisition.

6. NEW ACCOUNTING PRONOUNCEMENT:

In November 2002, the Emerging Issues Task Force (EITF) issued EITF Issue No. 00-21, Accounting for Multiple-Element Revenue Arrangements. EITF 00-21 addresses the determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the related revenues should be measured and allocated to the separate units of accounting, i.e., the delivery or performance of multiple products, services, and/or rights to use assets. In applying this guidance, separate contracts with the same party, entered into at or near the same time, will be presumed to be a package, and the consideration will be measured and allocated to the separate units based on their relative fair values. EITF 00-21 will apply to revenue arrangements entered into after June 30, 2003. The Company will adopt this new accounting guidance effective July 1, 2003 and does not believe this issue will impact the Company’s financial position, results of operations or cash flows.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto contained elsewhere in this document, in addition to InterDigital Communications Corporation’s (collectively with its subsidiaries referred to as InterDigital, the Company, we, us and our) Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (Form 10-K) as filed with the Securities and Exchange Commission (SEC) on March 31, 2003, other reports filed with the SEC and the “Statement Pursuant to the Private Securities Reform Act of 1995” below. Please refer to the Glossary of Terms located after the Table of Contents for a list and detailed description of the various technical, industry and other defined terms that are used in this Form 10-Q.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our significant accounting policies are described in Note 1 of the Notes to Consolidated Financial Statements included in our Form 10-K, and a discussion of our critical accounting policies, and the related estimates, are included in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K. There have been no material changes in our existing accounting policies or, except as noted below, estimates from the disclosure included in our Form 10-K.

Our insurance provider has claimed, based on the expected value to the Company resulting from our settlement with Ericsson, an insurance reimbursement agreement requires us to reimburse it approximately $27.8 million for legal fees it claims were paid under the terms of the insurance reimbursement agreement. Neither party has requested any dispute resolution process and we strongly disagree with this initial position taken by our insurance provider.

We have accrued an estimated $3.4 million associated with this claim in accordance with Financial Interpretation (FIN) 14 Reasonable Estimation of the Amount of Loss, an interpretation of FASB Statement No. 5 Accounting for Contingencies. The amount of reimbursement to be paid, if any, could be affected by the outcome of any negotiations or legal proceedings with our insurance provider.

NEW ACCOUNTING PRONOUNCEMENT

In November 2002, the Emerging Issues Task Force (EITF) issued EITF Issue No. 00-21, Accounting for Multiple-Element Revenue Arrangements. EITF 00-21 addresses the determination of whether an arrangement involving more than one deliverable contains more than one unit of accounting and how the related revenues should be measured and allocated to the separate units of accounting, i.e., the delivery or performance of multiple products, services, and/or rights to use assets. In applying this guidance, separate contracts with the same party, entered into at or near the same time, will be presumed to be a package, and the consideration will be measured and allocated to the separate units based on their relative fair values. EITF 00-21 will apply to revenue arrangements entered into after June 30, 2003. The Company will adopt this new accounting guidance effective July 1, 2003 and does not believe this issue will impact the Company’s financial position, results of operations or cash flows.

SIGNIFICANT TRANSACTIONS / MATTERS

Nokia and Samsung

We believe the license agreements with Ericsson and Sony Ericsson establish the financial terms necessary to define the royalty obligations of Nokia Corporation (Nokia) and Samsung Electronics Co. Ltd. (Samsung) on sales of 2G GSM/TDMA and 2.5G GSM/GPRS/TDMA products under their existing patent license agreements with us. Under the most favored licensee (MFL) provisions applicable to their respective patent license agreements, we believe both companies are obligated to pay royalties to us on sales of covered products from January 1, 2002 by reference to the terms of the Ericsson (as for infrastructure products) and Sony Ericsson (as for terminal unit products) license agreements. The MFL provisions include terms for a period of review, negotiation, and dispute resolution with regard to the determination of the royalty obligations of both Nokia and Samsung.

In July 2003, Nokia requested binding arbitration regarding Nokia’s royalty payment obligations for its worldwide sales of 2G and 2.5G products under our existing patent license agreement. Pursuant to the dispute resolution provisions of the patent license agreement, Nokia’s request for arbitration was filed in the International Court of Arbitration of the International Chamber of Commerce.

Nokia’s arbitration request relates to our claim that the patent license agreements we signed with Ericsson and Sony Ericsson in March 2003 defined the financial terms under which Nokia would be required to pay royalties on its worldwide sale of 2G and 2.5G products commencing January 1, 2002. Nokia is seeking a determination that their

9

obligation under our existing patent license agreement is not defined by our license agreements with Ericsson and Sony Ericsson. Alternatively, Nokia is seeking an order requiring access to various documents related to previous litigations, negotiations, and arbitrations with other parties. Pending access to the requested documents, Nokia is seeking to prevent the commencement of arbitration proceedings that would determine royalty amounts owed to us for the period starting January 1, 2002. As part of our response, we intend to file a counterclaim seeking a determination of and award for royalties owed to us by Nokia.

Separately, Nokia has filed an action in Federal Court to gain access to documents previously sealed by the Court related to the now-settled Ericsson litigation. We intend to oppose Nokia’s actions.

We have not and will not record revenue associated with the Nokia and Samsung license agreements related to sales of covered products during any period subsequent to January 1, 2002, until all elements required for revenue recognition are met.

Acquisition

On July 30, 2003, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Tantivy Communications, Inc. (Tantivy), pursuant to which we acquired substantially all the assets of Tantivy. Included in the acquisition are patents, patent applications, know-how, state-of-the art laboratory facilities, and other technologies related to CDMA2000, Smart Antenna, wireless LAN and other wireless communications technologies, including patents and patent applications to which we had previously acquired rights under a patent license agreement.

The purchase price for the acquisition was $11.5 million, consisting of approximately $10.0 million in cash and cancellation of approximately $1.5 million in outstanding indebtedness owed to us by Tantivy. In addition, for approximately five years, Tantivy will be entitled to receive a percentage of amounts received by InterDigital on the licensing or sale of Smart Antenna and 802.11 intellectual property acquired from Tantivy in the acquisition.

In connection with our acquisition of substantially all the assets of Tantivy we opened an engineering design center in Melbourne, Florida and hired 10 individuals that were formerly employed by Tantivy. We do not expect that the addition of the Melbourne design center will have a significant impact on our operating expenses or capital expenditures for the foreseeable future.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL REQUIREMENTS

We generated positive cash flow from operating activities of $30.5 million in first half 2003 compared to $9.8 million in first half of 2002. The increase in cash flow from operating activities in first half 2003 over first half 2002, was primarily due to cash receipts associated with our above-noted license agreements with Ericsson and Sony Ericsson. The positive operating cash flow in first half 2003 arose principally from net receipts of approximately $68.0 million from patent licensing agreements. This included approximately $29.0 million from Ericsson and Sony Ericsson, $26.4 million from NEC Corporation of Japan (NEC) associated with our 2G and 3G license agreements and $12.6 million from Sharp and other licensees related to previously recorded receivables from their respective patent license agreements. These receipts were partially offset by cash operating expenses of $35.5 million and other working capital changes during first half 2003. The positive operating cash flow in first half 2002 arose principally from net receipts from licensing arrangements of $45.4 million, including $29.5 million from NEC associated with our 2G and 3G agreements, $8.2 million from Nokia relating to our WTDD technology development work and $7.7 million from Sharp and other licensees related to previously recorded receivables from their respective patent license agreements. These receipts were partially offset by cash operating expenses of $34.5 million and other working capital changes during first half 2002. The slight increase in our cash operating expenses between first half 2003 and first half 2002 is primarily attributable to higher directors’ and officers’ liability insurance costs offset by a 5% reduction in headcount between June 30, 2003 and June 30, 2002.

Net cash used for investing activities in first half 2003 was $28.5 million compared to $17.3 million in first half 2002. We purchased $22.5 million of short-term marketable securities, net of sales, in first half 2003 compared to

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$12.1 million in first half 2002. The increase resulted from the higher level of cash receipts from patent licensing in 2003. The pace of investments in hardware and software during first half 2003 decreased $2.3 million to $1.4 million compared to first half 2002 due to the timing of various development activities. Investment costs associated with patents increased $2.0 million to $3.4 million in first half 2003 compared to first half 2002, reflecting higher 3G patenting activity levels during the period. We expect patent cost investments to remain at or near first half 2003 levels and other investments in hardware and software to increase somewhat in second half 2003. During second quarter 2003, we loaned $1.3 million to Tantivy and prior to the acquisition of Tantivy’s assets in third quarter 2003, we loaned an additional $0.2 million. As noted above, this indebtedness was offset against our payment of the purchase price.

Net cash provided by financing activities in first half 2003 increased $13.1 million to $16.1 million compared to first half 2002. The increase in 2003 primarily resulted from net proceeds related to option and warrant exercises and the Company’s employee stock purchase plan ($16.3 million in first half 2003 compared to $3.3 million in first half 2002). Our Board of Directors recently approved the repurchase of up to two million shares of our outstanding Common Stock. The amount and timing of purchases will impact our working capital and will be based on a variety of factors, including potential stock acquisition price, cash requirements and other market and economic factors.

As of June 30, 2003, we had $127.9 million of cash, cash equivalents and short-term investments, compared to $87.6 million as of December 31, 2002. Our working capital (excluding cash, cash equivalents, short-term investments, current maturities of debt and current deferred revenue) increased to $74.4 million at June 30, 2003 from $41.6 million at December 31, 2002. The increase in working capital during first half 2003 was primarily due to the recognition of approximately $39.2 million of receivables, net of collections, during first half 2003, associated with our respective license agreements with Ericsson and Sony Ericsson.

We are capable of supporting our operating requirements for the near future through cash and short-term investments on hand, as well as other internally generated funds, primarily from 2G and 3G patent licensing royalties. At present, we do not anticipate the need to seek any additional financing through either bank facilities or the sale of debt or equity securities.

As of June 30, 2003, we had net operating loss (NOL) carryforwards of approximately $130 million for which no deferred tax asset has been recorded. We expect that we will continue to pay source withholding taxes to non-U.S. countries related to royalties, local and state income taxes, and alternative minimum taxes (AMT) when applicable. We do not expect to pay federal income tax (other than AMT) until these NOL’s are fully utilized.

At June 30, 2003 approximately $90 million of benefits associated with the exercise of non-qualified stock options are included in the net operating loss carryforward. However, these benefits have been deferred because the Company is in a net operating loss position. Such benefits will be credited to additional paid in capital in the year in which the benefits are realized.

Property and equipment are currently being utilized in our on-going business activities, and we believe that no write-downs are required at this time due to lack of use or technological obsolescence. With respect to patent assets, we believe that the fair value of our patents is at least equal to the carrying value included in the June 30, 2003 balance sheet.

RESULTS OF OPERATIONS

Second Quarter 2003 Compared to Second Quarter 2002

Revenues

Revenues in second quarter 2003 increased 3% to $25.8 million from $25.1 million in second quarter 2002. Recurring royalty revenue increased 54% to $25.6 million in second quarter 2003 from $16.6 million in second quarter 2002, aided by royalties of $4.8 million related to 2003 patent license agreements with Ericsson and Sony Ericsson and $2.3 million of royalties from first quarter sales of 3G products by NEC that were recorded in the second quarter upon receiving an update from NEC on their previously provided first quarter royalty report. Second quarter 2002 revenue included the recognition of $6.9 million of deferred royalty revenue (related to a non-refundable prepayment) associated with the discontinuation of sales of covered products by Kyocera and $1.6 million of specialized engineering services revenue related to our WTDD technology development work for Nokia.

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No revenue was recognized for specialized engineering services associated with the final stages of our WTDD technology development work for Nokia in second quarter 2003; $3.6 million was recognized related to these services in the comparable period of 2002. The final $1.0 million payment associated with the Nokia development agreement will be withheld until final delivery of the remaining technology required under the agreement has been made. We currently expect final delivery to occur in second half 2003 and will defer recognition of the final $1.0 million of specialized engineering services revenue associated with the agreement until that time.

Operating Expenses

Development expenses in second quarter 2003 decreased 3% to $11.4 million from $11.8 million in second quarter 2002 primarily due to lower compensation related costs.

Sales and marketing expenses in second quarter 2003 decreased 27% to $0.9 million from $1.3 million in second quarter 2002 mainly as a result of approximately equal reductions in stock-based compensation and trade show costs.

General and administrative expenses in second quarter 2003 increased 14% to $4.6 million from $4.1 million in second quarter 2002 due largely to higher directors’ and officers’ liability insurance costs.

Patents administration and licensing expenses increased 14% to $3.9 million in second quarter 2003 from $3.5 million in second quarter 2002 due primarily to an increase in commission expense related to higher patent licensing royalty revenue.

Other Income, Interest Income and Interest Expense

Interest income of $0.5 million in second quarter 2003 decreased 8% from $0.6 million in second quarter 2002 due primarily to lower yields available in 2003 as compared to 2002.

Income Taxes

The income tax provision in both first quarter 2003 and 2002 consisted primarily of withholding taxes associated with patent licensing royalties, principally from Japan. Our tax expense decreased $0.4 million in second quarter 2003 to $2.2 million from $2.6 million in second quarter 2002, due in part to the level of royalty revenue not subject to non-US withholding tax.

First Half 2003 Compared to First Half 2002

Revenues

Revenues in first half 2003 increased 37% to $63.1 million from $46.1 million in first half 2002. The increase was due largely to the recognition of $29.4 million of royalties associated with new patent license agreements with Ericsson and Sony Ericsson. Included in the $29.4 million was $20.3 million of royalties from Sony Ericsson related to pre-2003 terminal sales. We also recognized current royalties in first half 2003 from Sony Ericsson and Ericsson of $6.2 million and $3.0 million, respectively. In first half 2002, we recognized approximately $6.9 million of deferred royalty revenue (related to a non-refundable prepayment) associated with the discontinuation of covered products by Kyocera, $7.9 million of royalty revenue associated with NEC’s pre-2002 3G sales and $11.8 million of current 2G and 3G royalties. During first half 2003, our current royalties from NEC increased $3.5 million over first half 2002.

No revenue was recognized for specialized engineering services associated with the final stages of our WTDD technology development work for Nokia in first half 2003; $3.6 million was recognized related to these services in the comparable period of 2002. The final $1.0 million payment associated with the Nokia development agreement will be withheld until final delivery of the remaining technology required under the agreement has been made. We currently expect final delivery to occur in second half 2003 and will defer recognition of the final $1.0 million of specialized engineering services revenue associated with the agreement until that time.

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Operating Expenses

Development expenses in first half 2003 decreased 4% to $22.8 million from $23.6 million in first half 2002. The decrease was primarily due to lower compensation related costs.

Sales and marketing expenses of $2.1 million in first half 2003 decreased 10% from $2.4 million in first half 2002 due mainly to a reduction in stock-based compensation costs.

General and administrative expenses in first half 2003 increased 13% to $8.7 million from $7.8 million in first half 2002 due largely to higher directors’ and officers’ liability insurance costs.

Patents administration and licensing expenses increased 12% to $7.1 million in first half 2003 from $6.3 million in first half 2002 due primarily to approximately equal increases in patent amortization, resulting from an increase in the number of patents and related prosecution costs, and commission expense related to higher patent licensing royalty revenue.

Other Income, Interest Income and Interest Expense

We recognized $10.6 million as other income in first half 2003 related to the settlement of our litigation with Ericsson.

Interest income of $1.0 million in first half 2003 decreased 14% from $1.2 million in first half 2002 primarily due to lower yields available in 2003 as compared to 2002.

Income Taxes

The income tax provision in both first quarter 2003 and 2002 consisted primarily of withholding taxes associated with patent licensing royalties, principally from Japan. Our tax expense decreased $0.6 million in first half 2003 to $3.9 million from $4.5 million in first half 2002, due in part to the level of royalty revenue not subject to non-US withholding tax.

Expected Trends

We expect our third quarter 2003 revenues to be largely dependent on royalties from the same licensee base as the previous two quarters. We also expect to expand our licensee base with new agreements over the next twelve months. However, our level of success and the timing of any such agreements are difficult to predict at present. Any successful resolution of our issues with Nokia and Samsung under their existing license agreements could have a material and favorable impact on our revenues and cash flows. We intend to complete the WTDD technology development program as planned, but will delay investment in field trial demonstration products until 3G market demands warrant such investment. Also, we will continue to direct the majority of our development efforts toward programs aligned with projected opportunities arising from the emergence and timing of very fluid 2.5G and 3G wireless markets. We anticipate that our operating expenses and capital expenditures in second half 2003 will increase slightly as we examine and invest in growth and expansion opportunities and other strategic corporate initiatives.

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STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The foregoing Management’s Discussion and Analysis contains forward-looking statements reflecting, among other things, the Company’s beliefs and expectations as to (i) revenues, operating expenses, and capital expenditures, and the timing thereof, (ii) our near term operating requirements and lack of need to seek additional financing, (iii) expanding our licensee base and the timing thereof, (iv) the timing of the final delivery of technology and the final payment under the Nokia development agreement; (v) the impact of the license agreements with Ericsson and Sony Ericsson on defining the royalty obligations of Nokia and Samsung under their existing patent agreements with us; (vi) the amount of reimbursement due our insurance provider relating to the Ericsson settlement, and (vii) the completion of the TDD development program and our investment in field trials related thereto. Words such as “expect”, “will”, “believe”, “seeking” or similar expressions are intended to identify such forward-looking statements.

Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by the Company. Consequently, forward-looking statements are inherently subject to risks and uncertainties. We caution readers that actual results and outcomes could differ materially from those expressed in or anticipated by such forward-looking statements. You should not place undue reliance on these forward-looking statements, which are only as of the date of this Form 10-Q. Each of the following factors as well as other information in this Form 10-Q should be considered in evaluating our business and prospects. For example, our revenues are dependent on (i) the market share and performance of our licensees in selling their products, (ii) whether we are able to expand our customer, partner and licensing relationships, (iii) whether new licensees or existing licensees make past payments for royalties due, (iv) the timing of the completion of the Nokia technology development project and associated revenue recognition which could be affected by difficulties or delays in our development efforts and compliance of the deliverables under such project, and relationship issues (v) difficulties or delays in our other development efforts, and (vi) whether we are successful in patent enforcement and prosecution activities. Additionally, Nokia’s and Samsung’s royalty obligations may be affected by (i) resolution of the Samsung matter and of the Nokia arbitration as to the applicability of the terms of the Ericsson and Sony Ericsson licensing agreements to the royalty obligations of Nokia and Samsung under each of their licensing agreements, (ii) the actual process, decisions, and results from the Nokia arbitration process; (iii) any future legal proceedings that could adversely affect the royalty obligations or payments under Nokia license agreement, and (iv) licensee sales and the economy and sales trends in the wireless market.

Our expectations as to operating expenses and requirements, and as to our capital expenditures, are based on (i) our level of continued self funding (which in turn may be affected by our ability to enter into or expand strategic relationships), (ii) our expectations as to future development and expansion efforts (iii) our ability to continually improve operational efficiencies and effectiveness on an organizational level, (iv) the accuracy of our estimate to complete the Nokia technology development project, as well as (v) those expectations identified in our most recent financial forecast, which could be revised based on new business or significant cash inflows not presently included in the most recent financial forecast.

In addition, the amount of reimbursement due our insurance provider, if any, could be affected by the outcome of any future negotiations or legal proceedings with such insurance provider. Our expectations as to future development efforts and field trials may be affected by (i) market shifts and timing, (ii) our ability to enter into arrangements with third parties, and (iii) difficulties or delays in our development or productization efforts.

Our failure to generate sufficient cash flows over the long term, based on the factors listed above and those set forth in our Annual Report on Form 10-K for the year ended December 31, 2002, and our Form 10-Q for the quarter ended March 31, 2003, could adversely impact operating requirements and our current lack of need to seek additional financing. Our cash flow may be affected by a delay in the anticipated receipt of payments from our licensees, including payments from Ericsson, Sony Ericsson, Sharp, and NEC. While the Company believes that the Ericsson and Sony Ericsson license agreements establish the financial terms necessary to define the royalty obligations of Nokia and Samsung under their respective patent license agreements, any dispute (including arbitration), and the length and resolution of any dispute relating thereto, could affect the timing and amount of anticipated cash and revenue related to such patent license agreements.

Factors affecting one forward-looking statement may affect other forward-looking statements. We undertake no duty to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

There have been no material changes in quantitative and qualitative market risk from the disclosure included in our Annual Report on Form 10-K for the year ended December 31, 2002.

Item 4. CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and its Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this quarterly report, have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in rules and forms of the Securities and Exchange Commission.

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PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

Nokia

As previously reported in our Form 8-K dated July 22, 2003 Nokia Corporation (Nokia) requested binding arbitration regarding Nokia's royalty payment obligations for its worldwide sales of 2G and 2.5G products under our the existing patent license agreement. Pursuant to the dispute resolution provisions of the patent license agreement, Nokia’s request for arbitration was filed in the International Court of Arbitration of the International Chamber of Commerce.

Nokia’s arbitration request relates to our claim that the patent license agreements we signed with Ericsson and Sony Ericsson in March 2003 defined the financial terms under which Nokia would be required to pay royalties on its worldwide sale of 2G and 2.5G products commencing January 1, 2002. Nokia is seeking a determination that their obligation under our existing patent license agreement is not defined by our license agreements with Ericsson and Sony Ericsson. Alternatively, Nokia is seeking an order requiring access to various documents related to previous litigations, negotiations, and arbitrations with other parties. Pending access to the requested documents, Nokia is seeking to prevent the commencement of arbitration proceedings that would determine royalty amounts owed to us for the period starting January 1, 2002. As part of our response, we intend to file a counterclaim seeking a determination of and award for royalties owed to us by Nokia.

Separately, Nokia has filed an action in Federal Court to gain access to documents previously sealed by the Court related to the now-settled Ericsson litigation. We intend to oppose Nokia’s actions.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At our Annual Meeting of Shareholders (the “Meeting”) held on June 4, 2003, our Shareholders elected Messrs. D. Ridgely Bolgiano and Howard E. Goldberg as directors of the Company, and ratified the appointment of PricewaterhouseCoopers LLP as the Company’s independent accountants for the year ending December 31, 2003. Our Shareholders elected Mr. Bolgiano as a director by a vote of 48,347,255 shares in favor and 3,064,442 shares withheld. Our Shareholders elected Mr. Goldberg as a director by a vote of 48,411,134 shares in favor and 3,000,563 shares withheld. Messrs. Harry G. Campagna, Steven T. Clontz, Joseph S. Colson, Jr., and Robert S. Roath also continue to serve their terms as directors. The vote ratifying the appointment of PricewaterhouseCoopers LLP was 49,653,287 shares in favor, 1,356,099 shares against, and 402,311 shares abstaining. Our Shareholders did not approve an amendment to the Company’s 2000 Stock Award and Incentive Plan to increase the amount of shares authorized for issuance by a vote of 8,678,242 shares in favor, 20,419,145 shares against, and 366,273 shares abstaining. There were no broker non-votes with respect to any matters voted on at this Meeting.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)The following is a list of Exhibits filed as part of this Quarterly Report on Form 10-Q:

Exhibits*
10.59	Indemnity Agreement dated as of May 5, 2003 by and between the Company and Richard J. Brezski.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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32.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Howard E. Goldberg.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Richard J. Fagan.

(b)The following is a list of Current Reports filed on Form 8-K during second quarter 2003:

We filed a Current Report on Form 8-K dated May 13, 2003 under Item 7 – Financial Statements, Pro Forma Financial Information and Exhibits, and Item 9 – Information Furnished Under Item 12 (Results of Operations and Financial Condition) relating to the Company’s issuance of a press release announcing its results of operations and financial condition for the quarter ended March 31, 2003.

We filed a Current Report on Form 8-K dated June 4, 2003 under Item 5 – Other Events, relating to the Company’s announcement that on May 30, 2003, the Company’s wholly–owned subsidiary, InterDigital Technology Corporation, had extended by amendment its patent license agreement with Sharp Corporation.

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SIGNATURES

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 thereunto duly authorized.

INTERDIGITAL COMMUNICATIONS CORPORATION

Date: August 14, 2003	/s/ HOWARD E. GOLDBERG
	Howard E. Goldberg President and Chief Executive Officer

Date: August 14, 2003	/s/ R. J. FAGAN
	Richard J. Fagan Executive Vice President and Chief Financial Officer

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EX-10.59

                                                                   Exhibit 10.59

                               INDEMNITY AGREEMENT

          This Indemnity Agreement, dated as of May 5, 2003, is made by and
between InterDigital Communications Corporation, a Pennsylvania corporation (the
"Company"), and RICHARD J. BREZSKI (the "Indemnitee").

                                    RECITALS

     1.   The Company is aware that competent and experienced persons are
increasingly reluctant to serve as directors, officers or agents of corporations
unless they are protected by comprehensive liability insurance and
indemnification, due to increased exposure to litigation costs and risks
resulting from their service to such corporations, and due to the fact that the
exposure frequently bears no reasonable relationship to the compensation of such
directors, officers and other agents.

     2.   The statutes and judicial decisions regarding the duties of directors
and officers are often difficult to apply, ambiguous, or conflicting, and
therefore fail to provide such directors, officers and agents with adequate,
reliable knowledge of legal risks to which they are exposed or information
regarding the proper course of action to take.

     3.   Plaintiffs often seek damages in such large amounts and the costs of
litigation may be so enormous (whether or not the case is meritorious), that the
defense and/or settlement of such litigation is often beyond the personal
resources of directors, officers and other agents.

     4.   The Company believes that it is unfair for its directors, officers and
agents and the directors, officers and agents of its subsidiaries to assume the
risk of huge judgments and other expenses which may occur in cases in which the
director, officer or agent received no personal profit and in cases where the
director, officer or agent was not culpable.

     5.   The Company recognizes that the issues in controversy in litigation
against a director, officer or agent of a corporation such as the Company or its
subsidiaries are often related to the knowledge, motives and intent of such
director, officer or agent, that he is usually the only witness with knowledge
of the essential facts and exculpating circumstances regarding such matters, and
that the long period of time which usually elapses before the trial or other
disposition of such litigation often extends beyond the time that the director,
officer or agent can reasonably recall such matters; and may extend beyond the
normal time for retirement for such director, officer or agent with the result
that he, after retirement or in the event of his death, his spouse, heirs,
executors or administrators, may be faced with limited ability and undue
hardship in maintaining an adequate defense, which may discourage such a
director, officer or agent from serving in that position.

     6.   Based upon their experience as business managers, the Board of
Directors of the Company (the "Board") has concluded that, to retain and attract
talented and experienced individuals to serve as directors, officers and agents
of the Company and its subsidiaries and to encourage such individuals to make
the business decisions necessary for the success of the Company and its
subsidiaries, it is necessary for the Company to contractually indemnify its
directors, officers and agents and the directors, officers and agents of its
subsidiaries, and to

___________Initials                                         Initials____________



assume for itself maximum liability for expenses and damages in connection with
claims against such directors, officers and agents in connection with their
service to the Company and its subsidiaries, and has further concluded that the
failure to provide such contractual indemnification could result in great harm
to the Company and its subsidiaries and the Company's shareholders.

     7.   Section 1746 ("Section 1746") of the Pennsylvania Business Corporation
Law (the "PABCL"), under which the Company is organized, permits the Company to
indemnify its representatives (such as directors, officers, employees and
agents) by agreement and to indemnify persons who serve, at the request of the
Company, as the representatives of other corporations or enterprises, and
expressly provides that the indemnification provided by the PABCL is not
exclusive.

     8.   The Company desires and has requested the Indemnitee to serve or
continue to serve as a director, officer or agent of the Company and/or one or
more subsidiaries of the Company free from undue concern for claims for damages
arising out of or related to such services to the Company and/or one or more
subsidiaries of the Company.

     9.   Indemnitee is willing to serve, or to continue to serve, the Company
and/or one or more subsidiaries of the Company, provided that he is furnished
the indemnity provided for herein.

                                    AGREEMENT

          NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

          1.   Definitions.
               -----------

               a.   For the purposes of this Agreement, "agent" of the Company
means any person who is or was a director, officer, employee or other
representative of the Company or a subsidiary of the Company; or is or was
serving at the request of, for the convenience of, or to represent the interests
of the Company or a subsidiary of the Company as a director, officer, employee
or representative of another foreign or domestic corporation, partnership, joint
venture, trust or other enterprise; or was a director, officer, employee or
representative of a foreign or domestic corporation which was a predecessor
corporation of the Company or a subsidiary of the Company, or was a director,
officer, employee or representative of another enterprise at the request of, for
the convenience of, or to represent the interests of such predecessor
corporation.

               b.   For the purposes of this Agreement, "expenses" include all
out-of-pocket costs of any type or nature whatsoever (including, without
limitation, all attorneys' fees and related disbursements, punitive and other
damages, judgments, fines, penalties, excise taxes assessed with respect to an
employee benefit plan, and amounts paid or to be paid in settlement), actually
and reasonably incurred by the Indemnitee in connection with either the
investigation, defense or appeal of a proceeding or establishing or enforcing a
right to indemnification under this Agreement or PABCL or otherwise.

___________Initials                                         Initials____________



               c.   For the purposes of this Agreement, "proceeding" means any
threatened, pending, or completed action, suit or other proceeding, whether
civil, criminal, arbitrational, administrative, or investigative.

               d.   For the purposes of this Agreement, "subsidiary" means any
corporation of which more than 10% of the outstanding voting securities is owned
directly or indirectly by the Company, by the Company and one or more of its
other subsidiaries, or by one or more of its other subsidiaries.

          2.   Agreement to Serve. The Indemnitee agrees to serve and/or
               ------------------
continue to serve as agent of the Company, at its will (or under separate
agreement, if such agreement exists), in the capacity Indemnitee currently
serves as an agent of the Company, so long as he is duly appointed or elected
and qualified in accordance with the applicable provisions of the Bylaws of the
Company or any subsidiary of the Company or until such time as he tenders his
resignation in writing; provided, however, that nothing contained in this
Agreement is intended to create any right to continued employment by Indemnitee.

          3.   Liability Insurance.
               -------------------

               a.   The Company hereby covenants and agrees that, so long as the
Indemnitee continues to serve as an agent of the Company and thereafter so long
as the Indemnitee could be subject to any possible proceeding by reason of the
fact that the Indemnitee was an agent of the Company, the Company, subject to
Section 3(c), shall promptly obtain and maintain in full force and effect
directors' and officers' liability insurance ("D&O Insurance") in reasonable
amounts from established and reputable insurers.

               b.   In all policies of D&O Insurance, the Indemnitee shall be
named as an insured in such a manner as to provide the Indemnitee the same
rights and benefits as are accorded to the most favorably insured of the
Company's directors, if the Indemnitee is a director; or of the Company's
officers, if the Indemnitee is not a director of the Company but is an officer;
or of the Company's employees, if the Indemnitee is not a director or officer
but is an employee.

               c.   Notwithstanding the foregoing, the Company shall have no
obligation to obtain or maintain D&O Insurance if the Company determines in good
faith that such insurance is not reasonably available, the premium costs for
such insurance are disproportionate to the amount of coverage provided, the
coverage provided by such insurance is limited by exclusions so as to provide an
insufficient benefit, or the Indemnitee is covered by similar insurance
maintained by a subsidiary of the Company.

          4.   Mandatory Indemnification. Subject to Section 8 below, the
               -------------------------
Company shall indemnify the Indemnitee as follows:

               a.   To the extent the Indemnitee has been successful on the
merits or otherwise in defense of any proceeding (including, without limitation,
an action by or in the right of the Company) to which the Indemnitee was a party
by reason of the fact that he is or was an agent of the Company, or by reason of
anything done or not done by him in any such capacity, at any time in the past,
present or future, against all expenses relating to such proceeding;

___________Initials                                         Initials____________



               b.   If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding (other than an action by or in
the right of the Company) by reason of the fact that he is or was an agent of
the Company, or by reason of anything done or not done by him in any such
capacity, at any time in the past, present or future, the Company shall
indemnify the Indemnitee against any and all expenses and liabilities of any
type whatsoever relating to such proceeding, provided the Indemnitee acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful;

               c.   If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding by or in the right of the
Company by reason of the fact that he is or was an agent of the Company, or by
reason of anything done or not done by him in any such capacity, at any time in
the past, present or future, the Company shall indemnify the Indemnitee against
all expenses and liabilities related to such proceeding, provided the Indemnitee
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company; except that no indemnification
under this subsection 4(c) shall be made in respect to any claim, issue or
matter as to which such person shall have been finally adjudged to be liable to
the Company by a court of competent jurisdiction unless and only to the extent
that the court in which such proceeding was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such amounts which the court shall deem proper; and

               d.   If the Indemnitee is a person who was or is a party or is
threatened to be made a party to any proceeding by reason of the fact that he is
or was an agent of the Company, or by reason of anything done or not done by him
in any such capacity, at any time in the past, present or future, and if prior
to, during the pendency or after completion of such proceeding Indemnitee
becomes deceased, the Company shall indemnify the Indemnitee's heirs, executors
and administrators against any and all expenses and liabilities of any type
whatsoever actually and reasonably incurred to the extent Indemnitee would have
been entitled to indemnification pursuant to Sections 4(a), 4(b), or 4(c) above
were Indemnitee still alive.

               For purposes of this Section 4, the Indemnitee shall be deemed to
have acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company so long as the act or failure to
act of said Indemnitee is not finally adjudged by a court or other body of
competent jurisdiction to have constituted willful misconduct or recklessness.
For purposes of the preceding sentence, a finding by a court or other body of
competent jurisdiction that an act or failure to act of the Indemnitee or some
other agent of the Company constitutes "misconduct" or words of like import
shall not, of itself, create a presumption that the Indemnitee has engaged in
willful misconduct or recklessness under this Agreement, the Company's Articles
of Incorporation, the Company's bylaws or under the PABCL.

               For purposes of this Section 4, the termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a presumption
that the Indemnitee did not act in good faith and in a manner that he reasonably
believed to be in or not opposed to the best interests of the

___________Initials                                         Initials____________



Company, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.

               Notwithstanding the foregoing, the Company shall not be obligated
to indemnify the Indemnitee for expenses or liabilities of any type whatsoever
for which payment is actually made to or on behalf of Indemnitee and not
subsequently contested or returned under a valid and collectible insurance
policy of D&O Insurance, or a valid and enforceable indemnity clause, bylaw or
agreement.

          5.   Partial Indemnification. If the Indemnitee is entitled under any
               -----------------------
provision of this Agreement to indemnification by the Company for some or a
portion of any expenses or liabilities of any type whatsoever incurred by him
related to a proceeding, but not entitled, however, to indemnification for the
total amount of such expenses and liabilities, the Company shall nevertheless
indemnify the Indemnitee for such total amount except as to the portion to which
the Indemnitee is not entitled.

          6.   Mandatory Advancement of Expenses. Subject to Section 8(a) below,
               ---------------------------------
the Company shall advance all expenses incurred by the Indemnitee in connection
with the investigation, defense, settlement or appeal of any proceeding to which
the Indemnitee is a party or is threatened to be made a party by reason of the
fact that the Indemnitee is or was an agent of the Company, or by reason of
anything done or not done by him in any such capacity, at any time in the past,
present or future. Indemnitee hereby undertakes to repay such amounts advanced
only if, and to the extent that, it shall be determined ultimately that the
Indemnitee is not entitled to be indemnified by the Company as authorized
hereby. The advances to be made hereunder shall be paid by the Company to the
Indemnitee within twenty (20) days following delivery of a written request
therefor by the Indemnitee to the Company, accompanied by evidence in reasonable
detail of the expenses that the Indemnitee has incurred.

          7.   Notice and Other Indemnification Procedures.
               -------------------------------------------

               a.   Promptly after receipt by the Indemnitee of notice of the
commencement of or the threat of commencement of any proceeding, the Indemnitee
shall, if the Indemnitee believes that indemnification with respect thereto may
be sought from the Company under this Agreement, notify the Company of the
commencement or threat of commencement of any proceeding.

               b.   If, at the time of the receipt of a notice of the
commencement of a proceeding pursuant to Section 7(a) hereof, the Company has
D&O insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of the Indemnitee, all amounts payable as a result of such proceeding in
accordance with the terms of such policies.

               c.   In the event the Company shall be obligated to pay the
expenses of any proceeding against the Indemnitee, the Company, if appropriate,
shall be entitled to assume the defense of such proceeding, with counsel
approved by the Indemnitee (such approval not to be unreasonably withheld), upon
the delivery to the Indemnitee of written notice of its election so to do. After
delivery of such notice, approval of such counsel by the Indemnitee and the

___________Initials                                         Initials____________



retention of such counsel by the Company, the Company will not be liable to the
Indemnitee under this Agreement for any fees of counsel subsequently incurred by
the Indemnitee with respect to the same proceeding but the Indemnitee shall have
the right to employ his own counsel in any such proceeding at the Indemnitee's
expense. If the Company has assumed the defense of any proceeding and the
Indemnitee reasonably concludes at any time thereafter that there might be a
conflict of interest between the Company and the Indemnitee in the conduct of
any such defense, or if the Company shall not, in fact, have continuously
employed counsel to assume the defense of such proceeding, then the Indemnitee
shall have the right to retain his own counsel and the fees and expenses of
Indemnitee's counsel shall be at the expense of the Company.

          8.   Exceptions. Any other provision herein to the contrary
               ----------
notwithstanding, the Company shall not be obligated pursuant to the terms of
this Agreement:

               a.   To indemnify or advance expenses to the Indemnitee with
respect to proceedings or claims initiated or brought voluntarily by the
Indemnitee and not by way of defense, unless (i) such indemnification or
advancement is expressly required to be made by law, (ii) the proceeding was
authorized by the Board, (iii) such indemnification or advancement is provided
by the Company, in its sole discretion, pursuant to the powers vested in the
Company under the PABCL or (iv) the proceeding is brought to establish or
enforce a right to indemnification or advancement under this Agreement or any
other statute or law or otherwise as required under the PABCL;

               b.   To indemnify the Indemnitee for any liabilities or expenses
incurred by the Indemnitee with respect to any proceeding instituted by the
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous;

               c.   To indemnify the Indemnitee under this Agreement for any
amounts paid in settlement of a proceeding unless the Company consents to such
settlement or the Company unreasonably withholds such consent;

               d.   To indemnify the Indemnitee under this Agreement for any
expenses incurred on account of any act of failure to act of the Indemnitee
which is finally adjudged by a court or other body of competent jurisdiction to
have constituted willful misconduct or recklessness. For purposes of the
preceding sentence, a finding by a court or other body of competent jurisdiction
that an act or failure to act of the Indemnitee or some other agent of the
Company constitutes "misconduct" or words of like import shall not, of itself,
create a presumption that the Indemnitee has engaged in willful misconduct or
recklessness under this Agreement, the Company's Articles of Incorporation, the
Company's bylaws or under the PABCL;

               e.   To indemnify the Indemnitee under this Agreement if a court
of competent jurisdiction finally adjudges that such indemnification is illegal,
including, without limitation, by virtue of such indemnification being in
violation of public policy or any provision of law.

___________Initials                                         Initials____________



          9.   Non-Exclusivity. The provisions for indemnification and
               ---------------
advancement of expenses set forth in this Agreement shall not be deemed
exclusive of any other rights which the Indemnitee may have under any provision
of law, the Company's Articles of Incorporation or Bylaws, the vote of the
Company's shareholders or disinterested directors, other agreements, or
otherwise, both as to action in his official capacity and to action in another
capacity while occupying his position as an agent of the Company, and the
Indemnitee's rights hereunder shall continue after the Indemnitee has ceased
acting as an agent of the Company and shall inure to the benefit of the heirs,
executors and administrators of the Indemnitee.

          10.  Enforcement. Any right to indemnification or advancement of
               -----------
expenses granted by this Agreement to Indemnitee shall be enforceable by or on
behalf of Indemnitee in any court of competent jurisdiction if (i) the claim for
indemnification or advancement of expenses is denied, in whole or in part, or
(ii) no disposition of such claim is made within ninety (90) days of request
therefor. Indemnitee, in such enforcement action, if successful in whole or in
part, shall be entitled to be paid also the expense of prosecuting his claim. It
shall be a defense to any action for which a claim for indemnification is made
under this Agreement (other than an action brought to enforce a claim for
expenses pursuant to Section 6 hereof, provided that the required undertaking
has been tendered to the Company) that Indemnitee is not entitled to
indemnification because of the limitations set forth in Sections 4 and 8 hereof.
Neither the failure of the Company (including its Board or its shareholders) to
have made a determination prior to the commencement of such enforcement action
that indemnification of Indemnitee is proper in the circumstances, nor an actual
determination by the Company (including its Board or its shareholders) that such
indemnification is improper, shall be a defense to the action or create a
presumption that Indemnitee is not entitled to indemnification under this
Agreement or otherwise.

          11.  Subrogation. In the event of payment under this Agreement, the
               -----------
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

          12.  Survival of Rights.
               ------------------

               a.   All agreements and obligations of the Company contained
herein shall continue during the period Indemnitee is an agent of the Company
and shall continue thereafter so long as Indemnitee could be subject to any
possible proceeding by reason of the fact that Indemnitee was serving in the
capacity referred to herein.

               b.   The Company shall require any successor to the Company
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had
taken place.

          13.  Interpretation of Agreement. It is understood that the parties
               ---------------------------
hereto intend this Agreement to be interpreted and enforced so as to provide
indemnification and advancement of expenses to the Indemnitee to the fullest
extent permitted by law including those

___________Initials                                         Initials____________



circumstances in which indemnification and advancement of expenses would
otherwise be discretionary.

          14.  Severability. If any provision or provisions of this Agreement
               ------------
shall be held to be invalid, illegal or unenforceable for any reason whatsoever,
(i) the validity, legality and enforceability of the remaining provisions of the
Agreement (including without limitation, all portions of any paragraphs of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall
not in any way be affected or impaired thereby, and (ii) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) shall be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable and to give
effect to Section 13 hereof.

          15.  Modification and Waiver. No supplement, modification or amendment
               -----------------------
of this Agreement shall be binding unless executed in writing by both of the
parties hereto. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provisions hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.

          16.  Notice. All notices, requests, demands and other communications
               ------
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and receipted for by the party addressee or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day
after the mailing date. Addresses for notice to either party are as shown on the
signature page of this Agreement, or as subsequently modified by written notice.

          17.  Governing Law. This Agreement shall be governed exclusively by
               -------------
and construed according to the laws of the Commonwealth of Pennsylvania as
applied to contracts entered into and to be performed entirely within
Pennsylvania.

          18.  Counterparts. This Agreement may be executed in any number of
               ------------
counterparts (including by facsimile), all of which, taken together, shall
constitute one instrument.

          19.  Gender; Number. Words of gender may be read as masculine,
               --------------
feminine or neuter, as required in context. Words of number may be read as
singular or plural, as required by context.

___________Initials                                         Initials____________



          The parties hereto have entered into this Indemnity Agreement
effective as of the date first above written.

                                       INTERDIGITAL COMMUNICATIONS CORPORATION


                                       /s/ Lawrence F. Shay
                                       -----------------------------------------
                                       Name: Lawrence F. Shay
                                       Title: Vice President and General Counsel

                                       Address of Company:
                                       781 Third Avenue,
                                       King of Prussia, PA 19406


                                       INDEMNITEE:


                                       /s/ Richard J. Brezski
                                       -----------------------------------------
                                       Name: Richard J. Brezski
                                       Title: Controller

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
OF
INTERDIGITAL COMMUNICATIONS CORPORATION
PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Howard E. Goldberg, certify that:

1.I have reviewed this quarterly report of Form 10-Q of InterDigital Communications Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b) intentionally omitted pursuant to transition reporting permitted under SEC Release No. 33-8238; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2003	/s/ HOWARD E. GOLDBERG
	Howard E. Goldberg President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
OF
INTERDIGITAL COMMUNICATIONS CORPORATION
PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Richard J. Fagan, certify that:

1.I have reviewed this quarterly report of Form 10-Q of InterDigital Communications Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b) intentionally omitted pursuant to transition reporting permitted under SEC Release No. 33-8238; and

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2003

/s/ R. J. FAGAN

Richard J. Fagan
ExecutiveVicePresidentandChiefFinancialOfficer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of InterDigital Communications Corporation (the “Company”) for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Howard E. Goldberg, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  August 14, 2003	/s/ HOWARD E. GOLDBERG
	Howard E. Goldberg President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of InterDigital Communications Corporation (the “Company”) for the period ended June 30, 2003 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard J. Fagan, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:August 14, 2003	/s/ R. J. FAGAN
	Richard J. Fagan ExecutiveVicePresidentandChiefFinancialOfficer