Qualcomm 2005 Annual Report Download - page 71
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on September 25, 2015, are redeemable in whole, but not in part, at
the Company’s option prior to the time such rights are triggered for
a price of $0.001 per Right.
Stock Repurchase Program
On March 8, 2005, the Company authorized the repurchase of up to
$2 billion of the Company’s common stock under a program with no
expiration date. During fi scal 2005, the Company repurchased and
retired 27,083,000 shares of common stock for $953 million and sold
put options under this program. At September 25, 2005, the Company
had two outstanding put options, with expiration dates of December 7,
2005 and March 21, 2006, that may require the Company to purchase
11,500,000 shares of its common stock upon exercise for $411 mil-
lion (net of the option premiums received). Any shares repurchased
upon exercise of the put options will be retired. The recorded values
of the put option liabilities totaled $7 million at September 25, 2005.
During fi scal 2005, the Company recognized $16 million in investment
income due to decreases in the fair values of the put options and
$15 million in investment income from premiums received on a put
option that expired unexercised. At September 25, 2005, $636 million
remained authorized for repurchases under this program.
On February 10, 2003, the Company had authorized the repurchase
of up to $1 billion of the Company’s common stock over a two-year
period. The Company did not repurchase any of the Company’s
common stock under this program during fi scal 2004; however, the
Company did sell put options. The Company repurchased all of the
put options during fi scal 2004. The net gain recorded in investment
income during fi scal 2004 related to the put options, including
premiums received, was $5 million.
During fi scal 2003, the Company repurchased and retired 9,831,000
shares of common stock for $166 million and sold put options. The put
options expired worthless during fi scal 2003. The $7 million in premi-
ums received from the put options were recorded as paid-in capital.
Dividends
On March 2, 2004, the Company announced an increase in its quarterly
dividend from $0.035 to $0.050 per share on common stock. On July 13,
2004, the Company announced an increase in its quarterly dividend
from $0.050 to $0.070 per share on common stock. On March 8,
2005, the Company announced an increase in its quarterly dividend
from $0.070 to $0.090 per share on common stock. Cash dividends
announced in fi scal 2005 and 2004 were as follows (in millions, except
per share data):
2005 2004
Per Share Total Per Share Total
First quarter $0.070 $115 $0.070(1) $112
Second quarter 0.070 115 0.050 81
Third quarter 0.090 147 —
(2) —
Fourth quarter 0.090 147 0.070 114
Total $0.320 $524 $0.190 $307
(1) In the fi rst quarter of fi scal 2004, the Company announced two dividends
of $0.035 per share which were paid in the fi rst and second quarters of
fi scal 2004.
(2) The Company paid a dividend of $0.05 per share in the third quarter of
fi scal 2004 that had been announced in the second quarter of fi scal 2004.
On October 10, 2005, the Company announced a cash dividend of
$0.09 per share on the Company’s common stock, payable on January 4,
2006 to stockholders of record as of December 7, 2005, which will be
refl ected in the fi rst quarter of fi scal 2006.
NOTE 8. EMPLOYEE BENEFIT PLANS
Employee Savings and Retirement Plan
The Company has a 401(k) plan that allows eligible employees to
contribute up to 50% of their eligible compensation, subject to annual
limits. The Company matches a portion of the employee contributions
and may, at its discretion, make additional contributions based upon
earnings. The Company’s contribution expense for fi scal 2005, 2004
and 2003 was $27 million, $21 million and $20 million, respectively.
Stock Option Plans
The Company may grant options to selected employees, directors
and consultants to the Company to purchase shares of the Company’s
common stock at a price not less than the fair market value of the
stock at the date of grant. The 2001 Stock Option Plan (the 2001
Plan) was adopted and replaced the 1991 Stock Option Plan (the
1991 Plan), which expired in August 2001. Options granted under the
1991 Plan remain outstanding until exercised or cancelled. The shares
reserved under the 2001 Plan were equal to the number of shares
available for future grant under the 1991 Plan on the date the 2001
Plan was approved by the Company’s stockholders. At that date,
approximately 101,083,000 shares were available for future grants
under the 2001 Plan. In fi scal 2004, the Company reserved another
64,000,000 shares for future grants under the 2001 Plan. The Company
may terminate the 2001 Plan at any time. The 2001 Plan provides
for the grant of both incentive stock options and non-qualifi ed stock
options. Generally, options outstanding vest over fi ve years and are
exercisable for up to 10 years from the grant date. At September 25,
2005, options for approximately 120,298,000 shares under both
plans were exercisable at prices ranging from $1.93 to $86.19 per
share for an aggregate exercise price of $2.6 billion.
The 2001 Non-Employee Directors’ Stock Option Plan (the 2001
Directors’ Plan) was adopted and replaced the 1998 Non-Employee
Directors’ Stock Option Plan (the 1998 Directors’ Plan). Options
granted under the 1998 Directors’ Plan remain outstanding until
exercised or cancelled. The shares reserved under the 2001 Directors’
Plan are equal to the number of shares available for future grant
under the 1998 Directors’ Plan on the date the 2001 Directors’ Plan
was approved by the Company’s stockholders. At that date, 4,100,000
shares were available for future grants under the 2001 Directors’ Plan.
The Company may terminate the 2001 Directors’ Plan at any time.
This plan provides for non-qualifi ed stock options to be granted to
non-employee directors at fair market value, vesting over periods
not exceeding fi ve years and are exercisable for up to 10 years from
the grant date. At September 25, 2005, options for approximately
3,393,000 shares under both plans were exercisable at prices ranging
from $2.91 to $66.50 per share for an aggregate exercise price of
$35 million.