Qualcomm 2006 Annual Report Download - page 84

70 qualcomm 2006
Notes to Consolidated Financial Statements continued
Stock Repurchase Program
On November 7, 2005, the Company authorized the repurchase of
up to $2.5 billion of the Company’s common stock under a program
with no expiration date. The $2.5 billion stock repurchase program
replaced a $2.0 billion stock repurchase program, of which approxi-
mately $1.0 billion remained authorized for repurchases. During
scal 2006 and 2005, the Company repurchased and retired
34,000,000 shares and 27,083,000 of common stock for $1.5 billion
and $953 million, respectively, excluding $5 million of premiums
received related to put options that were exercised in scal 2006.
The Company did not repurchase any of the Company’s common
stock during scal 2004. At September 24, 2006, approximately
$0.9 billion remained authorized for repurchases under the stock
repurchase program, net of put options outstanding.
In connection with the Company’s stock repurchase program,
the Company sold put options on its own stock during scal 2006,
2005 and 2004. At September 24, 2006, the Company had two
outstanding put options enabling holders to sell 2,000,000 shares
of the Company’s common stock to the Company for approximately
$89 million (net of the put option premiums received), and the
recorded values of the put option liabilities totaled $19 million.
In October 2006, one of the put options was exercised, and the
Company repurchased and retired 1,000,000 shares of its common
stock for approximately $45 million (net of the put option premium
received). Upon repurchase, the shares were retired. The remaining
put option, with an expiration date in November 2006, may require
the Company to repurchase 1,000,000 shares of its common stock
for approximately $45 million (net of the put option premium
received). Any shares purchased upon the exercise of the put
option will be retired. During scal 2006, the Company recognized
$29 million in investment losses due to net increases in the fair
values of put options, net of premiums received of $11 million.
During scal 2005 and 2004, the Company recognized gains of
$31 million and $5 million, respectively, in investment income due
to decreases in the fair values of put options, including premiums
received of $15 million and $5 million, respectively.
note 7. caPital stock
Preferred Stock
The Company has 8,000,000 shares of preferred stock authorized
for issuance in one or more series, at a par value of $0.0001 per
share. In conjunction with the distribution of preferred share pur-
chase rights, 4,000,000 shares of preferred stock are designated as
Series A Junior Participating Preferred Stock and such shares are
reserved for issuance upon exercise of the preferred share purchase
rights. At September 24, 2006 and September 25, 2005, no shares
of preferred stock were outstanding.
Preferred Share Purchase Rights Agreement
The Company has a Preferred Share Purchase Rights Agreement
(Rights Agreement) to protect stockholders’ interests in the event
of a proposed takeover of the Company. Under the original Rights
Agreement, adopted on September 26, 1995, the Company declared
a dividend of one preferred share purchase right (a Right) for each
share of the Company’s common stock outstanding. Pursuant to
the Rights Agreement, as amended and restated on September 26,
2005, each Right entitles the registered holder to purchase from
the Company a one one-thousandth share of Series A Junior Partici-
pating Preferred Stock, $0.0001 par value per share, subject to
adjustment for subsequent stock splits, at a purchase price of $180.
The Rights are exercisable only if a person or group (an Acquiring
Person) acquires benecial ownership of 15% or more of the
Company’s outstanding shares of common stock without Board
approval. Upon exercise, holders, other than an Acquiring Person,
will have the right, subject to termination, to receive the Company’s
common stock or other securities, cash or other assets having
a market value, as dened, equal to twice-such purchase price.
The Rights, which expire 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.
Dividends
The Company announced increases in its quarterly dividend per share of common stock from $0.035 to $0.05 on March 2, 2004, from $0.05
to $0.07 on July 13, 2004, from $0.07 to $0.09 on March 8, 2005, and from $0.09 to $0.12 on March 7, 2006. Cash dividends announced in
scal 2006, 2005 and 2004 were as follows (in millions, except per share data):
2006 2005 2004
Per Share Total Per Share Total Per Share Total
First quarter $0.09 $148 $0.07 $115 $0.07(a) $112
Second quarter 0.09 150 0.07 115 0.05 81
Third quarter 0.12 202 0.09 147 —(b) —
Fourth quarter 0.12 198 0.09 147 0.07 114
Total $0.42 $698 $0.32 $524 $0.19 $307
(a) In the rst quarter of scal 2004, the Company announced two dividends of $0.035 per share which were paid in the rst and second quarters of scal 2004.
(b) The Company paid a dividend of $0.05 per share in the third quarter of scal 2004 that had been announced in the second quarter of scal 2004.