Qualcomm 2006 Annual Report Download - page 88

74 qualcomm 2006
Notes to Consolidated Financial Statements continued
are, in some way, a violation of South Korean anti-trust regulations.
To date, the Company has not received the complaints.
Although there can be no assurance that unfavorable outcomes
in any of the foregoing matters would not have a material adverse
effect on the Company’s operating results, liquidity or nancial
position, the Company believes the claims made by other parties
are without merit and will vigorously defend the actions. The
Company has not recorded any accrual for contingent liability
associated with the legal proceedings described above based on
the Company’s belief that a liability, while possible, is not probable.
Further, any possible range of loss cannot be estimated at this
time. The Company is engaged in numerous other legal actions
arising in the ordinary course of its business and believes that the
ultimate outcome of these actions will not have a material adverse
effect on its operating results, liquidity or nancial position. In
addition, some matters that have previously been disclosed may
no longer be described in this Note because of rulings in the case,
settlements, changes in the Company’s business or other develop-
ments rendering them, in the Company’s judgment, no longer material
to the Company’s operating results, liquidity or nancial position.
Purchase Obligations
The Company has agreements with suppliers and other parties to
purchase inventory, other goods and services and long-lived assets
and estimates its noncancelable obligations under these agreements
for scal 2007 to 2011 to be approximately $663 million, $79 million,
$31 million, $20 million and $18 million, respectively, and $18 million
thereafter. Of these amounts, commitments to purchase integrated
circuit product inventories for scal 2007 to 2009 comprised
$540 million, $48 million and $5 million, respectively.
Leases
The Company leases certain of its facilities and equipment under
noncancelable operating leases, with terms ranging from less
than one year to 28 years and with provisions for cost-of-living
increases with certain leases. Rental expense for scal 2006,
2005 and 2004 was $47 million, $39 million and $31 million,
respectively. The Company leases certain property under capital
lease agreements which expire at various dates through 2036.
Capital lease obligations are included in other liabilities. The
future minimum lease payments for all capital leases and operat-
ing leases as of September 24, 2006 are as follows (in millions):
Capital Operating
Leases Leases Total
2007 $ 3 $ 71 $ 74
2008 3 42 45
2009 3 32 35
2010 4 28 32
2011 4 21 25
Thereafter 108 97 205
Total minimum lease payments $125 $291 $416
Deduct: Amounts representing interest (67)
Present value of minimum
lease payments 58
Deduct: Current portion of capital
lease obligations —
Long-term portion of capital
lease obligations $ 58
QUALCOMM Incorporated and SnapTrack, Inc. v. Nokia Corporation
and Nokia Inc.: On November 4, 2005, the Company, along with its
wholly-owned subsidiary, SnapTrack, led an action in the United
States District Court for the Southern District of California against
Nokia alleging infringement of eleven QUALCOMM patents and one
SnapTrack patent relating to GSM/GPRS/EDGE and position loca-
tion and seeking monetary damages and injunctive relief. The case
is currently stayed pending a decision by the Federal Circuit regard-
ing Nokia’s arbitration demand. On May 24, 2006, the Company
led an action in the Chancery Division of the High Court of Justice
for England and Wales against Nokia alleging infringement of two
QUALCOMM patents relating to GSM/GPRS/EDGE technology
seeking monetary damages and injunctive relief. On June 9, 2006,
the Company led a complaint with the ITC against Nokia alleging
importation of products that infringe six QUALCOMM patents
relating to power control, video encoding and decoding, and power
conservation mode technologies and seeking an exclusionary
order and a cease and desist order. On July 7, 2006, the ITC com-
menced an investigation. On August 9, 2006, the Company led
an action in the District Court of Dusseldorf, Federal Republic of
Germany, against Nokia alleging infringement of two QUALCOMM
patents relating to GSM/GPRS/EDGE technology seeking monetary
damages and injunctive relief. On October 9, 2006, the Company
led an action in the High Court of Paris, France against Nokia
alleging infringement of two patents relating to GSM/GPRS/EDGE
technology seeking monetary damages and injunctive relief. On
October 9, 2006, the Company led an action in the Milan Court,
Italy against Nokia alleging infringement of two patents relating
to GSM/GPRS/EDGE technology seeking monetary damages and
injunctive relief.
Nokia Corporation and Nokia Inc. v. QUALCOMM Incorporated:
On August 9, 2006, Nokia Corporation and Nokia, Inc. led a com-
plaint in Delaware Chancery Court seeking declaratory and
injunctive relief relating to alleged commitments made by the
Company to wireless industry standards setting organizations.
The Company has moved to dismiss the complaint.
Other: The Company has been named, along with many other
manufacturers of wireless phones, wireless operators and industry-
related organizations, as a defendant in several purported class
action lawsuits, and several individually led actions pending in
Pennsylvania, Washington D.C., and Louisiana, seeking monetary
damages arising out of its sale of cellular phones. The courts that
have reviewed similar claims against other companies to date
have held that there was insufcient scientic basis for the
plaintiffs’ claims in those cases.
On October 28, 2005, it was reported that six companies (Broadcom,
Nokia, Texas Instruments, NEC, Panasonic and Ericsson) led com-
plaints with the European Commission, alleging that the Company
violated European Union competition law in its WCDMA licensing
practices. The Company has received the complaints and has sub-
mitted a reply.
It has been reported that two U.S. companies (Texas Instruments
and Broadcom) and two South Korean companies (Nextreaming Corp.
and THINmultimedia Inc.) have led complaints with the Korean Fair
Trade Commission alleging that the Company’s business practices