Qualcomm 2002 Annual Report Download - page 57

PAGE 55
QUALCOMM 2002 ANNUAL REPORT
with respect to the recoverability of investments. While we may hedge certain trans-
actions with non-United States customers, declines in currency values in certain
regions may, if not reversed, adversely affect future product sales because our products
may become more expensive to purchase in the countries of the affected currencies.
We are exposed to foreign exchange risk related to our consolidation of the Vésper
Operating Companies. We report our financial statements in U.S. dollars. The Vésper
Operating Companies account for the majority of their transactions in Brazilian real,
and their results are translated into U.S. dollars during and at the end of the fiscal
quarter. In addition, the Vésper Operating Companies capital lease commitments are
denominated in U.S. dollars. As a result, a significant change in the value of the U.S.
dollar against the Brazilian real could have a material effect on the Vésper Operating
Companies and on us. A significant devaluation of the Brazilian real has occurred in
the past and may occur again the future. At September 30, 2002, a 10% weakening of
the U.S. dollar relative to the Brazilian real would result in a decrease in net income
of approximately $16 million for the year ended September 30, 2002.
Finance receivables and notes receivable from international carriers that do not
use the United States dollar as their functional currencies subject us to credit risk.
Because our financing is dollar denominated, any significant change in the value of
the dollar against the debtors’ functional currencies could result in an increase in the
debtor’s cash flow requirements and could thereby affect our ability to collect our
receivables. At September 30, 2002, finance receivables from international customers
totaled $817 million.
Our analysis methods used to assess and mitigate risk discussed above should
not be considered projections of future risks.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
CONTROLS AND PROCEDURES
(a) Under the supervision and with the participation of our management, includ-
ing our principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined under
Rule 13a–14(c) promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), within 90 days of the filing date of this report. Based on their
evaluation, our principal executive officer and our principal financial officer concluded
that our disclosure controls and procedures are effective.
(b) There have been no significant changes (including corrective actions with
regard to significant deficiencies or material weaknesses) in our internal controls or
in other factors that could significantly affect these controls subsequent to the date
of the evaluation referenced in paragraph (a) above.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of QUALCOMM Incorporated
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of cash flows and of stockholders’ equity
present fairly, in all material respects, the financial position of QUALCOMM
Incorporated and its subsidiaries (the “Company”) at September 30, 2002 and 2001,
and the results of their operations and their cash flows for each of the three years in
the period ended September 30, 2002 in conformity with accounting principles gen-
erally accepted in the United States of America. These financial statements are the
responsibility of the Company’s management; our responsibility is to express an opin-
ion on these financial statements based on our audits. We conducted our audits of
these statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits provide a reason-
able basis for our opinion.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of recognizing revenue and adopted Statement of Financial
Accounting Standard No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” during the year ended September 30, 2001.
PRICEWATERHOUSECOOPERS LLP
San Diego, California
November 6, 2002, except for Note 15 which is as of November 21, 2002.