Qualcomm 2005 Annual Report Download - page 66
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62 qualcomm 2005
Future Accounting Requirements
In December 2004, the FASB revised Statement No. 123 (FAS 123R),
“Share-Based Payment,” which requires companies to expense the
estimated fair value of employee stock options and similar awards.
On April 14, 2005, the U.S. Securities and Exchange Commission
adopted a new rule amending the compliance dates for FAS 123R.
In accordance with the new rule, the accounting provisions of
FAS 123R will be effective for the Company beginning in the fi rst
quarter of fi scal 2006. The Company tentatively expects to adopt
the provisions of FAS 123R using a modifi ed prospective applica-
tion. FAS 123R, which provides certain changes to the method for
valuing share-based compensation among other changes, will apply
to new awards and to awards that are outstanding on the effective
date and are subsequently modifi ed or cancelled. Compensation
expense for outstanding awards for which the requisite service
had not been rendered as of the effective date will be recognized
over the remaining service period using the compensation cost
calculated for pro forma disclosure purposes under FAS 123.
At September 25, 2005, unamortized compensation expense
related to outstanding unvested options, as determined in accor-
dance with FAS 123, that the Company expects to record during
fi scal 2006 was approximately $394 million before income taxes.
The Company will incur additional expense during fi scal 2006
related to new awards granted during 2006 that cannot yet be
quantifi ed. The Company is in the process of determining how the
guidance regarding valuing share-based compensation as prescribed
in FAS 123R will be applied to valuing share-based awards granted
after the effective date and the impact that the recognition of
compensation expense related to such awards will have on its
fi nancial statements.
NOTE 2. MARKETABLE SECURITIES
Marketable securities were comprised as follows (in millions):
Current Noncurrent
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
2005 2004 2005 2004
Held-to-maturity:
Government-sponsored enterprise securities $ 60 $ — $ — $ 70
Corporate bonds and notes 70 10 — 60
130 10 — 130
Available-for-sale:
U.S. Treasury securities 151 267 — —
Government-sponsored enterprise securities 704 542 — —
Municipal bonds 10 — — —
Foreign government bonds 17 8 — —
Corporate bonds and notes 2,645 2,603 14 3
Mortgage-and asset-backed securities 767 1,226 — —
Non-investment grade debt securities 24 — 694 571
Equity mutual funds — — 293 296
Equity securities 30 112 1,132 653
4,348 4,758 2,133 1,523
$4,478 $4,768 $2,133 $1,653
As of September 25, 2005, the contractual maturities of debt securities were as follows (in millions):
Years to Maturity No Single
Less than One to Five to Greater than Maturity
One Year Five Years Ten Years Ten Years Date Total
Held-to-maturity $ 130 $ — $ — $ — $ — $ 130
Available-for-sale 2,439 1,173 626 21 7 67 5,026
$2,569 $1,173 $626 $21 $767 $5,156
Securities with no single maturity date include mortgage-and asset-backed securities.