Qualcomm 2005 Annual Report Download - page 73
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Information about stock options outstanding at September 25, 2005 with exercise prices less than or above $44.76 per share, the closing price
at September 25, 2005, follows (number of shares in thousands):
Exercisable Unexercisable Total
Weighted Weighted Weighted
Average Average Average
Number Exercise Number Exercise Number Exercise
Stock Options of Shares Price of Shares Price of Shares Price
Less than $44.76 120,418 $19.84 78,295 $29.48 198,713 $23.64
Above $44.76 4,073 58.66 8 54.32 4,081 58.65
Total outstanding 124,491 $21.11 78,303 $29.48 202,794 $24.35
Employee Stock Purchase Plans
The Company has two employee stock purchase plans for all eligible
employees to purchase shares of common stock at 85% of the lower
of the fair market value on the fi rst or the last day of each six-month
offering period. Employees may authorize the Company to withhold
up to 15% of their compensation during any offering period, subject
to certain limitations. The 2001 Employee Stock Purchase Plan
authorizes up to approximately 24,309,000 shares to be granted.
The 1996 Non-Qualifi ed Employee Stock Purchase Plan authorizes
up to 400,000 shares to be granted. During fi scal 2005, 2004 and
2003, approximately 1,786,000, 2,205,000 and 2,744,000 shares
were issued under the plans at an average price of $29.63, $18.60
and $13.20 per share, respectively. At September 25, 2005, approx-
imately 15,446,000 shares were reserved for future issuance.
Executive Retirement Plans
The Company has voluntary retirement plans that allow eligible
executives to defer up to 100% of their income on a pre-tax basis.
On a quarterly basis, the Company matches up to 10% of the partici-
pants’ deferral in Company common stock based on the then-current
market price, to be distributed to the participant upon eligible retire-
ment. The income deferred and the Company match held in trust are
unsecured and subject to the claims of general creditors of the
Company. Company contributions begin vesting based on certain
minimum participation or service requirements and are fully vested at
age 65. Participants who terminate employment forfeit their unvested
shares. All shares forfeited are used to reduce the Company’s future
matching contributions. The plans authorize up to 1,600,000 shares
to be allocated to participants at any time. During fi scal 2005, 2004
and 2003, approximately 92,000, 108,000 and 89,000 shares,
respectively, were allocated under the plans. The Company recorded
$3 million, $5 million and $2 million in compen sation expense during
fi scal 2005, 2004 and 2003, respectively, related to its net matching
contributions to the plans. At September 25, 2005, approximately
238,000 shares were reserved for future allocation.
NOTE 9. COMMITMENTS AND CONTINGENCIES
Litigation
Durante, et al v. QUALCOMM: On February 2, 2000, three former
employees fi led a putative class action against the Company, alleging
unlawful age discrimination in their selection for layoff in 1999, and
seeking monetary damages based thereon. On June 18, 2003, the
Court ordered decertifi cation of the class and dismissed all remaining
claims of the plaintiffs. On August 1, 2005, the Ninth Circuit Court
of Appeals upheld the judgment in favor of the Company. On June 20,
2003, 76 of the opt-in plaintiffs fi led, but did not serve, a new action
in the same court, alleging violations of the Age Discrimination in
Employment Act as a result of their layoffs in 1999. All plaintiffs
have now dismissed all remaining claims in exchange for the
Company’s agreement not to seek litigation costs against them.
Zoltar Satellite Alarm Systems, Inc. v. QUALCOMM, Inc. and
SnapTrack, Inc.: On March 30, 2001, Zoltar Satellite Alarm Systems,
Inc. fi led suit against QUALCOMM and its subsidiary SnapTrack, Inc. in
the United States District Court for the Northern District of California
seeking monetary damages and injunctive relief based on the alleged
infringement of three patents. Following a verdict and fi nding of no
infringement of Zoltar’s patent claims, the Court entered a judgment
in favor of the Company and SnapTrack on Zoltar’s complaint and
awarded the Company and SnapTrack their costs of suit. Zoltar fi led
a notice of appeal, and the Company and SnapTrack fi led a respon-
sive notice and motion to dismiss. Zoltar’s appeal was dismissed and
the issue of reaching a fi nal judgment on issues aside from non-
infringement is pending before the district court.
QUALCOMM Incorporated v. Maxim Integrated Products, Inc.: On
December 2, 2002, the Company fi led an action in the United States
District Court for the Southern District of California against Maxim
alleging infringement of three patents and seeking monetary dam-
ages and injunctive relief based thereon. The Company amended the
complaint, bringing the total number of patents at issue to four and
adding misappropriation of trade secret and unfair competition
claims. Maxim counterclaimed against the Company, alleging
antitrust violations, patent misuse and unfair competition seeking
monetary damages and injunctive relief based thereon. On May 5,
2004, the Court granted Maxim’s motion that no indirect infringe-
ment arose in connection with defendants’ sales of certain products
to certain licensees of the Company. A motion by the Company for
preliminary injunction regarding the alleged trade secret misappro-
priations by Maxim was heard on January 4, 2005. The Court found
that Maxim had acted unlawfully by misappropriating the Company’s
trade secrets and issued an injunction order prohibiting further mis-
appropriation and requiring Maxim to notify customers of the order.
Maxim has sought appellate review of the injunction order.
Whale Telecom Ltd v. QUALCOMM Incorporated: On November 15,
2004, Whale Telecom Ltd. sued the Company in the New York State
Supreme Court, County of New York, seeking monetary damages
based on the claim that the Company fraudulently induced it to enter
into certain infrastructure services agreements in 1999 and later
interfered with their performance of those agreements.