Qualcomm 2011 Annual Report Download - page 42

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annual effective tax rate was 20% for fiscal 2011 , compared to 22% for fiscal 2010 . During the first quarter of fiscal 2011, the United States
government extended the federal research and development tax credit to include qualified research expenditures paid or incurred after December
31, 2009 and before January 1, 2012. We recorded a tax benefit of $32 million related to fiscal 2010 in fiscal 2011 from the retroactive extension
of this credit. Additionally, in fiscal 2011, we recorded a tax benefit of $44 million related to an agreement reached on a component of our fiscal
2006 through fiscal 2010 state tax returns. The annual effective tax rate for fiscal 2010 included tax expense of approximately $137 million that
arose because certain deferred revenue was taxable in fiscal 2010, but the resulting deferred tax asset will reverse in future years when our state
tax rate will be lower as a result of California tax legislation enacted in 2009.
The annual effective tax rate for fiscal 2011 of 20% was less than the United States federal statutory rate primarily due to benefits of 19%
related to foreign earnings taxed at less than the United States federal rate and benefits of 3% related to the research and development tax credit,
partially offset by state taxes of 5% and tax expense of 1% related to the valuation of deferred tax assets to reflect changes in California law.
Fiscal 2010 Compared to Fiscal 2009
Revenues. Total revenues for fiscal 2010 were $10.98 billion, compared to $10.39 billion for fiscal 2009 . Revenues from two customers of
our QCT and QTL segments (each of whom accounted for more than 10% of our consolidated revenues for the period) comprised approximately
25% and 31% in aggregate of total consolidated revenues in fiscal 2010 and 2009 , respectively.
Revenues from sales of equipment and services for fiscal 2010 were $6.97 billion, compared to $6.44 billion for fiscal 2009 . The increase in
revenues from sales of equipment and services was primarily due to a $541 million increase in QCT revenues. Licensing revenues were $4.01
billion in fiscal 2010 , compared to $3.95 billion in fiscal 2009 . The increase in licensing revenues was primarily due to a $56 million increase
in QTL revenues.
Cost of Equipment and Services. Cost of equipment and services revenues for fiscal 2010 was $3.30 billion, compared to $3.03 billion for
fiscal 2009 . Cost of equipment and services revenues as a percentage of equipment and services revenues was 47% for both fiscal 2010 and
2009 . The margin percentage was negatively impacted by the effect of an increase in costs related to our QMT division, which was offset by an
increase in QCT gross margin percentage. Cost of equipment and services revenues included $41 million in share-based compensation in fiscal
2010 , compared to $40 million for fiscal 2009 .
Research and Development Expenses. For fiscal 2010 , research and development expenses were $2.45 billion or 22% of revenues,
compared to $2.35 billion or 23% of revenues for fiscal 2009 . The dollar increase is primarily attributable to a $156 million increase in costs
related to the development of integrated circuit products, next generation CDMA and OFDMA technologies and other initiatives to support the
acceleration of advanced wireless products and services. The increase in research and development expenses was partially offset by a $69
million decrease in costs primarily related to the development of our asset-tracking products and services and Brew products. Research and
development expenses for fiscal 2010 included share-based compensation of $293 million, compared to $272 million in fiscal 2009 .
Selling, General and Administrative Expenses. For fiscal 2010 , selling, general and administrative expenses were $1.50 billion or 14% of
revenues, compared to $1.46 billion or 14% of revenues for fiscal 2009 . The dollar increase was primarily attributable to a $56 million increase
in patent-related costs, a $25 million increase in employee-related expenses and a $16 million increase in selling and marketing expenses,
partially offset by a $62 million gain on the sale of our Australia spectrum license. Selling, general and administrative expenses for fiscal 2010
included share-based compensation of $263 million, compared to $252 million in fiscal 2009 .
Other Operating Expenses. Operating expenses for fiscal 2009 included a $783 million charge in connection with the Settlement and Patent
License and Non-Assert Agreement with Broadcom and a $230 million fine levied by the KFTC.
Net Investment Income (Loss). Net investment income was $766 million for fiscal 2010 , compared to net investment loss of $139 million
for fiscal 2009 . The net increase was primarily comprised as follows (in millions):
37