Qualcomm 2011 Annual Report Download - page 85

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
At September 25, 2011 , the Company does not expect any unrecognized tax benefits to result in cash payment in fiscal 2012 . Unrecognized
tax benefits at September 25, 2011 include $88 million for tax positions that, if recognized, would impact the effective tax rate. The
unrecognized tax benefits differ from the amount that would affect the Company’s effective tax rate primarily because the unrecognized tax
benefits are included on a gross basis and do not reflect secondary impacts such as the federal deduction for state taxes, adjustments to deferred
tax assets and the valuation allowance that might be required if the Company’s tax positions are sustained. The decrease in unrecognized tax
benefits in fiscal 2011 was primarily due to an agreement reached on a component of the Company’s fiscal 2006 through fiscal 2010 state tax
returns related to the method used by the Company to apportion income to states for such periods, which is partially offset by an increase
resulting from the acquisition of Atheros (Note 12). The Company does not believe that it is reasonably possible that the total amounts of
unrecognized tax benefits at September 25, 2011 will significantly increase or decrease in fiscal 2012. Interest expense related to uncertain tax
positions was negligible in fiscal 2011 , 2010 and 2009 . The amount of accrued interest and penalties was negligible at September 25, 2011 and
September 26, 2010 .
Cash amounts paid for income taxes, net of refunds received, were $2.1 billion , $671 million and $516 million for fiscal 2011 , 2010 and
2009 , respectively.
Note 7. Capital Stock
Preferred Stock. The Company has 8,000,000 shares of preferred stock authorized for issuance in one or more series, at a par value of
$0.0001 per share. In conjunction with the distribution of preferred share purchase rights, 4,000,000 shares of preferred stock are designated as
Series A Junior Participating Preferred Stock, and such shares are reserved for issuance upon exercise of the preferred share purchase rights. At
September 25, 2011 and September 26, 2010 , no shares of preferred stock were outstanding.
Preferred Share Purchase Rights Agreement. The Company has a Preferred Share Purchase Rights Agreement (Rights Agreement) to
protect stockholders’ interests in the event of a proposed takeover of the Company. Under the original Rights Agreement, adopted on
September 26, 1995, the Company declared a dividend of one preferred share purchase right (a Right) for each share of the Company’s common
stock outstanding. Pursuant to the Rights Agreement, as amended and restated on December 7, 2006, each Right entitles the registered holder to
purchase from the Company a one one-thousandth share of Series A Junior Participating Preferred Stock, $0.0001 par value per share, subject to
adjustment for subsequent stock splits, at a purchase price of $180 . The Rights are exercisable only if a person or group (an Acquiring Person)
acquires beneficial ownership of 20% or more of the Company’s outstanding shares of common stock without approval of the Board of
Directors. Upon exercise, holders, other than an Acquiring Person, will have the right, subject to termination, to receive the Company’s common
stock or other securities, cash or other assets having a market value, as defined, equal to twice such purchase price. The Rights, which expire on
September 25, 2015 , are redeemable in whole, but not in part, at the Company’s option prior to the time such Rights are triggered for a price of
$0.001 per Right.
Stock Repurchase Program. On March 1, 2010, the Company announced that it had been authorized to repurchase up to $3.0 billion of the
Company’s common stock. The stock repurchase program has no expiration date. Any shares repurchased are retired, and the amount paid in
excess of par value is recorded to paid-in capital. During fiscal 2011 , 2010 and 2009 , the Company repurchased and retired 2,878,000 ,
79,789,000 and 8,920,000 shares of common stock, respectively, for $142 million , $3.0 billion and $284 million , respectively, before
commissions. At September 25, 2011 , approximately $1.0 billion remained authorized for repurchase under the Company’s stock repurchase
program, net of put options outstanding. Since September 25, 2011, the Company repurchased 2,046,000 shares of the Company’s common
stock for $99 million .
In connection with the Company’s stock repurchase program, the Company sold three put options on its own stock during fiscal 2011 . At
September 25, 2011 , the Company had three outstanding put options enabling holders to sell 11,800,000 shares of the Company’s common
stock to the Company for approximately $511 million (net of the $75 million in put option premiums received). The recorded value of the put
option liability of $80 million at September 25, 2011 was recorded in other current liabilities. During fiscal 2011 , the Company recognized
losses of $5 million in net investment income (loss) due to an increase in the fair value of the put options. No put options were outstanding
during fiscal 2010 or 2009 .
Dividends. The Company announced increases in its quarterly dividend per share of common stock from $0.16 to $0.17 on March 3, 2009,
from $0.17 to $0.19 on March 1, 2010, and from $0.190 to $0.215 on March 8, 2011. Dividends charged to retained earnings in fiscal 2011 ,
2010 and 2009 were as follows (in millions, except per share data):
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