Qualcomm 2012 Annual Report Download - page 31

license agreements with Japanese companies to eliminate these provisions while preserving the license of our patents to those companies. We
disagree with the conclusions that we forced our Japanese licensees to agree to any provision in the parties’
agreements and that those provisions
violate the Japanese Antimonopoly Act. We have invoked our right under Japanese law to an administrative hearing before the JFTC. In
February 2010, the Tokyo High Court granted our motion and issued a stay of the cease and desist order pending the administrative hearing
before the JFTC. The JFTC has held hearings on 15 different dates, with another hearing scheduled for December 20, 2012 and additional
hearing dates yet to be scheduled.
Securities and Exchange Commission (SEC) Formal Order of Private Investigation and Department of Justice (DOJ) Investigation: On
September 8, 2010, we were notified by the SEC’s Los Angeles Regional office of a formal order of private investigation. We understand that
the investigation arose from a “whistleblower’s” allegations made in December 2009 to the audit committee of our Board of Directors and to the
SEC. In 2010, the audit committee completed an internal review of the allegations with the assistance of independent counsel and independent
forensic accountants. This internal review into the whistleblower’s allegations and related accounting practices did not identify any errors in our
financial statements. On January 27, 2012, we learned that the U.S. Attorney’s Office for the Southern District of California/DOJ (DOJ) had
begun a preliminary investigation regarding our compliance with the Foreign Corrupt Practices Act (FCPA). We believe that FCPA compliance
had also become a focus of the SEC investigation. The audit committee has commenced an internal review into our compliance with the FCPA
with the assistance of independent counsel and independent forensic accountants.
We have discovered, and as a part of our ongoing cooperation with these investigations have informed the SEC and the DOJ of, instances in
which special hiring consideration, gifts or other benefits (collectively, benefits) were provided to several individuals associated with Chinese
state-owned companies or agencies. Based on the facts currently known, we believe the aggregate monetary value of the benefits in question to
be less than $250,000, excluding employment compensation. We are continuing to investigate the circumstances relating to providing these
benefits and are attempting to identify whether any other benefits were provided.
We are continuing to cooperate with the SEC and the DOJ, but are unable to predict the outcome of their investigations.
Other: We have been named, along with many other manufacturers of wireless phones, wireless operators and industry-
related organizations,
as a defendant in three lawsuits pending in Washington D.C. superior court, seeking monetary damages arising out of our sale of cellular phones.
We will vigorously defend ourselves in the foregoing actions. However, litigation and investigations are inherently uncertain. Accordingly,
we cannot predict the outcome of these matters. We have not recorded any accrual at September 30, 2012 for contingent losses associated with
these matters based on our belief that losses, while possible, are not probable. Further, any possible range of loss cannot be reasonably estimated
at this time. Nonetheless, the unfavorable resolution of one or more of these matters could have a material adverse effect on our business, results
of operations, financial condition or cash flows. We are engaged in numerous other legal actions not described above arising in the ordinary
course of our business and, while there can be no assurance, we believe that the ultimate outcome of these actions will not have a material
adverse effect on our business, results of operations, financial condition or cash flows.
Item 4. Mine Safety Disclosures
Not applicable.
25