Qualcomm 2012 Annual Report Download - page 80

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company does not expect any unrecognized tax benefits recorded at September 30, 2012 to result in cash payment in fiscal 2013 .
Unrecognized tax benefits at September 30, 2012 included $86 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 were included on a gross basis and did 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 2012 was primarily due to settlement of the Company’s California tax examination for fiscal 2005 through
fiscal 2008, which is partially offset by an increase in unrecognized tax benefits generated in the current year. The Company does not believe
that it is reasonably possible that the total amounts of unrecognized tax benefits at September 30, 2012 will significantly increase or decrease in
fiscal 2013 . Interest expense related to uncertain tax positions was negligible in fiscal 2012 , 2011 and 2010 . The amount of accrued interest
and penalties was negligible at September 30, 2012 and September 25, 2011 .
Cash amounts paid for income taxes, net of refunds received, were $1.3 billion , $2.1 billion and $671 million for fiscal 2012 , 2011 and
2010 , respectively.
During fiscal 2012, the Company established its QCT segment
’ s non-United States headquarters in Singapore. The Company has obtained
tax incentives in Singapore, which are effective through March 2027, that result in a tax exemption for the first five years provided that the
Company meets specified employment and investment criteria in Singapore. The Company’s Singapore tax rate will increase in fiscal 2017 and
again in fiscal 2027 as a result of expiration of these incentives. The location of QCT’s headquarters in Singapore did not result in any change in
foreign tax in fiscal 2012. Had the Company established QCT’s non-United States headquarters in Singapore without these tax incentives, the
Company's income tax expense would have been higher by $193 million in fiscal 2012, reducing both basic and diluted net income per share
attributable to Qualcomm by $0.11 .
Note 5. 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 30, 2012 and September 25, 2011 , 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 6, 2012, the Company announced that it had been authorized to repurchase up to $4.0 billion of the
Company’s common stock. The stock repurchase program has no expiration date. The $4.0 billion stock repurchase program replaced a $3.0
billion stock repurchase program, of which $948 million remained authorized for repurchase, net of put options outstanding. Any shares
repurchased are retired, and the amount paid in excess of par value is recorded to paid-in capital. During fiscal 2012 , 2011 and 2010 , the
Company repurchased and retired 23,893,000 , 2,878,000 and 79,789,000 shares of common stock, respectively, for $1.3 billion , $142 million
and $3.0 billion , respectively, before commissions. At September 30, 2012 , approximately $2.8 billion remained authorized for repurchase
under the Company’s stock repurchase progra m. Since September 30, 2012 , the Company repurchased 4,132,000 shares of common stock for
$240 million .
In connection with the Company’s stock repurchase program, the Company sold three put options on its own stock during fiscal 2011, of
which all expired unexercised during fiscal 2012. The fair values of the put options of $80 million at September 25, 2011 were recorded in other
current liabilities. During fiscal 2012 and 2011 , the Company recognized gains of $80 million and losses of $5 million , respectively, in net
investment income due to changes in the fair values of the put options. No put options were outstanding during fiscal 2010.
Dividends. The Company announced increases in its quarterly dividend per share of common stock from $0.17 to $0.19 on March 1, 2010 ,
from $0.19 to $0.215 on March 8, 2011 , and from $0.215 to $0.25 on March 6, 2012 . Dividends charged to
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