Qualcomm 2012 Annual Report Download - page 91

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Goodwill recognized in the Atheros acquisition is not deductible for tax purposes and was allocated to the QCT segment for annual
impairment testing purposes. Goodwill largely consists of expected revenue synergies resulting from the combination of product portfolios, cost
synergies related to reduction in headcount growth and lower manufacturing costs, assembled workforce and access to additional sales and
distribution channels. The intangible assets acquired are being amortized on a straight-line basis over weighted-average useful lives of four
years,
six years and three years for technology-based, marketing-related and customer-related intangible assets, respectively. At September 30,
2012, the remaining IPR&D of $27 million consisted of five projects and are expected to be completed over the next year . Upon completion,
each IPR&D project will be amortized over its useful life; useful lives for IPR&D are expected to range between four to five years. The
Company’s results of operations for fiscal 2011 included the operating results of Atheros since the date of acquisition, the amounts of which
were not material.
The following table presents unaudited pro forma financial information for fiscal 2011 and 2010 that combines the results of operations of
Qualcomm and Atheros as though the companies had been combined as of the beginning of fiscal 2010. This unaudited pro forma information is
presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had
taken place as of the beginning of fiscal 2010. The unaudited pro forma results presented include amortization charges for acquired intangible
assets, eliminations of intercompany transactions, adjustments for the increased fair value of acquired inventory, adjustments for incremental
stock-based compensation expense related to the unearned portion of Atheros stock options and restricted stock units assumed and adjustments
for depreciation expense for property, plant and equipment and related tax effects.
During fiscal 2011, the Company acquired nine other businesses for total cash consideration of $466 million . Technology-based intangible
assets recognized in the amount of $150 million are being amortized on a straight-line basis over a weighted-average useful life of five years.
Goodwill of $276 million was recognized in these transactions, of which $234 million is expected to be deductible for tax purposes.
During fiscal 2010, the Company acquired six businesses for total cash consideration of $50 million . Technology-based intangible assets
recognized in the amount of $32 million are being amortized on a straight-line basis over a weighted-average useful life of 11 years.
Note 11. Fair Value Measurements
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or
most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable
accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and
minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that
market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the
Company. Unobservable inputs are inputs that reflect the Company’
s assumptions about the factors that market participants would use in valuing
the asset or
F- 29
Current assets
$
926
Amortizable intangible assets:
Technology-based intangible assets
692
Marketing-related intangible assets
50
Customer-related intangible assets
114
In-process research and development (IPR&D)
150
Goodwill
1,772
Other assets
78
Total assets
3,782
Liabilities
(313
)
$
3,469
2011 2010
(In millions)
Revenues
$
15,583
$
11,867
Net income attributable to Qualcomm
4,304
3,013