Qualcomm 2014 Annual Report Download - page 75

QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company believes, more likely than not, that it will have sufficient taxable income after deductions related to share-based awards to
utilize the majority of its deferred tax assets. At September 28, 2014 , the Company has provided a valuation allowance on certain foreign
deferred tax assets, state net operating losses and state net capital losses of $9 million , $50 million and $1 million , respectively. The valuation
allowances reflect the uncertainties surrounding the Company’s ability to generate sufficient future taxable income in certain foreign and state
tax jurisdictions to utilize its net operating losses and the Company’s ability to generate sufficient capital gains to utilize all capital losses.
A summary of the changes in the amount of unrecognized tax benefits for fiscal 2014 , 2013 and 2012 follows (in millions):
The Company does not expect any unrecognized tax benefits recorded at September 28, 2014
to result in a significant cash payment in fiscal
2015 . Unrecognized tax benefits at September 28, 2014 included $85 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 2014 was primarily due to an agreement reached with the IRS on components of the Company’
s fiscal 2013
tax return. The increase in unrecognized tax benefits in fiscal 2013 was primarily due to tax positions related to transfer pricing. 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 was partially offset by an increase in unrecognized tax benefits generated in fiscal 2012. The Company does not believe that it
is reasonably possible that the total amounts of unrecognized tax benefits at September 28, 2014 will significantly increase or decrease in fiscal
2015 . Interest expense related to uncertain tax positions was negligible in fiscal 2014 , 2013 and 2012 . The amount of accrued interest and
penalties was negligible at September 28, 2014 and September 29, 2013 .
Cash amounts paid for income taxes, net of refunds received, were $1.2 billion , $1.1 billion and $1.3 billion for fiscal 2014 , 2013 and
2012 , respectively.
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 28, 2014 and September 29, 2013 , 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.
F- 19
2014 2013 2012
Beginning balance of unrecognized tax benefits
$
221
$
86
$
96
Additions based on prior year tax positions
1
1
—
Reductions for prior year tax positions and lapse in statute of limitations
(67
)
—
(
18
)
Additions for current year tax positions
5
145
10
Settlements with taxing authorities
(73
)
(11
)
(2
)
Ending balance of unrecognized tax benefits
$
87
$
221
$
86