UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark one)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-19528

QUALCOMM Incorporated

(Exact name of registrant as specified in its charter)

Delaware		95-3685934
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
5775 Morehouse Dr., San Diego, California		92121-1714
(Address of principal executive offices)		(Zip Code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days. Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

     The number of shares outstanding of each of the issuer’s classes of common stock, as of the close of business on April 19, 2010, were as follows:

Class		Number of Shares
Common Stock, $0.0001 per share par value		1,640,372,747

 

 

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Operations			4
Condensed Consolidated Statements of Cash Flows			5
Notes to Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3. Quantitative and Qualitative Disclosures About Market Risk			49
Item 4. Controls and Procedures			51
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			51
Item 1A. Risk Factors			51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			51
Item 3. Defaults Upon Senior Securities			52
Item 4. [Removed and Reserved]			52
Item 5. Other Information			52
Item 6. Exhibits			52
SIGNATURES
CERTIFICATIONS
EX-10.87
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

QUALCOMM Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)

		March 28,				September 27,
		2010				2009
ASSETS
Current assets:
Cash and cash equivalents		$	2,553			$	2,717
Marketable securities			8,603				8,352
Accounts receivable, net			680				700
Inventories			402				453
Deferred tax assets			204				149
Other current assets			210				199
Total current assets			12,652				12,570
Marketable securities			7,057				6,673
Deferred tax assets			1,376				843
Property, plant and equipment, net			2,374				2,387
Goodwill			1,483				1,492
Other intangible assets, net			3,093				3,065
Other assets			462				415
Total assets		$	28,497			$	27,445
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable		$	545			$	636
Payroll and other benefits related liabilities			368				480
Unearned revenues			592				441
Income taxes payable			764				29
Other current liabilities			1,061				1,227
Total current liabilities			3,330				2,813
Unearned revenues			3,687				3,464
Other liabilities			760				852
Total liabilities			7,777				7,129
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value; issuable in series; 8 shares authorized; none outstanding at March 28, 2010 and September 27, 2009			—				—
Common stock, $0.0001 par value; 6,000 shares authorized; 1,640 and 1,669 shares issued and outstanding at March 28, 2010 and September 27, 2009, respectively			—				—
Paid-in capital			7,613				8,493
Retained earnings			12,287				11,235
Accumulated other comprehensive income			820				588
Total stockholders’ equity			20,720				20,316
Total liabilities and stockholders’ equity		$	28,497			$	27,445

See Notes to Condensed Consolidated Financial Statements.

QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)

		Three Months Ended								Six Months Ended
		March 28,				March 29,				March 28,				March 29,
		2010				2009				2010				2009
Revenues:
Equipment and services		$	1,595			$	1,412			$	3,257			$	2,835
Licensing and royalty fees			1,068				1,043				2,076				2,137
Total revenues			2,663				2,455				5,333				4,972
Operating expenses:
Cost of equipment and services revenues			809				738				1,624				1,493
Research and development			648				604				1,244				1,207
Selling, general and administrative			430				375				810				789
Litigation settlement, patent license and other related items (Note 8)			—				748				—				748
Total operating expenses			1,887				2,465				3,678				4,237
Operating income (loss)			776				(10	)			1,655				735
Investment income (loss), net (Note 5)			189				(91	)			361				(385	)
Income (loss) before income taxes			965				(101	)			2,016				350
Income tax expense			(191	)			(188	)			(401	)			(298	)
Net income (loss)		$	774			$	(289	)		$	1,615			$	52
Basic earnings (loss) per common share		$	0.47			$	(0.18	)		$	0.97			$	0.03
Diluted earnings (loss) per common share		$	0.46			$	(0.18	)		$	0.96			$	0.03
Shares used in per share calculations:
Basic			1,662				1,651				1,667				1,652
Diluted			1,678				1,651				1,685				1,665
Dividends per share announced		$	0.17			$	0.16			$	0.34			$	0.32

See Notes to Condensed Consolidated Financial Statements.

QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

		Six Months Ended
		March 28, 2010				March 29, 2009
Operating Activities:
Net income		$	1,615			$	52
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			329				306
Revenues related to non-monetary exchanges			(68	)			(57	)
Income tax provision (less than) in excess of income tax payments			(6	)			166
Non-cash portion of share-based compensation expense			304				285
Incremental tax benefit from stock options exercised			(31	)			(32	)
Net realized (gains) losses on marketable securities and other investments			(182	)			33
Impairment losses on marketable securities and other investments			73				601
Other items, net			(4	)			(20	)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net			35				2,824
Inventories			52				113
Other assets			(70	)			(30	)
Trade accounts payable			(81	)			(103	)
Payroll, benefits and other liabilities			(239	)			710
Unearned revenues			305				(84	)
Net cash provided by operating activities			2,032				4,764
Investing Activities:
Capital expenditures			(196	)			(468	)
Purchases of available-for-sale securities			(4,480	)			(4,296	)
Proceeds from sale of available-for-sale securities			4,241				2,461
Cash received for partial settlement of investment receivables			33				317
Other investments and acquisitions, net of cash acquired			(28	)			(40	)
Change in collateral held under securities lending			—				173
Other items, net			3				6
Net cash used by investing activities			(427	)			(1,847	)
Financing Activities:
Proceeds from issuance of common stock			484				101
Incremental tax benefit from stock options exercised			31				32
Repurchase and retirement of common stock			(1,715	)			(285	)
Dividends paid			(563	)			(528	)
Change in obligations under securities lending			—				(173	)
Other items, net			(1	)			(3	)
Net cash used by financing activities			(1,764	)			(856	)
Effect of exchange rate changes on cash			(5	)			(9	)
Net (decrease) increase in cash and cash equivalents			(164	)			2,052
Cash and cash equivalents at beginning of period			2,717				1,840
Cash and cash equivalents at end of period		$	2,553			$	3,892

See Notes to Condensed Consolidated Financial Statements.

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 – Basis of Presentation

     Financial Statement Preparation. The accompanying interim condensed consolidated financial statements have been prepared by QUALCOMM Incorporated (the Company or QUALCOMM), without audit, in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all information and footnotes necessary for a fair presentation of its consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States. The condensed consolidated balance sheet at September 27, 2009 was derived from the audited financial statements at that date but may not include all disclosures required by accounting principles generally accepted in the United States. The Company operates and reports using a 52-53 week fiscal year ending on the last Sunday in September. The three-month and six-month periods ended March 28, 2010 and March 29, 2009 included 13 weeks and 26 weeks, respectively.

     In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, which are only normal and recurring, necessary for a fair statement of results of operations, financial position and cash flows. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 2009. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s financial statements and the accompanying notes. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year presentation.

     Revenue Recognition. Beginning in the first quarter of fiscal 2010, the Company elected to early adopt the Financial Accounting Standards Board’s (FASB) amended accounting guidance for revenue recognition that (a) removes tangible products containing software components and non-software components that function together to deliver the product’s essential functionality from the scope of software revenue recognition guidance; and (b) eliminates the use of the residual method for arrangements with multiple deliverables and requires entities to allocate revenue using the relative selling price method. This new guidance applies to applicable transactions originating or materially modified after September 27, 2009. The adoption of this new guidance did not have a material impact on the timing or pattern of revenue recognition.

     Earnings (Loss) Per Common Share. Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s share-based compensation plans and the weighted-average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of share equivalents, which is calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an option, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the estimated tax benefits that would be recorded in paid-in capital, if any, when the option is exercised are assumed to be used to repurchase shares in the current period. Share-based awards with market conditions are included in the computation of earnings per share if they are dilutive and if the established conditions have been satisfied or would have been satisfied at the reporting date. The incremental dilutive common share equivalents, calculated using the treasury stock method, for the three months and six months ended March 28, 2010 were 16,227,000 and 17,935,000, respectively. Due to the net loss for the three months ended March 29, 2009, the assumed exercise of 221,307,000 common share equivalents had an anti-dilutive effect and were excluded from the computation of diluted loss per share. The incremental dilutive common share equivalents, calculated using the treasury stock method, for the six months ended March 29, 2009 were 13,281,000.

     Employee stock options to purchase approximately 151,396,000 and 136,623,000 shares of common stock during the three months and six months ended March 28, 2010, respectively, and employee stock options to purchase approximately 157,035,000 shares of common stock during the six months ended March 29, 2009, were outstanding but not included in the computation of diluted earnings per common share because the effect on diluted earnings per share would be anti-dilutive. The computation of diluted earnings per share for the three months and

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

six months ended March 28, 2010 excluded 3,900 and 184,000 performance-based stock units issued during fiscal 2010, respectively, because the effect on diluted earnings per share would be anti-dilutive. The computation of diluted earnings per share for the six months ended March 29, 2009 excluded 55,000 restricted stock units issued during fiscal 2008 because the effect on diluted earnings per share would be anti-dilutive.

     Comprehensive Income (Loss). Total comprehensive income (loss) consisted of the following (in millions):

		Three Months Ended								Six Months Ended
		March 28,				March 29,				March 28,				March 29,
		2010				2009				2010				2009
Net income (loss)		$	774			$	(289	)		$	1,615			$	52
Other comprehensive income (loss):
Foreign currency translation			(10	)			(2	)			(2	)			(60	)
Noncredit other-than-temporary impairment losses and subsequent changes in fair value related to certain marketable debt securities, net of income taxes			12				—				20				—
Net unrealized gains (losses) on other marketable securities and derivative instruments, net of income taxes			162				120				331				(948	)
Reclassification of net realized (gains) losses on marketable securities and derivative instruments included in net income, net of income taxes			(103	)			4				(164	)			26
Reclassification of other-than-temporary losses on marketable securities included in net income, net of income taxes			15				172				47				490
Total other comprehensive income (loss)			76				294				232				(492	)
Total comprehensive income (loss)		$	850			$	5			$	1,847			$	(440	)

Components of accumulated other comprehensive income consisted of the following (in millions):

		March 28,				September 27,
		2010				2009
Noncredit other-than-temporary impairment losses and subsequent changes in fair value related to certain marketable debt securities, net of income taxes		$	75			$	71
Net unrealized gains on other marketable securities, net of income taxes			780				574
Net unrealized gains (losses) on derivative instruments, net of income taxes			7				(17	)
Foreign currency translation			(42	)			(40	)
		$	820			$	588

     At March 28, 2010, the accumulated noncredit other-than-temporary impairment losses included $42 million of other-than-temporary losses on marketable debt securities related to factors other than credit, net of income taxes.

     Share-Based Payments. Total estimated share-based compensation expense was as follows (in millions):

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

		Three Months Ended								Six Months Ended
		March 28,				March 29,				March 28,				March 29,
		2010				2009				2010				2009
Cost of equipment and services revenues		$	10			$	10			$	21			$	20
Research and development			75				68				147				137
Selling, general and administrative			69				62				137				128
Share-based compensation expense before income taxes			154				140				305				285
Related income tax (benefit) expense (1)			(56	)			5				(93	)			(42	)
Share-based compensation expense, net of income taxes		$	98			$	145			$	212			$	243

     The Company recorded $38 million and $31 million in share-based compensation expense during the six months ended March 28, 2010 and March 29, 2009, respectively, related to share-based awards granted during those periods. In addition, for the six months ended March 28, 2010 and March 29, 2009, $31 million and $32 million, respectively, were reclassified to reduce net cash provided by operating activities with an offsetting increase in net cash used by financing activities to reflect the incremental tax benefits from stock options exercised in those periods. At March 28, 2010, total unrecognized compensation cost related to non-vested stock options granted prior to that date was $1.3 billion, which is expected to be recognized over a weighted-average period of 3.1 years. Net stock options, after forfeitures and cancellations, granted during the six months ended March 28, 2010 and March 29, 2009 represented 1.1% and 1.2%, respectively, of outstanding shares as of the beginning of each fiscal period. Total stock options granted during the six months ended March 28, 2010 and March 29, 2009 represented 1.4% and 1.3%, respectively, of outstanding shares as of the end of each fiscal period.

     During the three months ended December 27, 2009, the Company granted approximately 703,000 performance-based stock units to certain employees, of which approximately 44,000 units were forfeited as of March 28, 2010. The remaining 659,000 performance-based stock units (representing a maximum share payout of approximately 824,000 common shares) were unvested at March 28, 2010. The performance-based stock units vest three years from the date of grant based on the attainment of certain total shareholder return performance measures and the employee’s continued service through the vest date. The aggregate fair value of the performance-based stock units outstanding at March 28, 2010 of $30 million, which was estimated using a Monte Carlo simulation, will be recorded over the three-year vesting period.

     During the three months ended March 28, 2010, the Company granted approximately 53,000 deferred stock units and approximately 5,000 restricted stock units to members of its Board of Directors, all of which remain unvested at March 28, 2010. The awards are classified as liability instruments and are remeasured to fair value at the end of each reporting period. The aggregate fair value of the awards was $2 million at March 28, 2010.

Note 2 — 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 liability. There are three levels of inputs that may be used to measure fair value:

	•		Level 1 includes financial instruments for which quoted market prices for identical instruments are available in active markets.
	•		Level 2 includes financial instruments for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets with insufficient volume

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

			or infrequent transactions (less active markets) or model-driven valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
	•		Level 3 includes financial instruments for which fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including the Company’s own assumptions.

     Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

     The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at March 28, 2010 (in millions):

		Level 1				Level 2				Level 3				Total
Assets
Cash equivalents		$	1,502			$	809			$	—			$	2,311
Marketable securities
U.S. Treasury securities and government-related securities			5				1,162				—				1,167
Corporate bonds and notes			—				5,461				—				5,461
Mortgage- and asset-backed securities			—				795				12				807
Auction rate securities			—				—				176				176
Non-investment-grade debt securities			—				2,988				15				3,003
Common and preferred stock			1,142				559				—				1,701
Equity mutual and exchange-traded funds			1,026				—				—				1,026
Debt mutual funds			—				2,319				—				2,319
Total marketable securities			2,173				13,284				203				15,660
Derivative instruments			—				28				—				28
Other investments (1)			133				—				—				133
Total assets measured at fair value		$	3,808			$	14,121			$	203			$	18,132
Liabilities
Derivative instruments		$	—			$	16			$	—			$	16
Other liabilities (1)			133				—				—				133
Total liabilities measured at fair value		$	133			$	16			$	—			$	149

     Marketable Securities. With the exception of auction rate securities, the Company obtains pricing information from quoted market prices, recognized independent pricing vendors or multiple pricing vendors, or quotes from brokers/dealers. The Company conducts reviews of its primary pricing vendors to validate that the inputs used in that vendor’s pricing process are deemed to be observable as defined in the standard.

     The fair value of other government-related securities and investment- and non-investment-grade corporate bonds and notes is generally determined using standard observable inputs, including matrix pricing or reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids and/or offers.

     The fair value of debt mutual funds is determined based on published net asset values. Debt mutual funds are included in Level 2 of the fair value hierarchy if the net asset values are reported other than daily or if the mutual funds are considered illiquid. The Company looks to the characteristics of the underlying collateral to assess the fund’s valuation and to determine whether fair value is determined using observable or unobservable inputs.

     The fair value of mortgage- and asset-backed securities is derived from the use of matrix pricing or cash flow pricing models in which inputs are observable, including contractual terms, maturity, prepayment speeds, credit rating and securitization structure, to determine the timing and amount of future cash flows. Certain mortgage- and

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

asset-backed securities, principally those that are rated below AAA, require use of significant unobservable inputs to estimate fair value, including significant assumptions about prioritization of the payment schedule, default likelihood, recovery rates and prepayment speed.

     The fair value of auction rate securities is estimated by the Company using a discounted cash flow model that incorporates transaction details such as contractual terms, maturity and timing and amount of future cash flows, as well as assumptions related to liquidity and credit valuation adjustments of market participants. Though the vast majority of the securities are pools of student loans guaranteed by the U.S. government, prepayment speeds and illiquidity discounts are considered significant unobservable inputs. Therefore, auction rate securities are included in Level 3.

     Derivative Instruments. Derivative instruments include foreign currency option contracts to hedge certain foreign currency transactions. Derivative instruments are valued using standard calculations/models that are primarily based on observable inputs, including foreign currency exchange rates, volatilities and interest rates. Therefore, derivative instruments are included in Level 2.

     Activity between Levels of the Fair Value Hierarchy. There were no significant transfers between Level 1 and Level 2 during the six months ended March 28, 2010 or March 29, 2009. When a determination is made to classify an asset or liability within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. The following table includes the activity for marketable securities classified within Level 3 of the valuation hierarchy (in millions):

		Six Months Ended March 28, 2010
		Auction rate				Other marketable
		securities				securities				Total
Beginning balance of Level 3 marketable securities		$	174			$	31			$	205
Total realized and unrealized (losses) gains:
Included in investment income (loss), net			—				2				2
Included in other comprehensive income			7				—				7
Settlements			(5	)			(10	)			(15	)
Transfers into Level 3			—				4				4
Ending balance of Level 3 marketable securities		$	176			$	27			$	203

		Six Months Ended March 29, 2009
		Auction rate				Other marketable
		securities				securities				Total
Beginning balance of Level 3 marketable securities		$	186			$	25			$	211
Total realized and unrealized (losses) gains:
Included in investment income (loss), net			—				(8	)			(8	)
Included in other comprehensive income			(12	)			3				(9	)
Settlements			(3	)			(8	)			(11	)
Transfers into Level 3			—				15				15
Ending balance of Level 3 marketable securities		$	171			$	27			$	198

     The Company’s policy is to recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal month in which the actual event or change in circumstances that caused the transfer occurs. Transfers into Level 3 in the six-month periods ended March 28, 2010 and March 29, 2009 consisted of debt securities with significant inputs that became unobservable as a result of an increased likelihood of a shortfall in contractual cash flows or a significant downgrade in the credit ratings.

     Nonrecurring Fair Value Measurements. The Company measures certain assets at fair value on a nonrecurring basis. These assets include cost and equity method investments when they are deemed to be other-than-temporarily impaired, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property, plant and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired. During the six months ended March 28, 2010 and March 29, 2009, the Company recorded $6 million and $9 million, respectively, in other-than-temporary impairments on cost and equity method

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

investments, which had carrying values of $15 million and $1 million at March 28, 2010 and March 29, 2009, respectively. The fair value of these investments was measured using financial metrics, comparison to other private and public companies and analysis of the financial condition and near-term prospects of the issuer, including recent financing activities and their capital structure as well as other economic variables. These fair value measurements were classified as Level 3 because the Company used significant unobservable inputs to value them, principally because the issuers are non-public entities.

Note 3 — Marketable Securities

     Marketable securities were comprised as follows (in millions):

		Current								Noncurrent
		March 28,				September 27,				March, 28				September 27,
		2010				2009				2010				2009
Available-for-sale:
U.S. Treasury securities and government-related securities		$	1,162			$	1,407			$	5			$	—
Corporate bonds and notes			4,223				3,988				1,238				1,204
Mortgage- and asset-backed securities			766				821				41				36
Auction rate securities			—				—				176				174
Non-investment-grade debt securities			28				21				2,975				2,719
Common and preferred stock			105				140				1,596				1,377
Equity mutual and exchange-traded funds			—				—				1,026				948
Debt mutual funds			2,319				1,975				—				215
		$	8,603			$	8,352			$	7,057			$	6,673

     As of March 28, 2010, the contractual maturities of available-for-sale debt securities were as follows (in millions):

Years to Maturity																No Single
Less Than				One to				Five to				Greater Than				Maturity
One Year				Five Years				Ten Years				Ten Years				Date				Total
$	2,968			$	4,208			$	883			$	591			$	4,283			$	12,933

     Securities with no single maturity date included mortgage- and asset-backed securities, auction rate securities, non-investment-grade debt securities and debt mutual funds.

     The Company recorded realized gains and losses on sales of available-for-sale marketable securities as follows (in millions):

										Net
		Gross				Gross				Realized
		Realized				Realized				Gains
		Gains				Losses				(Losses)
For the three months ended
March 28, 2010		$	86			$	(6	)		$	80
March 29, 2009			12				(12	)			—
For the six months ended
March 28, 2010		$	194			$	(12	)		$	182
March 29, 2009			32				(65	)			(33	)

     Available-for-sale securities were comprised as follows (in millions):

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

						Unrealized				Unrealized
		Cost				Gains				Losses				Fair Value
March 28, 2010
Equity securities		$	2,327			$	419			$	(19	)		$	2,727
Debt securities			12,349				607				(23	)			12,933
		$	14,676			$	1,026			$	(42	)		$	15,660
September 27, 2009
Equity securities		$	2,282			$	340			$	(157	)		$	2,465
Debt securities			12,069				530				(39	)			12,560
		$	14,351			$	870			$	(196	)		$	15,025

     The following table shows the gross unrealized losses and fair values of the Company’s investments in individual securities that have been in a continuous unrealized loss position deemed to be temporary for less than 12 months and for more than 12 months, aggregated by investment category (in millions):

		March 28, 2010
		Less than 12 months								More than 12 months
						Unrealized								Unrealized
		Fair Value				Losses				Fair Value				Losses
Corporate bonds and notes		$	549			$	(1	)		$	38			$	—
Mortgage- and asset-backed securities			127				(1	)			4				—
Auction rate securities			—				—				176				(5	)
Non-investment-grade debt securities			168				(4	)			147				(11	)
Common and preferred stock			144				(7	)			43				(3	)
Equity mutual and exchange-traded funds			180				(1	)			146				(8	)
Debt mutual funds			650				(1	)			1				—
		$	1,818			$	(15	)		$	555			$	(27	)
		September 27, 2009
		Less than 12 months								More than 12 months
						Unrealized								Unrealized
		Fair Value				Losses				Fair Value				Losses
Corporate bonds and notes		$	462			$	(1	)		$	183			$	(5	)
Mortgage- and asset-backed securities			56				(1	)			20				(1	)
Auction rate securities			23				(1	)			151				(10	)
Non-investment-grade debt securities			127				(5	)			263				(15	)
Common and preferred stock			155				(11	)			155				(16	)
Equity mutual and exchange-traded funds			44				(6	)			730				(124	)
		$	867			$	(25	)		$	1,502			$	(171	)

     The unrealized losses on the Company’s investments in marketable securities at September 27, 2009 were caused primarily by a prolonged disruption in global financial markets that included a deterioration of confidence and a severe decline in the availability of capital and demand for debt and equity securities. At March 28, 2010, the Company concluded that the unrealized losses were temporary. Further, for common and preferred stock, equity mutual and exchange-traded funds and debt mutual funds with unrealized losses, the Company has the ability and the intent to hold such securities until they recover, which is expected to be within a reasonable period of time. For debt securities with unrealized losses, the Company does not have the intent to sell, nor is it more likely than not that the Company will be required to sell, such securities before recovery or maturity.

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     The following table shows the activity for the credit loss portion of other-than-temporary impairments on debt securities held by the Company (in millions):

		Three Months				Six Months
		Ended				Ended
		March 28,				March 28,
		2010				2010
Beginning balance of credit losses		$	143			$	170
Credit losses recognized on securities previously not impaired			—				1
Reductions in credit losses related to securities sold			(6	)			(18	)
Accretion of credit losses due to an increase in cash flows expected to be collected			(3	)			(19	)
Ending balance of credit losses		$	134			$	134

Note 4 — Composition of Certain Financial Statement Items

     Inventories.

		March 28,				September 27,
		2010				2009
		(In millions)
Raw materials		$	14			$	15
Work-in-process			169				199
Finished goods			219				239
		$	402			$	453

     Intangible Assets. Gross technology-based intangible assets increased by $135 million during the six months ended March 28, 2010. The increase was primarily due to certain patents assigned to the Company pursuant to a license agreement entered into in the first quarter of fiscal 2010. The estimated fair value of these patents was determined using an income approach based on projected cash flows, on a discounted basis, over the assigned patents’ estimated useful life of approximately 16 years. The estimated fair value of such patents is being amortized on a straight-line basis over this useful life, beginning from the date the patents were assigned to the Company.

     Other Current Liabilities.

		March 28,				September 27,
		2010				2009
		(In millions)
Customer-related liabilities, including incentives, rebates and other reserves		$	585			$	461
Current portion of payable to Broadcom for litigation settlement			170				170
Accrued liability to KFTC (Note 8)			—				230
Payable for unsettled securities trades			62				101
Other			244				265
		$	1,061			$	1,227

Note 5 — Investment Income (Loss), Net

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

		Three Months Ended								Six Months Ended
		March 28,				March 29,				March 28,				March 29,
		2010				2009				2010				2009
		(In millions)								(In millions)
Interest and dividend income		$	129			$	121			$	274			$	256
Interest expense			(7	)			(4	)			(16	)			(7	)
Net realized gains (losses) on marketable securities			80				—				182				(33	)
Impairment losses on marketable securities			(15	)			(204	)			(67	)			(592	)
Impairment losses on other investments			(1	)			(5	)			(6	)			(9	)
Gains (losses) on derivative instruments			3				13				(1	)			13
Equity in losses of investees			—				(12	)			(5	)			(13	)
		$	189			$	(91	)		$	361			$	(385	)

Note 6 — Income Taxes

     The Company currently estimates its annual effective income tax rate to be approximately 21% for fiscal 2010, compared to the 23% effective income tax rate in fiscal 2009. The United States federal research and development credit expired on December 31, 2009. Therefore, the Company’s annual effective tax rate for fiscal 2010 only reflects federal research and development credits generated through December 31, 2009. The annual effective tax rate also includes tax expense of approximately $130 million that arises because deferred revenue related to the Company’s 2008 license and settlement agreements with Nokia is taxable in fiscal 2010 but the resulting deferred tax asset will reverse in future years when the Company’s state tax rate will be lower as a result of California tax legislation enacted in 2009.

     The estimated annual effective tax rate for fiscal 2010 of 21% is less than the United States federal statutory rate primarily due to benefits of approximately 22% related to foreign earnings taxed at less than the United States federal rate, partially offset by state taxes of approximately 5% and tax expense of approximately 4% related to the deferred revenue that is taxable in fiscal 2010, but for which the resulting deferred tax asset will reverse in future years when the Company’s state tax rate will be lower. The prior fiscal year rate was lower than the United States federal statutory rate primarily due to benefits related to foreign earnings taxed at less than the United States federal rate, adjustments to prior year estimates of uncertain tax positions as a result of tax audits during the year and the generation of research and development credits, partially offset by an increase in the valuation allowance related to capital losses, the revaluation of deferred items and state taxes.

Note 7 — Stockholders’ Equity

     Changes in stockholders’ equity for the six months ended March 28, 2010 were as follows (in millions):

Balance at September 27, 2009		$	20,316
Net income			1,615
Other comprehensive income			232
Repurchase of common stock			(1,715	)
Net proceeds from the issuance of common stock			487
Share-based compensation			306
Tax benefit from exercise of stock options			32
Dividends			(563	)
Other			10
Balance at March 28, 2010		$	20,720

     Stock Repurchase Program. During the six months ended March 28, 2010 and March 29, 2009, the Company repurchased and retired 43,871,000 and 8,920,000 shares of the Company’s common stock, respectively, for $1.7 billion and $284 million, respectively. 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, and the entire authorized amount remained available at March 28, 2010. The stock repurchase program has no expiration date.

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     Dividends. On March 1, 2010, the Company announced an increase in its quarterly cash dividend per share of common stock from $0.17 to $0.19, which is effective for quarterly dividends payable after March 28, 2010. On April 8, 2010, the Company announced a cash dividend of $0.19 per share on the Company’s common stock, payable on June 25, 2010 to stockholders of record as of May 28, 2010. Cash dividends announced in the six months ended March 28, 2010 and March 29, 2009 were as follows (in millions, except per share data):

		2010								2009
		Per Share				Total				Per Share				Total
First quarter		$	0.17			$	284			$	0.16			$	264
Second quarter			0.17				279				0.16				264
Total		$	0.34			$	563			$	0.32			$	528

Note 8 — Commitments and Contingencies

     Litigation. Tessera, Inc. v. QUALCOMM Incorporated: On April 17, 2007, Tessera filed a patent infringement lawsuit in the United States District Court for the Eastern Division of Texas and a complaint with the United States International Trade Commission (ITC) pursuant to Section 337 of the Tariff Act of 1930 against the Company and other companies, alleging infringement of two patents relating to semiconductor packaging structures and seeking monetary damages and injunctive and other relief. The District Court action is stayed pending resolution of the ITC proceeding, including appeals. The U.S. Patent and Trademark Office’s (USPTO) Central Reexamination Unit has issued office actions rejecting all of the asserted patent claims on the grounds that they are invalid in view of certain prior art and has made these rejections final. Tessera has appealed the rejections to the Board of Appeals and Interferences. On December 1, 2008, the Administrative Law Judge (ALJ) ruled that the patents are valid but not infringed. On May 20, 2009, however, the ITC reversed the ALJ’s determination that the patents were not infringed, and it issued the following remedial orders: (1) a limited exclusion order that bans the Company and the other named respondents from importing into the United States the accused chip packages (except to the extent those products are licensed) and (2) a cease and desist order that prohibits the Company from engaging in certain domestic activities respecting those products. The President declined to review the decision. The Company and other respondents have appealed. The ITC and the appeals court declined to stay the ITC’s decision pending appeal. The Company has shifted supply of accused chips for the United States market to a licensed supplier, Amkor. The appellate hearing is scheduled for May 7, 2010. A licensed source of supply permits the Company to continue to supply the United States market without interruption. The subject patents expire on September 24, 2010, at which time the ITC orders will cease to be operative.

     Korea Fair Trade Commission Complaint: Two U.S. companies (Texas Instruments and Broadcom) and two South Korean companies (Nextreaming and Thin Multimedia) filed complaints with the Korea Fair Trade Commission (KFTC) alleging that certain of the Company’s business practices violate South Korean antitrust regulations. As a result of its agreement with the Company, Broadcom withdrew its complaint to the KFTC in May 2009. After a hearing, the KFTC announced its ruling via press release in July 2009. On January 4, 2010, the KFTC issued its written decision, explaining its ruling that the Company violated South Korean law by offering certain discounts and rebates for purchases of its CDMA chips and for including in certain agreements language requiring the continued payment of royalties after all licensed patents have expired. The KFTC levied a fine of 273.2 billion Korean won, which was accrued in fiscal 2009 (Note 4) and paid in the second quarter of fiscal 2010, and ordered the Company to cease the practices at issue. In February 2010, the Company filed a complaint against the KFTC with the Seoul High Court appealing the KFTC’s written decision. The Company does not anticipate that the cease and desist remedies ordered will have a material effect on the results of its operations. In July 2009, the KFTC also announced that it would continue its review of the Company’s integration of multimedia functions into its chips, but it has not announced any decisions in that regard. The Company believes that its practices do not violate South Korean competition law, are grounded in sound business practice and are consistent with its customers’ desires.

     Japan Fair Trade Commission Complaint: The Japan Fair Trade Commission (JFTC) received unspecified complaints alleging that the Company’s business practices are, in some way, a violation of Japanese law. On September 29, 2009, the JFTC issued a cease and desist order (CDO) concluding that the Company’s Japanese licensees were forced to cross-license patents to the Company on a royalty-free basis and were forced to accept a

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

provision under which they agreed not to assert their essential patents against the Company’s other licensees who made a similar commitment in their license agreements with the Company. The CDO seeks to require the Company to modify its existing license agreements with Japanese companies to eliminate these provisions while preserving the license of the Company’s patents to those companies. The Company disagrees with the conclusions that it forced its Japanese licensees to agree to any provision in the parties’ agreements and that those provisions violate Japan’s Anti-Monopoly Act. The Company has invoked its right under Japanese law to an administrative hearing before the JFTC. In February 2010, the Tokyo High Court granted the Company’s motion and issued a stay of the CDO pending the administrative hearing before the JFTC. The JFTC held the first day of the hearing on February 17, 2010, and scheduled additional hearings in April and June 2010.

     Panasonic Arbitration: On August 5, 2009, Panasonic filed an arbitration demand alleging that it does not owe royalties, or owes less royalties, on its WCDMA subscriber devices sold on or after December 21, 2008, and that the Company breached the license agreement between the parties as well as certain commitments to standards setting organizations. On January 31, 2010, Panasonic amended the arbitration demand to include claims based on alleged misrepresentations and the Japanese Antimonopoly Act and increased its claim for damages to include royalties it has paid on its WCDMA subscriber devices sold prior to December 21, 2008. The arbitration demand seeks declaratory relief regarding the amount of royalties due and payable by Panasonic, as well as the return of certain royalties it had previously paid. The Company has responded to the arbitration demand, denying the allegations and requesting judgment in its favor on all claims. Although the Company believes Panasonic’s claims are without merit, it has deferred the recognition of revenue related to WCDMA subscriber unit royalties reported and paid by Panasonic in the fourth quarter of fiscal 2009 and the first six months of fiscal 2010.

     Other: The Company has been named, along with many other manufacturers of wireless phones, wireless operators and industry-related organizations, as a defendant in purported class action lawsuits, and individually filed actions pending in federal court in Pennsylvania and Washington D.C. superior court, seeking monetary damages arising out of its sale of cellular phones.

     While there can be no assurance of favorable outcomes, the Company believes the claims made by other parties in the foregoing matters are without merit and will vigorously defend the actions. The Company has not recorded any accrual for contingent liabilities associated with the legal proceedings described above based on the Company’s belief that liabilities, while possible, are not probable. Further, any possible range of loss cannot be reasonably estimated at this time. The Company is engaged in numerous other legal actions arising in the ordinary course of its business and, while there can be no assurance, believes that the ultimate outcome of these actions will not have a material adverse effect on its operating results, liquidity or financial position.

     Litigation Settlement, Patent License and Other Related Items. On April 26, 2009, the Company entered into a Settlement and Patent License and Non-Assert Agreement with Broadcom. The Company agreed to pay Broadcom $891 million, of which $329 million was paid through March 28, 2010, and the remainder will be paid ratably through April 2013. The Company recorded a pre-tax charge of $783 million related to this agreement during fiscal 2009, including $748 million recorded during the three months ended March 29, 2009. At March 28, 2010, the carrying value of the liability was $534 million, which also approximated the fair value of the contractual liability net of imputed interest.

     Indemnifications. In general, the Company does not agree to indemnify its customers and licensees for losses sustained from infringement of third-party intellectual property. However, the Company is contingently liable under certain product sales, services, license and other agreements to indemnify certain customers against certain types of liability and/or damages arising from qualifying claims of patent infringement by products or services sold or provided by the Company. The Company’s obligations under these agreements may be limited in terms of time and/or amount, and in some instances, the Company may have recourse against third parties for certain payments made by the Company. These indemnification arrangements are not initially measured and recognized at fair value because they are deemed to be similar to product warranties in that they relate to claims and/or other actions that could impair the ability of the Company’s direct or indirect customers to use the Company’s products or services. Accordingly, the Company records liabilities resulting from the arrangements when they are probable and can be reasonably estimated. Reimbursements under indemnification arrangements have not been material to the Company’s consolidated financial statements. The Company has not recorded any accrual for contingent liabilities at March 28, 2010 associated with these indemnification arrangements, other than negligible amounts for

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

reimbursement of legal costs, based on the Company’s belief that additional liabilities, while possible, are not probable. Further, any possible range of loss cannot be estimated at this time.

     Purchase Obligations. The Company has agreements with suppliers and other parties to purchase inventory, other goods, services and long-lived assets. Noncancelable obligations under these agreements at March 28, 2010 for the remainder of fiscal 2010 and for each of the subsequent four years from fiscal 2011 through 2014 were approximately $899 million, $174 million, $120 million, $40 million and $15 million, respectively, and $85 million thereafter. Of these amounts, for the remainder of fiscal 2010 and for fiscal 2011, commitments to purchase integrated circuit product inventories comprised $725 million and $24 million, respectively.

     Leases. The Company leases certain of its facilities and equipment under noncancelable operating leases, with terms ranging from less than one year to 35 years and with provisions in certain leases for cost-of-living increases. The Company leases certain property under capital lease agreements that expire at various dates through 2043. Capital lease obligations are included in other liabilities. The future minimum lease payments for all capital leases and operating leases at March 28, 2010 were as follows (in millions):

		Capital				Operating
		Leases				Leases				Total
Remainder of fiscal 2010		$	8			$	44			$	52
2011			16				88				104
2012			15				59				74
2013			15				31				46
2014			16				23				39
Thereafter			419				240				659
Total minimum lease payments		$	489			$	485			$	974
Deduct: Amounts representing interest			281
Present value of minimum lease payments			208
Deduct: Current portion of capital lease obligations			2
Long-term portion of capital lease obligations		$	206

Note 9 — Segment Information

     The Company is organized on the basis of products and services. The Company aggregates four of its divisions into the Qualcomm Wireless & Internet segment. Reportable segments are as follows:

	•		Qualcomm CDMA Technologies (QCT) — develops and supplies integrated circuits and system software for wireless voice and data communications, multimedia functions and global positioning system products based on its CDMA technology and other technologies;
	•		Qualcomm Technology Licensing (QTL) — grants licenses to use portions of the Company’s intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products, including, without limitation, products implementing cdmaOne, CDMA2000, WCDMA, CDMA TDD (including TD-SCDMA), GSM/GPRS/EDGE and/or OFDMA standards and their derivatives, and collects license fees and royalties in partial consideration for such licenses;
	•		Qualcomm Wireless & Internet (QWI) — comprised of:

	•		Qualcomm Internet Services (QIS) — provides content enablement services for the wireless industry and push-to-talk and other products and services for wireless network operators;
	•		Qualcomm Government Technologies (QGOV) — provides development, hardware and analytical expertise to United States government agencies involving wireless communications technologies;
	•		Qualcomm Enterprise Services (QES) — provides satellite- and terrestrial-based two-way data messaging, position reporting, wireless application services and managed data services to transportation and logistics companies and other enterprise companies; and

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

•

Firethorn — builds and manages software applications that enable financial institutions and wireless operators to offer mobile commerce services.

•

Qualcomm Strategic Initiatives (QSI) — manages the Company’s strategic investment activities, including FLO TV Incorporated (FLO TV), the Company’s wholly-owned wireless multimedia operator subsidiary. QSI makes strategic investments in companies that the Company believes will open new markets for CDMA technology, support the design and introduction of new CDMA-based products or possess unique capabilities or technology.

     The Company evaluates the performance of its segments based on earnings (loss) before income taxes (EBT). EBT includes the allocation of certain corporate expenses to the segments, including depreciation and amortization expense related to unallocated corporate assets. Certain income and charges are not allocated to segments in the Company’s management reports because they are not considered in evaluating the segments’ operating performance. Unallocated income and charges include certain investment income (loss), certain share-based compensation and certain research and development expenses and marketing expenses that were not deemed to be directly related to the businesses of the segments. The table below presents revenues and EBT for reportable segments (in millions):

																		Reconciling
		QCT				QTL				QWI				QSI				Items				Total
For the three months ended:
March 28, 2010
Revenues		$	1,537			$	974			$	152			$	2			$	(2	)		$	2,663
EBT			344				821				(1	)			(136	)			(63	)			965
March 29, 2009
Revenues		$	1,316			$	954			$	176			$	8			$	1			$	2,455
EBT			217				839				25				(102	)			(1,080	)			(101	)
For the six months ended:
March 28, 2010
Revenues		$	3,144			$	1,891			$	294			$	4			$	—			$	5,333
EBT			769				1,594				8				(243	)			(112	)			2,016
March 29, 2009
Revenues		$	2,650			$	1,961			$	346			$	13			$	2			$	4,972
EBT			385				1,713				28				(200	)			(1,576	)			350

Reconciling items in the previous table were as follows (in millions):

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

		Three Months Ended								Six Months Ended
		March 28,				March 29,				March 28,				March 29,
		2010				2009				2010				2009
Revenues
Elimination of intersegment revenue		$	(5	)		$	(3	)		$	(7	)		$	(6	)
Other nonreportable segments			3				4				7				8
Reconciling items		$	(2	)		$	1			$	—			$	2
Earnings (losses) before income taxes
Unallocated cost of equipment and services revenues		$	(10	)		$	(10	)		$	(21	)		$	(20	)
Unallocated research and development expenses			(117	)			(95	)			(205	)			(178	)
Unallocated selling, general and administrative expenses			(71	)			(92	)			(144	)			(150	)
Unallocated litigation settlement			—				(748	)			—				(748	)
Unallocated investment income (loss), net			187				(82	)			365				(377	)
Other nonreportable segments			(51	)			(52	)			(105	)			(101	)
Intracompany eliminations			(1	)			(1	)			(2	)			(2	)
Reconciling items		$	(63	)		$	(1,080	)		$	(112	)		$	(1,576	)

     During the three months and six months ended March 28, 2010, unallocated research and development expenses included $75 million and $147 million, respectively, and unallocated selling, general and administrative expenses included $69 million and $137 million, respectively, of share-based compensation expense. During the three months and six months ended March 29, 2009, unallocated research and development expenses included $68 million and $137 million, respectively, and unallocated selling, general and administrative expenses included $62 million and $128 million, respectively, of share-based compensation expense. Unallocated cost of equipment and services revenues was comprised entirely of share-based compensation expense.

     Revenues from external customers and intersegment revenues were as follows (in millions):

		QCT				QTL				QWI				QSI
For the three months ended:
March 28, 2010
Revenues from external customers		$	1,532			$	974			$	152			$	2
Intersegment revenues			5				—				—				—
March 29, 2009
Revenues from external customers		$	1,314			$	954			$	175			$	8
Intersegment revenues			2				—				1				—
For the six months ended:
March 28, 2010
Revenues from external customers		$	3,137			$	1,891			$	294			$	4
Intersegment revenues			7				—				—				—
March 29, 2009
Revenues from external customers		$	2,647			$	1,960			$	344			$	13
Intersegment revenues			3				1				2				—

     Intersegment revenues are based on prevailing market rates for substantially similar products and services or an approximation thereof, but the purchasing segment may record the cost of revenues at the selling segment’s original cost. The elimination of the selling segment’s gross margin is included with other intersegment eliminations in reconciling items.

     Segment assets are comprised of accounts receivable, finance receivables and inventories for QCT, QTL and QWI. The QSI segment assets include certain marketable securities, notes receivable, wireless licenses, other investments and all assets of QSI’s consolidated subsidiaries, including FLO TV. QSI’s assets related to the FLO TV business totaled $1.3 billion at both March 28, 2010 and September 27, 2009. Reconciling items for total assets

QUALCOMM Incorporated
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

included $398 million and $389 million at March 28, 2010 and September 27, 2009, respectively, of property, plant and equipment, goodwill and other assets related to the Qualcomm MEMS Technologies division, a nonreportable segment developing display technology for mobile devices and other applications. Total segment assets differ from total assets on a consolidated basis as a result of unallocated corporate assets primarily comprised of certain cash, cash equivalents, marketable securities, property, plant and equipment, deferred tax assets, goodwill and other intangible assets of nonreportable segments. Segment assets and reconciling items were as follows (in millions):

		March 28,				September 27,
		2010				2009
QCT		$	885			$	892
QTL			28				89
QWI			143				142
QSI			1,656				1,614
Reconciling items			25,785				24,708
Total consolidated assets		$	28,497			$	27,445