What changed in this filing

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Item 9A. Controls and Procedures

2023-11-01 compared with 2022-11-02 · 287 added, 362 removed, 1048 unchanged (38% of the section changed)

20 unchanged sentences

Other Information

During the quarter ended September 24, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

4 unchanged sentences

Executive Compensation

The information required by this item is incorporated by reference to our 2023 Proxy Statement in the section titled “Executive Compensation and Related Information” under the headings “Compensation Discussion and Analysis,” “HR and Compensation Committee Report” and “Compensation Tables and Narrative Disclosures,” in the section titled “Director Compensation” and in the section titled “Stock Ownership of Certain Beneficial Owners and Management” under the heading “Compensation Committee Interlocks and Insider Participation.”

The information required by this item is incorporated by reference to our 2024 Proxy Statement in the section titled “Executive Compensation and Related Information” under the heading “Compensation Discussion and Analysis,” in the sections titled “HR and Compensation Committee Report,” “Compensation Tables and Narrative Disclosures” and “Director Compensation,” and in the section titled “Stock Ownership of Certain Beneficial Owners and Management” under the heading “Compensation Committee Interlocks and Insider Participation.”

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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Number Exhibit Description Form Date of First Filing Exhibit Number Filed Herewith

2.1 Agreement and Plan of Merger, dated as of January 12, 2021, among Qualcomm Technologies, Inc., Nile Acquisition Corporation and NuVia, Inc.

8-K 1/13/2021 2.1

2.1 Agreement and Plan of Merger, dated as of October 4, 2021, by and among QUALCOMM Incorporated, SSW HoldCo LP, SSW Merger Sub Corp and Veoneer, Inc.

18 unchanged sentences

8-K 5/31/2017 4.2

4.7 Form of Floating Rate Notes due 2023.

8-K 5/31/2017 4.5

4.7 Form of 2.900% Notes due 2024.

4 unchanged sentences

8-K 5/31/2017 4.11

4.11 Form of 4.300% Notes due 2047.

8-K 5/31/2017 4.11

4.10 Officers’ Certificate, dated May 8, 2020, for the 2.150% Notes due 2030 and the 3.250% Notes due 2050.

14 unchanged sentences

10-Q 2/3/2021 4.24

Number Exhibit Description Form Date of First Filing Exhibit Number Filed Herewith

4.18 Form of 1.650% Notes due 2032.

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8-K 5/9/2022 4.4

Number Exhibit Description Form Date of First Filing Exhibit Number Filed Herewith

4.22 Officers’ Certificate, dated November 9, 2022, for the 5.400% Notes due 2033 and the 6.000% Notes due 2053.

11/9/2022 4.2

4.23 Form of 5.400% Notes due 2033.

11/9/2022 4.3

4.24 Form of 6.000% Notes due 2053.

11/9/2022 4.4

4.25 Description of registrant’s securities.

10-K 11/6/2019 4.15

8-K 12/10/2020 10.1

10.2 LIBOR Transition Amendment to Credit Agreement, dated as of December 21, 2021, by and between QUALCOMM Incorporated and Bank of America, N.A., as administrative agent.

10-Q 2/2/2022 10.25

10.3 Investment and Separation Matters Agreement, dated as of October 4, 2021, by and among QUALCOMM Incorporated, SSW HoldCo LP and SSW Merger Sub Corp.

8-K 10/4/2021 10.1

10.4 Letter Agreement, dated as of January 24, 2022, by and among QUALCOMM Incorporated, SSW HoldCo LP and SSW Merger Sub Corp and SSW Investors LP.

10-Q 4/27/2022 10.27

10.1 Credit Agreement, dated as of December 8, 2020, among QUALCOMM Incorporated, the lenders party thereto, the letter of credit issuers party thereto and Bank of America, N.A., as administrative agent, swing line lender and a letter of credit issuer (as amended by the LIBOR Transition Amendment dated as of December 21, 2021 and as further amended by Amendment No.

2 dated as of March 10, 2023).

5/3/2023 10.1

10.2 Form of Indemnity Agreement between the Company and its directors and officers.

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10-Q 4/25/2018 10.62

10.8 Form of Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Performance Stock Unit Award RTSR Shares Grant Notice and ROIC Shares Grant Notice, and Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Performance Stock Unit Award Agreement (September 30, 2019 - September 25, 2022 Performance Period).

10-K 11/6/2019 10.29

10.5 QUALCOMM Incorporated 2023 Long-Term Incentive Plan .

05/3/2023 10.26

10.6 Form of Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Performance Stock Unit Award Grant Notice and Executive Performance Stock Unit Award Agreement (2020 Form).

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10-K 11/3/2021 10.23

10.10 Form of Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Performance Stock Unit Award Grant Notice and Executive Performance Stock Unit Award Agreement (2022 Form).

2/2/2023 10.23

10.11 Form of Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Restricted Stock Unit Award Grant Notice and Executive Restricted Stock Unit Award Agreement (2022 Form).

2/2/2023 10.24

10.12 Form of 20 23 Annual Cash Incentive Plan Performance Unit Agreement .

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10-Q 5/3/2023 10.15

Number Exhibit Description Form Date of First Filing Exhibit Number Filed Herewith

10.15 Qualcomm Incorporated Non-Executive Officer Change in Control Severance Plan (as amended and restated).

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10-Q 2/3/2021 10.16

10.17 A mendment No.

1 to the Qualcomm Incorporated Non-Qualified Deferred Compensation Plan .

Number Exhibit Description Form Date of First Filing Exhibit Number Filed Herewith

10.18 Qualcomm Incorporated 202 3 Director Compensation Plan.

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10.19 Qualcomm Incorporated 202 4 Director Compensation Plan.

10.20 Form of Non-Employee Director Deferred Stock Unit Grant Notices and Non-Employee Director Deferred Stock Unit Agreements under the 2016 Long-Term Incentive Plan for non-employee directors residing in the United States (2016 Form).

10.20 Form s of 2016 Long-Term Incentive Plan Non-Employee Director Deferred Stock Unit Grant Notice s and Non-Employee Director Deferred Stock Unit Agreement s .

10-Q 4/25/2018 10.60

1 unchanged sentence

10-Q 4/28/21 10.4

10.22 Form of 2016 Long-Term Incentive Plan Non-Employee Director Deferred Stock Unit Grant Notice and Non-Employee Director Deferred Stock Unit Agreement (2018 Form).

10-Q 4/25/2018 10.60

10.22 Forms of Non-Employee Director Deferred Stock Unit Grant Notices and Non-Employee Director Deferred Stock Unit Agreements under the 2023 Long-Term Incentive Plan for Non-Employee Directors in the United States.

5/3/2023 10.27

10.23 Forms of Non-Employee Director Deferred Stock Unit Grant Notices and Non-Employee Director Deferred Stock Unit Agreements under the 2023 Long-Term Incentive Plan for Non-Employee Directors in Hong Kong.

5/3/2023 10.28

21 Subsidiaries of the Company.

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Akash Palkhiwala.

97 Incentive Compensation Repaymen t Policy ( Policy Relating to Recovery of Erroneously Awarded Compensation ) .

101.INS Inline XBRL Instance Document.

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Akash Palkhiwala (Principal Financial Officer)

/s/ Erin Polek Senior Vice President, Corporate Controller and Chief Accounting Officer November 2, 2022

Erin Polek (Principal Accounting Officer)

/s/ Neil Martin

Senior Vice President, Finance and Chief Accounting Officer

November 1, 2023

(Principal Accounting Officer)

/s/ Sylvia Acevedo Director November 1, 2023

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Certain amounts recorded as a reduction to revenues for customer incentive arrangements are considered variable consideration and are included in the transaction price primarily based on estimating the most likely amount expected to be provided to the customer.

The principal considerations for our determination that performing procedures relating to revenue recognition of QCT customer incentive arrangements is a critical audit matter are the significant audit effort in performing procedures and evaluating audit evidence obtained related to the completeness and accuracy of reductions to QCT revenues recognized.

The principal considerations for our determination that performing procedures relating to revenue recognition of QCT customer incentive arrangements is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence obtained related to the completeness and accuracy of reductions to revenues and accruals for QCT customer incentives arrangements recorded in the consolidated financial statements.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s review of and accounting for QCT customer incentive arrangements as well as controls relating to management’s review over the completeness and accuracy of reductions to revenues in fiscal 2022 and accruals for customer incentive arrangements as of the balance sheet date.

These procedures included testing the effectiveness of controls relating to management’s review of and accounting for QCT customer incentive arrangements as well as controls relating to management’s review over the completeness and accuracy of reductions to revenues in fiscal 2023 and accruals for QCT customer incentive arrangements as of the balance sheet date.

These procedures also included, among others, testing the completeness and accuracy of reductions to revenues and accruals for QCT customer incentive arrangements recorded in the consolidated financial statements, and recalculating, on a test basis, reductions to revenues and accruals for QCT customer incentive arrangements based upon customer-specific contractual terms.

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Retained earnings 20,733 17,840

Accumulated other comprehensive (loss) income ( 22 ) 128

Accumulated other comprehensive income (loss)

Total stockholders’ equity 21,581 18,013

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Other (Note 2)

862 ( 1,059 ) —

Total costs and expenses 28,032 28,340 23,777

1 unchanged sentence

Interest expense ( 694 ) ( 490 ) ( 559 )

Investment and other (expense) income, net ( 372 ) 1,044 66

Investment and other income (expense), net

349 ( 372 ) 1,044

Income from continuing operations before income taxes 7,443 14,998 10,274

1 unchanged sentence

Income from continuing operations 7,339 12,986 9,043

Discontinued operations, net of income taxes (Note 9) ( 50 ) — —

Discontinued operations, net of income taxes ( 107 ) ( 50 ) —

Net income $ 7,232 $ 12,936 $ 9,043

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Net income $ 7,232 $ 12,936 $ 9,043

Other comprehensive (loss) income, net of income taxes:

Foreign currency translation (losses) gains ( 433 ) 40 60

Net unrealized (losses) gains on certain available-for-sale securities ( 113 ) ( 5 ) 22

Other comprehensive income (loss), net of income taxes:

Foreign currency translation gains (losses)

140 ( 433 ) 40

Net unrealized gains (losses) on certain available-for-sale debt securities 54 ( 113 ) ( 5 )

Net unrealized gains (losses) on derivative instruments

99 361 ( 53 )

Other gains (losses) 10 35 ( 2 )

Other reclassifications included in net income 77 — ( 59 )

Total other comprehensive (loss) income ( 150 ) ( 79 ) 107

Total other comprehensive income (loss)

380 ( 150 ) ( 79 )

Comprehensive income $ 7,612 $ 12,786 $ 8,964

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Depreciation and amortization expense 1,809 1,762 1,582

Indefinite and long-lived asset impairment charges

Income tax provision less than income tax payments ( 1,269 ) ( 138 ) ( 245 )

Share-based compensation expense 2,484 2,031 1,663

Net losses (gains) on marketable securities and other investments 432 ( 1,002 ) ( 336 )

Impairment losses on marketable securities and other investments 47 33 405

Net (gains) losses on marketable securities and other investments

( 152 ) 432 ( 1,002 )

Impairment losses on other investments

Other items, net 25 ( 56 ) ( 82 )

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Acquisitions and other investments, net of cash acquired ( 235 ) ( 4,912 ) ( 1,377 )

Proceeds from sales of property, plant and equipment

Proceeds from other investments 20 132 320

Other items, net 19 41 ( 62 )

Net cash used by investing activities ( 5,804 ) ( 3,356 ) ( 5,263 )

Net cash provided (used) by investing activities from discontinued operations

1,383 ( 16 ) —

Net cash provided (used) by investing activities

762 ( 5,804 ) ( 3,356 )

Financing Activities:

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Other items, net ( 19 ) ( 34 ) ( 35 )

Net cash (used) provided by financing activities from discontinued operations

Net cash used by financing activities ( 6,663 ) ( 7,196 ) ( 6,798 )

Effect of exchange rate changes on cash and cash equivalents 30 ( 113 ) 27

Net (decrease) increase in total cash and cash equivalents ( 4,017 ) 409 ( 5,132 )

Total cash and cash equivalents at beginning of period 7,116 6,707 11,839

Total cash and cash equivalents at end of period (including $ 326 million classified as held for sale at September 25, 2022)

Net increase (decrease) in total cash and cash equivalents

5,428 ( 4,017 ) 409

Total cash and cash equivalents at beginning of period (including $ 326 classified as held for sale at September 25, 2022)

3,099 7,116 6,707

Total cash and cash equivalents at end of period (including $ 77 and $ 326 classified as held for sale at September 24, 2023 and September 25, 2022, respectively)

$ 8,527 $ 3,099 $ 7,116

See accompanying notes.

27 unchanged sentences

20,733 17,840 9,822

Accumulated other comprehensive (loss) income:

Accumulated other comprehensive income (loss):

Balance at beginning of period

Other comprehensive (loss) income ( 150 ) ( 79 ) 107

( 22 ) 128 207

Other comprehensive income (loss)

380 ( 150 ) ( 79 )

Balance at end of period

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Significant Accounting Policies

We are a global leader in the development and commercialization of foundational technologies for the wireless industry.

We are a global leader in the development and commercialization of foundational technologies for the wireless industry, including 3G, 4G and 5G wireless connectivity, and high-performance and low-power computing including on-device artificial intelligence (AI).

Our technologies and products are used in mobile devices and other wireless products, including those used in the internet of things (IoT) and automotive systems for connectivity, digital cockpit and advanced driver assistance and automated driving (ADAS/AD).

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We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents.

Cash equivalents may be comprised of money market funds, certificates of deposit, commercial paper, corporate bonds and notes, certain bank time and demand deposits and government agencies’ securities.

Cash equivalents may be comprised of money market funds, certificates of deposit, commercial paper, corporate bonds and notes, certain bank time and demand deposits, U.S.

Treasury securities and government-related securities.

The carrying amounts approximate fair value due to the short maturities of these instruments.

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We manage our exposure to foreign exchange market risks, when deemed appropriate, through the use of derivative instruments, including foreign currency forward and option contracts with financial counterparties, that may or may not be designated as hedging instruments.

At September 25, 2022 and September 26, 2021, these derivative instruments had maturity dates between one and 21 months.

These derivative instruments generally have maturity dates between one and 24 months.

Gains and losses arising from such contracts that are designated as cash flow hedging instruments are recorded as a component of accumulated other comprehensive income (loss) as gains and losses on derivative instruments, net of income taxes.

The hedging gains and losses in accumulated other comprehensive income (loss) are subsequently reclassified to revenues or costs and expenses, as applicable, in the consolidated statements of operations in the same period in which the underlying transactions affect our earnings.

The cash flows associated with derivative instruments designated as cash flow hedging instruments are classified as cash flows from operating activities in the consolidated statements of cash flows, which is the same category as the hedged transaction.

For foreign currency forward contracts not designated as hedging instruments, the changes in fair value are recorded in investment and other income (expense) , net in the period of change.

The cash flows associated with such derivative instruments not designated as hedging instruments are classified as cash flows from operating activities in the consolidated statements of cash flows, which is the same category as the hedged transaction.

The cash flows associated with such derivative instruments are classified as cash flows from operating activities in the consolidated statements of cash flows, which is the same category as the hedged transaction.

Interest Rate Swaps:

From time to time, we enter into interest rate swap agreements that allow us to effectively convert fixed-rate payments into floating-rate payments on portions of our outstanding long-term debt.

We enter into these agreements, in part, to manage interest rate risk associated with our cash equivalents and marketable securities, in addition to changes in the fair value of our outstanding debt.

We enter into these agreements to manage interest rate risk associated with our cash equivalents and marketable securities, in addition to changes in the fair value of our outstanding debt.

These transactions are designated as fair value hedges, and the gains and losses related to changes in the fair value of the interest rate swaps substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to changes in the market interest rates.

1 unchanged sentence

The interest settlement payments associated with the interest rate swap agreements are classified as cash flows from operating activities in the consolidated statements of cash flows.

During fiscal 2021, we entered into forward-starting interest rate swaps to hedge the variability of forecasted interest payments on certain anticipated debt issuances.

These have been designated as cash flow hedges of forecasted transactions.

From time to time, we also enter into forward-starting interest rate swaps to hedge the variability of forecasted interest payments on certain anticipated debt issuances.

These swaps are designated as cash flow hedges of forecasted transactions.

The gains and losses arising from such contracts are recorded as a component in accumulated other comprehensive income (loss) as gains and losses on derivative instruments.

When the anticipated debt issuances are completed, the hedging gains and losses in accumulated other comprehensive income (loss) are reclassified as interest expense over the terms of the related debt issued.

When the anticipated debt is issued, any associated swaps are terminated, and the hedging gains and losses in accumulated other comprehensive income (loss) are recorded to interest expense over the term of the hedged portions of the related debt issued.

Gross Notional Amounts:

6 unchanged sentences

$ 5,149 $ 7,707

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The gross notional amounts of our derivatives by currency were as follows (in millions):

1 unchanged sentence

2023 September 25,

British pound sterling $ 172 $ 83

Chinese renminbi $ 1,333 $ 1,920

Indian rupee 1,151 1,657

Japanese yen 8 27

United States dollar 2,181 3,744

Other 484 386

$ 5,149 $ 7,707

Other Hedging Activities.

At September 25, 2022 and September 26, 2021, we designated $ 235 million and $ 1.5 billion, respectively, of foreign currency-denominated liabilities, excluding accrued interest, related to the fine(s) imposed by the European Commission as hedges of our net investment in certain foreign subsidiary(ies).

Gains and losses arising from the portion of these balances that are designated as net investment hedges are recorded as a component of accumulated other comprehensive income (loss) as foreign currency translation adjustments.

During fiscal 2022, we discontinued the net investment hedge related to one of the fines previously recorded related to the European Commission (EC) Investigation (Note 7).

The associated foreign currency gains related to this fine previously recorded will remain in accumulated other comprehensive income (loss) until the foreign subsidiaries are sold or substantially liquidated, at which point it will be reclassified into earnings.

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements.

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The fair value of U.S.

Treasury securities and government-related securities, corporate bonds and notes and common stock is generally determined using standard observable inputs, including reported trades, quoted market prices, matrix pricing, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets and/or benchmark securities.

Treasury securities and government-related securities, corporate bonds and notes and common stock is generally determined using standard observable inputs, including reported trades, market based quotes, matrix pricing, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets and/or benchmark securities.

The fair value of mortgage- and asset-backed securities is derived from the use of matrix pricing (prices for similar securities) or, in some cases, cash flow pricing models with observable inputs, such as contractual terms, maturity, credit rating and/or securitization structure to determine the timing and amount of future cash flows.

6 unchanged sentences

Corresponding offsetting amounts related to the revaluation of our deferred compensation plan liabilities are included in operating expenses.

Other investments included in Level 3 are comprised of contingently issuable equity instruments and warrants issued in connection with certain mergers and initial public offerings of

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

our non-marketable equity investees and convertible debt instruments issued by private companies.

Other investments included in Level 3 are comprised of convertible debt instruments issued by private companies.

The inputs we use to estimate the fair values of these instruments are generally unobservable, and therefore, they are included in Level 3.

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Recoverability of inventories is assessed based on review of future customer demand that considers multiple factors, including committed purchase orders from customers as well as purchase commitment projections provided by customers and our own forecasts of customer demand, among other factors.

This valuation also requires us to make judgments and assumptions based on information currently available about market conditions, including competition, anticipated technological changes, internal product life cycle and development plans, product pricing and other broader market conditions that may impact customer demand, such as the impact of certain capacity constraints experienced across the semiconductor industry through the third quarter of fiscal 2022 and in fiscal 2021, as well as the impact of the macroeconomic environment in fiscal 2022.

This valuation also requires us to make judgments and assumptions based on information currently available about market conditions, including competition, anticipated technological changes, internal product life cycle and development plans, product pricing and other broader market conditions that may impact customer demand, such as the impact of certain capacity constraints experienced across the semiconductor industry in fiscal 2021 and through the third quarter of fiscal 2022, as well as the impact of the macroeconomic environment in fiscal 2022 and 2023.

We generally place binding purchase orders with our suppliers in advance of receiving contractually binding forecasts and/or purchase orders from our customers.

The time period between placing purchase orders with our suppliers and receiving contractually binding forecasts and/or purchase orders from our customers has increased and may continue to increase as a result of extended manufacturing lead-times, driven in part by a continued transition to leading-edge technologies and/or increased complexity in the manufacturing process of our products.

If we overestimate demand for our products, the amount of our loss will be impacted by our contractual ability to reduce inventory purchases from our suppliers.

Our manufacturing relationships generally allow for cancellation of outstanding purchase commitments, but in some cases may require incremental fees and/or the loss of amounts paid in advance related to capacity underutilization.

Further, if our customers cancel purchase orders or alter forecasts this may result in excess inventory on hand.

If we overestimate demand for our products, the amount of our loss will be impacted by our ability to reduce inventory purchases from our suppliers.

Further, if our customers cancel purchase orders or alter forecasts this may result in excess

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

inventory on hand.

Our assumptions of future product demand are inherently uncertain, and changes in our estimates and assumptions may cause us to record additional write-downs in the future if demand forecasted for specific products is greater than actual demand.

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Acquired intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite.

For intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded values.

For intangible assets acquired in a nonmonetary exchange, the estimated fair values of the assets transferred (or the estimated fair values of the assets received, if more clearly evident) are used to establish their recorded values, unless the values of neither the assets received nor the assets transferred are determinable within reasonable limits, in which case the assets received are measured based on the carrying values of the assets transferred.

For intangible assets purchased in a business combination, the estimated fair values of the assets acquired are used to establish their recorded values.

Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value.

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If goodwill is quantitatively assessed for impairment and a reporting unit’s carrying value exceeds its fair value, the difference is recorded as an impairment.

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

indefinite-lived intangible assets are quantitatively assessed for impairment, if necessary, by comparing their estimated fair values to their carrying values.

Other indefinite-lived intangible assets are quantitatively assessed for impairment, if necessary, by comparing their estimated fair values to their carrying values.

If the carrying value exceeds the fair value, the difference is recorded as an impairment.

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Revenues from sales of our products are recognized upon transfer of control to the customer, which is generally at the time of shipment.

Revenues from providing services are typically recognized over time as our performance obligation is satisfied.

Revenues from providing services are typically recognized over time as our performance obligation is

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenues from providing services and licensing system software were each less than 5 % of total revenues for all periods presented.

We grant licenses or otherwise provide rights to use portions of our intellectual property portfolio, which, among other rights, includes certain patent rights essential to and/or useful in the manufacture, sale or use of certain wireless products.

Licensees pay royalties based on their sales of products incorporating or using our licensed intellectual property and may also pay a fixed license fee in one or more installments.

Sales-based royalties are generally based upon a percentage of the wholesale (i.e., licensee’s) selling price of complete licensed products, net of certain permissible deductions (including transportation, insurance, packing costs and other items).

We broadly provide per unit royalty caps that apply to certain categories of complete wireless devices, such as smartphones, tablets, laptops and smartwatches, and provide for a maximum royalty amount payable per device.

Licensees pay per-unit royalties based on their sales of products incorporating or using our licensed intellectual property and, to a lesser extent, lump sum payments (license fees).

Per-unit royalties are generally based upon a percentage of the wholesale (i.e., licensee’s) selling price of complete licensed products, net of certain permissible deductions (including transportation, insurance, packing costs and other items), with certain products subject to per unit minimums and/or per unit caps.

Certain products may also have a fixed royalty amount per unit.

We estimate and recognize sales-based royalties on such licensed products in the period in which the associated sales occur, considering all relevant information (historical, current and forecasted) that is reasonably available to us.

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We account for a contract with a customer/licensee when it is legally enforceable, the parties are committed to perform their respective obligations, the rights of the parties regarding the goods and/or services to be transferred are identified, payment terms are identified, the contract has commercial substance and collectability of substantially all of the consideration is probable, which for product sales, is generally when a customer purchase order is executed and for licensing revenues, is generally upon execution of a license agreement.

If all such conditions are not met, revenues and any associated receivables

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

are generally not recognized until such time that the required conditions are met.

If all such conditions are not met, revenues and any associated receivables are generally not recognized until such time that the required conditions are met.

Cash collected from customers prior to a contract existing is recorded to other customer-related liabilities in other current liabilities.

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For certain QCT (Qualcomm CDMA Technologies) customer incentive arrangements, there is complexity in applying certain contractual terms to determine the amount recorded as a reduction to revenues.

For the periods presented, no significant reversals of revenues have been made related to such amounts previously recorded.

For the periods presented, no significant reversals of revenues

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

have been made related to such amounts previously recorded.

The amounts accrued for customer incentive arrangements are recorded as a reduction to accounts receivable, net or as other current liabilities based on whether we have the intent and contractual right of offset.

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Revenues recognized from sales of our products and sales-based royalties are generally included in accounts receivable, net (including unbilled receivables) based on our unconditional right to payment for satisfied or partially satisfied performance obligations.

Concentrations.

A significant portion of our revenues are concentrated with a small number of customers/licensees of our QCT and QTL (Qualcomm Technology Licensing) segments.

The comparability of customer/licensee concentrations for the periods presented are impacted by the timing of customer/licensees device launches and/or innovation cycles and other seasonal trends, among other fluctuations in demand.

Revenues from each customer/licensee that were 10% or greater of total revenues were as follows:

September 25,

2022 September 26,

2021 September 27,

Customer/licensee (w) 21 % 14 % 19 %

Customer/licensee (x) 21 23 10

Customer/licensee (y) * 13 12

Customer/licensee (z) * * 10

* Less than 10%

We rely on sole- or limited-source suppliers for some products, particularly products in our QCT segment, subjecting us to possible shortages of raw materials or manufacturing capacity.

The loss of a supplier or the inability of a supplier to meet performance or quality specifications or delivery schedules could harm our ability to meet our delivery obligations and/or negatively impact our revenues, business operations and ability to compete for future business.

Share-Based Compensation.

Share-based compensation expense for equity-classified awards, principally related to restricted stock units (RSUs), is measured at the grant date, or at the acquisition date for awards assumed in business combinations, based on the estimated fair value of the award and is recognized over the employee’s requisite service period.

The fair values of RSUs are estimated based on the fair market values of the underlying stock on the dates of grant or dates

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the RSUs are assumed.

The fair values of RSUs are estimated based on the fair market values of the underlying stock on the dates of grant or dates the RSUs are assumed.

Share-based compensation expense is adjusted to exclude amounts related to share-based awards that are expected to be forfeited.

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Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable.

Our legal costs associated with defending ourself are recorded to expense as incurred.

Our legal costs associated with defending ourselves are recorded to expense as incurred.

Foreign Currency.

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We recognize liabilities for uncertain tax positions based on a two-step process.

The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

appeals or litigation processes, if any.

The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement.

While we believe we have appropriate support for the positions taken on our tax returns, we regularly assess the potential outcomes of examinations by tax authorities in determining the adequacy of our provision for income taxes.

We continually assess the likelihood and amount of potential adjustments and adjust the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.

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Therefore, the actual liability for U.S.

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

taxes may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities.

or foreign taxes may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities.

For tax years prior to fiscal 2021, we are participating in the IRS Compliance Assurance Process program whereby we endeavor to agree with the IRS on the treatment of all issues prior to filing our federal return.

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To reflect share repurchases in the consolidated balance sheet, we (i) reduce common stock for the par value of the shares, (ii) reduce paid-in capital for the amount in excess of par to zero during the quarter in which the shares are repurchased and (iii) record the residual amount, if any, to retained earnings.

In August 2022, the Inflation Reduction Act was enacted in the United States, which included, among other items, a 1% excise tax on certain net stock repurchases after December 31, 2022.

In August 2022, the Inflation Reduction Act was enacted in the United States, which included, among other items, a 1% excise tax on certain net stock repurchases that became effective for us after December 31.

Any such excise tax on our stock repurchases will be recorded as a component of stockholders’ equity.

Earnings (Loss) Per Share.

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period.

Diluted earnings per share is computed by dividing net income by the combination of the weighted-average number of dilutive common share equivalents, comprised of shares issuable under our share-based compensation plans and shares subject to accelerated share repurchase programs, if any, and the weighted-average number of common shares outstanding during the reporting period.

Earnings Per Share.

Basic earnings per share is computed by dividing net income by the weighted-average number of common shares outstanding during the reporting period.

Diluted earnings per share is computed by dividing net income by the combination of the weighted-average number of common shares outstanding and the weighted-average number of dilutive common share equivalents, comprised of shares issuable under our share-based compensation plans, during the reporting period.

The following table provides information about the diluted earnings per share calculation (in millions):

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$ 5,042 $ 5,168

Depreciation and amortization expense related to property, plant and equipment for fiscal 2022, 2021 and 2020 was $ 1.3 billion, $ 1.0 billion and $ 772 million, respectively.

Depreciation and amortization expense related to property, plant and equipment for fiscal 2023, 2022 and 2021 was $ 1.4 billion, $ 1.3 billion and $ 1.0 billion, respectively.

Goodwill and Other Intangible Assets.

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Balance at September 26, 2021

$ 6,523 $ 723 $ 7,246

Acquisitions 3,375 12 3,387

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Customer incentives and other customer-related liabilities $ 1,821 $ 1,879

Accrual for EC fines (Note 7) 245 1,522

Income taxes payable 1,717 634

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We disaggregate our revenues by segment (Note 8), by product and service (as presented on our consolidated statements of operations), and for our QCT segment, by revenue stream, which is based on the industry and application in which our products are sold (as presented below).

Beginning in the first quarter of fiscal 2023, QCT RFFE (radio frequency front-end) revenues, which were previously presented as a separate revenue stream, are now included within our Handsets, Automotive and internet of things (IoT) revenue streams as applicable.

Prior period information has been recast to reflect this change.

RFFE revenues include revenues from the sale of 4G, 5G sub 6 and 5G millimeter wave RFFE products (a substantial portion of which relate to mobile handsets) and exclude radio frequency transceiver components.

This change aligns with changes made to our internal reporting of revenues.

We believe this change provides a more meaningful presentation in understanding QCT revenues going forward, as we expect RFFE revenues to correspond with trends in Handsets, Automotive and IoT (as applicable) and is more consistent with how our revenue diversification is viewed externally.

In certain cases, the determination of QCT revenues by industry and application requires the use of certain assumptions.

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Handsets (1) $ 22,570 $ 28,815 $ 20,475

RFFE (2) 4,330 4,158 2,362

Automotive (2) 1,872 1,509 1,110

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Total QCT revenues $ 30,382 $ 37,677 $ 27,019

(1) Includes revenues from products sold for use in mobile handsets, excluding RFFE (radio frequency front-end) components.

(2) Includes all revenues from sales of 4G, 5G sub-6 and 5G millimeter wave RFFE products (a substantial portion of which are sold for use in mobile handsets) and excludes radio frequency transceiver components.

(3) Includes revenues from products sold for use in automobiles, including connectivity, digital cockpit and advanced driver assistance and automated driving.

(1) Includes revenues from products sold for use in mobile handsets.

(2) Includes revenues from products sold for use in automobiles, including connectivity, digital cockpit and ADAS/AD.

(3) Primarily includes products sold for use in the following industries and applications:

consumer (including computing, voice and music and XR), edge networking (including mobile broadband and wireless access points) and industrial (including handhelds, retail, transportation and logistics and utilities).

Revenue recognized from performance obligations satisfied (or partially satisfied) in previous periods were as follows (in millions):

Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods generally include certain QCT sales-based royalty revenues related to system software, certain amounts related to QCT customer incentives and QTL royalty revenues recognized related to devices sold in prior periods (including adjustments to prior period royalty estimates, which includes the impact of the reporting by our licensees of actual royalties due) and were as follows (in millions):

2023 2022 2021

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$ 598 $ 788 $ 283

(1) Primarily related to certain QCT sales-based royalty revenues related to system software, certain QCT customer incentives and, to a lesser extent, QTL royalty revenues recognized related to devices sold in prior periods (including adjustments to prior period royalty estimates, which includes the impact of the reporting by our licensees of actual royalties due).

(2) Primarily related to certain QCT customer incentives, QTL revenues recognized related to devices sold in prior periods (including adjustments to prior period royalty estimates, which includes the impact of the reporting by our licensees of actual royalties due) and the release of a variable constraint against revenues not previously allocated to our segment results (Note 8).

(3) Primarily related to licensing revenues recognized in the fourth quarter of fiscal 2020 (a portion of which was attributable to fiscal 2020) resulting from the settlement with Huawei and, to a lesser extent, QTL royalties recognized related to devices sold in prior periods (including adjustments to prior period royalty estimates, which includes the impact of the reporting by our licensees of actual royalties due) and certain QCT customer incentives .

Unearned revenues (which are considered contract liabilities) consist primarily of certain customer contracts for which QCT received fees upfront and QTL license fees for intellectual property with continuing performance obligations.

In fiscal 2023 and fiscal 2022, we recognized revenues of $ 355 million and $ 609 million, respectively, that were recorded as unearned revenues at September 25, 2022 and September 26, 2021, respectively.

Remaining performance obligations, which are primarily included in unearned revenues (as presented on our consolidated balance sheet), represent the aggregate amount of the transaction price of certain customer contracts yet to be

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unearned revenues (which are considered contract liabilities) consist primarily of license fees for intellectual property with continuing performance obligations.

In fiscal 2022 and fiscal 2021, we recognized revenues of $ 609 million and $ 557 million, respectively, that were recorded as unearned revenues at September 26, 2021 and September 27, 2020, respectively.

Remaining performance obligations, substantially all of which are included in unearned revenues, represent the aggregate amount of the transaction price of certain customer contracts yet to be recognized as revenues as of the end of the reporting period and exclude revenues related to (a) contracts that have an original expected duration of one year or less and (b) sales-based royalties (i.e., future royalty revenues) pursuant to our license agreements.

Our remaining performance obligations are primarily comprised of certain customer contracts for which QTL received license fees upfront and certain customer contracts for which QCT received upfront fees for licensing system software.

At September 25, 2022, we had $ 690 million of remaining performance obligations, of which $ 451 million, $ 173 million, $ 57 million, $ 5 million and $ 1 million is expected to be recognized as revenues for each of the subsequent five years from fiscal 2023 through 2027, respectively, and $ 3 million expected thereafter.

Share-based Compensation Expense.

Total share-based compensation expense, related to all of our share-based awards, was comprised as follows (in millions):

2022 2021 2020

Cost of revenues $ 61 $ 47 $ 34

Research and development 1,537 1,234 872

Selling, general and administrative 463 389 306

Share-based compensation expense before income taxes 2,061 1,670 1,212

Related income tax benefit ( 489 ) ( 435 ) ( 238 )

$ 1,572 $ 1,235 $ 974

recognized as revenues as of the end of the reporting period and exclude revenues related to (a) contracts that have an original expected duration of one year or less and (b) sales-based royalties (i.e., future royalty revenues) pursuant to our license agreements.

Concentrations.

A significant portion of our revenues are concentrated with a small number of customers/licensees of our QCT and QTL (Qualcomm Technology Licensing) segments.

Revenues from each customer/licensee that were 10% or greater of total revenues were as follows:

September 24,

2023 September 25,

2022 September 26,

Customer/licensee (w) 27 % 21 % 23 %

Customer/licensee (x) 21 21 14

Customer/licensee (y) * * 13

* Less than 10%

We rely on sole- or limited-source suppliers for some products, particularly products in our QCT segment, subjecting us to possible shortages of raw materials or manufacturing capacity.

Other Income, Costs and Expenses.

In the third quarter of fiscal 2022, the General Court of the European Union issued a ruling annulling a decision made by the EC in fiscal 2018 (Note 7).

Other expenses in fiscal 2023 consisted of $ 712 million in total restructuring and restructuring-related charges (substantially all of which related to severance costs, resulting from certain cost reduction actions committed to in fiscal 2023) and a $ 150 million intangible asset impairment charge related to in-process research and development.

Actions associated with restructuring plans initiated in the first half of fiscal 2023 were substantially completed (including payments of the related severance) by the end of fiscal 2023.

Given the continued uncertainty in the macroeconomic and demand environment, we initiated additional restructuring actions in the fourth quarter of fiscal 2023 to enable investments in key growth and diversification opportunities.

These actions resulted in $ 385 million in accrued severance costs in the fourth quarter of fiscal 2023.

We anticipate these additional actions to be substantially completed (including payments of the related severance) in the first half of fiscal 2024.

We may incur additional restructuring and restructuring-related charges, as the actual amount of costs may differ from our current expectations and estimates.

In the third quarter of fiscal 2022, the General Court of the European Union issued a ruling annulling a decision made by the EC in fiscal 2018.

As a result of the court’s decision, we recorded a $ 1.1 billion benefit to other income in fiscal 2022.

Other expenses in fiscal 2020 consisted of $ 28 million in gains related to a favorable legal settlement.

Investment and Other (Expense) Income, Net (in millions)

Investment and Other Income (Expense), Net (in millions)

2023 2022 2021

Interest and dividend income $ 313 $ 91 $ 83

Net (losses) gains on marketable securities ( 363 ) 427 198

Net gains (losses) on marketable securities

75 ( 363 ) 427

Net gains on other investments 21 113 470

Net (losses) gains on deferred compensation plan assets ( 141 ) 130 47

Net gains (losses) on deferred compensation plan assets

86 ( 141 ) 130

Impairment losses on other investments ( 132 ) ( 47 ) ( 33 )

Net (losses) gains on derivative instruments ( 37 ) ( 14 ) 8

Equity in net (losses) earnings of investees ( 7 ) 13 ( 21 )

Net gains (losses) on foreign currency transactions 19 ( 32 ) ( 25 )

Other ( 14 ) ( 25 ) ( 33 )

$ 349 $ ( 372 ) $ 1,044

In fiscal 2020, in part due to the impact of COVID-19, certain of our investments were impaired and written down to their estimated fair values (a significant portion of which related to the full impairment of our investment in OneWeb, who filed for bankruptcy in the second quarter of fiscal 2020).

QUALCOMM Incorporated

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Federal ( 1,475 ) ( 34 ) ( 251 )

State ( 8 ) 15 2

Foreign (1) ( 143 ) 10 12

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The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision from continuing operations (in millions, except percentages).

Substantially all of our income from continuing operations is in the U.S., of which a significant portion qualifies for preferential treatment as FDII at a 13 % effective tax rate.

A significant portion of our U.S.

income qualifies for preferential treatment as FDII (foreign-derived intangible income) at a 13 % effective tax rate.

2023 2022 2021

Expected income tax provision at federal statutory tax rate $ 1,563 $ 3,150 $ 2,158

Benefit from FDII deduction ( 753 ) ( 550 ) ( 381 )

Excess tax benefit associated with share-based awards ( 257 ) ( 265 ) ( 83 )

Foreign currency losses (gains) related to Korean withholding tax receivable 243 12 ( 37 )

Nontaxable reversal of 2018 EC fine ( 224 ) — —

Benefit from FDII deduction related to capitalizing research and development expenditures ( 598 ) — —

Benefit from FDII deduction, excluding the impact of capitalizing research and development expenditures ( 447 ) ( 753 ) ( 550 )

Benefit related to research and development tax credits ( 235 ) ( 224 ) ( 195 )

Benefit from fiscal 2021 and 2022 FDII deductions related to a change in sourcing of research and development expenditures ( 126 ) — —

Benefit from releasing valuation allowance on unutilized foreign loss carryforwards ( 114 ) — —

Foreign currency (gains) losses related to Korean withholding tax receivable ( 66 ) 243 12

Shortfall (excess) tax benefit associated with share-based awards 3 ( 257 ) ( 265 )

Nontaxable reversal of 2018 EC fine — ( 224 ) —

Other 124 77 71

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Effective tax rate 1 % 13 % 12 %

Beginning in fiscal 2023, for federal income tax purposes, we are required to capitalize and amortize domestic research and development expenditures over five years and foreign research and development expenditures over fifteen years (such expenditures were previously deducted as incurred).

Our cash flows from operations will be adversely affected due to significantly higher cash tax payments.

However, since the resulting deferred tax asset is established at the statutory rate of 21 % (rather than the current effective tax rate of 13 % to 16 % after considering the FDII deduction), capitalization favorably affects our total provision for income taxes and results of operations.

The adverse cash flow impact and favorable tax provision impact will diminish in future years as capitalized research and development expenditures continue to amortize.

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Beginning in fiscal 2019, as a result of certain court rulings in Korea, among other factors, we decided to apply for a partial refund claim for taxes previously withheld from licensees in Korea on payments due under their license agreements to which we have claimed a foreign tax credit in the United States.

As a result, $ 2.0 billion and $ 1.7 billion was recorded as a noncurrent income taxes receivable (recorded in other assets) at September 24, 2023 and September 25, 2022, respectively, and $ 2.3 billion and $ 2.1 billion was recorded as a noncurrent liability for uncertain tax benefits (recorded in other liabilities) at September 24, 2023 and September 25, 2022, respectively.

At September 25, 2022, we estimated remaining future payments of $ 1.7 billion for a one-time repatriation tax accrued in fiscal 2018, after application of certain tax credits, which is payable in installments over the next four years.

Income taxes payable (recorded in other current liabilities) were $ 1.7 billion and $ 634 million at September 24, 2023 and September 25, 2022, respectively.

This increase was primarily due to announcements by the Internal Revenue Service (IRS), which postponed our remaining current year U.S.

federal income tax-payments from fiscal 2023, which were paid in October 2023.

At September 24, 2023, we estimated remaining future payments of $ 1.5 billion for a one-time repatriation tax accrued in fiscal 2018, after application of certain tax credits, which is payable in installments over the next three years.

At September 24, 2023, $ 391 million was recorded in other current liabilities, reflecting the next installment due in January 2024, with the remaining noncurrent portion presented as income taxes payable on our balance sheet.

We continue to assert that certain of our foreign earnings are not indefinitely reinvested.

At September 25, 2022, we had not recorded a deferred tax liability of approximately $ 70 million related to foreign withholding taxes on approximately $ 851 million of undistributed earnings of certain subsidiaries that we continue to consider to be indefinitely reinvested outside the

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

United States.

Should we decide to no longer indefinitely reinvest such earnings outside the U.S., we would have to adjust the income tax provision in the period we make such determination.

We have tax incentives in Singapore that require we meet specified employment and other criteria.

Although our profit in Singapore declined as a result of restructuring our operations in 2018, we were required to meet (and did meet) certain incentive requirements through March 2022.

Failure to meet such requirements could have required us to refund previously realized material tax benefits for 2017 and 2018.

We had deferred tax assets and deferred tax liabilities as follows (in millions):

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Unused tax credits $ 1,819 $ 1,624

Unused net operating losses 887 663

Capitalized research and development expenditures

Customer incentives 659 807

Accrued liabilities and reserves 401 264

Unused net operating losses 364 887

Share-based compensation 285 225

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Unrealized losses on other investments and marketable securities 159 197

Unearned revenues 100 181

Other 409 435

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Operating lease assets ( 194 ) ( 184 )

Property, plant and equipment ( 101 ) ( 111 )

Unrealized gains on other investments and marketable securities ( 101 ) ( 84 )

Accrued withholding taxes ( 62 ) ( 42 )

Property, plant and equipment ( 52 ) ( 101 )

Other ( 118 ) ( 98 )

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(1) Non-current deferred tax liabilities were included in other liabilities in the consolidated balance sheets.

At September 25, 2022, we had unused federal net operating loss carryforwards of $ 808 million, of which $ 134 million expire from 2023 through 2037 and $ 674 million may be carried forward indefinitely, unused state net operating loss carryforwards of $ 896 million expiring from 2023 through 2037 and unused foreign net operating loss carryforwards of $ 2.6 billion, of which substantially all may be carried forward indefinitely.

At September 24, 2023, we had unused federal net operating loss carryforwards of $ 448 million, of which $ 118 million expire from 2024 through 2037 and $ 330 million may be carried forward indefinitely, unused state net operating loss carryforwards of $ 707 million expiring from 2024 through 2037 and unused foreign net operating loss carryforwards of $ 910 million, of which substantially all may be carried forward indefinitely.

At September 24, 2023, we had unused state tax credits of $ 1.7 billion, of which substantially all may be carried forward indefinitely, unused federal tax credits of $ 134 million expiring from 2028 through 2041 and unused tax credits of $ 54 million in foreign jurisdictions expiring from 2034 through 2043.

We do not expect our federal net operating loss carryforwards to expire unused.

At September 25, 2022, we have provided a valuation allowance on certain state tax credits, foreign deferred tax assets, state net operating losses and federal tax credits of $ 1.5 billion, $ 673 million, $ 42 million and $ 4 million, respectively.

The valuation allowance reflects the uncertainties surrounding our ability to generate sufficient future taxable income in certain tax jurisdictions to utilize our net operating losses.

We believe, more likely than not, that we will have sufficient taxable income after deductions related to share-based awards to utilize our remaining deferred tax assets.

At September 24, 2023, we have provided a valuation allowance on certain state tax credits, foreign deferred tax assets and state net operating losses of $ 1.7 billion, $ 77 million and $ 36 million respectively.

The valuation allowance reflects the

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

uncertainties surrounding our ability to generate sufficient future taxable income in certain tax jurisdictions to utilize our net deferred tax assets.

We believe, more likely than not, that we will have sufficient taxable income to utilize our remaining deferred tax assets.

The valuation allowance decreased from $ 2.2 billion at September 25, 2022, primarily due to the write-off of certain deferred tax assets and the related valuation allowance resulting from the liquidation of a Dutch subsidiary in fiscal 2023.

A summary of the changes in the amount of unrecognized tax benefits for fiscal 2023, 2022 and 2021 follows (in millions):

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federal jurisdiction and various state and foreign jurisdictions.

For tax years prior to fiscal 2021, we are a participant in the IRS Compliance Assurance Process (CAP) Program, whereby we and the IRS endeavor to agree on the treatment of all tax issues prior to the tax return being filed.

We are no longer subject to U.S.

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These examinations are at various stages with respect to assessments, claims, deficiencies and refunds, many of which are open for periods after fiscal 2001.

At September 25, 2022, we believe that adequate amounts have been reserved for based on facts known.

However, the final determination of tax audits and any related legal proceedings could materially differ from amounts reflected in our income tax provision and the related accruals.

Cash amounts paid for income taxes, net of refunds received, were $ 1.4 billion, $ 2.1 billion and $ 1.5 billion for fiscal 2023, 2022 and 2021, respectively.

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Balance at end of period

On October 14, 2022 , we announced a cash dividend of $ 0.75 per share on our common stock, payable on December 15, 2022 to stockholders of record as of the close of business on December 1, 2022 .

On October 13, 2023 , we announced a cash dividend of $ 0.80 per share on our common stock, payable on December 14, 2023 to stockholders of record as of the close of business on November 30, 2023 .

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Employee Benefit Plans

Equity Compensation Plans.

On March 10, 2020, our stockholders approved the amended and restated Qualcomm Incorporated 2016 Long-Term Incentive Plan (the 2016 Plan), including an increase in the share reserve by 75 million shares.

On March 8, 2023, our stockholders approved the Qualcomm Incorporated 2023 Long-Term Incentive Plan (the 2023 Plan), as a successor to and continuation of our Amended and Restated Qualcomm Incorporated 2016 Long-Term Incentive Plan (the Prior Plan), and to increase the share reserve by 82 million shares.

Effective on and after that date, no new awards were granted under the Prior Plan, although all outstanding awards under the Prior Plan remained outstanding according to their terms and the terms of the Prior Plan.

The 2023 Plan provides for the grant of RSUs and other stock-based awards.

The RSUs generally include dividend-equivalent rights and vest over three years from the date of grant.

The Board of Directors may amend or terminate the 2016

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Plan at any time.

The Board of Directors may amend or terminate the 2023 Plan at any time.

Certain amendments, including an increase in the share reserve, require stockholder approval.

At September 24, 2023, approximately 88 million shares were available for future grant under the 2023 Plan.

The following is a summary of employee RSU transactions under our 2016 Plan that contain only service requirements to vest:

The following is a summary of employee RSU transactions that contain only service requirements to vest:

Number of Shares

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RSUs outstanding at September 24, 2023 35 122.86

The weighted-average estimated grant date fair values of employee RSUs under our 2016 Plan that contain only service requirements to vest granted during fiscal 2021 and 2020 were $ 124.22 and $ 82.57 per share, respectively.

The weighted-average estimated grant date fair values of employee RSUs that contain only service requirements to vest granted during fiscal 2022 and 2021 were $ 136.09 and $ 124.22 per share, respectively.

Upon vesting, we issue new shares of common stock.

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Employee Stock Purchase Plan.

We have an employee stock purchase plan for eligible employees to purchase shares of common stock at 85 % of the lower of the fair market value on the first or the last day of each offering period, which is generally six months.

Employees may authorize us to withhold up to 15 % of their compensation during any offering period, subject to certain limitations.

The employee stock purchase plan includes a non-423(b) plan.

We have an employee stock purchase plan that allows eligible employees to purchase shares of common stock at 85 % of the value of our common stock on specific dates through periodic payroll deductions.

The shares reserved for future issuance under the employee stock purchase plan were 19 million at September 24, 2023.

During fiscal 2022, 2021 and 2020, 3 million, 3 million and 5 million shares, respectively, were issued under the plan at an average price of $ 124.98 , $ 107.48 and $ 66.53 per share, respectively.

At September 25, 2022, total unrecognized compensation expense related to non-vested purchase rights granted prior to that date was $ 44 million.

We recorded cash received from the exercise of purchase rights of $ 395 million, $ 355 million and $ 343 million during fiscal 2023, 2022 and 2021, respectively.

Share-based Compensation Expense.

Total share-based compensation expense, related to all of our share-based awards, was comprised as follows (in millions):

2023 2022 2021

Cost of revenues $ 76 $ 61 $ 47

Research and development 1,911 1,537 1,234

Selling, general and administrative 497 463 389

Share-based compensation expense before income taxes 2,484 2,061 1,670

Related income tax benefit ( 463 ) ( 489 ) ( 435 )

$ 2,021 $ 1,572 $ 1,235

QUALCOMM Incorporated

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Long-term Debt.

In May 2022, we issued unsecured fixed-rate notes, consisting of $ 500 million of fixed-rate 4.25 % notes and $ 1.0 billion of fixed-rate 4.50 % notes (May 2022 Notes) that mature on May 20, 2032 and May 20, 2052, respectively.

The net proceeds from the May 2022 Notes, together with cash on hand, were used to repay $ 1.5 billion of fixed-rate notes that matured in May 2022.

In November 2022, we issued unsecured fixed-rate notes, consisting of $ 700 million of fixed-rate 5.40 % notes and $ 1.2 billion of fixed-rate 6.00 % notes (collectively, November 2022 Notes) that mature on May 20, 2033 and May 20, 2053, respectively.

The net proceeds from the November 2022 Notes were used to repay $ 946 million of fixed-rate notes and $ 500 million of floating-rate notes that matured in January 2023 and the excess was used for general corporate purposes.

The following table provides a summary of our long-term debt and current portion of long-term debt:

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1,500 3.15 % - 4.27 %

1,500 3.13 % - 4.26 %

November 2022 Notes 2033 - 2053

1,900 3.47 % - 5.02 %

Total principal 15,886 15,432

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Total $ 15,398 $ 14,983

At September 25, 2022, future principal payments were $ 1.4 billion in fiscal 2023, $ 914 million in fiscal 2024, $ 1.4 billion in fiscal 2025, $ 2.0 billion in fiscal 2027 and $ 9.7 billion after fiscal 2027;

At September 24, 2023, future principal payments were $ 914 million in fiscal 2024, $ 1.4 billion in fiscal 2025, $ 2.0 billion in fiscal 2027, $ 961 million in fiscal 2028 and $ 10.6 billion after fiscal 2028;

no principal payments are due in fiscal 2026.

At September 24, 2023, the aggregate fair value of the notes, based on Level 2 inputs, was approximately $ 14.3 billion.

At September 25, 2022, with the exception of $ 500 million of outstanding unsecured floating-rate notes due January 30, 2023, all of our outstanding long-term debt is comprised of unsecured fixed-rate notes.

At September 24, 2023, all of our outstanding long-term debt is comprised of unsecured fixed-rate notes.

We may redeem the outstanding fixed-rate notes at any time in whole, or from time to time in part, at specified make-whole premiums as defined in the applicable form of note.

We may not redeem the outstanding floating-rate notes prior to maturity.

The obligations under the notes rank equally in right of payment with all of our other senior unsecured indebtedness and will effectively rank junior to all liabilities of our subsidiaries.

The effective interest rates for the notes include the interest on the notes, amortization of the discount, which includes debt issuance costs, and if applicable, adjustments related to hedging.

Interest is payable in arrears quarterly for the floating-rate notes and semi-annually for the fixed-rate notes.

Cash interest paid related to our commercial paper program and long-term debt, net of cash received from the related interest rate swaps, was $ 491 million, $ 477 million and $ 507 million during fiscal 2022, 2021 and 2020, respectively.

Interest is payable in arrears semi-annually for the notes.

Cash interest paid related to our commercial paper program and long-term debt was $ 614 million, $ 491 million and $ 477 million during fiscal 2023, 2022 and 2021, respectively.

Interest Rate Swaps.

At September 25, 2022 and September 26, 2021, we had outstanding forward-starting interest rate swaps with an aggregate notional amount of $ 1.6 billion and $ 2.6 billion, respectively.

During the third quarter of fiscal 2022, we terminated $ 1 billion of swaps associated with our May 2022 Notes, and the related gains of $ 123 million are being reclassified from accumulated comprehensive income as a reduction to interest expense over the terms of the related debt.

At September 25, 2022, we had outstanding interest rate swaps with an aggregate notional amount of $ 2.1 billion that are designated as fair value hedges and allow us to effectively convert fixed-rate payments into floating-rate payments on a portion of our outstanding long-term debt.

At September 25, 2022, we had outstanding forward-starting interest rate swaps with an aggregate notional amount of $ 1.6 billion.

During the first quarter of fiscal 2023, in connection with the issuance of the November 2022 Notes, we terminated these swaps, and the related gains of $ 334 million, included within accumulated comprehensive income, are being recorded as a reduction to interest expense over the hedged portions of the related debt.

At September 24, 2023 and September 25, 2022, we had outstanding interest rate swaps with an aggregate notional amount of $ 2.1 billion that are designated as fair value hedges and allow us to effectively convert fixed-rate payments into floating-rate payments on a portion of our outstanding long-term debt.

Commercial Paper Program .

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Maturities of commercial paper can range from 1 to up to 397 days.

At September 25, 2022 and September 26, 2021, we had $ 499 million and $ 500 million, respectively, of outstanding commercial paper recorded as short-term debt with a weighted-average interest rate of 2.69 % and 0.13 %, respectively, which included fees paid to the commercial paper dealers.

At September 25, 2022 and September 26, 2021, the weighted-average remaining days to maturity were 27 days and 39 days, respectively.

The carrying value of the outstanding commercial paper approximated its estimated fair value at September 25, 2022.

At September 24, 2023 and September 25, 2022, we had no amounts and $ 499 million, respectively, of outstanding commercial paper recorded as short-term debt.

At September 25, 2022, the weighted-average interest rate was 2.69 %, which included fees paid to the commercial paper dealers, and the weighted-average remaining days to maturity was 27 days.

Revolving Credit Facility.

We have a Revolving Credit Facility that provides for unsecured revolving facility loans, swing line loans and letters of credit in an aggregate amount of up to $ 4.3 billion, which expires on December 8, 2025.

At September 25, 2022, no amounts were outstanding under the Revolving Credit Facility.

At September 24, 2023 and September 25, 2022, no amounts were outstanding under the Revolving Credit Facility.

QUALCOMM Incorporated

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The complaints sought unspecified damages, interest, fees and costs.

On May 4, 2017, the court consolidated the two actions.

On July 3, 2017, the plaintiffs filed a consolidated amended complaint asserting the same basic theories of liability and requesting the same basic relief.

On September 1, 2017, we filed a motion to dismiss the consolidated amended complaint, and on March 18, 2019, the court denied our motion.

On January 15, 2020, we filed a motion for judgment on the pleadings, which the court denied on February 3, 2022.

On May 23, 2022, the plaintiffs filed a motion for class certification, and a hearing on the motion was held on October 19, 2022.

The court has not yet ruled on the motion.

We believe the plaintiffs’ claims are without merit.

The court consolidated the two actions, and on July 3, 2017, the plaintiffs filed a consolidated amended complaint asserting the same basic theories of liability and requesting the same basic relief.

On May 23, 2022, the plaintiffs filed a motion for class certification, and on March 20, 2023, the court issued an order granting in part and denying in part the plaintiffs’ motion for class certification.

The order denied class certification on the basis of alleged misrepresentations relating to our chip-level licensing practices, but certified a class on the basis of alleged misrepresentations relating to the separate operations of QCT and QTL.

Trial is scheduled to begin on October 28, 2024.

We intend to continue to vigorously defend ourselves in this matter.

Consumer Class Action Lawsuits:

Beginning in January 2017, a number of consumer class action complaints were filed against us in the United States District Courts for the Southern and Northern Districts of California, each on behalf of a putative class of purchasers of cellular phones and other cellular devices.

In April 2017, the Judicial Panel on Multidistrict Litigation transferred the cases that had been filed in the Southern District of California to the Northern District of California.

The cases filed in the Southern District of California were subsequently transferred to the Northern District of California.

On July 11, 2017, the plaintiffs filed a consolidated amended complaint alleging that we violated California and federal antitrust and unfair competition laws by, among other things, refusing to license standard-essential patents to our competitors, conditioning the supply of certain of our baseband chipsets on the purchaser first agreeing to license our entire patent portfolio, entering into exclusive deals with companies, including Apple Inc., and charging unreasonably high royalties that do not comply with our commitments to standard setting organizations.

The complaint sought unspecified damages and disgorgement and/or restitution, as well as an order that we be enjoined from further unlawful conduct.

On July 5, 2018, the plaintiffs filed a motion for class certification, and on September 27, 2018, the court granted that motion.

We appealed the district court’s class certification order to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit), and on September 29, 2021, the Ninth Circuit vacated the class certification order, ruling that the district court had failed to correctly assess the propriety of applying California law to a nationwide class.

The Ninth Circuit remanded the case to the district court and instructed the court to consider the effect of United States Federal Trade Commission (FTC) v.

QUALCOMM Incorporated (which the Ninth Circuit decided in favor of Qualcomm in August 2020) on this case.

On June 10, 2022, the plaintiffs filed an amended complaint, limiting the proposed class to California residents rather than a nationwide class, and on August 1, 2022, we filed a motion to dismiss the amended complaint.

A hearing on our motion is scheduled for November 15, 2022.

We believe the plaintiffs’ claims are without merit.

Since November 2017, several other consumer class action complaints have been filed against us in Canada (in the Supreme Court of British Columbia and the Quebec Superior Court), Israel (in the Haifa District Court) and the United Kingdom (in the Competition Appeal Tribunal), each on behalf of a putative class of purchasers of cellular phones and other cellular devices, alleging violations of certain of those countries’ competition and consumer protection laws.

On September 27, 2018, the court certified the class.

We appealed the court’s class certification order to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit).

On September 29, 2021, the Ninth Circuit vacated the class certification order, ruling that the district court had failed to correctly assess the propriety of applying California law to a nationwide class, and remanded the case to the district court.

On June 10, 2022, the plaintiffs filed an amended complaint, limiting the proposed class to California residents rather than a nationwide class.

We filed a motion to dismiss the amended complaint, and on January 6, 2023, the court issued an order granting in part and denying in part our motion to dismiss.

We subsequently filed a motion for summary judgment on the plaintiffs’ remaining claims.

The court granted our motion in its entirety and, on October 5, 2023, entered final judgment in Qualcomm’s favor.

Beginning in November 2017, several other consumer class action complaints were filed against us in Canada (in the Supreme Court of British Columbia and the Quebec Superior Court), Israel (in the Haifa District Court) and the United Kingdom (in the Competition Appeal Tribunal), each on behalf of a putative class of purchasers of cellular phones and other cellular devices, alleging violations of certain of those countries’ competition and consumer protection laws and seeking damages.

The claims in these complaints are similar to those in the U.S.

consumer class action complaints.

The complaints seek damages.

We believe the plaintiffs’ claims are without merit.

consumer class action complaints described above.

These matters are at various stages of litigation, and we intend to continue to vigorously defend ourselves.

ParkerVision, Inc.

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On April 20, 2022, ParkerVision filed a notice of appeal to the United States Court of Appeals for the Federal Circuit.

We believe ParkerVision’s claims are without merit.

A hearing on the appeal is scheduled for November 6, 2023.

We intend to continue to vigorously defend ourselves in this matter.

QUALCOMM Incorporated:

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ARM further seeks exemplary or punitive damages, costs, expenses and reasonable attorney’s fees, and equitable relief addressing any infringement occurring after entry of judgment.

We believe ARM’s claims are without merit.

On September 30, 2022, we filed our Answer and Counterclaim in response to ARM’s complaint denying ARM’s claims.

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On October 26, 2022, we filed an Amended Counterclaim seeking additional declaratory relief that certain statements ARM is making in the marketplace concerning our rights under the ARM-Qualcomm Agreements are false, and that ARM has no right to prevent us from shipping our products, which are validly licensed.

Korea Fair Trade Commission (KFTC) Investigation (2015):

On March 17, 2015, the KFTC notified us that it was conducting an investigation of us relating to the Korean Monopoly Regulation and Fair Trade Act (MRFTA).

On December 27, 2016, the KFTC announced that it had reached a decision in the investigation, finding that we violated provisions of the MRFTA.

On January 22, 2017, we received the KFTC’s formal written decision, which found that the following conducts violate the MRFTA:

(i) refusing to license, or imposing restrictions on licenses for, cellular communications standard-essential patents with competing modem chipset makers;

(ii) conditioning the supply of modem chipsets to handset suppliers on their execution and performance of license agreements with us;

and (iii) coercing agreement terms including portfolio license terms, royalty terms and free cross-grant terms in executing patent license agreements with handset makers.

The KFTC’s decision orders us to:

(a) upon request by modem chipset companies, engage in good-faith negotiations for patent license agreements, without offering unjustifiable conditions, and if necessary submit to a determination of terms by an independent third party;

(b) not demand that handset companies execute and perform under patent license agreements as a precondition for purchasing modem chipsets;

(c) not demand unjustifiable conditions in our license agreements with handset companies and, upon request, renegotiate existing patent license agreements;

and (d) notify modem chipset companies and handset companies of the decision and order imposed on us and report to the KFTC new or amended agreements.

According to the KFTC’s decision, the foregoing will apply to transactions between us and the following enterprises:

(1) handset manufacturers headquartered in Korea and their affiliate companies;

(2) enterprises that sell handsets in or to Korea and their affiliate companies;

(3) enterprises that supply handsets to companies referred to in (2) above and the affiliate companies of such enterprises;

(4) modem chipset manufacturers headquartered in Korea and their affiliate companies;

and (5) enterprises that supply modem chipsets to companies referred to in (1), (2) or (3) above and the affiliate companies of such enterprises.

The KFTC’s decision also imposed a fine of 1.03 trillion Korean won (approximately $ 927 million), which we paid on March 30, 2017.

On February 21, 2017, we filed an action in the Seoul High Court to cancel the KFTC’s decision.

The Seoul High Court held hearings concluding on August 14, 2019, and on December 4, 2019, announced its judgment affirming certain portions of the KFTC’s decision and finding other portions of the KFTC’s decision unlawful.

The Seoul High Court cancelled the KFTC’s remedial orders described in (c) above, and solely insofar as they correspond thereto, the Seoul High Court cancelled the KFTC’s remedial orders described in (d) above.

The Seoul High Court dismissed the remainder of our action to cancel the KFTC’s decision.

On December 19, 2019, we filed a notice of appeal to the Korea Supreme Court challenging those portions of the Seoul High Court decision that are not in our favor.

The KFTC filed a notice of appeal to the Korea Supreme Court challenging the portions of the Seoul High Court decision that are not in its favor.

Both we and the KFTC have filed briefs on the merits.

T he Korea Supreme Court has not yet ruled on our appeal or that of the KFTC.

We believe that our business practices do not violate the MRFTA.

Korea Fair Trade Commission (KFTC) Investigation (2020) :

On June 8, 2020, the KFTC informed us that it was conducting an investigation of us relating to the MRFTA.

The KFTC has not provided a formal notice on the scope of its investigation, but we believe it concerns our business practices in connection with our sale of RFFE components.

We continue to cooperate with the KFTC as it conducts its investigation.

If a violation is found, a broad range of remedies is potentially available to the KFTC, including imposing a fine (of up to 3% of our sales in the relevant markets during the alleged period of violation) and/or injunctive relief prohibiting or restricting certain business practices.

It is difficult to predict the outcome of this matter or what remedies, if any, may be imposed by the KFTC.

We believe that our business practices do not violate the MRFTA.

Icera Complaint to the European Commission (EC):

On June 7, 2010, the EC notified and provided us with a redacted copy of a complaint filed with the EC by Icera, Inc.

(subsequently acquired by Nvidia Corporation) alleging that we were engaged in anticompetitive activity.

On July 16, 2015, the EC announced that it had initiated formal proceedings in this matter.

On July 18, 2019, the EC issued a decision finding that between 2009 and 2011, we engaged in predatory pricing by selling certain baseband chipsets to two customers at prices below cost with the intention of hindering competition and imposed a fine of approximately 242 million euros.

On October 1, 2019, we filed an appeal of the EC’s decision with the General Court of the European Union.

The court has not yet ruled on our appeal.

We believe that our business practices do not violate the European Union (EU) competition rules.

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In the third quarter of fiscal 2019, we recorded a charge of $ 275 million to other expenses related to this EC fine.

We provided a financial guarantee in the first quarter of fiscal 2020 to satisfy the obligation in lieu of cash payment while we appeal the EC’s decision.

The fine is accruing interest at a rate of 1.50 % per annum while it is outstanding and included in other current liabilities.

European Commission (EC) Investigation:

On October 15, 2014, the EC notified us that it was conducting an investigation of us relating to Articles 101 and/or 102 of the Treaty on the Functioning of the European Union (TFEU).

On January 24, 2018, the EC issued a decision finding that pursuant to an agreement with Apple Inc.

we paid significant amounts to Apple on the condition that it exclusively use our baseband chipsets in its smartphones and tablets, reducing Apple’s incentives to source baseband chipsets from our competitors and harming competition and innovation for certain baseband chipsets, and imposed a fine of 997 million euros.

On April 6, 2018, we filed an appeal of the EC’s decision with the General Court of the European Union.

From May 4, 2021 to May 6, 2021, a hearing on our appeal was held before the court.

On June 15, 2022, the court issued a ruling annulling the EC’s decision in its entirety.

The deadline for the EC to appeal the General Court’s decision to the European Court of Justice expired in August 2022.

Consequently, the case is now over.

In the first quarter of fiscal 2018, we recorded a charge of $ 1.2 billion to other expenses related to this EC fine.

We provided financial guarantees in the third quarter of fiscal 2018 to satisfy the obligation in lieu of cash payment while we appealed the EC’s decision.

The fine accrued interest at a rate of 1.50 % per annum while it was outstanding.

In the first quarter of fiscal 2019, we designated the liability as a hedge of our net investment in certain foreign subsidiaries, with gains and losses recorded in accumulated other comprehensive income (loss) as a component of the foreign currency translation adjustment.

As a result of the General Court’s ruling, in the third quarter of fiscal 2022, we recorded a $ 1.1 billion benefit in other income and a $ 62 million reduction in interest expense resulting from the reversal of the accrued fine and the associated interest previously recorded.

Trial is scheduled to begin on September 23, 2024.

We intend to continue to vigorously defend ourselves in this matter.

Contingent Losses and Other Considerations:

We will continue to vigorously defend ourselves in the foregoing matters.

However, litigation and investigations are inherently uncertain, and we face difficulties in evaluating or estimating likely outcomes or ranges of possible loss, particularly in antitrust and trade regulation investigations.

Other than with respect to the EC fine related to the Icera Complaint to the European Commission, we have no t recorded any accrual at September 25, 2022 for contingent losses associated with these matters based on our belief that losses, while reasonably possible, are not probable.

Litigation and investigations are inherently uncertain, and we face difficulties in evaluating or estimating likely outcomes or ranges of possible loss, particularly in antitrust and trade regulation investigations.

We have no t recorded any accrual at September 24, 2023 for contingent losses associated with the pending matters described above based on our belief that losses, while reasonably possible, are not probable.

Further, any possible amount or range of loss cannot be reasonably estimated at this time.

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 (for example, proceedings relating to employment matters or the initiation or defense of proceedings relating to intellectual property rights) and, while there can be no assurance, we believe that the ultimate outcome of these other legal actions will not 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 (for example, our 2010 European Commission matter relating to the Icera complaint, and other matters arising in the ordinary course of our business, including those relating to employment matters or the initiation or defense of proceedings relating to intellectual property rights) and, while there can be no assurance, we believe that the ultimate outcome of these other legal actions will not have a material adverse effect on our business, results of operations, financial condition or cash flows.

Indemnifications .

We generally do not indemnify our customers, licensees and suppliers for losses sustained from infringement of third-party intellectual property rights.

However, we are contingently liable under certain agreements to defend and/or indemnify certain customers, licensees and suppliers against certain types of liability and/or damages arising from the infringement of third-party intellectual property rights.

Our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments made by us.

However, we are contingently liable under certain agreements to defend and/or indemnify certain customers, licensees, and suppliers against certain types of liability and/or damages arising from the infringement of third-party intellectual property rights and companies that purchase businesses we previously consolidated against certain contingent losses.

Our obligations under these agreements may be limited in terms of time and/or amounts, and in some instances, we may have recourse against third parties for certain payments made by us.

Claims and reimbursements under indemnification arrangements have not been material to our consolidated financial statements.

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Such agreements include multi-year capacity purchase commitments with certain suppliers of our integrated circuit products.

Total advance payments related to multi-year capacity commitments recorded on the consolidated balance sheets at September 25, 2022 and September 26, 2021 were $ 3.8 billion and $ 1.7 billion, respectively, of which $ 701 million and $ 90 million were recorded in other current assets, respectively, and $ 3.1 billion and $ 1.6 billion were recorded in other assets, respectively.

Total advance payments related to multi-year capacity purchase commitments recorded on the consolidated balance sheets at September 24, 2023 and September 25, 2022 were $ 3.3 billion and $ 3.8 billion, respectively, of which $ 404 million and $ 701 million were recorded in other current assets, respectively, and $ 2.9 billion and $ 3.1 billion were recorded in other assets, respectively.

Integrated circuit product inventory obligations represent purchase commitments (including those under multi-year capacity purchase commitments to the extent such minimum amounts are both fixed and determinable) for raw materials, semiconductor die, finished goods and manufacturing services, such as wafer bump, probe, assembly and final test.

Under our manufacturing relationships with our foundry suppliers and assembly and test service providers, cancellation of outstanding purchase commitments is generally allowed but may result in the payment of costs incurred through the date of cancellation, and in some cases, incremental fees and/or the loss of amounts paid in advance related to capacity underutilization and the failure to meet future minimum purchase volumes under multi-year capacity purchase commitments.

Also, in some cases, we may be subject to incremental fees and/or the loss of amounts paid in advance due to capacity underutilization and/or the failure to meet minimum purchase volumes under multi-year capacity purchase commitments.

Obligations under our purchase agreements, which primarily relate to integrated circuit product inventory obligations, at September 24, 2023 totaled $ 12.2 billion of which, $ 6.8 billion is expected to be paid in the next 12 months.

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We lease certain of our land, facilities and equipment under operating leases, with terms ranging from less than one year to 20 years, some of which include options to extend for up to 20 years.

At September 25, 2022 and September 26, 2021, the weighted-average remaining lease term for operating leases were eight years and seven years , respectively.

Operating lease expense for fiscal 2022, 2021 and 2020 was $ 207 million, $ 203 million and $ 181 million,

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

respectively.

At September 24, 2023 and September 25, 2022, the weighted-average remaining lease term for operating leases was eight years .

Operating lease expense for fiscal 2023, 2022 and 2021 was $ 204 million, $ 207 million and $ 203 million, respectively.

At September 24, 2023, other assets included $ 612 million of operating lease assets, with corresponding lease liabilities of $ 98 million recorded in other current liabilities and $ 571 million recorded in other liabilities .

At September 25, 2022, other assets included $ 631 million of operating lease assets, with corresponding lease liabilities of $ 104 million recorded in other current liabilities and $ 573 million recorded in other liabilities.

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

At September 24, 2023, future lease payments under our operating leases were as follows (in millions):

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Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments.

We also have nonreportable segments, including QGOV (Qualcomm Government Technologies) and our cloud AI inference processing initiative.

We also have nonreportable segments, including QGOV (Qualcomm Government Technologies) and our cloud computing processing initiative (formerly referred to as our cloud AI inference processing initiative).

Our CODM allocates resources to and evaluates the performance of our segments based on revenues and earnings (loss) before income taxes (EBT).

Segment EBT includes the allocation of certain corporate expenses to the segments, including depreciation and amortization expense related to unallocated corporate assets.

Segment EBT includes the allocation of certain corporate expenses to the segments, including depreciation and amortization expense related to certain corporate assets.

Certain income and charges are not allocated to segments in our management reports because they are not considered in evaluating the segments’ operating performance.

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Total $ 7,443 $ 14,998 $ 10,274

Reconciling items for revenues and EBT in the previous table were as follows (in millions):

2023 2022 2021

Nonreportable segments $ 144 $ 134 $ 128

Unallocated revenues

$ 104 $ 134 $ 182

Unallocated revenues

$ ( 40 ) $ — $ 54

Unallocated cost of revenues ( 205 ) ( 266 ) ( 277 )

Unallocated research and development expenses ( 2,034 ) ( 1,767 ) ( 1,820 )

Unallocated selling, general and administrative expenses ( 588 ) ( 609 ) ( 538 )

Unallocated other (expense) income (Note 2)

( 862 ) 1,059 —

Unallocated interest expense ( 694 ) ( 490 ) ( 559 )

Unallocated investment and other income (expense), net

364 ( 91 ) 166

Nonreportable segments ( 38 ) ( 24 ) ( 58 )

$ ( 4,097 ) $ ( 2,188 ) $ ( 3,032 )

The net book value of long-lived tangible assets located outside of the U.S.

was $ 3.5 billion and $ 2.9 billion at September 25, 2022 and September 26, 2021, respectively.

(the majority of which is located in Taiwan and the rest of the Asia-Pacific region) was $ 3.6 billion and $ 3.5 billion at September 24, 2023 and September 25, 2022, respectively.

The net book value of long-lived tangible assets located in the U.S.

was $ 2.0 billion and $ 2.3 billion at September 24, 2023 and September 25, 2022, respectively.

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We report revenues from external customers by country based on the location to which our products or services are delivered, which for QCT is generally the country in which our customers manufacture their products, and for licensing revenues, the invoiced addresses of our licensees.

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$ 35,820 $ 44,200 $ 33,566

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Reconciling items for revenues and EBT in a previous table were as follows (in millions):

2022 2021 2020

Nonreportable segments $ 134 $ 128 $ 133

Unallocated revenues (Note 2) — 54 1,841

$ 134 $ 182 $ 1,974

Unallocated revenues (Note 2) $ — $ 54 $ 1,841

Unallocated cost of revenues ( 266 ) ( 277 ) ( 340 )

Unallocated research and development expenses ( 1,767 ) ( 1,820 ) ( 1,046 )

Unallocated selling, general and administrative expenses ( 609 ) ( 538 ) ( 401 )

Unallocated other income (Note 2) 1,059 — 28

Unallocated interest expense ( 490 ) ( 559 ) ( 599 )

Unallocated investment and other (expense) income, net ( 91 ) 166 105

Nonreportable segments ( 24 ) ( 58 ) ( 63 )

$ ( 2,188 ) $ ( 3,032 ) $ ( 475 )

Certain revenues were not allocated to our segments in our management reports because they were not considered in evaluating segment results.

Unallocated revenues in fiscal 2021 were comprised of the release of a variable constraint against revenues not previously allocated to our segment results.

Unallocated revenues in fiscal 2020 were comprised of licensing revenues from Huawei resulting from the settlement agreement signed in July 2020 and royalties for sales made in the March 2020 and June 2020 quarters under a new global patent license agreement signed in July 2020.

On March 16, 2021, we completed the acquisition of Nuvia for $ 1.1 billion (net of $ 174 million cash acquired), substantially all of which was paid in cash.

In connection with the acquisition, we assumed or replaced unvested Nuvia stock awards with Qualcomm stock awards with an estimated fair value of $ 258 million, which have post-acquisition requisite service periods of up to four years .

At the time of the acquisition, Nuvia had certain in-process technologies and was comprised of a CPU (central processing unit) and technology design team with expertise in high performance processors, SoC and power management for compute-intensive devices and applications.

Upon completion of development, Nuvia’s technologies are expected to be integrated into certain QCT products.

We recorded $ 885 million of goodwill, which is not deductible for tax purposes and was allocated to our QCT segment for annual impairment testing purposes.

Goodwill is primarily attributable to assembled workforce and certain revenue and cost synergies expected to arise after the acquisition.

We also recorded a $ 247 million in-process research and development intangible asset related to a single project, which is expected to be completed in fiscal 2023 and, upon completion, will be amortized over its useful life, which is expected to be seven years .

Our results of operations for fiscal 2021 included the operating results of Nuvia since the acquisition date, the amounts of which were not material.

Acquisitions and Divestitures

On October 4, 2021, we and SSW Partners, a New York-based investment partnership, entered into a definitive agreement to acquire Veoneer, Inc.

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We intend to incorporate Arriver’s computer vision, drive policy and driver assistance technologies into our Snapdragon automotive platform to deliver an integrated software SoC ADAS platform for automakers and Tier-1 automotive suppliers.

SSW Partners retained Veoneer’s Tier-1 automotive supplier businesses, primarily consisting of the Active Safety and Restraint Control Systems businesses (the Non-Arriver businesses), which it intends to sell in one or more transactions.

We have agreed to provide certain funding of approximately $ 300 million to the Non-Arriver businesses while SSW Partners seeks a buyer(s), of which approximately $ 150 million of funding remained available to the Non-Arriver businesses at September 25, 2022.

Such amounts, along with cash retained in the Non-Arriver business, are expected to be used to fund working and other near-term capital needs, as well as certain costs incurred in connection with the close of the acquisition.

Although we do not own or operate the Non-Arriver businesses, we have determined that we are the primary beneficiary, within the meaning of the Financial Accounting Standards Board (FASB) accounting guidance related to consolidation (ASC 810), of these businesses under the variable interest model.

SSW Partners retained Veoneer’s Tier-1 automotive supplier businesses, primarily consisting of the Active Safety and the Restraint Control Systems businesses (the Non-Arriver businesses), with the intent to sell such businesses in multiple transactions.

Although we do not own or operate the Non-Arriver businesses, we are the primary beneficiary, within the meaning of the Financial Accounting Standards Board (FASB) accounting guidance related to consolidation (ASC 810), of these businesses under the variable interest model, until sold by SSW.

Factors considered in reaching this conclusion included, among others:

(i) our involvement in the design of and our funding of substantially all of the total cash consideration payable in the

(i) our involvement in the design of and our funding of substantially all of the total cash consideration payable in the transaction and (ii) our obligations to absorb losses and rights to receive returns from the Non-Arriver businesses.

Accordingly, the assets and liabilities of the Non-Arriver businesses have been consolidated and presented as held for sale on our consolidated balance sheet, and the operating results have been presented as discontinued operations (through the date of disposition).

Our accounting purchase price was approximately $ 4.3 billion, substantially all of which relates to our share of cash consideration at close for the outstanding common shares of Veoneer and the Magna termination fee and excludes Veoneer’s convertible senior notes that are reflected as an assumed liability.

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

transaction and (ii) our obligations to absorb losses and rights to receive returns from the Non-Arriver businesses.

We expect that SSW Partners will complete the sale of the Non-Arriver businesses within fiscal 2023, subject to any required regulatory approvals and other closing conditions being met.

Accordingly, the assets and liabilities of the Non-Arriver businesses are consolidated and presented as held for sale on our balance sheet, and the operating results are presented as discontinued operations.

We have finalized the purchase price allocation, except for certain tax matters.

Accordingly, the preliminary purchase price allocation shown below could change during the remainder of the measurement period (which will not exceed 12 months from the Closing Date).

The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values was as follows (in millions):

The allocation of the purchase price to the assets acquired and liabilities assumed based on their fair values was as follows (in millions):

Current held for sale assets, net of costs to sell (1) 626

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(1) Held for sale assets and liabilities relate to the Non-Arriver businesses and were measured at fair value less costs to sell (including SSW Partners’ estimated return with respect to the sale proceeds of the Non-Arriver businesses), which was estimated using a market approach based on significant inputs that were not observable.

In the fourth quarter of fiscal 2022, we finalized and adjusted the valuation of the Non-Arriver businesses by $ 229 million and recorded an offsetting adjustment to decrease goodwill for this amount.

The Non-Arriver businesses’ assets are not available to be used to settle our obligations, and the Non-Arriver businesses’ creditors do not have recourse to us.

SSW Partners owns and operates the Non-Arriver businesses, and its funding of the purchase price for Veoneer was recorded as a component of held for sale liabilities.

SSW Partners’ funding of the purchase price for Veoneer was recorded as a component of held for sale liabilities.

The underlying classes of assets and liabilities held for sale have not been presented because such amounts are not material.

Goodwill related to this transaction was allocated to our QCT segment, and $ 471 million of which is expected to be deductible for tax purposes.

Goodwill related to this transaction was allocated to our QCT segment, $ 471 million of which is expected to be deductible for tax purposes.

Goodwill is primarily attributable to assembled workforce and certain synergies expected to arise after the acquisition.

Completed technology-based intangible assets are being amortized on a straight-line basis over the weighted-average useful life of nine years .

Completed technology-based intangible assets will be amortized on a straight-line basis over the weighted-average useful life of nine years .

IPR&D relates to a single project that is expected to be completed in fiscal 2025.

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We valued the completed technology and IPR&D using an income approach based on significant unobservable inputs.

Pro forma results of operations have not been presented because the effects of this acquisition were not material to our consolidated results of operations.

Since the Closing Date, the operating results of the Arriver and Non-Arriver businesses were initially reported on a one quarter lag.

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The effect of this change was not material to our consolidated financial statements, and the impact of eliminating the one quarter reporting lag has been included in our operating results in the fourth quarter of fiscal 2022.

The Non-Arriver businesses are presented as discontinued operations and remain on a one quarter reporting lag.

Pro forma results of operations have not been presented because the effects of this acquisition were not material to our consolidated results of operations.

The cash flows generated from (used by) the Non-Arriver businesses are reflected as discontinued operations and are classified as operating, investing and financing activities in the consolidated statements of cash flows.

Investing and financing activities from discontinued operations reported in fiscal 2022 were not material.

During fiscal 2022, we acquired eight other businesses for a total accounting purchase price of $ 792 million.

We recognized $ 202 million of intangible assets (which primarily relate to completed technology) that will be amortized on a straight-line basis over a weighted-average useful life of six years .

Substantially all of the goodwill recognized in these transactions of $ 598 million was allocated to our QCT segment.

On June 1, 2023, SSW Partners completed the sale of the Active Safety business to Magna for net cash proceeds of $ 1.5 billion.

We expect that SSW Partners will complete the sale of the Restraint Control Systems business within calendar 2023, subject to any required regulatory approvals and other closing conditions being met.

Discontinued operations for fiscal 2023 included a gain on the sale of the Active Safety business and certain write-down charges related to the Restraint Control Systems business, based on the expected sales price, the individual and aggregate amounts of which were not material.

The Restraint Control Systems business continues to be presented as discontinued operations on a one quarter reporting lag.

The cash flows provided (used) by the Non-Arriver businesses are reflected as discontinued operations and are classified as operating, investing (which includes cash proceeds from the sale of the Active Safety business) and financing activities in the consolidated statements of cash flows.

QUALCOMM Incorporated

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value Measurements

Fair Value Measurements and Marketable Securities

The following table presents our fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at September 24, 2023 (in millions):

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Corporate bonds and notes $ — $ 2,590 $ — $ 2,590

Equity securities 164 — — 164

Mortgage- and asset-backed securities — 123 — 123

Equity securities 121 — — 121

Treasury securities and government-related securities 20 20 — 40

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Total liabilities measured at fair value $ 740 $ 317 $ — $ 1,057

Marketable Securities

Our marketable securities were all classified as current and were comprised as follows (in millions):

September 25,

2022 September 26,

Available-for-sale debt securities:

Corporate bonds and notes $ 3,330 $ 4,459

Mortgage- and asset-backed securities 99 147

Treasury securities and government-related securities 16 10

Total available-for-sale debt securities 3,445 4,616

Equity securities

Total marketable securities $ 3,609 $ 5,298

At September 24, 2023 and September 25, 2022, our marketable securities were all classified as current and were primarily comprised of available-for-sale debt securities (substantially all of which were corporate bonds and notes).

The contractual maturities of available-for-sale debt securities were as follows (in millions):

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One to five years 1,306

Five to ten years 3

No single maturity date 123

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The table below details the activity of the valuation allowance on deferred tax assets for fiscal 2023, 2022 and 2021 (in millions):

Period Charged to

Expenses Other Balance at

Period Charged (Credited) to

Other Balance at

Year ended September 24, 2023 $ 2,223 $ ( 420 ) $ — $ 1,803

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures