SAN DIEGO -- December 11, 2000 -- Qualcomm Incorporated (Nasdaq: QCOM) today announced that the International Court of Arbitration (ICA) of the International Chamber of Commerce (ICC) has issued its decision and award arising from the arbitration between Qualcomm and the Korean Electronics and Telecommunications Research Institute (ETRI). As a result of the award by the ICC, Qualcomm will report, in its first fiscal quarter of 2001 ending in December 2000, a one-time charge of approximately $80 million for additional royalties to be shared with ETRI as well as interest and other costs for the period from inception of the Joint Development Agreement between the parties in 1992 to September 24, 2000. In addition, the ICA ordered that Qualcomm continue to share with ETRI a part of the royalties that Qualcomm receives only on sales of certain Code Division Multiple Access (CDMA) equipment for use in Korea. The continuing payments ordered in the ICA decision are expected to have little impact, on the order of $4 million per quarter depending on the sales of phones and infrastructure in Korea, on the revenues and earnings of Qualcomm in future quarters.
"While we are disappointed by the ICA's decision, we continue to look forward to receiving strong royalty revenues from sales of CDMA equipment in Korea," said Louis M. Lupin, senior vice president and general counsel of Qualcomm. "The ICA's decision does not in any way affect Qualcomm's ability to collect royalties on CDMA, WCDMA or other CDMA-based standards, and has no impact on the ability of Qualcomm to collect royalties from sales of CDMA equipment in Korea."
The Company is evaluating its options with respect to the award.
Qualcomm Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on the Company's CDMA digital technology. The Company's business areas include integrated CDMA chipsets and system software; technology licensing; Eudora® email software for Windows® and Macintosh® computing platforms; digital cinema systems; and satellite-based systems including portions of the Globalstar™ system and wireless fleet management systems, OmniTRACS® and OmniExpress™. Qualcomm owns patents that are essential to all of the CDMA wireless telecommunications standards that have been adopted or proposed for adoption by standards-setting bodies worldwide. Qualcomm has licensed its essential CDMA patent portfolio to more than 90 telecommunications equipment manufacturers worldwide. Headquartered in San Diego, Calif., Qualcomm is included in theS&P500 Index and is a 2000 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties, including the Company's ability to successfully design and have manufactured significant quantities of CDMA components on a timely and profitable basis, the extent and speed to which CDMA is deployed, change in economic conditions of the various markets the Company serves, as well as the other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended September 24, 2000, and most recent Form 10-Q.