Merger of Qualcomm and Atheros (Deb Sahoo)

ACQUISITION OF ATHEROS COMMUNICATIONS BY QUALCOMM
DEB SAHOO, MBA, ROSS SCHOOL OF BUSINESS, UNIVERSITY OF MICHIGAN, ANN ARBOR
April 25, 2011
INDUSTRY NEWS
Industry Buzz
Target Overview
Financial Statements of Buyer
Financial Statements of Target
11
Discounted Cash Flow Valuation of Target
15
Comparable Company Valuation of Target
18
Precedent Transactions Valuation of Target
22
Valuation Summary
24
Financial Projections of Buyer and Target
26
Transaction Analysis
29
EPS Accretion/Dilution Analysis
35
Profitability Contribution Analysis
40
Deal Fact
42
TABLE OF CONTENTS
Executive Summary
EXECUTIVE SUMMARY
Company: Qualcomm Inc.

Headquarter: San Diego, CA
CEO: Paul E. Jacobs
Number of Employees: 17,500
Engaged in the development, design, manufacture, and
marketing of digital wireless telecommunications products and
services based on code division multiple access technology
Develops and supplies CDMA based integrated circuits and
system software for wireless voice and data communications,
multimedia functions and global positioning system products for
wireless device and infrastructure manufacturers
Target Overview
Company: Atheros Communications Inc.

Headquarter: Santa Clara, California
CEO: Willy C. Shih, PhD
Number of Employees: 1,778
Developer of semiconductor system solutions for wired and
wireless communications products
Combines its wireless systems expertise with high performance
radio frequency (RF), mixed signal and digital semiconductor
designs and provides highly integrated but low cost chipsets
Key Financials of Buyer and Target
Valuation
Buyer
Total deal value: $3,654 MM

Total Enterprise Value/ 2011P EBITDA: 18.7x
Total Enterprise Value/ 2011P Revenue: 3.15x
FY 2011P P/E: 28.9x
Offer Price per Share: $45.0
Cash Consideration: 40%
Premium: 30.4%
EPS Accretion without synergy: +1.4%
EPS Accretion with synergy: +2.5%
% Shares owned by Qualcomm shareholders: 98%
Ticker: QCOM
Stock Price: $56.82
5 Year avg. Sales Growth: 15.0%
Market Cap: $95.55B
Number of Basic Shares: 1,617.7MM
2010 EBITDA: $3,949 MM
Total Enterprise Value: $78.54B
Ticker: ATHR
Stock Price: $34.50
5 Year avg. Sales Growth: 40.3%
Market Cap: $3.27 B
Number of Basic Shares: 73 MM
2010 EBITDA: $147 MM
Total Enterprise Value: $2,686B
Target
EXECUTIVE SUMMARY
Buyer Overview
TARGET OVERVIEW
Develops semiconductor system solutions for communication products

that include solutions for wireless local area network (WLAN), mobile
WLAN, Ethernet, Bluetooth, global positioning system (GPS), and power
line communications
Offers reference designs used in designing networking cards and
routers, broadband gateways, mobile devices, and handsets and
provides single and multi-chip WLAN products, including wireless
networking products for personal computers (PCs) and small
office/home office (SOHO) markets; and wireless infrastructure systemson-chip with network management capabilities for the enterprise
networking market
Atheros wireless system solutions are used in various applications in the
PCs, enterprise access, broadband gateway, SOHO networking,
consumer electronics, and mobile communications markets and Its
radio-on-chips for mobile solutions are used for WLAN in mobile devices,
such as smart phones and mobile consumer products
Its ETHOS products comprise access points, routers, gateways,
Ethernet physical layer, transceivers, and switches for personal computer
customers
Also provides Bluetooth solutions for PCs; GPS system solutions for
signal acquisition, tracking, data extraction, and GPS navigation
Industry Comparables
Products and Services

WLAN
ETHERNET
BLUETOOTH
HYBRID
GPS
PLC
PON
Stock Performance
Stock Price: $34.50

52 Week High: $44.88
52 Week Low: $22.77
Stock Beta: 1.82
FY 2010 EPS: $0.73
TARGET OVERVIEW
Company Overview
FINANCIAL STATEMENTS OF BUYER
30-Sep-10
30-Sep-09
30-Sep-08
28-Sep-07
29-Sep-06
10,991.0
10,416.0
11,142.0
8,871.0
7,526.0
Cost of Goods Sold (COGS) incl. D&A
3,517.0
3,181.0
3,414.0
2,681.0
2,182.0
COGS excluding D&A
2,851.0
2,546.0
2,958.0
2,298.0
1,910.0
666.0
635.0
456.0
383.0
272.0
Depreciation
437.0
428.0
372.0
317.0
239.0
Amortization of Intangibles
229.0
207.0
84.0
66.0
33.0
Gross Income
7,474.0
7,235.0
7,728.0
6,190.0
5,344.0
SG&A Expense
4,191.0
3,996.0
3,998.0
3,351.0
2,654.0
Research & Development
2,549.0
2,440.0
2,281.0
1,829.0
1,538.0
Other SG&A
1,642.0
1,556.0
1,717.0
1,522.0
1,116.0
0.0
230.0
0.0
0.0
0.0
3,283.0
3,009.0
3,730.0
2,839.0
2,690.0
935.0
653.0
646.0
826.0
523.0
58.0
24.0
22.0
11.0
4.0
122.0
1,545.0
529.0
27.0
24.0
4,038.0
2,093.0
3,825.0
3,627.0
3,185.0
787.0
484.0
666.0
323.0
686.0
1,557.0
182.0
465.0
229.0
387.0
389.0
291.0
245.0
185.0
156.0
-1,152.0
30.0
-36.0
-90.0
142.0
-7.0
-19.0
-8.0
-1.0
1.0
After-tax Adjustments - Net
-4.0
-17.0
1.0
-1.0
-29.0
Equity in Earnings of Affiliates
-4.0
-17.0
1.0
-1.0
-29.0
Consolidated Net Income
3,247.0
1,592.0
3,160.0
3,303.0
2,470.0
M inority Interest Expense
0.0
0.0
0.0
0.0
0.0
3,247.0
1,592.0
3,160.0
3,303.0
2,470.0
All figures in millions of U.S. Dollar, except per share items

Sales/Revenue
Depreciation & Amortization Expense
Other Operating Expense

EBIT (Operating Income)
Nonoperating Income (Expense) - Net
Interest Expense
Unusual Expense (Income) - Net
Pretax Income
Income Taxes
Income Taxes - Current Domestic
Income Taxes - Current Foreign
Income Taxes - Deferred Domestic
Income Taxes - Deferred Foreign
Net Income
5 Year Income Statement of Qualcomm Inc.
30-Sep-10
30-Sep-09
30-Sep-08
28-Sep-07
29-Sep-06
10,279.0
11,069.0
6,411.0
6,581.0
5,721.0
Total Accounts Receivable
730.0
729.0
4,038.0
715.0
700.0
Inventories
528.0
453.0
521.0
469.0
250.0
Other Current Assets
596.0
319.0
753.0
1,056.0
378.0
Total Current Assets
12,133.0
12,570.0
11,723.0
8,821.0
7,049.0
Net Property, Plant & Equipment
2,373.0
2,387.0
2,162.0
1,788.0
1,482.0
Total Investments and Advances
8,123.0
6,673.0
4,858.0
5,234.0
4,228.0
--
0.0
0.0
0.0
0.0
Intangible Assets
4,510.0
4,557.0
4,621.0
1,989.0
1,707.0
Other Assets
1,511.0
415.0
369.0
345.0
230.0
Total Assets
28,650.0
26,602.0
23,733.0
18,177.0
14,696.0
1,086.0
2.0
1.0
0.0
0.0
764.0
636.0
570.0
635.0
420.0
Income Tax Payable
1,443.0
0.0
20.0
119.0
137.0
Other Current Liabilities
2,175.0
2,175.0
1,700.0
1,504.0
865.0
Total Current Liabilities
5,468.0
2,813.0
2,291.0
2,258.0
1,422.0
0.0
187.0
142.0
91.0
58.0
--
47.0
--
--
--
Deferred Taxes
-1,922.0
-840.0
-829.0
-313.0
-512.0
Other Liabilities
4,246.0
4,079.0
4,185.0
306.0
322.0
Total Liabilities
7,792.0
6,286.0
5,789.0
2,342.0
1,290.0
Common Equity
20,858.0
20,316.0
17,944.0
15,835.0
13,406.0
Total Shareholders' Equity
20,858.0
20,316.0
17,944.0
15,835.0
13,406.0
Liabilities & Shareholders' Equity
28,650.0
26,602.0
23,733.0
18,177.0
14,696.0

Assets
Cash & ST Investments
Long-Term Note Receivable

ST Debt & Curr. Portion LT Debt
Accounts Payable
Long-Term Debt
Provision for Risks & Charges
5 Year Balance Sheet of Qualcomm Inc.
30-Sep-10
30-Sep-09
30-Sep-08
28-Sep-07
29-Sep-06
3,247.0
1,592.0
3,160.0
3,303.0
2,470.0
Depreciation, Depletion & Amortization
666.0
635.0
456.0
383.0
272.0
Deferred Taxes & Investment Tax Credit
116.0
-33.0
306.0
91.0
514.0

Operating Activities
Net Income before Extraordinaries
Other Funds
93.0
985.0
344.0
10.0
10.0
4,122.0
3,179.0
4,266.0
3,787.0
3,266.0
-46.0
3,993.0
-708.0
24.0
-13.0
Receivables
-18.0
3,083.0
-653.0
-16.0
-133.0
Inventories
-80.0
69.0
-47.0
-234.0
-71.0
Accounts Payable
148.0
57.0
-63.0
209.0
51.0
--
--
--
139.0
--
Other Assets/Liabilities
-96.0
784.0
55.0
-74.0
140.0
Net Operating Cash Flow
4,076.0
7,172.0
3,558.0
3,811.0
3,253.0
426.0
761.0
1,397.0
818.0
685.0
Funds from Operations

Changes in Working Capital
Other Accruals
Investing Activities
Capital Expenditures
Net Assets from Acquisitions
0.0
0.0
0.0
0.0
0.0
617.0
-5,223.0
-991.0
-494.0
-1,534.0
-1,030.0
527.0
-431.0
-586.0
-404.0
-839.0
-5,457.0
-2,819.0
-1,898.0
-2,623.0
Cash Dividends Paid
-1,177.0
-1,093.0
-982.0
-862.0
-698.0
Change in Capital Stock
-2,327.0
357.0
-486.0
-909.0
-797.0
1,064.0
0.0
0.0
0.0
0.0
35.0
-97.0
161.0
660.0
403.0
-2,405.0
-833.0
-1,307.0
-1,111.0
-1,092.0
Exchange Rate Effect
-2.0
-5.0
-3.0
2.0
-1.0
M iscellaneous Funds
0.0
0.0
0.0
0.0
0.0
830.0
877.0
-571.0
804.0
-463.0
Purchase/Sale of Investments
Other Funds
Net Investing Cash Flow
Financing Activities
Issuance/Reduction of Debt, Net

Other Funds
Net Financing Cash Flow
Net Change in Cash
5 Year Cash Flow Statement of Qualcomm Inc.
FINANCIAL STATEMENTS OF TARGET

Sales/Revenue
31-Dec-10
31-Dec-09
31-Dec-08
31-Dec-07
29-Dec-06
926.8
542.5
472.4
417.0
301.7
Cost of Goods Sold (COGS) incl. D&A
507.7
290.4
248.7
217.0
159.4
COGS excluding D&A
459.0
272.0
229.9
204.6
156.1
48.7
18.5
18.8
12.4
3.3
8.7
6.9
6.5
5.0
1.8
40.0
11.6
12.2
7.4
1.5
Gross Income
419.1
252.0
223.7
200.0
142.3
SG&A Expense
320.7
219.3
197.8
160.1
113.6
Research & Development
189.7
130.6
121.6
100.9
71.1
Other SG&A
131.0
88.7
76.3
59.2
42.5
0.0
0.0
0.0
0.0
0.0
98.4
32.7
25.9
39.8
28.7
Nonoperating Income (Expense) - Net
4.3
6.0
8.9
11.5
8.7
Interest Expense
0.0
0.0
0.0
0.0
0.0
36.8
12.6
15.5
7.2
10.8
--
2.0
15.5
2.3
--
33.7
--
--
--
--
3.1
10.5
0.0
4.9
10.8
Pretax Income
66.0
26.2
19.3
44.2
26.5
Income Taxes
11.6
-20.2
0.4
4.2
7.8
-4.8
7.5
6.4
8.8
6.5
3.8
-20.4
1.2
0.9
0.1
12.3
-7.1
-6.4
-4.7
1.5
Depreciation & Amortization Expense

Depreciation
Amortization of Intangibles
Other Operating Expense

EBIT (Operating Income)
Unusual Expense (Income) - Net

Financial Assets Impairment
Legal Claim Expense
Other Unusual Expense
Income Taxes - Current Domestic

Income Taxes - Current Foreign
Income Taxes - Deferred Domestic
0.3
-0.2
-0.8
-0.8
-0.2
Consolidated Net Income
Income Taxes - Deferred Foreign
54.4
46.4
18.9
40.0
18.7
Net Income
54.4
46.4
18.9
40.0
18.7
5 Year Income Statement of Atheros Communications Inc.
31-Dec-10
31-Dec-09
31-Dec-08
31-Dec-07
29-Dec-06
Cash & ST Investments
515.8
402.2
293.8
219.5
185.9
Total Accounts Receivable
103.1
58.0
58.4
58.0
46.0
Inventories
95.7
70.4
69.8
35.5
25.9
20.1
27.0
15.9
16.1
10.6
734.8
557.6
437.8
329.1
268.4
Net Property, Plant & Equipment
22.1
15.0
14.8
13.5
9.0
Total Investments and Advances
12.8
15.5
17.0
30.5
0.0
0.0
0.0
0.0
0.0
0.0
375.3
324.2
125.0
136.1
81.7
Other Assets
9.0
0.0
0.0
0.0
0.0
Total Assets
1,154.0
912.3
594.6
509.2
359.2
0.0
0.0
0.0
0.0
0.0
51.8
59.9
30.5
29.6
17.1
118.5
81.2
65.5
47.3
46.9
170.2
141.1
96.0
76.8
64.0
Long-Term Debt
0.0
0.0
0.0
0.0
0.0
Deferred Taxes
17.8
39.4
27.1
30.9
-4.9
Other Liabilities
71.3
-0.0
0.0
0.0
18.6
Total Liabilities
259.3
180.5
123.1
107.7
77.7
Common Equity
894.8
731.9
471.5
401.5
280.9
894.8
731.9
471.5
401.5
280.9
0.0
0.0
0.0
0.0
0.5
894.8
731.9
471.5
401.5
281.5
1,154.0
912.3
594.6
509.2
359.2

Assets
Long-Term Note Receivable

Intangible Assets

ST Debt & Curr. Portion LT Debt
Accounts Payable
Total Shareholders' Equity

Accumulated M inority Interest
Total Equity
5 Year Balance Sheet of Atheros Communications Inc.
31-Dec-10
31-Dec-09
31-Dec-08
31-Dec-07
29-Dec-06
Net Income before Extraordinaries
54.4
46.4
18.9
40.0
18.7
Depreciation, Depletion & Amortization
48.7
18.5
18.8
5.0
3.3
Deferred Taxes & Investment Tax Credit
9.6
-23.0
-2.0
1.6
1.4
57.8
50.8
46.8
36.9
19.6
170.5
92.7
82.4
83.4
43.0
-24.3
50.1
-19.0
-11.9
6.5
Receivables
-44.3
11.6
-0.4
-10.7
-12.5
Inventories
-25.8
7.6
-35.0
-7.7
-1.4
Accounts Payable
-9.7
20.2
0.6
11.9
-1.0
Other Accruals
55.6
13.5
17.8
-4.0
24.3
Other Assets/Liabilities
-0.1
-2.8
-1.9
-1.3
-3.0
Net Operating Cash Flow
146.2
142.8
63.4
71.5
49.4
14.0
3.9
7.4
9.7
5.9
-70.6
-70.7
-0.5
-23.7
-52.1
0.0
0.0
0.7
2.3
0.0
-131.0
-57.9
-133.6
9.8
11.1
-1.2
0.2
-2.5
-0.3
0.0
-216.8
-132.2
-143.3
-21.6
-46.9
53.0
22.6
18.6
23.1
14.1
Issuance/Reduction of Debt, Net
0.0
0.0
0.0
0.0
0.0
Other Funds
0.0
0.7
1.5
2.9
6.3
53.0
23.2
20.1
26.0
20.4
0.0
0.0
-0.0
0.0
-0.0
-17.7
33.8
-59.7
75.9
23.0

Operating Activities
Other Funds
Funds from Operations
Changes in Working Capital
Investing Activities
Capital Expenditures
Net Assets from Acquisitions
Sale of Fixed Assets & Businesses
Purchase/Sale of Investments
Other Funds
Net Investing Cash Flow
Financing Activities
Change in Capital Stock
Net Financing Cash Flow

M iscellaneous Funds
Net Change in Cash
5 Year Cash Flow Statement of Atheros Communications Inc.
DISCOUNTED CASH FLOW VALUATION OF TARGET
Free Cash Flow Projection
FY Ending December 30
2009
2010
2011
$542.5
$926.8
70.8%
EBITDA
% Margin
Less: Depreciation
EBITA
Tax Rate
Revenue
% Growth
Unlevered Net Income

Plus: Depreciation
Less: Capital Expenditures
Less: Change in Working Capital
Free Cash Flow
Net Debt
FDSO
TEV/EBITDA
2012
2013
2014
2015
$986.6
6.5%
$1,129.3
14.5%
$1,210.0
7.1%
$1,222.1
1.0%
$1,234.3
1.0%
5.8%
147.1
15.9%
166.4
16.9%
248.3
22.0%
297.0
24.5%
300.0
24.5%
303.0
24.5%
16.2%
(8.7)
138.4
20.0%
(7.0)
159.4
20.0%
(8.2)
240.1
20.0%
(8.5)
288.5
20.0%
(8.6)
291.4
20.0%
(8.7)
294.3
20.0%
$110.7
8.7
(12.5)
288.2
$395.1
($490.4)
75.629
14.4x
CAGR
$127.5
7.0
(15.6)
44.9
$163.8
$192.1
8.2
(17.7)
107.0
$289.6
$230.8
8.5
(18.1)
60.5
$281.7
$233.1
8.6
(23.2)
9.1
$227.5
$235.4
2011-2015
16.6%
16.6%
8.7
(23.5)
9.2
$229.8
8.8%
Free Cash Flow Projection
DCF Valuation (2011-2015): EBITDA Multiple Method
Discount
Rate
(WACC)
Discount
Rate
(WACC)
15.0%
16.0%
17.0%
Total Enterprise Value

Terminal EBITDA Multiple
14.0x
15.0x
16.0x
$2,899.8
$3,050.4
$3,201.1
$2,791.5
$2,935.7
$3,080.0
$2,688.3
$2,826.5
$2,964.7
15.0%
16.0%
17.0%
Implied Perpetuity Growth Rate

14.0x
15.0x
16.0x
9.1%
9.5%
9.8%
10.0%
10.4%
10.7%
11.0%
11.4%
11.7%
(1)
Discount
Rate
(WACC)
15.0%
16.0%
17.0%
Total Equity Value

14.0x
15.0x
16.0x
$3,390.2
$3,540.8
$3,691.5
$3,281.9
$3,426.1
$3,570.4
$3,178.7
$3,316.9
$3,455.1
(2)
Discount
Rate
(WACC)
15.0%
16.0%
17.0%
Price Per Share

14.0x
15.0x
$44.8
$46.8
$43.4
$45.3
$42.0
$43.9
16.0x
$48.8
$47.2
$45.7
DCF Valuation (2011-2015): Perpetuity Growth Method
Discount
Rate
(WACC)
Discount
Rate
(WACC)
15.0%
16.0%
17.0%

Terminal Perpetuity Growth Rate
3.0%
4.0%
5.0%
$1,771.8
$1,871.3
$1,990.8
$1,638.9
$1,720.3
$1,816.5
$1,524.9
$1,592.3
$1,670.9
15.0%
16.0%
17.0%
Implied Terminal EBITDA Multiple

3.0%
4.0%
5.0%
6.5x
7.2x
8.0x
6.0x
6.6x
7.2x
5.6x
6.1x
6.6x
(1)
Discount
Rate
(WACC)
15.0%
16.0%
17.0%
Total Equity Value

3.0%
4.0%
5.0%
$2,262.2
$2,361.7
$2,481.2
$2,129.3
$2,210.7
$2,306.9
$2,015.3
$2,082.7
$2,161.3
15.0%
16.0%
17.0%
Price Per Share

3.0%
4.0%
5.0%
$29.91
$31.23
$32.81
$28.16
$29.23
$30.50
$26.65
$27.54
$28.58
(2)
Discount
Rate
(WACC)
Valuation Sensitivity Analysis
COMPARABLE COMPANY VALUATION OF TARGET
Industry Comparables
Capitalization Analysis
LTM as of 21-Apr-2011
Company Name
Broadcom Corp.
Intel Corp.
Marvell Technology
RF Micro Devices
Intersil Corp.
Ticker
Price
(21-Apr-2011)
Market
Value
Diluted
Shares
Outstanding
Equity
Value
Enterprise
Value
Cash
and ST
Investments
Total
Debt
Preferred
Equity
Minority
Interest
Total
Assets
Long
Term
Debt
D/
D+E
BRCM
INTC
MRVL
RFMD
ISIL
40.16
21.94
15.83
6.17
14.54
19,504.4
118,150.4
10,026.7
1,703.7
1,815.1
544.6
5,696.0
676.9
284.2
124.6
21,871.6
124,970.2
10,715.0
1,753.2
1,811.7
17,543.7
98,380.4
7,097.2
1,611.5
1,730.6
2,657.7
21,885.0
2,930.0
304.7
383.0
697.0
2,115.0
0.5
212.5
298.5
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
7,944.3
62,897.0
6,310.5
1,053.4
1,578.6
697.0
2,077.0
0.0
207.4
275.0
0.11x
0.04x
0.00x
0.24x
0.22x
19.7
15.8
30,240.1
10,026.7
5,632.1
2,657.7
664.7
298.5
651.3
275.0
0.1
0.1
Mean
Median
1,465.2
544.6
32,224.3
10,715.0
25,272.7
7,097.2
15,956.7
6,310.5
Margin Analysis
Company Name
Broadcom Corp.
Intel Corp.
Marvell Technology
RF Micro Devices
Intersil Corp.
Ticker
BRCM
INTC
MRVL
RFMD
ISIL
Mean
Median
Gross Margin (%)

FY-1
FY0
LTM
FY-1
50.4
55.6
52.5
24.5
52.7
51.4
65.2
57.0
36.0
54.8
4.5
16.9
11.9
(98.1)
8.8
47.1
52.5
51.4
65.2
57.0
36.3
54.8
52.9
54.8
52.9
54.8
(11.2)
8.8
EBIT Margin (%)

FY0
16.9
35.6
25.0
11.2
15.8
20.9
16.9
LTM
EBITDA Margin (%)

FY-1
FY0
LTM
FY-1
16.9
35.6
25.0
14.9
15.8
6.8
31.3
18.8
14.3
18.9
46.2
29.8
23.0
21.7
1.5
12.4
12.6
(100.2)
6.3
21.6
16.9
17.8
16.6
18.9
46.2
29.8
20.5
21.7
27.4
21.7
27.9
23.0
(13.5)
6.3
Net Margin (%)

FY0
15.9
26.3
25.0
7.3
3.2
15.5
15.9
LTM
15.9
26.3
25.0
11.5
3.2
16.4
15.9
Valuation Analysis
Company Name
Broadcom Corp.
Intel Corp.
Marvell Technology
RF Micro Devices
Intersil Corp.
Mean
Median
Low
High
Ticker
Market
Value
Enterprise
Value
Sales
EBITDA
BRCM
INTC
MRVL
RFMD
ISIL
19,504.4
118,150.4
10,026.7
1,703.7
1,815.1
17,543.7
98,380.4
7,097.2
1,611.5
1,730.6
6,818.3
43,623.0
3,611.9
1,099.3
822.4
1,291.0
20,148.0
1,077.1
252.9
178.6
30,240.1
10,026.7
1,703.7
118,150.4
25,272.7
7,097.2
1,611.5
98,380.4
11,195.0
3,611.9
822.4
43,623.0
4,589.5
1,077.1
178.6
20,148.0
LTM
Price / EPS
FY1
FY2
20.18
10.92
11.81
13.41
69.24
14.38
9.74
10.66
10.06
14.57
13.13
9.09
9.52
11.16
11.39
2.6x
2.3x
2.0x
1.5x
2.1x
15.2x
6.3x
7.8x
9.8x
13.3x
25.1
13.4
10.9
69.2
11.9
10.7
9.7
14.6
10.9
11.2
9.1
13.1
2.1x
2.1x
1.5x
2.6x
10.5x
9.8x
6.3x
15.2x
Price to
Book
Value
Price
to
Sales
13.6x
4.9x
6.6x
6.4x
9.7x
3.7x
2.4x
1.9x
2.6x
1.7x
3.2x
2.9x
3.0x
1.6x
2.2x
8.2x
6.6x
4.9x
13.6x
2.5x
2.4x
1.7x
3.7x
2.6x
2.9x
1.6x
3.2x
Enterprise Value /
Sales
EBIT
EBITDA
Comparable Company Key Financial Statistics
Atheros Inc. Key Financial Metrics

Net Debt
FDSO
Book Value of Share
EPS (FY1)
EPS(FY2)
Sales
EBIT
EBITDA
$
$
$
$
$
$
($490.4)
75.629
11.8
1.6
1.9
926.8
98.4
147.1
Implied Total Enterprise Value

Mean
Median
Low
2,213.1
1,399.9
1,555.4
1,921.0
1,034.5
1,209.8
2,188.3
1,255.9
1,599.1
1,950.3
968.6
969.3
1,551.5
1,147.3
1,302.3
1,358.7
624.2
718.3
Implied Price per Share

High
Mean
Median
Low
3,321.9
1,716.5
1,880.4
2,384.7
1,496.4
1,999.0
29.3
18.5
20.6
31.9
20.2
22.5
28.9
16.6
21.1
32.3
19.3
19.3
20.5
15.2
17.2
24.4
14.7
16.0
High
-
43.9
22.7
24.9
38.0
26.3
32.9
Comparable Company Valuation Range
PRECEDENT TRANSACTIONS VALUATION OF TARGET
Precedent Transactions
Deal
Buyer
Target
Deal Details
Year
Name
Industry
Ticker
Name
Industry
Ticker
2009
2009
2009
2009
2009
Cisco Systems
Cisco Systems
EMC Corp.
Hewlett Packaard
Dell Inc.
Hardware
Hardware
Hardware
Hardware
Hardware
CSCO
CSCO
EMC
HPQ
DELL
Tandberg
Starent
Data Domain
3Com
Perot Systems
Hardware
Hardware
Hardware
Hardware
IT Services
TAA
STAR
DDUP
COMS
PER
Mean
Median
Low
High
Enterprise Value
EV/Revenue
EV/EBITDA
Premium
$3,000.0
$2,400.0
$2,100.0
$2,700.0
$3,900.0
3.5x
5.4x
5.5x
2.5x
2.4x
15.1x
22.1x
20.0x
19.3x
12.9x
11%
20%
30%
39%
67%
$2,820.0
$2,700.0
$2,100.0
$3,900.0
3.9x
3.5x
2.4x
5.5x
17.9x
19.3x
12.9x
22.1x
33%
30%
11%
67%
Atheros Inc. Key Financial Metrics

Net Debt
FDSO
Revenue
EBITDA
$
$
($490.4)
75.629
926.8
147.1
Implied Total Enterprise Value
Implied Price per Share
Mean
Median
Low
High
Mean
Median
Low
High
3,577.4
2,630.1
3,243.8
2,839.0
2,224.3
1,897.6
5,097.4
3,250.9
53.8
41.3
49.4
44.0
35.9
31.6
73.9
49.5
PRECEDENT TRANSACTION VALUATION OF TARGET
Precedent Transactions Analysis
VALUATION SUMMARY
DCF Analysis
Low
Range
High
15% -17% WACC

$2,826.5
$223.9
$3,050.4
14x -16x Exit Multiple

$2,791.5
$288.5
$3,080.0
Precedent Transactions
2.4x -5.5x Revenue
$2,224.3
$2,873.1
$5,097.4
12.9x -22.1x EBITDA

$1,897.6
$1,353.3
$3,250.9
Comparable Companies
1.5x - 2.4x Revenue
$1,358.7
$865.6
$2,224.3
4.88x - 9.7x EBITDA

$718.3
$707.0
$1,425.3
VALUATION SUMMARY
Target Valuation Summary
FINANCIAL PROJECTIONS OF BUYER AND TARGET
FY Ended December 30
CAGR
2008A
2009A
2010A
2011P
2012P
2013P
2014E
2015E
$11,142.0
NA
$10,416.0
(6.5%)
$10,991.0
5.5%
$14,263.0
29.8%
$15,996.2
12.2%
$17,581.0
9.9%
$19,322.8
9.9%
$21,237.2
9.9%
2,958.0
26.5%
$8,184.0
73.5%
2,546.0
24.4%
$7,870.0
75.6%
2,851.0
25.9%
$8,140.0
74.1%
4,017.4
28.2%
$10,245.6
71.8%
4,403.6
27.5%
$11,592.6
72.5%
4,964.4
28.2%
$12,616.6
71.8%
5,456.2
28.2%
$13,866.6
71.8%
5,996.8
28.2%
$15,240.4
71.8%
SG&A
% of Sales
3,998.0
35.9%
3,996.0
38.4%
4,191.0
38.1%
4,221.5
29.6%
4,554.6
28.5%
5,059.8
28.8%
5,561.1
28.8%
6,112.0
28.8%
EBITDA
% Margin
$4,186.0
37.6%
$3,874.0
37.2%
$3,949.0
35.9%
$6,024.1
42.2%
$7,038.0
44.0%
$7,556.8
43.0%
$8,305.5
43.0%
$9,128.3
43.0%
372.0
3.3%
84.0
0.8%
$456.0
4.1%
428.0
4.1%
207.0
2.0%
$635.0
6.1%
437.0
4.0%
229.0
2.1%
$666.0
6.1%
362.6
2.5%
100.0
0.7%
$462.6
3.2%
600.0
3.8%
93.3
0.6%
$693.3
4.3%
800.0
4.6%
83.1
0.5%
$883.1
5.0%
879.3
4.6%
83.1
0.4%
$962.4
5.0%
966.4
4.6%
83.1
0.4%
$1,049.5
4.9%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
EBIT
% Margin
$3,730.0
33.5%
$3,239.0
31.1%
$3,283.0
29.9%
$5,561.5
39.0%
$6,344.7
39.7%
$6,673.7
38.0%
$7,343.1
38.0%
$8,078.9
38.0%
9.8%
EBITA
% Margin
$3,814.0
34.2%
$3,446.0
33.1%
$3,512.0
32.0%
$5,661.5
39.7%
$6,438.0
40.2%
$6,756.8
38.4%
$7,426.2
38.4%
$8,162.0
38.4%
9.6%
Interest Income
Interest Expense
Equity Income
Minority Interest
Other Income
Other Expense
Income Before Taxes
646.0
22.0
0.0
0.0
0.0
529.0
$3,825.0
653.0
24.0
0.0
0.0
0.0
1,545.0
$2,323.0
935.0
58.0
0.0
0.0
0.0
122.0
$4,038.0
0.0
0.0
0.0
0.0
0.0
0.0
$5,561.5
0.0
0.0
0.0
0.0
0.0
0.0
$6,344.7
0.0
0.0
0.0
0.0
0.0
0.0
$6,673.7
0.0
0.0
0.0
0.0
0.0
0.0
$7,343.1
0.0
0.0
0.0
0.0
0.0
0.0
$8,078.9
666.0
17.4%
484.0
20.8%
787.0
19.5%
671.2
12.1%
1,160.3
18.3%
813.8
12.2%
895.4
12.2%
985.1
12.2%
$3,159.0
28.4%
$1,839.0
17.7%
$3,251.0
29.6%
$4,890.3
34.3%
$5,184.4
32.4%
$5,859.9
33.3%
$6,447.7
33.4%
$7,093.7
33.4%
9.7%
11.5%
Total Revenue
% Growth
COGS - ex D&A
% of Sales
Gross Profit
% Margin
Depreciation
% of Sales
Amortization
% of Sales
Total D&A
% of Sales
Stock-Based Comp
% of Sales
Income tax
% Tax Rate
Net Income
% Margin
Diluted EPS
2011-2015
10.5%
10.4%
10.9%
9.8%
$1.90
$1.10
$1.96
$2.63
$2.83
$3.55
$3.72
$4.07
1,663.158
1,675.789
1,656.633
1,856.916
1,832.791
1,648.788
1,734.815
1,742.123
$69.4
0.0
0.0
$163.9
0.0
0.0
$184.4
0.0
0.0
$87.9
0.0
0.0
$76.2
0.0
0.0
$73.0
0.0
0.0
$73.0
0.0
0.0
$73.0
0.0
0.0
Net Income - GAAP

% Margin
$3,089.6
27.7%
$1,675.1
16.1%
$3,066.6
27.9%
$4,802.4
33.7%
$5,108.2
31.9%
$5,786.9
32.9%
$6,374.7
33.0%
$7,020.7
33.1%
10.0%
Diluted EPS - GAAP
$1.86
$1.00
$1.85
$2.59
$2.79
$3.51
$3.67
$4.03
11.7%
$1,397.0
12.5%
$761.0
7.3%
$426.0
3.9%
$466.3
3.3%
$672.4
4.2%
$899.9
5.1%
$966.1
5.0%
$1,061.9
5.0%
Diluted Shares Out

Cash to GAAP Reconciliation
Amortization
Stock-Based Comp
One-Time Charges
Capex
% of Sales
Income Statement Projection of Qualcomm Inc.
2008A
2009A
2010A
2011P
CAGR
2012P
2013P
2014E
2015E
2011-2015
Total Revenue
% Growth
$472.4
NA
$542.5
14.8%
$926.8
70.8%
$986.6
6.5%
$1,129.3
14.5%
$1,210.0
7.1%
$1,222.1
1.0%
$1,234.3
1.0%
COGS - ex D&A
% of Sales
Gross Profit
% Margin
229.9
48.7%
$242.5
51.3%
272.0
50.1%
$270.5
49.9%
459.0
49.5%
$467.8
50.5%
532.0
53.9%
$454.6
46.1%
555.3
49.2%
$574.0
50.8%
578.0
47.8%
$632.0
52.2%
583.8
47.8%
$638.3
52.2%
589.6
47.8%
$644.7
52.2%
SG&A
% of Sales
197.8
41.9%
219.3
40.4%
320.7
34.6%
288.2
29.2%
325.7
28.8%
335.0
27.7%
338.4
27.7%
341.7
27.7%
EBITDA
% Margin
$44.7
9.5%
$51.2
9.4%
$147.1
15.9%
$166.4
16.9%
$248.3
22.0%
$297.0
24.5%
$300.0
24.5%
$303.0
24.5%
6.5
1.4%
12.2
2.6%
$18.7
4.0%
6.9
1.3%
11.6
2.1%
$18.5
3.4%
8.7
0.9%
40.0
4.3%
$48.7
5.3%
7.0
0.7%
14.0
1.4%
$21.0
2.1%
8.2
0.7%
14.5
1.3%
$22.7
2.0%
8.5
0.7%
15.2
1.3%
$23.7
2.0%
8.6
0.7%
15.2
1.2%
$23.8
1.9%
8.7
0.7%
15.2
1.2%
$23.9
1.9%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
EBIT
% Margin
$26.0
5.5%
$32.7
6.0%
$98.4
10.6%
$145.4
14.7%
$225.6
20.0%
$273.3
22.6%
$276.2
22.6%
$279.1
22.6%
17.7%
EBITA
% Margin
$38.2
8.1%
$44.3
8.2%
$138.4
14.9%
$159.4
16.2%
$240.1
21.3%
$288.5
23.8%
$291.4
23.8%
$294.3
23.8%
16.6%
0.0
0.0
0.0
0.0
8.9
15.5
0.0
0.0
0.0
0.0
6.0
12.6
0.0
0.0
0.0
0.0
4.3
36.8
0.0
2.0
0.0
0.0
0.0
0.0
0.0
4.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Income Before Taxes
$19.4
$26.1
$65.9
$143.4
$221.6
$273.3
$276.2
$279.1
Provision for Tax

% Tax Rate
3.4
17.4%
5.4
20.8%
12.8
19.5%
17.3
12.1%
40.5
18.3%
33.3
12.2%
33.7
12.2%
34.0
12.2%
$16.0
3.4%
$20.7
3.8%
$53.1
5.7%
$126.1
12.8%
$181.1
16.0%
$240.0
19.8%
$242.5
19.8%
$245.1
19.9%
18.1%
12.5%
Depreciation
% of Sales
Amortization
% of Sales
Total D&A
% of Sales
Stock-Based Comp
% of Sales
Interest Income
Interest Expense
Equity Income
Minority Interest
Other Income
Other Expense
Net Income
% Margin
Diluted EPS
5.8%
9.1%
16.2%
18.1%
$0.25
$0.33
$0.73
$1.56
$1.89
$2.48
$2.48
$2.50
62.910
63.570
72.500
80.940
95.610
96.650
97.770
98.200
$10.1
0.0
0.0
$9.2
0.0
0.0
$32.2
0.0
0.0
$12.3
0.0
0.0
$11.8
0.0
0.0
$13.3
0.0
0.0
$13.3
0.0
0.0
$13.3
0.0
0.0
Net Income - GAAP

% Margin
$5.9
1.3%
$11.5
2.1%
$20.9
2.2%
$113.8
11.5%
$169.2
15.0%
$226.6
18.7%
$229.2
18.8%
$231.7
18.8%
19.5%
Diluted EPS - GAAP
$0.09
$0.18
$0.29
$1.41
$1.77
$2.34
$2.34
$2.36
13.8%
$7.4
1.6%
$3.9
0.7%
$12.5
1.3%
$15.6
1.6%
$17.7
1.6%
$18.1
1.6%
$23.2
1.9%
$23.5
1.9%
Diluted Shares Out

Cash to GAAP Reconciliation
Amortization
Stock-Based Comp
One-Time Charges
Capex
% of Sales
Income Statement Projection of Atheros Communications Inc.
TRANSACTION ANALYSIS
Current
Price
Transaction Prices Per Atheros Inc. Share
$34.50
$44.00
$45.00
$46.00
$47.00
$48.00
$49.00
$50.00
Uses
Atheros Inc. Common Consideration
Atheros Inc. Options Consideration
Atheros Inc. Preferred Consideration
Total Equity Consideration
$2,779.0
0.0
0.0
$2,779.0
$3,544.2
0.0
0.0
$3,544.2
$3,624.8
0.0
0.0
$3,624.8
$3,705.3
0.0
0.0
$3,705.3
$3,785.9
0.0
0.0
$3,785.9
$3,866.4
0.0
0.0
$3,866.4
$3,947.0
0.0
0.0
$3,947.0
$4,027.5
0.0
0.0
$4,027.5
Atheros Inc. Revolver Refinanced

Atheros Inc. Convertible Debt Assumed
Atheros Inc. Convertible Debt Refinanced/Retired
Atheros Inc. Non-Convertible LT Debt Assumed
Atheros Inc. Non-Convertible LT Debt Refinanced/Retired
Total Levered Consideration
0.0
0.0
0.0
0.0
0.0
$2,779.0
0.0
0.0
0.0
0.0
0.0
$3,544.2
0.0
0.0
0.0
0.0
0.0
$3,624.8
0.0
0.0
0.0
0.0
0.0
$3,705.3
0.0
0.0
0.0
0.0
0.0
$3,785.9
0.0
0.0
0.0
0.0
0.0
$3,866.4
0.0
0.0
0.0
0.0
0.0
$3,947.0
0.0
0.0
0.0
0.0
0.0
$4,027.5
Acquirer Refinanced Debt

Financing Fees
Advisory Fees
Total Uses
0.0
0.0
30.0
$2,809.0
0.0
0.0
30.0
$3,574.2
0.0
0.0
30.0
$3,654.8
0.0
0.0
30.0
$3,735.3
0.0
0.0
30.0
$3,815.9
0.0
0.0
30.0
$3,896.4
0.0
0.0
30.0
$3,977.0
0.0
0.0
30.0
$4,057.5
Sources
Qualcomm Inc. Common Consideration
Qualcomm Inc. Options Consideration
Qualcomm Inc. Preferred Consideration
Cash Consideration
Qualcomm Inc. Revolver
Acquisition Debt
Atheros Inc. LT Debt Assumed
$1,667.4
0.0
0.0
1,141.6
0.0
0.0
0.0
$2,126.5
0.0
0.0
1,447.7
0.0
0.0
0.0
$2,174.9
0.0
0.0
1,479.9
0.0
0.0
0.0
$2,223.2
0.0
0.0
1,512.1
0.0
0.0
0.0
$2,271.5
0.0
0.0
1,544.3
0.0
0.0
0.0
$2,319.8
0.0
0.0
1,576.6
0.0
0.0
0.0
$2,368.2
0.0
0.0
1,608.8
0.0
0.0
0.0
$2,416.5
0.0
0.0
1,641.0
0.0
0.0
0.0
Total Sources
$2,809.0
$3,574.2
$3,654.8
$3,735.3
$3,815.9
$3,896.4
$3,977.0
$4,057.5
0.000
0.000
0.000
0.000
0.000
0.000
0.000
0.000
Sources & Uses
Check
Cash Schedule
Cash Available
Qualcomm Inc. Existing Cash
Atheros Inc. Existing Cash
Minimum Cash Balance
Total Cash Available
Cash Needed
Cash Paid to Atheros Inc. Shareholders
Financing Fees
Advisory Fees
Qualcomm Inc. Debt Retired
Atheros Inc. Debt Retired
Cash Needed Before Revolver
Optional Paydown of Atheros Inc. Revolver
Optional Paydown of Qualcomm Inc. Revolver
Total Cash Needed
$10,279.0
515.8
(100.0)
$10,694.8
$10,279.0
515.8
(100.0)
$10,694.8
$10,279.0
515.8
(100.0)
$10,694.8
$10,279.0
515.8
(100.0)
$10,694.8
$10,279.0
515.8
(100.0)
$10,694.8
$10,279.0
515.8
(100.0)
$10,694.8
$10,279.0
515.8
(100.0)
$10,694.8
$10,279.0
515.8
(100.0)
$10,694.8
$1,111.6
0.0
30.0
0.0
0.0
$1,141.6
0.0
0.0
$1,141.6
$1,417.7
0.0
30.0
0.0
0.0
$1,447.7
0.0
0.0
$1,447.7
$1,449.9
0.0
30.0
0.0
0.0
$1,479.9
0.0
0.0
$1,479.9
$1,482.1
0.0
30.0
0.0
0.0
$1,512.1
0.0
0.0
$1,512.1
$1,514.3
0.0
30.0
0.0
0.0
$1,544.3
0.0
0.0
$1,544.3
$1,546.6
0.0
30.0
0.0
0.0
$1,576.6
0.0
0.0
$1,576.6
$1,578.8
0.0
30.0
0.0
0.0
$1,608.8
0.0
0.0
$1,608.8
$1,611.0
0.0
30.0
0.0
0.0
$1,641.0
0.0
0.0
$1,641.0
Sources and Uses of Funds
Transaction Value Per Share
$45.00
Assets
Current Assets
Cash and Equivalents
Accounts Receivable
Inventory
Deferred Income Taxes
Qualcomm Inc.
Atheros Inc.
25-04-11
25-04-11
Adjustments
Write-Up
Pro Forma
Financing
$10,279.0
730.0
528.0
0.0
596.0
$12,133.0
$515.8
103.1
95.7
0.0
20.1
$734.7
$2,373.0
1,488.0
3,022.0
8,123.0
0.0
0.0
1,511.0
$22.1
222.0
153.4
12.8
0.0
0.0
9.0
$28,650.0
$1,154.0
$31,164.0
Liabilities and Stockholders' Equity

Current Liabilities
Accounts Payable
Accrued Expenses
Income Taxes Payable
Deferred Revenue
Current Portion of Long-Term Debt
$764.0
0.0
1,443.0
0.0
2,175.0
1,086.0
$5,468.0
$51.8
0.0
0.0
0.0
118.5
0.0
$170.3
$815.8
0.0
1,443.0
0.0
2,293.5
1,086.0
$5,638.3
Revolver
Non-Convertible Debt
Convertible Debt
Deferred Income Taxes
Other Long-Term Liabilities
Total Liabilities
$0.0
0.0
0.0
(1,922.0)
4,246.0
$7,792.0
$0.0
0.0
0.0
17.8
71.3
$259.4
$0.0
0.0
6,856.0
0.0
(88.0)
785.0
13,305.0
$0.0
773.7
0.0
0.0
0.0
0.0
120.9
Net PP&E
Goodwill
Intangibles
Investments/Restricted Cash
Unearned Compensation
Deferred Financing Fees
Other Assets
Total Assets
Preferred Stock, par value

Common Stock, par value
APIC / Capital Surplus
Treasury Stock
Accum. & Other Comp. Income (Loss)
Unrealized Gain/Loss Marketable Securities
Retained Earnings
($1,479.9)
25-04-11
15.0
2,142.4
682.5
0.0
0.0
127.6
$9,314.9
833.1
623.7
0.0
616.1
$11,387.8
$2,410.1
3,852.4
3,857.9
8,135.8
0.0
0.0
1,520.0
$0.0
0.0
0.0
(17.8)
$0.0
0.0
0.0
(1,794.4)
4,317.3
$8,161.2
$0.0
1,401.2
0.0
0.0
0.0
0.0
(150.9)
$0.0
2,174.9
6,856.0
0.0
(88.0)
785.0
13,275.0
Total Stockholders' Equity
$20,858.0
$894.6
$23,002.9
Total Liabilities and Stockholders' Equity
$28,650.0
$1,154.0
$31,164.0
0.000
0.000
0.000
Check
Pro Forma Balance Sheet
2008A
Total Revenue
% Growth
2009A
CAGR
2010A
2011E
2012E
2013E
2014E
2015E
2011-2015
$11,614.4
NA
$10,958.5
(5.6%)
$11,917.8
8.8%
$15,249.6
28.0%
$17,125.5
12.3%
$18,791.0
9.7%
$20,544.9
9.7%
$22,471.5
9.7%
COGS
COGS Synergies
% of Sales
Gross Profit
% Margin
3,187.9
0.0
27.4%
$8,426.5
72.6%
2,818.0
0.0
25.7%
$8,140.5
74.3%
3,310.0
0.0
27.8%
$8,607.8
72.2%
4,549.4
0.0
29.8%
$10,700.2
70.2%
4,958.9
(25.0)
28.8%
$12,191.6
71.2%
5,542.4
(25.0)
29.4%
$13,273.6
70.6%
6,040.0
(25.0)
29.3%
$14,529.9
70.7%
6,586.4
(25.0)
29.2%
$15,910.1
70.8%
SG&A
SG&A Synergies
% of Sales
4,195.8
0.0
36.1%
4,215.3
0.0
38.5%
4,511.7
0.0
37.9%
4,509.7
0.0
29.6%
4,880.3
(50.0)
28.2%
5,394.8
(50.0)
28.4%
5,899.4
(50.0)
28.5%
6,453.8
(50.0)
28.5%
$4,230.7
36.4%
$3,925.2
35.8%
$4,096.1
34.4%
$6,190.5
40.6%
$7,361.3
43.0%
$7,928.8
42.2%
$8,680.4
42.3%
$9,506.3
42.3%
378.5
0.0
3.3%
96.2
0.0
0.8%
474.7
4.1%
434.9
0.0
4.0%
218.6
0.0
2.0%
653.5
6.0%
445.7
0.0
3.7%
269.0
0.0
2.3%
714.7
6.0%
369.6
1.5
2.4%
114.0
136.5
1.6%
621.6
4.1%
608.2
1.5
3.6%
107.8
136.5
1.4%
854.0
5.0%
808.5
1.5
4.3%
98.3
136.5
1.2%
1,044.8
5.6%
887.8
1.5
4.3%
98.3
136.5
1.1%
1,124.2
5.5%
975.0
1.5
4.3%
98.3
136.5
1.0%
1,211.3
5.4%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
0.0
0.0%
EBIT
% Margin
$3,756.0
32.3%
$3,271.7
29.9%
$3,381.4
28.4%
$5,568.9
36.5%
$6,507.3
38.0%
$6,884.0
36.6%
$7,556.3
36.8%
$8,295.0
36.9%
10.5%
EBITA
% Margin
$3,852.2
33.2%
$3,490.3
31.9%
$3,650.4
30.6%
$5,819.4
38.2%
$6,751.6
39.4%
$7,118.8
37.9%
$7,791.1
37.9%
$8,529.8
38.0%
10.0%
0.0
0.0
0.0
0.0
29.6
0.0
0.0
0.0
29.6
0.0
0.0
0.0
29.6
0.0
0.0
0.0
29.6
0.0
0.0
0.0
EBITDA
% Margin
Existing Depreciation
New Depreciation
% of Sales
Existing Amortization
New Amortization
% of Sales
Total D&A
% of Sales
Stock-Based Comp
% of Sales
Interest (Income) / Expense

Equity (Income)
Minority Interest
Other (Income) / Expense
Other Transaction Adjustments
Income Before Taxes
Income Tax
% Tax Rate
Pro Forma Net Income
% Margin
Pro Forma Diluted EPS
Diluted Shares Out
10.2%
10.4%
11.3%
0.0
0.0
0.0
0.0
0.0
$5,819.4
$6,722.0
$7,089.2
$7,761.5
$8,500.2
1,064.2
18.3%
1,229.3
18.3%
1,296.5
18.3%
1,419.4
18.3%
1,554.5
18.3%
$4,755.2
31.2%
$5,492.7
32.1%
$5,792.7
30.8%
$6,342.1
30.9%
$6,945.7
30.9%
9.9%
11.7%
$2.51
$2.94
$3.43
$3.58
$3.90
1,895.192
1,871.068
1,687.064
1,773.091
1,780.400
Accredition/Dulition
Qualcomm Inc. Standalone Diluted EPS
$ Accretion / (Dilution)
% Accretion / (Dilution)
Incremental Pre-Tax Synergies to Breakeven
$2.63
($0.12)
(4.7%)
$288.7
$2.83
$0.11
3.8%
($244.8)
$3.55
($0.12)
(3.4%)
$248.7
$3.72
($0.14)
(3.8%)
$303.3
Capex
% of Sales
$481.9
3.2%
$690.1
4.0%
$918.0
4.9%
$989.4
4.8%
$4.07
($0.17)
(4.2%)
$371.9
$1,085.3
4.8%
9.9%
Pro Forma Income Statement
Current
Price
$34.50

$44.00
$45.00
$46.00
$47.00
$48.00
$49.00
$50.00
Fair Value of Options Issued by Acquirer

Unvested Options
Weighted Average Strike
Weighted Average Remaining Term (yrs)
Black Scholes Value Per Option
Options Outstanding
Fair Value of Unvested Options
$14.60
4.0
$24.51
0.000
$0.0
$14.60
4.0
$33.44
0.000
$0.0
$14.60
4.0
$34.39
0.000
$0.0
$14.60
4.0
$35.35
0.000
$0.0
$14.60
4.0
$36.30
0.000
$0.0
$14.60
4.0
$37.26
0.000
$0.0
$14.60
4.0
$38.22
0.000
$0.0
$14.60
4.0
$39.18
0.000
$0.0
Vested Options
Weighted Average Strike
Weighted Average Remaining Term (yrs)
Black Scholes Value Per Option
Options Outstanding
Fair Value of Vested Options
$29.49
2.7
$15.91
0.000
$0.0
$29.49
2.7
$23.64
0.000
$0.0
$29.49
2.7
$24.48
0.000
$0.0
$29.49
2.7
$25.33
0.000
$0.0
$29.49
2.7
$26.19
0.000
$0.0
$29.49
2.7
$27.05
0.000
$0.0
$29.49
2.7
$27.92
0.000
$0.0
$29.49
2.7
$28.79
0.000
$0.0
Common Equity Consideration

Fair Value of Unvested Options
Fair Value of Vested Options
Fair Value of Preferred Stock
Total Purchase Price
$2,779.0
0.0
0.0
0.0
$2,779.0
$3,544.2
0.0
0.0
0.0
$3,544.2
$3,624.8
0.0
0.0
0.0
$3,624.8
$3,705.3
0.0
0.0
0.0
$3,705.3
$3,785.9
0.0
0.0
0.0
$3,785.9
$3,866.4
0.0
0.0
0.0
$3,866.4
$3,947.0
0.0
0.0
0.0
$3,947.0
$4,027.5
0.0
0.0
0.0
$4,027.5
Unearned Compensation
Adjusted Purchase Price
$0.0
$2,779.0
$0.0
$3,544.2
$0.0
$3,624.8
$0.0
$3,705.3
$0.0
$3,785.9
$0.0
$3,866.4
$0.0
$3,947.0
$0.0
$4,027.5
$2,779.0
(894.6)
$1,884.4
$3,544.2
(894.6)
$2,649.6
$3,624.8
(894.6)
$2,730.2
$3,705.3
(894.6)
$2,810.7
$3,785.9
(894.6)
$2,891.3
$3,866.4
(894.6)
$2,971.8
$3,947.0
(894.6)
$3,052.4
$4,027.5
(894.6)
$3,132.9
$15.0
471.1
(222.0)
17.8
$15.0
662.4
(222.0)
17.8
$15.0
682.5
(222.0)
17.8
$15.0
702.7
(222.0)
17.8
$15.0
722.8
(222.0)
17.8
$15.0
743.0
(222.0)
17.8
$15.0
763.1
(222.0)
17.8
$15.0
783.2
(222.0)
17.8
Purchase Price Calculation
Purchase Price Allocation

Adjusted Purchase Price
Less: Target Book Value of Net Assets
Excess Purchase Price to Allocate
Write-Up of Tangible Assets
Write-Up of Identifiable Intangible Assets
Write-Off of Target's Existing Goodwill
Write-Off of Target's Existing DTL
Allocation to Goodwill (Before DTL Allocation)
$1,602.5
$2,176.4
$2,236.8
$2,297.2
$2,357.6
$2,418.1
$2,478.5
$2,538.9
($88.9)
0.0
$1,691.4
($123.9)
0.0
$2,300.3
($127.6)
0.0
$2,364.4
($131.2)
0.0
$2,428.5
($134.9)
0.0
$2,492.6
($138.6)
0.0
$2,556.7
($142.3)
0.0
$2,620.8
($146.0)
0.0
$2,684.9
$1,884.4
25.0%
$471.1
5.0
$94.2
$2,649.6
25.0%
$662.4
5.0
$132.5
$2,730.2
25.0%
$682.5
5.0
$136.5
$2,810.7
25.0%
$702.7
5.0
$140.5
$2,891.3
25.0%
$722.8
5.0
$144.6
$2,971.8
25.0%
$743.0
5.0
$148.6
$3,052.4
25.0%
$763.1
5.0
$152.6
$3,132.9
25.0%
$783.2
5.0
$156.6
18.3%
$77.0
18.3%
$108.3
18.3%
$111.5
18.3%
$114.8
18.3%
$118.1
18.3%
$121.4
18.3%
$124.7
18.3%
$128.0
Write-Up of Tangible Assets

Depreciation Period (yrs)
Annual Incremental Depreciation Expense
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
$15.0
10.0
$1.5
Marginal Tax Rate

After-Tax Annual Depreciation Expense
18.3%
$1.2
18.3%
$1.2
18.3%
$1.2
18.3%
$1.2
18.3%
$1.2
18.3%
$1.2
18.3%
$1.2
18.3%
$1.2
DTL From Write-Up of Assets

DTL From Deferred Compensation
Total Goodwill Created
Amortization of Identifiable Intangibles
Excess of Purchase Price Over Book Value
% Allocated to Identifiable Intangibles
Write-Up of Intangible Assets
Amortization Period (yrs)
Annual Incremental Amortization Expense
Marginal Tax Rate
After-Tax Annual Amortization Expense
Depreciation of Fixed Asset Write-Up
Purchase Price Allocation and Accounting Adjustments
Atheros Inc.
$34.50
Common Stock
Stock Options
ITM Convertible Securities
Total Diluted Equity Value
Net Debt
Premiums Analysis
Current Price
52-Week High
52-Week Low
1 Week Trading Average
1 Month Trading Average
3 Months Trading Average
6 Months Trading Average
$2,519.3
259.6
0.0
$2,779.0
(515.8)
$2,263.2
$45.00
$46.00
$47.00
$48.00
$49.00
$50.00
$3,213.1
331.1
0.0
$3,544.2
(515.8)
$3,028.4
$3,286.1
338.7
0.0
$3,624.8
(515.8)
$3,109.0
$3,359.1
346.2
0.0
$3,705.3
(515.8)
$3,189.5
$3,432.1
353.7
0.0
$3,785.9
(515.8)
$3,270.1
$3,505.2
361.2
0.0
$3,866.4
(515.8)
$3,350.6
$3,578.2
368.8
0.0
$3,947.0
(515.8)
$3,431.2
$3,651.2
376.3
0.0
$4,027.5
(515.8)
$3,511.7
Atheros Inc.
$56.82
$91,918.5
12,213.9
0.0
$104,132.4
(17,316.0)
$86,816.4
Transaction Premium Per Atheros Inc. Share
$34.50
44.88
22.77
41.60
41.70
41.70
63.50
0.0%
(23.1%)
51.5%
(17.1%)
(17.3%)
(17.3%)
(45.7%)
27.5%
(2.0%)
93.2%
5.8%
5.5%
5.5%
(30.7%)
30.4%
0.3%
97.6%
8.2%
7.9%
7.9%
(29.1%)
FY 2011P Revenue
FY 2012P Revenue
FY 2013P Revenue
$986.6
1,129.3
1,210.0
2.29x
2.00x
1.87x
3.07x
2.68x
2.50x
3.15x
2.75x
2.57x
3.23x
2.82x
2.64x
3.31x
2.90x
2.70x
3.40x
2.97x
2.77x
FY 2011P EBITDA
FY 2012P EBITDA
FY 2013P EBITDA
$166.4
248.3
297.0
13.6x
9.1x
7.6x
18.2x
12.2x
10.2x
18.7x
12.5x
10.5x
19.2x
12.8x
10.7x
19.7x
13.2x
11.0x
FY 2011P EBITA
FY 2012P EBITA
FY 2013P EBITA
$159.4
240.1
288.5
14.2x
9.4x
7.8x
19.0x
12.6x
10.5x
19.5x
12.9x
10.8x
20.0x
13.3x
11.1x
$1.56
1.89
2.48
22.1x
18.2x
13.9x
28.2x
23.2x
17.7x
28.9x
23.8x
18.1x
29.5x
24.3x
18.5x
Multiples Analysis
FY 2011P Cash P/E

FY 2012P Cash P/E
FY 2013P Cash P/E
Qualcomm Inc.
$44.00
33.3%
2.5%
102.0%
10.6%
10.3%
10.3%
(27.6%)
36.2%
4.7%
106.4%
13.0%
12.7%
12.7%
(26.0%)
39.1%
7.0%
110.8%
15.4%
15.1%
15.1%
(24.4%)
Qualcomm Inc.
42.0%
9.2%
115.2%
17.8%
17.5%
17.5%
(22.8%)
$56.82
59.84
31.63
60.60
61.20
62.70
72.80
44.9%
11.4%
119.6%
20.2%
19.9%
19.9%
(21.3%)
0.0%
(5.0%)
79.6%
(6.2%)
(7.2%)
(9.4%)
(22.0%)
3.48x
3.04x
2.84x
3.56x
3.11x
2.90x
6.09x
5.43x
4.94x
$14,263.0
15,996.2
17,581.0
20.1x
13.5x
11.3x
20.6x
13.8x
11.6x
21.1x
14.1x
11.8x
14.4x
12.3x
11.5x
$6,024.1
7,038.0
7,556.8
20.5x
13.6x
11.3x
21.0x
14.0x
11.6x
21.5x
14.3x
11.9x
22.0x
14.6x
12.2x
15.3x
13.5x
12.8x
$5,661.5
6,438.0
6,756.8
30.2x
24.8x
18.9x
30.8x
25.3x
19.3x
31.5x
25.9x
19.7x
32.1x
26.4x
20.1x
21.6x
20.1x
16.0x
$2.63
2.83
3.55
Transaction Muliple Analysis of Atheros Inc. Acquisition
Transaction Premium and Multiple Analysis
EPS ACCRETION/DILUTION ANALYSIS
Standalone
Qualcomm Inc.
Equity Purchase Price
$95,854.3
Transaction Multiples Analysis

FY 2011P Revenue
FY 2012P Revenue
All Stock
$44.00
$3,544.2
$45.00
$3,624.8
$46.00
$3,705.3
$47.00
$3,785.9
$48.00
$3,866.4
$49.00
$3,947.0
$50.00
$4,027.5
6.09x
5.43x
3.07x
2.68x
3.15x
2.75x
3.23x
2.82x
3.31x
2.90x
3.40x
2.97x
3.48x
3.04x
3.56x
3.11x
FY 2011P EBITDA
FY 2012P EBITDA
14.4x
12.3x
18.2x
12.2x
18.7x
12.5x
19.2x
12.8x
19.7x
13.2x
20.1x
13.5x
20.6x
13.8x
21.1x
14.1x
FY 2011P Cash P/E

FY 2012P Cash P/E
21.6x
20.1x
28.2x
23.2x
28.9x
23.8x
29.5x
24.3x
30.2x
24.8x
30.8x
25.3x
31.5x
25.9x
32.1x
26.4x
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
Qualcomm Inc. Standalone EPS

FY 2012P Cash Net Income
FY 2012P Shares Outstanding
FY 2012P Cash EPS
After-Tax Acquisition Adjustments
Atheros Inc. FY 2012P Cash Net Income
Interest Lost on Cash Used
Incremental Interest on New Debt
Interest Gained on Conversion of Convert(s)
Deferred Stock-Based Compensation
Amortization of Indentifiable Intangibles
Depreciation of Acquired Tangible Assets
Write-Down of Deferred Revenue
$181.1
(0.5)
0.0
0.0
0.0
0.0
(1.2)
0.0
Pro Forma Cash Net Income Without Synergies

After-Tax Synergies
Pro Forma Cash Net Income With Synergies
Diluted Shares - Treasury Method
Qualcomm Inc. FY 2012P Shares Outstanding
Shares Issued for Atheros Inc. Basic Shares
Total Shares Post-Transaction
Accretion/Dilution Summary
FY 2012P Cash EPS Without Synergies
$ Accretion / Dilution
% Accretion / Dilution
Pre-Tax Synergies to Breakeven
% of Combined Opex (Excl. Syngergies)
FY 2012P Cash EPS With Synergies
Ownership Structure Post Transaction

% Shares Owned by Qualcomm Inc. Shareholders Post-Transaction
% Shares Owned by Atheros Inc. Post-Transaction
Total %
$181.1
(0.5)
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
(0.5)
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
(0.5)
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
(0.5)
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
(0.5)
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
(0.5)
0.0
0.0
0.0
0.0
(1.2)
0.0
$5,363.8
61.3
$5,425.0
$5,363.8
61.3
$5,425.0
$5,363.8
61.3
$5,425.0
$5,363.8
61.3
$5,425.0
$5,363.8
61.3
$5,425.0
$5,363.8
61.3
$5,425.0
$5,363.8
61.3
$5,425.0
1,832.791
62.376
1,895.167
1,832.791
63.794
1,896.585
1,832.791
65.211
1,898.003
1,832.791
66.629
1,899.420
1,832.791
68.046
1,900.838
1,832.791
69.464
1,902.255
1,832.791
70.882
1,903.673
$2.83
$2.83
$0.00
0.1%
($3.6)
(0.0%)
$2.83
($0.00)
(0.0%)
$1.3
0.0%
$2.83
($0.00)
(0.1%)
$6.2
0.1%
$2.82
($0.00)
(0.2%)
$11.2
0.1%
$2.82
($0.01)
(0.2%)
$16.1
0.2%
$2.82
($0.01)
(0.3%)
$21.0
0.2%
$2.82
($0.01)
(0.4%)
$25.9
0.2%
$2.83
$2.86
$0.03
1.2%
($78.6)
(0.7%)
$2.86
$0.03
1.1%
($73.7)
(0.7%)
$2.86
$0.03
1.0%
($68.8)
(0.6%)
$2.86
$0.03
1.0%
($63.8)
(0.6%)
$2.85
$0.03
0.9%
($58.9)
(0.6%)
$2.85
$0.02
0.8%
($54.0)
(0.5%)
$2.85
$0.02
0.7%
($49.1)
(0.5%)
96.7%
3.3%
100.0%
96.6%
3.4%
100.0%
96.6%
3.4%
100.0%
96.5%
3.5%
100.0%
96.4%
3.6%
100.0%
96.3%
3.7%
100.0%
96.3%
3.7%
100.0%
EPS Accretion/Dilution All Stock Deal
Standalone
Qualcomm Inc.
$95,854.3

FY 2011P Revenue
FY 2012P Revenue
60.0% Stock / 40.0% Cash

$44.00
$3,544.2
$45.00
$3,624.8
$46.00
$3,705.3
$47.00
$3,785.9
$48.00
$3,866.4
$49.00
$3,947.0
$50.00
$4,027.5
6.09x
5.43x
3.07x
2.68x
3.15x
2.75x
3.23x
2.82x
3.31x
2.90x
3.40x
2.97x
3.48x
3.04x
3.56x
3.11x
FY 2011P EBITDA
FY 2012P EBITDA
14.4x
12.3x
18.2x
12.2x
18.7x
12.5x
19.2x
12.8x
19.7x
13.2x
20.1x
13.5x
20.6x
13.8x
21.1x
14.1x
FY 2011P Cash P/E

FY 2012P Cash P/E
21.6x
20.1x
28.2x
23.2x
28.9x
23.8x
29.5x
24.3x
30.2x
24.8x
30.8x
25.3x
31.5x
25.9x
32.1x
26.4x
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83

FY 2012P Cash EPS
$181.1
0.0
0.0
0.0
0.0
0.0
(1.2)
0.0

After-Tax Synergies

Total %
$181.1
0.0
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
0.0
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
0.0
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
0.0
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
0.0
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
0.0
0.0
0.0
0.0
0.0
(1.2)
0.0
$5,364.2
61.3
$5,425.5
$5,364.2
61.3
$5,425.5
$5,364.2
61.3
$5,425.5
$5,364.2
61.3
$5,425.5
$5,364.2
61.3
$5,425.5
$5,364.2
61.3
$5,425.5
$5,364.2
61.3
$5,425.5
1,832.791
37.426
1,870.217
1,832.791
38.276
1,871.068
1,832.791
39.127
1,871.918
1,832.791
39.977
1,872.769
1,832.791
40.828
1,873.619
1,832.791
41.678
1,874.470
1,832.791
42.529
1,875.320
$2.83
$2.87
$0.04
1.4%
($90.5)
(0.8%)
$2.87
$0.04
1.4%
($87.6)
(0.8%)
$2.87
$0.04
1.3%
($84.7)
(0.8%)
$2.86
$0.04
1.3%
($81.7)
(0.8%)
$2.86
$0.03
1.2%
($78.8)
(0.7%)
$2.86
$0.03
1.2%
($75.8)
(0.7%)
$2.86
$0.03
1.1%
($72.9)
(0.7%)
$2.83
$2.90
$0.07
2.6%
($165.5)
(1.5%)
$2.90
$0.07
2.5%
($162.6)
(1.5%)
$2.90
$0.07
2.5%
($159.7)
(1.5%)
$2.90
$0.07
2.4%
($156.7)
(1.5%)
$2.90
$0.07
2.4%
($153.8)
(1.4%)
$2.89
$0.07
2.3%
($150.8)
(1.4%)
$2.89
$0.06
2.3%
($147.9)
(1.4%)
98.0%
2.0%
100.0%
98.0%
2.0%
100.0%
97.9%
2.1%
100.0%
97.9%
2.1%
100.0%
97.8%
2.2%
100.0%
97.8%
2.2%
100.0%
97.7%
2.3%
100.0%
EPS Accretion/Dilution 60% Stock + 40% Cash Deal
Standalone
Qualcomm Inc.
$95,854.3

FY 2011P Revenue
FY 2012P Revenue
All Cash
$44.00
$3,544.2
$45.00
$3,624.8
$46.00
$3,705.3
$47.00
$3,785.9
$48.00
$3,866.4
$49.00
$3,947.0
$50.00
$4,027.5
6.09x
5.43x
3.07x
2.68x
3.15x
2.75x
3.23x
2.82x
3.31x
2.90x
3.40x
2.97x
3.48x
3.04x
3.56x
3.11x
FY 2011P EBITDA
FY 2012P EBITDA
14.4x
12.3x
18.2x
12.2x
18.7x
12.5x
19.2x
12.8x
19.7x
13.2x
20.1x
13.5x
20.6x
13.8x
21.1x
14.1x
FY 2011P Cash P/E

FY 2012P Cash P/E
21.6x
20.1x
28.2x
23.2x
28.9x
23.8x
29.5x
24.3x
30.2x
24.8x
30.8x
25.3x
31.5x
25.9x
32.1x
26.4x
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83
$5,184.4
1,832.791
$2.83

FY 2012P Cash EPS
$181.1
(58.4)
0.0
0.0
0.0
0.0
(1.2)
0.0

After-Tax Synergies

Total %
$181.1
(59.7)
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
(61.0)
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
(62.4)
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
(63.7)
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
(65.0)
0.0
0.0
0.0
0.0
(1.2)
0.0
$181.1
(66.3)
0.0
0.0
0.0
0.0
(1.2)
0.0
$5,305.8
61.3
$5,367.1
$5,304.5
61.3
$5,365.8
$5,303.2
61.3
$5,364.5
$5,301.9
61.3
$5,363.2
$5,300.6
61.3
$5,361.9
$5,299.3
61.3
$5,360.5
$5,297.9
61.3
$5,359.2
1,832.791
0.0
1,832.791
1,832.791
0.0
1,832.791
1,832.791
0.0
1,832.791
1,832.791
0.0
1,832.791
1,832.791
0.0
1,832.791
1,832.791
0.0
1,832.791
1,832.791
0.0
1,832.791
$2.83
$2.89
$0.07
2.3%
($148.6)
(1.4%)
$2.89
$0.07
2.3%
($147.0)
(1.4%)
$2.89
$0.06
2.3%
($145.4)
(1.4%)
$2.89
$0.06
2.3%
($143.8)
(1.3%)
$2.89
$0.06
2.2%
($142.2)
(1.3%)
$2.89
$0.06
2.2%
($140.6)
(1.3%)
$2.89
$0.06
2.2%
($139.0)
(1.3%)
$2.83
$2.93
$0.10
3.5%
($223.6)
(2.1%)
$2.93
$0.10
3.5%
($222.0)
(2.1%)
$2.93
$0.10
3.5%
($220.4)
(2.1%)
$2.93
$0.10
3.4%
($218.8)
(2.0%)
$2.93
$0.10
3.4%
($217.2)
(2.0%)
$2.92
$0.10
3.4%
($215.6)
(2.0%)
$2.92
$0.10
3.4%
($214.0)
(2.0%)
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
100.0%
0.0%
100.0%
EPS Accretion/Dilution All Cash Deal
Accretion/Dilution without Synergy
Cash
%
1.4% $ 43.00
30%
1.1%
35%
1.3%
40%
1.4%
45%
1.6%
50%
1.8%
$ 44.00
1.1%
1.2%
1.4%
1.6%
1.7%
Accretion/Dilution with Synergy
Offer Price
$ 45.00 $ 46.00
1.0%
1.0%
1.2%
1.1%
1.4%
1.3%
1.5%
1.5%
1.7%
1.7%
$ 47.00
0.9%
Cash
1.1%
1.3%
%
1.4%
1.6%
Pre Tax Synergy Required to Breakeven
-8759.7% $ 43.00
Cash
%
30%
35%
40%
45%
50%
($72.4)
($82.9)
($93.5)
($104.0)
($114.6)
$ 44.00
($68.9)
($79.7)
($90.5)
($101.3)
($112.1)
$ 44.00
2.2%
2.4%
2.6%
2.7%
2.9%
Offer Price
$ 45.00 $ 46.00
2.2%
2.1%
2.3%
2.3%
2.5%
2.5%
2.7%
2.6%
2.9%
2.8%
$ 47.00
2.1%
2.2%
2.4%
2.6%
2.8%
% Share Owned by Microsoft Post Transaction
Offer Price
$ 45.00 $
($65.5)
($76.6)
($87.6)
($98.6)
($109.7)
2.5% $ 43.00
30%
2.3%
35%
2.4%
40%
2.6%
45%
2.8%
50%
2.9%
46.00
$ 47.00
($62.1)
($73.4)
($84.7)
($95.9)
($107.2)
($58.6)
($70.2)
($81.7)
($93.2)
($104.8)
Cash
%
98.0% $ 43.00
30%
97.7%
35%
97.9%
40%
98.0%
45%
98.2%
50%
98.4%
$ 44.00
97.7%
97.8%
98.0%
98.2%
98.3%
Offer Price
$ 45.00 $ 46.00
97.6%
97.6%
97.8%
97.7%
98.0%
97.9%
98.1%
98.1%
98.3%
98.3%
$ 47.00
97.5%
97.7%
97.9%
98.0%
98.2%
EPS Accretion/Dilution Sensitivity Analysis
PROFITABILITY CONTRIBUTION ANALYSIS
Qualcomm Inc.
FY11
FY12
Revenue
% Growth
$14,263.0
29.8%
$15,996.2
12.2%
EBITDA
% Margin
$6,024.1
42.2%
GAAP Net Income

% Margin
Cash Net Income
% Margin
Contribution
Revenue
EBITDA
GAAP Net Income
Cash Net Income
Combined
Atheros Inc.
FY11
(1)
Pro Forma
Synergies
FY12
FY11
FY12
FY11
$986.6
6.5%
$1,129.3
14.5%
$15,249.6
28.0%
$17,125.5
12.3%
$0.0
$7,038.0
44.0%
$166.4
16.9%
$248.3
22.0%
$6,190.5
40.6%
$7,286.3
42.5%
$4,802.4
33.7%
$5,108.2
31.9%
$113.8
11.5%
$169.2
15.0%
$4,916.2
32.2%
$4,890.3
34.3%
$5,184.4
32.4%
$126.1
12.8%
$181.1
16.0%
93.5%
97.3%
97.7%
97.5%
93.4%
96.6%
96.8%
96.6%
6.5%
2.7%
2.3%
2.5%
6.6%
3.4%
3.2%
3.4%
FY12
(2)
FY11
FY12
$0.0
$15,249.6
28.0%
$17,125.5
12.3%
$0.0
$75.0
$6,190.5
40.6%
$7,361.3
43.0%
$5,277.4
30.8%
$0.0
$61.3
$4,977.4
32.6%
$5,338.7
31.2%
$5,016.4
32.9%
$5,365.5
31.3%
$0.0
$61.3
$5,077.7
33.3%
$5,426.8
31.7%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
PROFITABILITY CONTRIBUTION ANALYSIS
Profitability Contribution by Buyer and Target
DEAL FACT
Prepared
by
Deb Sahoo
MBA, Ross School of Business
University of Michigan, Ann Arbor

Merger of Qualcomm and Atheros (Deb Sahoo)

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ACQUISITION OF ATHEROS COMMUNICATIONS BY QUALCOMM

Financial Statements of Buyer

Financial Statements of Target

Discounted Cash Flow Valuation of Target

Comparable Company Valuation of Target

Precedent Transactions Valuation of Target

Financial Projections of Buyer and Target

EPS Accretion/Dilution Analysis

Profitability Contribution Analysis

Company: Qualcomm Inc.

Company: Atheros Communications Inc.

Key Financials of Buyer and Target

Total deal value: $3,654 MM

Develops semiconductor system solutions for communication products

Products and Services

Stock Price: $34.50

FINANCIAL STATEMENTS OF BUYER

Cost of Goods Sold (COGS) incl. D&A

COGS excluding D&A

Research & Development

After-tax Adjustments - Net

Equity in Earnings of Affiliates

Consolidated Net Income

M inority Interest Expense

All figures in millions of U.S. Dollar, except per share items

Depreciation & Amortization Expense

Other Operating Expense

FINANCIAL STATEMENTS OF BUYER

5 Year Income Statement of Qualcomm Inc.

Total Accounts Receivable

Other Current Assets

Total Current Assets

Net Property, Plant & Equipment

Total Investments and Advances

Income Tax Payable

Other Current Liabilities

Total Current Liabilities

Total Shareholders' Equity

Liabilities & Shareholders' Equity

All figures in millions of U.S. Dollar, except per share items

Long-Term Note Receivable

Liabilities & Shareholders' Equity

FINANCIAL STATEMENTS OF BUYER

5 Year Balance Sheet of Qualcomm Inc.

Depreciation, Depletion & Amortization

Deferred Taxes & Investment Tax Credit

All figures in millions of U.S. Dollar, except per share items

Net Operating Cash Flow

Funds from Operations

Cash Dividends Paid

Change in Capital Stock

Exchange Rate Effect

Issuance/Reduction of Debt, Net

Net Change in Cash

FINANCIAL STATEMENTS OF BUYER

5 Year Cash Flow Statement of Qualcomm Inc.

FINANCIAL STATEMENTS OF TARGET

All figures in millions of U.S. Dollar, except per share items

Cost of Goods Sold (COGS) incl. D&A

COGS excluding D&A

Research & Development

Nonoperating Income (Expense) - Net

Depreciation & Amortization Expense

Other Operating Expense

Unusual Expense (Income) - Net

Income Taxes - Current Domestic

Consolidated Net Income