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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: Clarksterh who wrote (12725)	7/22/1998 10:13:00 AM
From: Gregg Powers	Read Replies (2) \| Respond to of 152472

Clark: The company changed its accounting allocation for warranty reserves. When QC (and most other mfgs) book a sale, the cost-of-goods includes hard costs plus a reserve for future warranty expense. This is required in an attempt to "match" warranty claims to the period/sales from which they derive. Such reserves are a "contra-expense" item. Prior to this period, the reserves were taken inside QPE. However, as part of the recent restructuring of QPE, the reserves were "moved" out of QPE to the parent's income statement. Consequently there was an increase in reserves (i.e. a reduction of expense) at the parent level (i.e. QC's P&L) and an offsetting increase in minority interest expense (i.e. an increase in costs) at the QPE/minority interest level. The net result was a wash..so other than the change of scorekeeping "box" there was no P&L impact. Hope I haven't confused you more than I helped you! Best regards, Gregg