SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 1, 2000
QUALCOMM INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-19528 95-3685934
(Commission File No.) (IRS Employer Identification No.)
5775 MOREHOUSE DRIVE
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (858) 587-1121
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 1, 2000, QUALCOMM Incorporated, a Delaware corporation
("QUALCOMM"), completed the acquisition of all of the outstanding capital stock
of SnapTrack, Inc., a California corporation ("SnapTrack"). The acquisition was
effected pursuant to that certain Agreement and Plan of Merger and
Reorganization (the "Merger Agreement"), dated January 25, 2000 by and among
QUALCOMM, Falcon Acquisition Corporation, a Delaware corporation and wholly
owned subsidiary of QUALCOMM ("Merger Sub"), and SnapTrack, whereby Merger Sub
was merged with and into SnapTrack (the "Merger"), with SnapTrack being the
surviving corporation in the Merger and a wholly owned subsidiary of QUALCOMM.
In addition, QUALCOMM assumed all of the outstanding options and warrants to
purchase capital stock of SnapTrack in connection with the Merger and such
options and warrants are now exercisable for shares of QUALCOMM common stock.
The Merger is intended to qualify as a tax-free reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and
will be accounted for as a "purchase." For a detailed description of the terms
and conditions of the Merger Agreement, reference is made to such agreement,
which is filed as Exhibit 2.1 hereto and incorporated herein by reference.
As a result of the Merger, QUALCOMM is obligated to issue up to
7,433,792 shares of its common stock to the securityholders of SnapTrack;
provided however, that 10% of the total shares will be subject to an escrow for
a period of one year (which one-year period could be extended in the event any
claims are made) to satisfy the indemnification obligations of the SnapTrack
securityholders that run in favor of QUALCOMM and its affiliates.
Certain stockholders of SnapTrack who are entitled to receive an
aggregate of 1,949,509 shares of QUALCOMM common stock in the Merger have
executed lock-up agreements that impose certain limitations on such
stockholders' ability to sell or otherwise transfer such shares. For a detailed
description of the terms and conditions of the lock-up agreements, reference is
made to such agreements, which are filed as Exhibits 2.2 through 2.5 hereto and
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
(1) AUDITED CONSOLIDATED FINANCIAL INFORMATION OF SNAPTRACK, INC.
(b) PRO FORMA FINANCIAL INFORMATION.
(1) UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
OF QUALCOMM INCORPORATED.
The following unaudited pro forma condensed consolidated
financial information is being filed herewith:
Unaudited Pro Forma Condensed Consolidated Balance Sheet at
December 26, 1999
Unaudited Pro Forma Condensed Consolidated Statement of Income
for the three months ended December 26, 1999
Unaudited Pro Forma Condensed Consolidated Statement of Income
for the year ended September 30, 1999
Notes to Unaudited Pro Forma Condensed Consolidated Financial
Information
(c) EXHIBITS.
*2.1 Agreement and Plan of Merger and Reorganization dated as of
January 25, 2000 among QUALCOMM Incorporated, Falcon Acquisition
Corporation and SnapTrack, Inc. (Schedules to this exhibit have
been omitted in reliance on Item 601 of Regulation S-K).
*2.2 Lock-Up Agreement dated as of January 25, 2000 by and between
QUALCOMM Incorporated and Stephen Poizner.
*2.3 Lock-Up Agreement dated as of January 25, 2000 by and between
QUALCOMM Incorporated and Norman Krasner.
*2.4 Lock-Up Agreement dated as of January 25, 2000 by and between
QUALCOMM Incorporated and Bruce Noel.
*2.5 Lock-Up Agreement dated as of January 25, 2000 by and between
QUALCOMM Incorporated and Walter Bell.
2.6 Audited consolidated financial information of SnapTrack, Inc.
dated as of December 31, 1999.
23.1 Consent of Deloitte & Touche LLP.
*99.1 Press Release dated March 2, 2000.
- --------
* Previously filed on March 15, 2000 as an exhibit to this Form 8-K.
3.
ITEM 7.(b)(1) UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
OF QUALCOMM INCORPORATED
On March 1, 2000 (the "Closing Date"), QUALCOMM completed the
acquisition of all of the outstanding capital stock of SnapTrack (see "Item 2.
Acquisition or Disposition of Assets.") in a transaction accounted for as a
purchase. The following unaudited pro forma condensed consolidated financial
data present the effect of QUALCOMM`s acquisition of SnapTrack. The unaudited
pro forma condensed consolidated balance sheet presents the consolidated
financial position of QUALCOMM as of December 26, 1999, assuming that the
acquisition had occurred as of that date. Such pro forma information is based
upon the historical balance sheet data of QUALCOMM as of December 26, 1999 and
SnapTrack as of December 31, 1999. The unaudited pro forma condensed
consolidated statements of income for the year ended September 30, 1999 and for
the three months ended December 26, 1999 give effect to earnings as if the
acquisition had occurred on October 1, 1998. The unaudited pro forma condensed
consolidated financial data are prepared using the purchase method of
accounting.
The unaudited pro forma condensed consolidated financial data are based
on the estimates and assumptions set forth in the notes to such statements,
which are preliminary and have been made solely for purposes of developing such
pro forma information. The unaudited pro forma condensed consolidated financial
data are not necessarily an indication of the results that would have been
achieved had the transaction been consummated as of the dates indicated.
The unaudited pro forma condensed consolidated financial data should be
read in conjunction with the historical financial statements and notes thereto
of QUALCOMM, including the Annual Report on Form 10-K for the year ended
September 30, 1999 and the Quarterly Report on Form 10-Q for the quarter ended
December 26, 1999, and the historical financial statements of SnapTrack for the
year ended December 31, 1999, included herein.
4.
QUALCOMM INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 26, 1999
-------------------------------------------------------------------
HISTORICAL
---------------------------
ASSETS QUALCOMM SNAPTRACK ADJUSTMENTS PRO FORMA
----------- ----------- ----------- -----------
Current Assets:
Cash and cash equivalents $ 303,978 $ 5,931 $ (7)(a) $ 309,902
Investments 1,087,164 - - 1,087,164
Accounts receivable, net 998,200 1,175 - 999,375
Finance receivables 24,167 - - 24,167
Inventories, net 259,968 - - 259,968
Other current assets 201,825 246 487 (b) 202,558
----------- ----------- ----------- -----------
Total current assets 2,875,302 7,352 480 2,883,134
Property, plant and equipment, net 537,482 601 - 538,083
Investments 165,338 - - 165,338
Finance receivables, net 680,090 - - 680,090
Goodwill - - 944,355 (c) 944,355
Other assets 727,223 101 41,387 (d) 768,711
----------- ----------- ----------- -----------
Total assets $ 4,985,435 $ 8,054 $ 986,222 $ 5,979,711
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 715,546 $ 1,521 $ 1,617 (e) $ 718,684
Unearned revenue 64,625 6,935 (5,123)(f) 66,437
Bank lines of credit 124,000 - - 124,000
Current portion of long-term debt 3,109 715 - 3,824
Deferred tax liabilities - - 3,447 (b) 3,447
----------- ----------- ----------- -----------
Total current liabilities 907,280 9,171 (59) 916,392
Long-term debt - 768 - 768
Other liabilities 64,587 - 10,441 (b) 75,028
----------- ----------- ----------- -----------
Total liabilities 971,867 9,939 10,382 992,188
----------- ----------- ----------- -----------
Minority interest in consolidated subsidiaries 54,910 - - 54,910
----------- ----------- ----------- -----------
Company-obligated mandatorily redeemable Trust
Convertible Preferred Securities of a subsidiary trust
holding solely debt securities of the Company 269,895 - - 269,895
----------- ----------- ----------- -----------
Stockholders' Equity:
Preferred stock - 4 (4)(h) -
Common stock 70 2 1 (g)
(2)(h) 71
Deferred stock compensation - (30,522) 30,522 (h) -
Paid-in capital 3,196,953 53,241 (53,241)(h)
1,033,984 (g) 4,230,937
Retained earnings (deficit) 377,998 (24,620) 24,620 (h)
(60,030)(i) 317,968
Accumulated other comprehensive income 113,742 10 (10)(h) 113,742
----------- ----------- ----------- -----------
Total stockholders' equity (deficit) 3,688,763 (1,885) 975,840 4,662,718
----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 4,985,435 $ 8,054 $ 986,222 $ 5,979,711
=========== =========== =========== ===========
See accompanying notes to unaudited pro forma
condensed consolidated financial information
5.
QUALCOMM INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED DECEMBER 26, 1999
-----------------------------------------------------------------------
HISTORICAL
-----------------------------
QUALCOMM SNAPTRACK ADJUSTMENTS PRO FORMA
----------- ----------- ----------- -----------
Revenues $ 1,120,073 $ 319 $ - $ 1,120,392
----------- ----------- ----------- -----------
Operating expenses:
Cost of revenues 648,748 23 - 648,771
Research and development 83,404 2,115(j) - 85,519
Selling, general and administrative 101,848 1,944(k) - 103,792
Amortization of goodwill and intangible assets - - 61,398(l) 61,398
Other 26,152 - - 26,152
----------- ----------- ----------- -----------
Total operating expenses 860,152 4,082 61,398 925,632
----------- ----------- ----------- -----------
Operating income 259,921 (3,763) (61,398) 194,760
-
Interest expense (2,673) (70) - (2,743)
Investment income (expense), net 36,247 106 - 36,353
Distributions on Trust Convertible
Preferred Securities of subsidiary trust (11,045) - - (11,045)
Other - - - -
----------- ----------- ----------- -----------
Income (loss) before income taxes 282,450 (3,727) (61,398) 217,325
Income tax (expense) benefit (105,331) - 2,110(m) (103,221)
----------- ----------- ----------- -----------
Net income (loss) $ 177,119 $ (3,727) $ (59,288) $ 114,104
=========== =========== =========== ===========
Net earnings per common share:
Basic $ 0.27 $ 0.17(n)
=========== ===========
Diluted $ 0.23 $ 0.15(n)
=========== ===========
Shares used in per share calculations:
Basic 664,586 670,378(n)
=========== ===========
Diluted 790,827 798,191(n)
=========== ===========
See accompanying notes to unaudited pro forma
condensed consolidated financial information
6.
QUALCOMM INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED SEPTEMBER 30, 1999
-----------------------------------------------------------------------
HISTORICAL
-----------------------------
QUALCOMM SNAPTRACK ADJUSTMENTS PRO FORMA
----------- ----------- ----------- -----------
Revenues $ 3,937,299 $ 65 $ - $ 3,937,364
----------- ----------- ----------- -----------
Operating expenses:
Cost of revenues 2,485,072 70 - 2,485,142
Research and development 381,139 7,003 (j) - 388,142
Selling, general and administrative 425,941 6,564 (k) - 432,505
Amortization of goodwill and intangible assets - - 245,590(l) 245,590
Other 240,007 - - 240,007
----------- ----------- ----------- -----------
Total operating expenses 3,532,159 13,637 245,590 3,791,386
----------- ----------- ----------- -----------
Operating income (loss) 405,140 (13,572) (245,590) 145,978
Interest expense (14,698) (255) - (14,953)
Investment income (expense), net 24,576 404 - 24,980
Distributions on Trust Convertible -
Preferred Securities of subsidiary trust (39,297) - - (39,297)
Other (69,035) - - (69,035)
----------- ----------- ----------- -----------
Income (loss) before income taxes 306,686 (13,423) (245,590) 47,673
Income tax (expense) benefit (105,807) - 7,219(m) (98,588)
----------- ----------- ----------- -----------
Net income (loss) $ 200,879 $ (13,423) $ (238,371) $ (50,915)
=========== =========== =========== ===========
Net earnings (loss) per common share:
Basic $ 0.34 $ (0.08)(n)
=========== ===========
Diluted $ 0.31 $ (0.08)(n)
=========== ===========
Shares used in per share calculations:
Basic 594,714 600,506(n)
=========== ===========
Diluted 649,886 600,506(n)
=========== ===========
See accompanying notes to unaudited pro forma
condensed consolidated financial information
7.
QUALCOMM INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Note 1 - Basis of Presentation
On the Closing Date, QUALCOMM completed the acquisition of all of the
outstanding capital stock of SnapTrack (see "Item 2. Acquisition or Disposition
of Assets.") in a transaction accounted for as a purchase. The fair value of the
QUALCOMM common stock issuable to effect the purchase is estimated to be
approximately $139.56 per share based on the average closing price of QUALCOMM's
common stock for the four-day period ending on the Closing Date. The average
fair value of 1,543,876 replacement options and 86,193 warrants to purchase
QUALCOMM's common stock is estimated to be approximately $138.42 per share,
determined using the Black-Scholes option pricing model assuming a 6.5%
risk-free interest rate, 54% volatility and an expected life of 3.5 years. The
purchase price of the SnapTrack acquisition is estimated to be approximately $1
billion, including the value of the QUALCOMM shares, the value of vested and
unvested options and warrants issued at the Closing Date and estimated
transaction costs of $1.6 million.
The preliminary allocation of the purchase price using balances at March
1, 2000 is summarized below (in thousands):
Patents $ 15,230
Completed technology 4,890
In-process technology 60,030
Assembled workforce 3,750
Customer base 10,450
Goodwill 948,040
Net liabilities assumed (6,781)
-----------
Total purchase price $ 1,035,609
===========
The preliminary purchase price allocation is based on the estimated fair
values of the acquired assets and assumed liabilities and an independent
appraisal of intangible assets. The Company expects to finalize the purchase
price allocation within one year and does not anticipate material adjustments to
the preliminary purchase price allocation presented. The amount allocated to
in-process technology represents the purchased in-process technology for
projects that, as of the date of the acquisition, had not yet reached
technological feasibility and had no alternative future use. The value of these
projects was determined by estimating the resulting net cash flows from the sale
of the products from completion of the projects, reduced by the portion of
revenue attributable to developed technology and the percentage completion of
the project. The resulting cash flows were then discounted back to their present
value at appropriate discount rates. The amounts allocated to in-process
technology were charged to the statement of income in the second quarter of
QUALCOMM's fiscal year 2000.
Note 2 - Pro Forma Adjustments
(a) Reflects cash proceeds paid by QUALCOMM to SnapTrack shareholders for
fractional shares.
(b) Reflects deferred tax assets and liabilities resulting from the
acquisition and the preliminary purchase price allocation described in
Note 1.
8.
(c) Reflects goodwill resulting from the acquisition based on the
preliminary purchase price allocation described in Note 1 as if the
acquisition had occurred on December 26, 1999.
(d) Reflects $7 million in deferred tax assets and other intangible assets
resulting from the acquisition based on the preliminary purchase price
allocation described in Note 1 as if the acquisition had occurred on
December 26, 1999.
(e) Reflects accrued liabilities related to transaction costs incurred by
QUALCOMM.
(f) Reflects an adjustment to reduce SnapTrack's unearned revenue to fair
value.
(g) Reflects the estimated value of common stock issuable to effect the
purchase.
(h) Reflects the elimination of SnapTrack's equity.
(i) Reflects amounts allocated to in-process technology based on the
preliminary purchase price allocation described in Note 1.
(j) SnapTrack research and development expense includes $0.2 million and
$1.3 million for the first three months in fiscal 2000 and the year
ended September 30, 1999, respectively, in amortization of deferred
stock compensation related to SnapTrack cheap stock issuance. Such cost
is duplicative, as the fair value of the stock has been included in the
purchase price which results in additional goodwill amortization, and
will not be recorded by QUALCOMM in periods subsequent to the purchase.
(k) SnapTrack selling, general and administrative expense includes $0.2
million and $1.2 million for the first three months in fiscal 2000 and
the year ended September 30, 1999, respectively, in amortization of
deferred stock compensation related to SnapTrack cheap stock issuance.
Such cost is duplicative, as the fair value of the stock has been
included in the purchase price which results in additional goodwill
amortization, and will not be recorded by QUALCOMM in periods subsequent
to the purchase.
(l) Reflects amortization of patents, assembled workforce, completed
technology, customer base and goodwill over their estimated useful lives
of four years as if the acquisition had occurred as of the beginning of
the periods presented. The amount allocated to in-process technology has
not been included in the unaudited pro forma condensed consolidated
statements of operations as it is nonrecurring. This amount was expensed
in the second quarter of QUALCOMM's fiscal 2000.
(m) Reflects the estimated tax benefit related to SnapTrack's net loss and
the change in deferred tax liabilities resulting from the amortization
of certain of the intangible assets recorded as part of the acquisition.
(n) Basic and diluted net earnings per share is computed using the weighted
average number of common shares outstanding during the period. Unaudited
pro forma basic and diluted net earnings per share include 5,792,120
shares of common stock to be issued in connection with the acquisition
of SnapTrack. Unaudited pro forma diluted net earnings per share for the
three months ended December 26, 1999 include 1,641,618 dilutive shares
issuable in connection with replacement stock options and warrants; such
shares have not been considered in calculating net loss per common share
for the year ended September 30, 1999 because their effect would be
anti-dilutive. QUALCOMM effected a four-for-one stock split in December
1999; pro forma net
9.
earnings per common share for the year ended September 30, 1999 are
presented giving retroactive effect to the stock split.
10.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
QUALCOMM INCORPORATED
Dated: April 11, 2000 By: /s/ ANTHONY S. THORNLEY
---------------------------------
Anthony S. Thornley
Executive Vice President and
Chief Financial Officer
11.