EXHIBIT 99.1
QUALCOMM Contact:
Julie Cunningham
Sr. Vice President, Investor Relations
1-(858) 658-4224 (ph) 1-(858) 651-9303 (fax)
e-mail: juliec@qualcomm.com
QUALCOMM ANNOUNCES SECOND QUARTER FISCAL 2003 RESULTS
REVENUES $1.0 BILLION AND EPS $0.13
REVENUES $1.0 BILLION AND EPS $0.38, EXCLUDING QSI SEGMENT
SAN DIEGO - April 23, 2003 - QUALCOMM Incorporated (NASDAQ: QCOM) today
announced its second quarter fiscal 2003 results ended March 30, 2003. Revenues
were $1.0 billion in the second fiscal quarter, up 50 percent year-over-year,
primarily due to increasing demand for CDMA products across global markets.
Second quarter net income was $103 million, up 135 percent year-over-year.
Earnings per share were $0.13, up 160 percent from $0.05 in the second quarter
of fiscal 2002.
Second quarter net income includes $160 million in asset impairment charges
related to Vesper. Following the recent denial of Vesper's request by the
Brazilian regulator to use mobile service in the 1900 MHz frequencies band, we
have decided to pursue an expedited exit strategy, including the sale or other
disposition of Vesper and/or its assets. The impairment loss recognized is the
difference between the carrying values of Vesper's long-lived assets and their
estimated fair market values.
Revenues excluding the QUALCOMM Strategic Initiatives (QSI) segment were $1.0
billion in the second fiscal quarter, up 54 percent year-over-year. Net income
excluding the QSI segment was $314 million, up 95 percent year-over-year.
Earnings per share excluding the QSI segment were $0.38, up 90 percent
year-over-year. Reconciliations between total QUALCOMM results and results
excluding QSI are listed in this release with more detailed information
for the prior periods presented on our Investor Relations web page at
www.qualcomm.com.
"During the March quarter, we exceeded our earnings target and delivered
excellent year-over-year growth. Our cash, cash equivalents and marketable
securities increased by $460 million in the second fiscal quarter including the
effect of initiating our first-ever stock repurchase program," said Dr. Irwin
Mark Jacobs, chairman and CEO of QUALCOMM. "New CDMA2000 1X networks were
launched by operators in China, India, Thailand, Australia, Mexico, Puerto Rico
and Brazil, and new
- more -
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 2 of 16
WCDMA networks were recently launched in Japan, Italy, the U.K. and Australia.
The highest-speed commercial 3G data networks, based on our CDMA2000 1xEV-DO
technology, are generating substantial increases in subscriber revenues for
operators in South Korea. Several new 1xEV-DO networks are expected to be
launched in the coming months, together with exciting new applications,
including streaming video. Seven operators in six nations have now commercially
deployed a broad selection of BREW-based applications and services, including
Vivo, the joint venture of Telefonica Moviles and Portugal Telecom in Brazil.
Despite these many positive developments, we were disappointed by the Brazilian
regulator's denial of Vesper's request to provide full mobility service, a
request we believe was in accordance with previous regulation and one which
would have greatly benefited subscribers in Brazil. As a result, we have
initiated efforts to exit our Vesper investment and realize the maximum value
possible from its assets."
Research and development (R&D) expenses were $132 million, including $2 million
for QSI, in the second fiscal quarter, up 13 percent year-over year. The
increase in R&D expenses compared to the year ago quarter was primarily related
to QCT product initiatives.
Selling, general and administrative (SG&A) expenses were $136 million, including
$19 million for QSI, in the second fiscal quarter, up 9 percent year-over-year.
The increase in SG&A expense compared to the year ago quarter was primarily due
to an increase in employee and other expenses related to the expansion of the
QCT customer base and our support and marketing efforts related to the BREW(TM)
application development platform.
Our fiscal 2003 effective income tax rate is now estimated to be 43 percent,
compared to 36 percent in fiscal 2002. Excluding the QSI segment, our fiscal
2003 effective tax rate is now estimated to be 33 percent, due to increased
foreign sales at lower tax rates, compared to 35 percent in fiscal 2002. The
change in the estimated 2003 effective tax rate excluding QSI required an
adjustment from the 34 percent effective tax rate in the first quarter of fiscal
2003, resulting in a 32 percent effective tax rate in the second quarter of
fiscal 2003. The Company also reversed approximately $1.1 billion of its
valuation allowance on substantially all of its U.S. deferred tax assets during
the three months ended March 30, 2003 as a credit to stockholders' equity.
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 3 of 16
QUALCOMM STRATEGIC INITIATIVES
The QUALCOMM Strategic Initiatives (QSI) segment includes our strategic
investments and related income and expenses, including the Vesper Companies in
Brazil. QSI revenues, which are primarily related to the consolidation of the
Vesper Companies, were $26 million in the second fiscal quarter, down 10 percent
sequentially. QSI losses before taxes were $246 million in the second fiscal
quarter. This includes Vesper related losses of $188 million, which consist
primarily of $160 million of asset impairment charges and $22 million of losses
from operations (net of minority interest). The balance of the QSI losses before
taxes is primarily our share of equity losses from our investment in Inquam of
$33 million and other-than-temporary losses on investments of $24 million.
BUSINESS OUTLOOK
The following statements are forward-looking and actual results may differ
materially. Please see Note Regarding Forward-Looking Statements in this release
for a description of certain risk factors and QUALCOMM's quarterly reports on
file with the Securities and Exchange Commission (SEC) for a more complete
description of risks.
THIRD QUARTER FISCAL 2003
- Based on the current business outlook, we anticipate that
revenues excluding the QSI segment in the third fiscal quarter
will increase by approximately 27 percent year-over-year. We
anticipate that earnings per share excluding the QSI segment
will be approximately $0.30-$0.31 in the third fiscal quarter,
an increase of approximately 25-29 percent year-over-year.
This estimate assumes shipments of approximately 23 million
MSM phone chips during the quarter. This would represent a 44
percent growth in MSM chip shipments year-over-year.
Approximately 96 percent of chip shipments in the third fiscal
quarter are expected to be 3G CDMA2000 MSM phone chips.
- Based on the current business outlook, we anticipate that
total QUALCOMM revenues in the third quarter will increase by
approximately 24 percent year-over-year. We anticipate that
total QUALCOMM earnings per share will be approximately $0.23
in the third fiscal quarter, including an estimated $0.08 loss
per share attributed to the QSI segment, compared to a $0.02
loss per share in the year ago quarter. Due to their nature,
certain income and expense items such as realized gains or
losses, gains or losses on derivatives, income related to the
use of our FCC Auction Discount Voucher and asset impairments
cannot be accurately forecast. Accordingly, the Company
excludes such items from its business outlook, and actual
results may
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 4 of 16
vary materially from the business outlook if the Company
incurs any such income or expense items.
FISCAL 2003
- Based on the current business outlook, we anticipate that
revenues excluding the QSI segment will grow by approximately
30-33 percent year-over-year and earnings per share excluding
the QSI segment to be in the range of $1.38-$1.41 for fiscal
2003, up 41-44 percent year-over-year, exceeding our previous
guidance. We estimate the CDMA phone market to be 103-110
million units in calendar 2003 with a decrease of
approximately 10 percent in average selling prices of CDMA
phones, upon which royalties are calculated.
- Based on the current business outlook, we anticipate that
total QUALCOMM revenues will grow by approximately 27-30
percent year-over-year and total QUALCOMM earnings per share
to be in the range of $0.84-$0.87 for fiscal 2003, up 91-98
percent year-over-year, including an estimated $0.54 loss per
share attributed to the QSI segment. Due to their nature,
certain income and expense items such as realized gains or
losses, gains or losses on derivatives, income related to the
use of our FCC Auction Discount Voucher and asset impairments
cannot be accurately forecast. Accordingly, the Company
excludes such items from its business outlook, and actual
results may vary materially from the business outlook if the
Company incurs any such income or expense items.
CASH AND MARKETABLE SECURITIES
QUALCOMM's cash, cash equivalents and marketable securities totaled
approximately $4.4 billion at the end of the second quarter of fiscal 2003,
compared to $3.9 billion on December 29, 2002 and $3.2 billion on September 29,
2002. Our previously announced stock repurchase program was initiated in the
second fiscal quarter utilizing $124 million in the quarter. Detailed
reconciliations between total QUALCOMM cash and cash equivalents and cash and
cash equivalents including marketable securities and excluding the QSI segment
are presented in this release.
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 5 of 16
RESULTS OF BUSINESS SEGMENTS
THE FOLLOWING TABLES PRESENT SEGMENT INFORMATION (IN THOUSANDS):
Second Quarter - Fiscal Year 2003
Reconciling Items QUALCOMM Total
Segments QCT QTL QWI (1) excluding QSI QSI QUALCOMM
- -------------------------------- --------- --------- -------- ----------------- ------------- ---------- ------------
Revenues 652,873 260,110 119,319 (15,524) 1,016,778 26,265 1,043,043
Change from prior quarter (8%) 2% 9% N/M (5%) (10%) (5%)
Change from prior year 90% 34% 8% N/M 54% (29%) 50%
Earnings (loss) before taxes 223,520 236,192 7,370 (6,431) 460,651 (245,775) 214,876
Change from prior quarter (22%) 3% 167% N/M (12%) (85%) (45%)
Change from prior year 188% 38% 286% N/M 83% (107%) 213%
Tax rates 32% 14% 52%
Net income (loss) 313,858 (210,842) 103,016
Change from prior quarter (9%) (104%) (57%)
Change from prior year 95% (303%) 135%
Diluted net earnings (loss) per
common share (3) 0.38 (0.26) 0.13
Change from prior quarter (10%) (100%) (57%)
Change from prior year 90% (333%) 160%
First Quarter - Fiscal Year 2003
Reconciling Items QUALCOMM Total
Segments QCT QTL QWI (1) excluding QSI QSI QUALCOMM
- -------------------------------- ------- --------- ------- ----------------- ------------- --------- ------------
Revenues 709,681 255,423 108,981 (6,121) 1,067,964 29,205 1,097,169
Earnings (loss) before taxes 288,282 229,409 2,761 1,848 522,300 (133,051) 389,249
Tax rates 34% 22% 38%
Net income (loss) 344,718 (103,384) 241,334
Diluted net earnings (loss) per
common share (3) 0.42 (0.13) 0.30
Second Quarter - Fiscal Year 2002
Goodwill
Reconciling Items QUALCOMM Amortization and Total
Segments QCT QTL QWI (1) excluding QSI QSI Other (2) QUALCOMM
- ----------------------------- ------- --------- ------- ----------------- ------------- --------- ---------------- --------
Revenues 343,815 193,955 110,264 11,229 659,263 36,852 - 696,115
Earnings (loss) before taxes 77,724 171,535 (3,964) 6,533 251,828 (118,828) (64,359) 68,641
Tax rates 36% 56% 0% 36%
Net income (loss) 160,814 (52,284) (64,600) 43,930
Diluted net earnings (loss)
per common share (3) 0.20 (0.06) (0.08) 0.05
Six Months - Fiscal Year 2003
Reconciling Items QUALCOMM Total
Segments QCT QTL QWI (1) excluding QSI QSI QUALCOMM
- ----------------------------- --------- ----------- ------- ----------------- ------------- --------- ------------
Revenues 1,362,554 515,533 228,300 (21,645) 2,084,742 55,470 2,140,212
Earnings (loss) before taxes 511,802 465,601 10,131 (4,583) 982,951 (378,826) 604,125
Tax rates 33% 17% 43%
Net income (loss) 658,576 (314,226) 344,350
Diluted net earnings (loss)
per common share (3) 0.81 (0.38) 0.42
Six Months - Fiscal Year 2002
Goodwill
Reconciling Items QUALCOMM Amortization and Total
Segments QCT QTL QWI (1) Excluding QSI QSI Other (2) QUALCOMM
- ---------------------------- ------- --------- ------- ----------------- ------------- --------- ---------------- ---------
Revenues 702,959 404,758 219,559 24,675 1,351,951 42,806 - 1,394,757
Earnings (loss) before taxes 164,665 360,223 (5,197) 19,586 539,277 (123,787) (129,298) 286,192
Tax rates 35% 69% 0% 36%
Net income (loss) 350,530 (38,498) (128,869) 183,163
Diluted net earnings (loss)
per common share (3) 0.43 (0.05) (0.16) 0.23
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 6 of 16
(1) Reconciling items related to revenues consist primarily of other
non-reportable segment revenues less intersegment eliminations. Reconciling
items related to earnings before taxes consist primarily of corporate
expenses, charges that are not allocated to the segments for management
reporting purposes, unallocated net investment income, non-reportable
segment results, interest expense and the elimination of intercompany
profit.
(2) Starting in fiscal 2003, the Company no longer records goodwill
amortization, in accordance with Financial Accounting Standards No. 142. In
the second quarter of fiscal 2002, goodwill amortization and other
adjustments included $61.1 million of amortization of goodwill, $3.1
million of amortization of intangible assets and $1.0 million of payroll
expenses on stock option exercises, offset by $0.1 million of credits
related to the sale of the terrestrial-based CDMA wireless infrastructure
business and $0.7 million of credits related to the reduction of reserves
established in connection with the Globalstar business. In the first six
months of fiscal 2002, goodwill amortization and other adjustments included
$122.3 million of amortization of goodwill, $6.1 million of amortization of
intangible assets and $3.1 million of payroll expenses on stock option
exercises, offset by $0.1 million of credits related to the sale of the
terrestrial-based CDMA wireless infrastructure business and $2.1 million of
credits related to the reduction of reserves established in connection with
the Globalstar business. With the adoption of FAS 142 in 2003 and given the
immateriality of the other adjustments, the Company no longer makes these
adjustments to its results excluding QSI in fiscal 2003.
(3) The sum of the earnings per share amounts may not equal total earnings per
share due to rounding.
N/M - Not Meaningful
BUSINESS SEGMENT HIGHLIGHTS
QUALCOMM CDMA TECHNOLOGIES (QCT)
- Shipped approximately 28 million MSM(TM) phone chips to customers
worldwide during the second fiscal quarter, up from approximately 14
million units in the year ago quarter.
- Shipped approximately 25 million 3G CDMA2000 1X/1xEV-DO MSM phone chips
during the second fiscal quarter for a cumulative total of nearly 94
million 3G CDMA2000 MSM phone chips.
- Shipped CSM infrastructure chips for 3G CDMA2000 1X/1xEV-DO to support
more than 1.5 million equivalent voice channels, down from approximately
2.5 million in the year ago quarter.
- Announced that more than 10 million gpsOne(TM)-enabled devices are now in
commercial use in Japan, South Korea and the United States, making
QUALCOMM's gpsOne technology the world's most widely deployed personal
location system.
- Announced strong market demand for the advanced multimedia MSM6100(TM)
chipset solution. A total of eight handset manufacturers, including
Curitel, Kyocera, LG Electronics, Motorola, Samsung Electronics, Sharp
Corporation, Synertek and Toshiba, covering 22 separate planned device
designs, have already begun to take receipt of shipments of the MSM6100
chipset in order to support rollouts of these new devices this year.
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 7 of 16
QUALCOMM TECHNOLOGY LICENSING (QTL)
- Signed a total of ten CDMA license agreements during the second fiscal
quarter, including six new licenses and four amendments to existing
license agreements.
- Thirty-two subscriber licensees reported sales of CDMA2000 1X products and
nine subscriber licensees reported sales of WCDMA products through the
second fiscal quarter.
- Thirteen infrastructure licensees reported sales of CDMA2000 1X products
and eight infrastructure licensees reported sales of WCDMA products
through the second fiscal quarter.
QUALCOMM WIRELESS & INTERNET GROUP (QWI)
QUALCOMM INTERNET SERVICES (QIS)
- Announced two additional commercial BREW launches by operators,
including the joint venture between Telefonica Moviles and Portugal
Telecom (Vivo) in Brazil and Telstra in Australia. Also, KDDI in Japan
launched over-the-air download capability for its BREW-based
service.
- Announced that ALLTEL will be the first operator to offer BREW Shop
software, a native PDA application which enables operators to use the
BREW Distribution System to offer over-the-air PDA application download
services.
- Announced the development of content for the BREW platform by leading
game and entertainment companies, including SEGA Mobile, Sony Pictures
Digital, Bandai, THQ, Sorrent and Mforma.
- Demonstrated over-the-air GPRS downloads of both native BREW and
Java(TM) applications using the BREW distribution system at the 3GSM
World Congress 2003 using the GSM/GPRS network of French wireless
operator SFR and a Maxon GSM/GPRS phone.
QUALCOMM WIRELESS BUSINESS SOLUTIONS(R)(QWBS)
- Shipped approximately 8,400 OmniTRACS(R) units and related products in
the second quarter, down 12 percent year-over-year largely due to a
decline in sales in Brazil. This brings the cumulative total to over
470,000 units shipped worldwide.
- Commercially introduced GlobalTRACS(TM), an equipment management system
that provides reliable, wireless access to equipment engine hours and
location data, regardless of equipment type or manufacturer.
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 8 of 16
- Announced several new innovative technologies for fleet management
solutions, including a high data rate technology, a portable computing
solution for load management with electronic signature capture and
transfer, and an untethered trailer monitoring system initiative.
CONFERENCE CALL
QUALCOMM's second quarter fiscal 2003 earnings conference call will be broadcast
live on April 23, 2003 beginning at 2:30 p.m. Pacific Daylight Time on the
Company's web site at: www.qualcomm.com. This conference call may contain
forward-looking financial information. The conference call will include a
discussion of "non-GAAP financial measures" as that term is defined in
Regulation G. The most directly comparable GAAP financial measures and
information reconciling these non-GAAP financial measures to the company's
financial results prepared in accordance with GAAP, as well as the other
material financial and statistical information to be discussed in the conference
call, will be posted on the company's Investor Relations web site at
www.qualcomm.com immediately prior to commencement of the call. The taped audio
replay will be available for approximately two weeks. To listen to the replay,
U.S. callers may dial (800) 633-8284 and international callers may dial (402)
977-9140. U.S. and international callers should use reservation number 21095067.
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. Headquartered in San Diego,
Calif., QUALCOMM is included in the S&P 500 Index and is a 2003 FORTUNE 500(R)
company traded on The Nasdaq Stock Market(R) under the ticker symbol QCOM.
NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES
The Company presents financial information excluding the QUALCOMM Strategic
Initiatives (QSI) segment to facilitate evaluation by management, investors and
analysts of its ongoing core operating businesses, including QUALCOMM CDMA
Technologies (QCT), QUALCOMM Technology Licensing (QTL) and QUALCOMM Wireless &
Internet (QWI). QSI results relate to strategic investments for which the
Company has exit strategies of varying durations. Management believes that the
information excluding QSI presents a more representative measure of the
operating and liquidity performance of the Company because it excludes the
effect of fluctuations in value of
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 9 of 16
investments that are unrelated to the Company's operational performance. The
financial information excluding QSI should be considered in addition, not as a
substitute for, or superior to, financial measures calculated in accordance with
GAAP. Reconciliations between total QUALCOMM results and results excluding QSI
are presented in this release.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to the historical information contained herein, this news release
contains forward-looking statements that are subject to risks and uncertainties.
Actual results may differ substantially from those referred to herein due to a
number of factors, including but not limited to risks associated with: changing
global economic conditions, particularly in the telecommunications and
Internet-related industries and the resulting uncertainty in forecasting future
results; timing and receipt of license fees and royalties; integrated circuit
inventory and order levels; the Company's ability to execute additional 3G
licenses; the scale-up, acceptance and operations of CDMA systems, including
CDMA2000 1xEV-DO and systems in new markets such as China and India; the ability
to sustain or improve operational efficiency and profitability; decreases in the
rate of growth in CDMA-based wireless data and Internet access or the CDMA
subscriber population; strategic investments, loans, acquisitions or
divestitures the Company has or may pursue; the value realized on sale of the
Vesper Companies' business or assets; changes in the fair values of marketable
securities and derivative instruments held; the development, deployment and
commercial acceptance of evolving CDMA technology standards; developments in
current or future litigation; customer receivables and performance guarantees;
component shortages; and international business activities, as well as the other
risks detailed from time-to-time in the Company's SEC reports.
###
QUALCOMM(R), QCT(R) QUALCOMM Wireless Business Solutions(R), OmniTRACS(R),
MSM(TM), MSM6100(TM), gpsOne(TM), GlobalTRACS(TM) and BREW(TM) are trademarks
and/or service marks of QUALCOMM Incorporated. All other trademarks are the
property of their respective owners.
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 10 of 16
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
RESULTS EXCLUDING QSI TO TOTAL QUALCOMM RESULTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED MARCH 30, 2003
----------------------------------------------------------
EXCLUDING QSI QSI TOTAL QUALCOMM
------------- ------------ --------------
Revenues:
Equipment and services $ 763,217 $ 26,265 $ 789,482
Licensing and royalty fees 253,561 - 253,561
------------ ------------ ------------
1,016,778 26,265 1,043,043
------------ ------------ ------------
Operating expenses:
Cost of equipment and services revenues 341,100 40,828 381,928
Research and development 129,757 2,044 131,801
Selling, general and administrative 116,954 18,770 135,724
Amortization of other acquisition-related
intangible assets 1,965 - 1,965
Asset impairment charges - 160,145 160,145
------------ ------------ ------------
Total operating expenses 589,776 221,787 811,563
------------ ------------ ------------
Operating income (loss) 427,002 (195,522) 231,480
Interest expense (375) (3,504) (3,879)
Investment income (expense), net 34,024 (a) (46,749) (d) (12,725)
------------ ------------ ------------
Income (loss) before income taxes 460,651 (245,775) (b) 214,876
Income tax (expense) benefit (146,793) (c) 34,933 (111,860) (c)
------------ ------------ ------------
Net income (loss) $ 313,858 $ (210,842) $ 103,016
============ ============ ============
Net earnings (loss) per common share:
Diluted $ 0.38 (e) $ (0.26) (e) $ 0.13 (e)
============ ============ ============
Shares used in per share calculations:
Diluted 818,088 818,088 818,088
============ ============ ============
(a) Includes $28 million in interest income related to cash, cash equivalents
and marketable debt securities, which are not part of the Company's
strategic investment portfolio.
(b) Includes $162 million loss, net of minority interest, of Vesper Holdings
from December 1, 2002 through February 28, 2003 due to the Company's
practice of consolidating foreign subsidiaries one month in arrears.
(c) The estimated fiscal year 2003 effective tax rate for operations excluding
QSI and total QUALCOMM are 33% and 43%, respectively. The change in the
estimated 2003 effective tax rate for operations excluding QSI from 34% used
in the first quarter of fiscal 2003 results in a 32% effective tax rate in
the second quarter of fiscal 2003. The change in the estimated 2003
effective tax rate for total QUALCOMM from 38% used in the first quarter of
fiscal 2003 results in a 52% effective tax rate in the second quarter of
fiscal 2003.
(d) Includes $57 million equity losses in investees, $24 million
other-than-temporary losses on investments, $23 million minority interest in
loss of consolidated subsidiaries and $7 million interest income.
(e) The sum of the earnings per share amounts may not equal total earnings per
share due to rounding.
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 11 of 16
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
RESULTS EXCLUDING QSI TO TOTAL QUALCOMM RESULTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
SIX MONTHS ENDED MARCH 30, 2003
----------------------------------------------------------
EXCLUDING QSI QSI TOTAL QUALCOMM
------------- ------------ --------------
Revenues:
Equipment and services $ 1,591,475 $ 55,470 $ 1,646,945
Licensing and royalty fees 493,267 - 493,267
------------ ------------ -------------
2,084,742 55,470 2,140,212
------------ ------------ -------------
Operating expenses:
Cost of equipment and services revenues 692,504 77,425 769,929
Research and development 240,004 4,276 244,280
Selling, general and administrative 223,756 59,967 283,723
Amortization of other acquisition-related
intangible assets 3,937 - 3,937
Asset impairment charges - 160,145 160,145
------------ ------------ -------------
Total operating expenses 1,160,201 301,813 1,462,014
------------ ------------ -------------
Operating income (loss) 924,541 (246,343) 678,198
Interest expense (1,714) (9,046) (10,760)
Investment income (expense), net 60,124 (a) (123,437) (d) (63,313)
------------ ------------ -------------
Income (loss) before income taxes 982,951 (378,826) (b) 604,125
Income tax (expense) benefit (324,375) (c) 64,600 (259,775) (c)
------------ ------------ -------------
Net income (loss) $ 658,576 $ (314,226) $ 344,350
============ ============ ============
Net earnings (loss) per common share:
Diluted $ 0.81 (e) $ (0.38) (e) $ 0.42 (e)
============ ============ ============
Shares used in per share calculations:
Diluted 816,916 816,916 816,916
============ ============ ============
(a) Includes $54 million in interest income related to cash, cash equivalents
and marketable debt securities, which are not part of the Company's
strategic investment portfolio.
(b) Includes $192 million loss, net of minority interest, of Vesper Holdings
from September 1, 2002 through February 28, 2002 due to the Company's
practice of consolidating foreign subsidiaries one month in arrears.
(c) The estimated fiscal year 2003 effective tax rate for operations excluding
QSI and total QUALCOMM are 33% and 43%, respectively.
(d) Includes $90 million other-than-temporary losses on investments, $89 million
equity losses in investees, $37 million minority interest in loss of
consolidated subsidiaries and $14 million interest income.
(e) The sum of the earnings per share amounts may not equal total earnings per
share due to rounding.
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 12 of 16
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING CASH FLOWS FROM
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES EXCLUDING QSI TO TOTAL
QUALCOMM CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED MARCH 30, 2003
---------------------------------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
---------------------------------------------------------
Earnings before taxes, depreciation,
amortization and asset impairments (1) $ 497,860 $ (20,068) $ 477,792
Working capital changes and taxes paid (2) 85,886 15,166 101,052
------------ ------------ -------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 583,746 (4,902) 578,844
Net additional share capital 56,823 - 56,823
Repurchases of common stock (123,577) - (123,577)
Capital expenditures (37,120) (12,290) (49,410)
Net issuance of finance receivables (245) (6,035) (6,280)
Other investments - (7,747) (7,747)
Other items 416 (7,336) (6,920)
Changes in fair value and other changes to marketable securities 9,403 (19,375) (9,972)
Marketable securities pending settlement 33,055 (4,712) 28,343
Transfer from QSI (3) 3,183 (3,183) -
Transfer to QSI (4) (40,087) 40,087 -
------------ ------------ -------------
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND
MARKETABLE SECURITIES (5) $ 485,597 $ (25,493) $ 460,104
============ ============ =============
(1) Reconciliation to GAAP:
Net income (loss) $ 313,858 $ (210,842) $ 103,016
Non-cash adjustments 131,127 190,774 321,901
Plus: Taxes paid 52,875 - 52,875
------------ ------------ -------------
Earnings before taxes, depreciation, amortization and asset
impairments $ 497,860 $ (20,068) $ 477,792
============ ============ =============
(2) Reconciliation to GAAP:
Increase in cash resulting from changes in working capital $ 138,761 $ 15,166 $ 153,927
Minus: Taxes paid (52,875) - (52,875)
------------ ------------ -------------
Working capital changes and taxes paid $ 85,886 $ 15,166 $ 101,052
============ ============ =============
(3) Cash from loan payments and sale of equity securities.
(4) Funding for strategic debt and equity investments, operations
of Vesper and other QSI operating expenses.
(5) Reconciliation to GAAP cash flow statement:
Net increase (decrease) in cash and cash equivalents (GAAP) $ 370,874 $ (1,326) $ 369,548
Plus: Net purchase (proceeds) of marketable securities 74,350 (80) 74,270
Plus: Net increase (decrease) in fair value and other
changes to marketable securities 9,403 (19,375) (9,972)
Plus: Net increase (decrease) in marketable securities
pending settlement 33,055 (4,712) 28,343
Less: Proceeds from trading securities included in working
capital change (2,085) - (2,085)
------------ ------------ -------------
Net increase (decrease) in cash, cash equivalents and
marketable securities $ 485,597 $ (25,493) $ 460,104
============ ============ =============
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 13 of 16
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING CASH FLOWS FROM
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES EXCLUDING QSI TO TOTAL QUALCOMM
CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED MARCH 30, 2003
---------------------------------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
---------------------------------------------------------
Earnings before taxes, depreciation,
amortization and asset impairments (1) $ 1,051,064 $ (43,544) $ 1,007,520
Working capital changes and taxes paid (2) (117,474) 19,281 (98,193)
------------ ------------ -------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 933,590 (24,263) 909,327
Net additional share capital 112,696 - 112,696
Repurchases of common stock (123,577) - (123,577)
Capital expenditures (113,339) (17,632) (130,971)
Net collections of finance receivables 6,790 372,222 379,012
Other investments - (31,738) (31,738)
Other items 5,857 (22,163) (16,306)
Changes in fair value and other changes to marketable securities 24,357 13,328 37,685
Marketable securities pending settlement 33,055 (4,712) 28,343
Transfer from QSI (3) 392,700 (392,700) -
Transfer to QSI (4) (109,493) 109,493 -
------------ ------------ -------------
NET INCREASE IN CASH, CASH EQUIVALENTS AND
MARKETABLE SECURITIES (5) $ 1,162,636 $ 1,835 $ 1,164,471
============ ============ =============
(1) Reconciliation to GAAP:
Net income (loss) $ 658,576 $ (314,226) $ 344,350
Non-cash adjustments 328,326 270,682 599,008
Plus: Taxes paid 64,162 - 64,162
------------ ------------ -------------
Earnings before taxes, depreciation, amortization and asset
impairments. $ 1,051,064 $ (43,544) $ 1,007,520
============ ============ =============
(2) Reconciliation to GAAP:
Increase (decrease) in cash resulting from changes in
working capital $ (53,312) $ 19,281 $ (34,031)
Minus: Taxes paid (64,162) - (64,162)
------------ ------------ -------------
Working capital changes and taxes paid $ (117,474) $ 19,281 $ (98,193)
============ ============ =============
(3) Cash from loan payments and sale of equity securities.
(4) Funding for strategic debt and equity investments, operations.
of Vesper and other QSI operating expenses
(5) Reconciliation to GAAP cash flow statement:
Net increase (decrease) in cash and cash equivalents (GAAP) $ 588,034 $ (4,897) $ 583,137
Plus: Net purchase (proceeds) of marketable securities 519,275 (1,884) 517,391
Plus: Net increase in fair value and other changes to
marketable securities 24,357 13,328 37,685
Plus: Net increase (decrease) in marketable securities
pending settlement 33,055 (4,712) 28,343
Less: Proceeds from trading securities included in working
capital change (2,085) - (2,085)
------------ ------------ -------------
Net increase in cash, cash equivalents and marketable
securities $ 1,162,636 $ 1,835 $ 1,164,471
============ ============ =============
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 14 of 16
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
ASSETS
QUALCOMM
EXCLUDING
QSI QSI (a) (b) QUALCOMM QUALCOMM
MARCH 30, MARCH 30, MARCH 30, SEPTEMBER 29,
2003 2003 2003 2002
------------ ------------ ------------ -------------
Current assets:
Cash and cash equivalents $ 1,971,670 $ 18,171 $ 1,989,841 $ 1,406,704
Marketable securities 1,732,454 18,150 1,750,604 1,411,178
Accounts receivable, net 507,748 26,466 534,214 536,950
Finance receivables, net 3,627 961 4,588 388,396
Inventories, net 139,663 11,419 151,082 88,094
Deferred tax assets (b) 459,241 - 459,241 122
Other current assets 110,954 24,108 135,062 109,322
------------ ------------ ------------ ------------
Total current assets 4,925,357 99,275 5,024,632 3,940,766
Marketable securities 480,669 142,869 623,538 381,630
Finance receivables, net 4,272 449,101 453,373 442,934
Other investments 4,722 172,714 177,436 276,414
Property, plant and equipment, net 498,725 89,542 588,267 686,283
Goodwill, net 345,048 1,865 346,913 344,803
Deferred tax assets (b) 603,979 - 603,979 7,493
Other assets 218,212 181,832 400,044 425,725
------------ ------------ ------------ ------------
Total assets $ 7,080,984 $ 1,137,198 $ 8,218,182 $ 6,506,048
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 141,041 $ 44,635 $ 185,676 $ 209,418
Payroll and other benefits related 111,767 9,423 121,190 126,005
liabilities
Unearned revenue 167,427 6,019 173,446 183,482
Dividends payable 39,475 - 39,475 -
Other current liabilities 184,355 28,855 213,210 156,081
------------ ------------ ------------ ------------
Total current liabilities 644,065 88,932 732,997 674,986
Unearned revenue 266,156 252 266,408 259,995
Long-term debt - 151,606 151,606 94,288
Other liabilities 29,294 17,058 46,352 40,283
------------ ------------ ------------ ------------
Total liabilities 939,515 257,848 1,197,363 1,069,552
------------ ------------ ------------ ------------
Minority interest in consolidated subsidiaries 50 - 50 44,540
------------ ------------ ------------ ------------
Stockholders' equity:
Preferred stock, $0.0001 par value - - - -
Common stock, $0.0001 par value 80 - 80 79
Paid-in capital 6,176,021 - 6,176,021 4,918,202
Retained earnings 909,513 - 909,513 604,624
Accumulated other comprehensive loss (35,633) (29,212) (64,845) (130,949)
------------ ------------ ------------ ------------
Total stockholders' equity 7,049,981 (29,212) 7,020,769 5,391,956
------------ ------------ ------------ ------------
Total liabilities and stockholders' equity $ 7,989,546 $ 228,636 $ 8,218,182 $ 6,506,048
============ ============ ============ ============
(a) Includes the consolidated Vesper Holdings balance sheet at February 28,
2003. The Company consolidates foreign subsidiaries one month in arrears.
(b) Deferred tax assets and liabilities are not allocated to the Company's
segments. A valuation allowance was provided on all net deferred tax assets
of investments that are consolidated by QSI, including Vesper, because of
uncertainty regarding their realization.
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 15 of 16
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
MARCH 30, MARCH 31, MARCH 30, MARCH 31,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenues:
Equipment and services $ 789,482 $ 504,130 $ 1,646,945 $ 993,222
Licensing and royalty fees 253,561 191,985 493,267 401,535
------------ ------------ ------------ ------------
1,043,043 696,115 2,140,212 1,394,757
------------ ------------ ------------ ------------
Operating expenses:
Cost of equipment and services revenues 381,928 291,914 769,929 537,111
Research and development 131,801 116,755 244,280 223,623
Selling, general and administrative 135,724 123,960 283,723 224,725
Amortization of goodwill and other
acquisition-related intangible assets 1,965 63,682 3,937 127,413
Asset impairment charges 160,145 - 160,145 -
------------ ------------ ------------ ------------
Total operating expenses 811,563 596,311 1,462,014 1,112,872
------------ ------------ ------------ ------------
Operating income 231,480 99,804 678,198 281,885
Interest expense (3,879) (6,156) (10,760) (8,718)
Investment (expense) income, net (12,725) (25,007) (63,313) 13,025
------------ ------------ ------------ ------------
Income before income taxes 214,876 68,641 604,125 286,192
Income tax expense (111,860) (24,711) (259,775) (103,029)
------------ ------------ ------------ ------------
Net income $ 103,016 $ 43,930 $ 344,350 $ 183,163
============ ============ ============ ============
Net earnings per common share:
Basic $ 0.13 $ 0.06 $ 0.44 $ 0.24
============ ============ ============ ============
Diluted $ 0.13 $ 0.05 $ 0.42 $ 0.23
============ ============ ============ ============
Shares used in per share calculations:
Basic 789,026 767,903 786,153 766,431
============ ============ ============ ============
Diluted 818,088 808,996 816,916 809,285
============ ============ ============ ============
Dividends declared per share $ 0.05 $ - $ 0.05 $ -
============ ============ ============ ============
QUALCOMM Announces Second Quarter Fiscal 2003 Results Page 16 of 16
QUALCOMM INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------------- ----------------
MARCH 30, DECEMBER 29, MARCH 30,
2003 2002 2003
------------ ------------ ----------------
OPERATING ACTIVITIES:
Net income $ 103,016 $ 241,334 $ 344,350
Depreciation and amortization 46,349 43,177 89,526
Asset impariment charges 160,145 - 160,145
Net realized gains on marketable securities and other investments (9,972) (1,296) (11,268)
Change in fair values of derivative investments (106) (14) (120)
Other-than-temporary losses on marketable securities and
other investments 23,967 66,583 90,550
Minority interest in loss of consolidated subsidiaries (22,733) (13,820) (36,553)
Equity in losses of investees 56,526 32,700 89,226
Non-cash income tax expense 58,986 136,627 195,613
Other non-cash charges and credits 8,739 13,150 21,889
Increase (decrease) in cash resulting from changes in:
Proceeds of trading securities 2,085 - 2,085
Accounts receivable, net 133,020 (129,674) 3,346
Inventories, net (43,335) (20,866) (64,201)
Other assets 21,416 (14,624) 6,792
Trade accounts payable (9,269) (9,663) (18,932)
Payroll, benefits, and other liabilities 23,278 (1,545) 21,733
Unearned revenue 26,732 (11,586) 15,146
------------ ------------ -------------
Net cash provided by operating activities 578,844 330,483 909,327
------------ ------------ -------------
INVESTING ACTIVITIES:
Capital expenditures (49,410) (81,561) (130,971)
Purchases of wireless licenses - (8,247) (8,247)
Purchases of available-for-sale securities (608,886) (840,036) (1,448,922)
Proceeds from sale of available-for-sale securities 600,539 415,046 1,015,585
Purchases of held-to-maturity securities (93,595) (66,611) (160,206)
Maturities of held-to-maturity securities 27,672 48,480 76,152
Issuance of finance receivables (7,281) (140,740) (148,021)
Collection of finance receivables 1,001 526,032 527,033
Issuance of notes receivable (511) (666) (1,177)
Other investments and acquisitions (7,747) (23,991) (31,738)
Other items, net (4,013) 5,651 1,638
------------ ------------ -------------
Net cash used by investing activities (142,231) (166,643) (308,874)
------------ ------------ -------------
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 56,823 55,873 112,696
Repurchase and retirement of common stock (123,577) - (123,577)
Proceeds from put options 7,136 - 7,136
Proceeds from the issuance of long-term debt 3,856 1,764 5,620
Payments on long-term debt (12,075) (5,142) (17,217)
Other items, net - 20 20
------------ ------------ -------------
Net cash (used) provided by financing activities (67,837) 52,515 (15,322)
------------ ------------ -------------
Effect of exchange rate changes on cash 772 (2,766) (1,994)
------------ ------------ -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 369,548 213,589 583,137
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,620,293 1,406,704 1,406,704
------------ ------------ -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,989,841 $ 1,620,293 $ 1,989,841
============ ============ =============