Exhibit 99.1 QUALCOMM Contact: Bill Davidson Vice President, Investor Relations 1-(858) 658-4813 (ph) 1-(858) 651-9303 (fax) e-mail: ir@qualcomm.com QUALCOMM ANNOUNCES SECOND QUARTER FISCAL 2004 RESULTS REVENUES $1.2 BILLION, EPS $0.58 REVENUES $1.2 BILLION, EPS $0.53 EXCLUDING QSI SEGMENT SAN DIEGO - April 21, 2004 - QUALCOMM Incorporated (NASDAQ: QCOM) today announced its second quarter fiscal 2004 results ended March 28, 2004. Revenues were $1.2 billion in the second quarter of fiscal 2004, up one percent sequentially and 20 percent year-over-year. The second quarter fiscal 2004 net income was $488 million and diluted earnings per share were $0.58, up 39 percent and 35 percent sequentially and 374 percent and 346 percent year-over-year, respectively. The second quarter fiscal 2004 net income excluding the QSI segment was $442 million, up six percent sequentially and 41 percent year-over-year. The second quarter fiscal 2004 diluted earnings per share excluding the QSI segment were $0.53, up four percent sequentially and 39 percent year-over-year. Detailed reconciliations between total QUALCOMM results and results excluding QSI are included at the end of this news release. Prior period reconciliations are presented on our Investor Relations web page at www.qualcomm.com. In this quarter we disposed of all remaining operations and assets related to the Vesper Operating Companies and TowerCo. In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," their results of operations and cash flows are presented as discontinued operations within the QSI segment. Our statements of operations and cash flows for prior periods have been adjusted to reflect this and are presented on our Investor Relations web page at www.qualcomm.com. "Our financial results reflect the strong acceptance and rapid global growth of 3G CDMA," said Dr. Irwin Mark Jacobs, chairman and CEO of QUALCOMM. "Consumers and enterprises increasingly recognize the benefits of CDMA-based networks, with the number of subscribers now exceeding 200 million. Early 3G CDMA entrants continue to perform well. KDDI, the first CDMA operator -more- QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 2 of 19 in Japan, announced its sixth consecutive month as the leading Japanese operator in net subscriber additions, and now has approximately 14 million subscribers on its 3G network. Better coverage and new handsets have accelerated WCDMA (UMTS) uptake and resulted in over 4 million cumulative subscribers in Japan and Europe at the end of the quarter. NTT DoCoMo, the largest Japanese operator, added approximately 724,000 subscribers to its 3G FOMA network in March 2004, for a total of over three million WCDMA subscribers. In South Korea, local number portability and compelling 1xEV-DO handsets contributed to the highest monthly net additions in two years and a 1xEV-DO base that now exceeds 6.4 million subscribers. The United States CDMA market continues to grow, benefiting from local number portability and the popularity of camera phones and color screens. Finally, we experienced continued growth in China and India and strong growth in Brazil, propelled by low-priced MSM6000-based entry level phones." "This quarter, we matched the prior quarter's record high by shipping approximately 32 million MSM phone chips; however, worldwide demand for our chipsets exceeded our supply, particularly the MSM5100 and MSM5500. We anticipate supply to better align with demand over the course of the next two quarters. "Research and development continued at high levels. Both the CDMA2000 1X Revision D and the 1xEV-DO Revision A standards were completed, each supporting peak data rates of 3.1 Mbps on the forward link and 1.8 Mbps on the reverse link. We publicly demonstrated CDMA2000 1xEV-DO Gold Multicast, allowing multimedia content to be sent simultaneously to many users; MediaFLO, an end-to-end product and service delivering multiple channels of video conveniently accessed by an on-screen channel guide; and Quality-of-Service features supporting greatly enhanced performance for Voice-over-Internet Protocol (VOIP), push-to-chat, and video telephony. We believe these and other projects will drive further expansion of 3G CDMA, subscriber migration from 2G systems, and higher revenues. Revenues for the second quarter of fiscal 2004 grew $199 million compared to the second quarter of fiscal 2003, including a $130 million increase in QUALCOMM Technology Licensing (QTL) segment revenues and a $65 million increase in QUALCOMM CDMA Technologies (QCT) segment revenues. QTL revenues increased over the prior year due primarily to greater phone and infrastructure equipment sales by our licensees. In the second quarter of fiscal 2004, our licensees QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 3 of 19 reported CDMA phone sales for the first quarter of fiscal 2004 of approximately 37 million units, compared to 27 million units in the second quarter of fiscal 2003. QCT sold approximately 32 million Mobile Station Modem(TM) (MSM(TM)) phone chips in the second quarter of fiscal 2004, compared to 28 million in the second quarter of fiscal 2003. Research and development (R&D) expenses were $169 million in the second quarter of fiscal 2004, up 28 percent from the second quarter of fiscal 2003, largely attributable to increases in costs related to integrated circuit products and corporate initiatives to support multimedia applications, high-speed wireless Internet access and multimode, multiband, multinetwork products, including CDMA2000 1xEV-DO/1xEV-DV, GSM1x and WCDMA (UMTS). Selling, general and administrative (SG&A) expenses were $138 million in the second quarter of fiscal 2004, up 14 percent from the second quarter of fiscal 2003, largely attributable to increases in employee related expenses for an expanding customer base. Our annual effective income tax rate is estimated to be approximately 30 percent for fiscal 2004, for both total QUALCOMM and QUALCOMM excluding QSI. In the first fiscal quarter our estimated effective tax rates were 32 percent and 31 percent for total QUALCOMM and QUALCOMM excluding QSI, respectively. Due to the change in the estimated rate for fiscal 2004, in the second fiscal quarter our tax rates were 28 percent for total QUALCOMM and 29 percent for QUALCOMM excluding QSI. In fiscal 2003, our actual effective income tax rate was approximately 34 percent and 33 percent, for total QUALCOMM and QUALCOMM excluding QSI, respectively. The lower estimated annual effective tax rate as compared to our prior estimate for fiscal 2004 and the prior fiscal year is largely due to expected higher foreign earnings which are subject to a lower rate. QUALCOMM STRATEGIC INITIATIVES The QUALCOMM Strategic Initiatives (QSI) segment includes our strategic investments and related income and expenses. During the first quarter of fiscal 2004, we sold the Vesper Operating Companies to Embratel, realizing a net loss of $52 million on the sale. In the second quarter of fiscal 2004, we sold our wholly-owned subsidiary, TowerCo, which owned and operated the Vesper communications towers, to Embratel, realizing a net gain of $40 million on the sale. Also in the second quarter of fiscal 2004, Anatel, the telecommunications regulatory agency in Brazil, approved QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 4 of 19 the return of personal mobile service (SMP) licenses. The related SMP debt was extinguished, resulting in a net gain of $19 million. As a result of the disposition of all remaining operations and assets related to the Vesper Operating Companies and TowerCo, their results of operations and cash flows are presented as discontinued operations within the QSI segment. In the second quarter of fiscal 2004, QSI's results consist primarily of $21 million in equity losses, partially offset by $4 million in other income resulting from the transfer of a portion of our FCC Auction Discount Voucher to a wireless operator. 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 annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of risks. THIRD QUARTER FISCAL 2004 Based on the current business outlook, we anticipate that revenues excluding the QSI segment in the third fiscal quarter will increase approximately 4-7 percent sequentially and 41-44 percent year-over-year. We anticipate that earnings per share excluding the QSI segment will be approximately $0.48-$0.50 in the third fiscal quarter, compared to $0.33 in the year ago quarter. This estimate assumes shipments of approximately 33-35 million MSM phone chips during the quarter. Based on the current business outlook, we anticipate that total QUALCOMM revenues in the third quarter will increase approximately 4-7 percent sequentially and 41-44 percent year-over-year. We anticipate that total QUALCOMM earnings per share will be approximately $0.46-$0.48 in the third fiscal quarter, including an estimated $0.02 loss per share attributed to the QSI segment, compared to $0.09 per share in the year ago quarter. Due to their nature, certain income and expense items such as realized investment gains or losses, 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. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 5 of 19 FISCAL 2004 Based on the current business outlook, we are increasing our guidance for fiscal 2004. We now anticipate that revenues excluding the QSI segment will grow by approximately 26-29 percent year-over-year and earnings per share excluding the QSI segment to be in the range of $1.93-$1.98 for fiscal 2004, compared to $1.42 last fiscal year. We estimate the CDMA phone market to be 152-160 million units in calendar 2004, and we estimate average selling prices of CDMA phones for fiscal 2004, upon which royalties are calculated, to remain constant year-over-year. Based on the current business outlook, we anticipate that total QUALCOMM revenues will grow by approximately 26-29 percent year-over-year and total QUALCOMM earnings per share to be in the range of $1.86-$1.91 for fiscal 2004, compared to $1.01 last fiscal year, including an estimated $0.07 loss per share attributed to the QSI segment for fiscal 2004. Due to their nature, certain income and expense items such as realized investment gains or losses, 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 both current and noncurrent marketable securities totaled approximately $6.6 billion at the end of the second quarter of fiscal 2004, compared to $5.9 billion on December 28, 2003, and $4.4 billion on March 30, 2003. We paid $57 million in cash dividends, $0.07 per share, in the second quarter of fiscal 2004. On March 2, 2004, we announced a 43 percent increase in the company's quarterly dividend to $0.10 per share payable on June 25, 2004 to stockholders of record on May 28, 2004. In the second quarter of fiscal 2004, net cash transfers from QSI were $39 million. Detailed reconciliations between total QUALCOMM cash flow and cash, cash equivalents and marketable securities excluding the QSI segment are included in this news release. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 6 of 19 RESULTS OF BUSINESS SEGMENTS The following tables, which present segment information, have been adjusted to reflect the SnapTrack reorganization (Note 1) and discontinued operations (Note 3) (dollars in thousands, except per share data): SECOND QUARTER - FISCAL YEAR 2004
QUALCOMM RECONCILING EXCLUDING TOTAL SEGMENTS QCT(1)* QTL QWI(1)* ITEMS (2)* QSI QSI* QUALCOMM* - -------- ------- --- ------- ---------- --- ---- --------- REVENUES 711,257 390,257 144,627 (30,522) 1,215,619 29 1,215,648 CHANGE FROM PRIOR QUARTER (5%) 10% 5% N/M 1% (51%) 1% CHANGE FROM PRIOR YEAR 10% 50% 14% N/M 20% (92%) 20% EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES 257,956 361,591 3,864 1,704 625,115 (15,055) 610,060 CHANGE FROM PRIOR QUARTER (1%) 11% (32%) N/M 3% (330%) 1% CHANGE FROM PRIOR YEAR 16% 53% (58%) N/M 36% 74% 52% INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX (3) -- 47,148 47,148 NET INCOME 442,419 46,018 488,437 CHANGE FROM PRIOR QUARTER 6% N/M 39% CHANGE FROM PRIOR YEAR 41% N/M 374% DILUTED EARNINGS PER COMMON SHARE (4) 0.53 0.05 0.58 CHANGE FROM PRIOR QUARTER 4% N/M 35% CHANGE FROM PRIOR YEAR 39% N/M 346%
FIRST QUARTER - FISCAL YEAR 2004
QUALCOMM RECONCILING EXCLUDING TOTAL SEGMENTS QCT(1)* QTL QWI(1)* ITEMS (2)* QSI QSI* QUALCOMM* - -------- ------- --- ------- ---------- --- ---- --------- REVENUES 748,378 353,421 138,308 (33,592) 1,206,515 59 1,206,574 EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES 260,477 324,673 5,667 16,038 606,855 (3,499) 603,356 LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX (3) -- (58,236) (58,236) NET INCOME (LOSS) 418,729 (66,436) 352,293 DILUTED EARNINGS PER COMMON SHARE (4) 0.51 (0.08) 0.43
SECOND QUARTER - FISCAL YEAR 2003
QUALCOMM RECONCILING EXCLUDING TOTAL SEGMENTS QCT(1)* QTL QWI(1)* ITEMS (2)* QSI QSI* QUALCOMM* - -------- ------- --- ------- ---------- --- ---- --------- REVENUES 646,513 260,110 127,356 (17,201) 1,016,778 351 1,017,129 EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES 221,696 236,192 9,194 (6,431) 460,651 (58,645) 402,006 LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX (3) -- (154,661) (154,661) NET INCOME (LOSS) 313,858 (210,842) 103,016 DILUTED EARNINGS PER COMMON SHARE (4) 0.38 (0.26) 0.13
SIX MONTHS - FISCAL YEAR 2004
QUALCOMM RECONCILING EXCLUDING TOTAL SEGMENTS QCT(1)* QTL QWI(1)* ITEMS (2)* QSI QSI* QUALCOMM* - -------- ------- --- ------- ---------- --- ---- --------- REVENUES 1,459,635 743,678 282,935 (64,114) 2,422,134 88 2,422,222 CHANGE FROM PRIOR YEAR 8% 44% 16% N/M 16% (86%) 16% EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES 518,433 686,264 9,531 17,742 1,231,970 (18,554) 1,213,416 CHANGE FROM PRIOR YEAR 2% 47% (32%) N/M 25% 88% 47% LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX (3) -- (11,088) (11,088) NET INCOME (LOSS) 861,148 (20,418) 840,730 DILUTED EARNINGS PER COMMON SHARE (4) 1.04 (0.02) 1.01 CHANGE FROM PRIOR YEAR 28% 95% 140%
SIX MONTHS - FISCAL YEAR 2003
QUALCOMM RECONCILING EXCLUDING TOTAL SEGMENTS QCT(1)* QTL QWI(1)* ITEMS (2)* QSI QSI* QUALCOMM* - -------- ------- --- ------- ---------- --- ---- --------- REVENUES 1,350,913 515,533 243,856 (25,560) 2,084,742 649 2,085,391 EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES 507,829 465,601 14,104 (4,583) 982,951 (156,518) 826,433 LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX (3) -- (189,646) (189,646) NET INCOME (LOSS) 658,576 (314,226) 344,350 DILUTED EARNINGS PER COMMON SHARE (4) 0.81 (0.38) 0.42
QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 7 of 19 - ---------- (1) During the second quarter of fiscal 2004, the Company reorganized its wholly-owned subsidiary, SnapTrack, Inc. (SnapTrack), a developer of wireless position location technology. The Company previously presented all of the revenues and operating results of SnapTrack in the QCT segment. As a result of the reorganization of SnapTrack, revenues and operating results related to SnapTrack's server software business (software for location-based services and applications) became part of the QIS division in the QWI segment. Revenues and operating results related to SnapTrack's client business (the gpsOne technology that is embedded with the integrated circuit products) remain with the QCT segment. Prior period segment information has been adjusted to conform to the new segment presentation. (2) 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. (3) During fiscal 2004, the Company sold its consolidated subsidiaries, the Vesper Operating Companies and TowerCo, and returned personal mobile service (SMP) licenses to Anatel, the telecommunications regulatory agency in Brazil. The results of operations of the Vesper Operating Companies and TowerCo, including gains and losses realized on the sales transactions and the SMP licenses, are presented as discontinued operations. The Company's statements of operations and cash flows for all prior periods have been adjusted to present the discontinued operations. (4) The sum of the earnings per share amounts may not equal total earnings per share due to rounding. * As adjusted. N/M - Not Meaningful BUSINESS SEGMENT HIGHLIGHTS QUALCOMM CDMA TECHNOLOGIES (QCT) - Shipped approximately 32 million Mobile Station Modem(TM) (MSM(TM)) phone chips to customers worldwide dUring the second quarter of fiscal 2004, compared to approximately 32 million units in the first quarter of fiscal 2004 and approximately 28 million units in the second quarter of fiscal 2003. Nearly 100 percent of the approximately 32 million MSMs shipped in the March 2004 quarter were 3G CDMA2000(R) 1X, 1xEV-DO and WCDMA (UMTS). - Shipped CSM(TM) infrastructure chips for 3G CDMA2000 1X and 1xEV-DO to support approximately 5.7 million equivalent voice channels, compared to approximately 4.6 million in the first quarter of fiscal 2004 and approximately 1.5 million in the second quarter of fiscal 2003. Equivalent voice channels are provided rather than actual chip shipments because our CSM infrastructure chips currently support from eight to 32 voice channels per chip. - Several leading manufacturers of telecommunications equipment including Hisense Group, Huawei Technologies, ZTE and Sierra Wireless, announced the selection of QUALCOMM's MSM6250(TM) chipset and systEm software for the design of multimode 3G WCDMA (UMTS) handsets and data cards, joining LG Electronics, Inc., Sanyo Electric and Toshiba Corporation who previously announced the selection of the MSM6250 chipset and software. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 8 of 19 - Announced the MSM6225(TM) chipset and system software to support data-centric and entry-level devices foR the emerging WCDMA (UMTS) market. Samples of the MSM6225 chipset are expected to ship in mid-2004. - Made several announcements supporting the integration of imaging graphics, audio and video in QCT's single-chip solution with partners including ATI to create a wireless 3D gaming platform, RealNetworks to enable the delivery of RealAudio and RealVideo content, Beatnik to support playback of synthetic music mobile application format content, and Coding Technologies for the delivery of high-fidelity audio at very low bit rates with integrated MPEG-4 AAC/ aacPlus. - Announced the integration of the H.264 video codec into our chipset solutions. - Announced plans to deliver QUALCOMM's first 90 nanometer (nm) low-power MSM solution in 2004 using Taiwan Semiconductor Manufacturing Company Ltd's 90nm low-power process technology. QUALCOMM TECHNOLOGY LICENSING (QTL) - Reported that licensees around the world are participating in the growing 3G CDMA market: o Forty-six subscriber licensees reported sales of CDMA2000 1X products and nine subscriber licensees reported sales of WCDMA (UMTS) products during the first quarter of fiscal 2004. o Fifteen infrastructure licensees reported sales of CDMA2000 1X products and eight infrastructure licensees reported sales of WCDMA (UMTS) products during the first quarter of fiscal 2004. o WCDMA (UMTS) royalties contributed approximately 12 percent of total royalties reported by licensees in the second quarter for sales in the first quarter of fiscal 2004. QUALCOMM WIRELESS & INTERNET GROUP (QWI) QUALCOMM INTERNET SERVICES (QIS) - Worldwide BREW(TM)-based application downloads continue to grow, reaching more than 100 million on a cumulative basis. Application downloads have doubled in six months and operators, publishers, developers and device manufacturers continue to realize growing revenues for wireless applications and services. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 9 of 19 - Announced the new QPoint(TM) solution, which leverages the power of the BREW solution and gpsOne(TM) hybRid Assisted GPS wireless location technology for mobile phones to provide the most complete server/client compatible mass-market location-based services solution available today. With the QPoint solution, QUALCOMM provides operators with flexible delivery options for location services, either through a hosted model or through channel partners. - Tata Teleservices, India's leading telecom service, announced plans to launch wireless applications and services based on the BREW system, as well as to offer push-to-chat services via QUALCOMM's BREWChat(TM) solution. - Made the first public demonstration of the QChat push-to-chat(TM) solution, which features a call set-up latency of less than one second. - Announced together with Iusacell, a provider of cellular telephony products and services in Mexico, a definitive agreement for Iusacell to deploy downloadable wireless applications and services based on the BREW solution. - Jointly announced with MSN the introduction of MSN Mobile services for the BREW system that will enable consumers to access MSN Hotmail and MSN Messenger services in a rich and familiar way via their BREW-enabled handsets. QUALCOMM WIRELESS BUSINESS SOLUTIONS(R)(QWBS) - Shipped approximately 11,200 OmniTRACS(R) units and related products in the second quarter of fiscal 2004, compared to approximately 10,900 in the first quarter of fiscal 2004 and 8,400 in the second quarter of fiscal 2003. This brings the cumulative total number of OmniTRACS and related product shipments to over 511,000 units shipped worldwide. - Announced that a fully automated driver productivity solution will be available by June 2004. The first phase of QUALCOMM's driver productivity solution provides fleets a stop management system with technology to automatically detect arrival and departure events at all significant stops a vehicle makes en route. The solution will also fully integrate with the industry's transportation management systems. - C.H. Robinson Worldwide Inc., one of North America's largest third-party logistics companies, has selected QUALCOMM's OmniOne(R)mobile communications system as its wireless workforce solution. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 10 of 19 CONFERENCE CALL QUALCOMM's second quarter fiscal 2004 earnings conference call will be broadcast live on April 21, 2004 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. A taped audio replay will be available via telephone on April 21, 2004 beginning at approximately 4:30 p.m. (PDT) through April 26, 2004 at 4:30 p.m. (PDT). 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 21187953. An audio replay of the conference call will be available on the Company's web site at www.qualcomm.com for two weeks following the live call. 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 investments that are unrelated to the Company's operational performance. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 11 of 19 The Company presents cash flow information excluding QSI and including marketable securities. The Company's management uses this non-GAAP presentation to analyze increases and decreases in certain of its liquid assets, comprised of cash, cash equivalents and marketable securities. Management views certain marketable securities as liquid assets available to fund operations, which result from cash management strategies designed to increase yields. However, these instruments do not meet the definition of cash equivalents in accordance with Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows" and must be excluded from the GAAP statements of cash flows. Since the GAAP statements of cash flows reconcile the Company's beginning and ending cash and cash equivalents balances, the purchases and sales of marketable securities are presented as inflows and outflows. For internal analysis of the Company's cash position, management does not view these transactions as inflows and outflows from the business, but as cash management transactions. If required, such investments could be settled relatively quickly as additional cash resources are needed. The Company believes that this non-GAAP presentation is a helpful measure of the Company's liquidity. 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 and between total QUALCOMM cash flow and cash, cash equivalents and marketable securities excluding the QSI segment are presented herein. 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: the rate of development, deployment and commercial acceptance of CDMA based networks and CDMA based technology, including CDMA2000 1X and WCDMA (UMTS), both domestically and internationally; our dependence on major customers and licensees; fluctuations in the demand for CDMA based products, services or applications; foreign currency fluctuations; strategic loans, investments and transactions the we have or may pursue; dependence on third party manufacturers and suppliers; our ability to maintain and improve operational efficiencies and profitability; developments in current and future litigation as well as other risks detailed from time-to-time in the Company's SEC reports. ### QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 12 of 19 QUALCOMM(R), QCT(R), Mobile Station Modem(TM), MSM(TM), CSM(TM), MSM5100(TM), MSM5500(TM), MSM6000(TM), MSM6200(TM), MSM6250(TM), MSM6225(TM), MSM6500(TM), MediaFLO(TM), BREW(TM), BREWChat(TM), QChat(R), QPoint(TM), gpsOne(TM), QUALCOMM Wireless Business Solutions(R), OmniTRACS(R), OmniOne(R) and GlobalTRACS(R) are trademarks and/or service marks of QUALCOMM Incorporated. All other trademarks are the property of their respective owners. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 13 of 19 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 28, 2004 ----------------------------------------------- EXCLUDING TOTAL QSI QSI QUALCOMM ----------- ----------- ----------- Revenues: Equipment and services $ 819,533 $ 29 $ 819,562 Licensing and royalty fees 396,086 -- 396,086 ----------- ----------- ----------- 1,215,619 29 1,215,648 ----------- ----------- ----------- Operating expenses: Cost of equipment and services revenues 335,135 -- 335,135 Research and development 169,023 -- 169,023 Selling, general and administrative 134,804 3,401 138,205 Amortization of other acquisition-related intangible assets 1,631 -- 1,631 Other (21) (4,895) (4,916) ----------- ----------- ----------- Total operating expenses 640,572 (1,494) 639,078 ----------- ----------- ----------- Operating income 575,047 1,523 576,570 Interest expense (580) -- (580) Investment income (expense), net 50,648(a) (16,578)(d) 34,070 ----------- ----------- ----------- Income (loss) from continuing operations before income taxes 625,115 (15,055) 610,060 Income tax (expense) benefit (182,696)(c) 13,925 (168,771)(c) ----------- ----------- ----------- Income (loss) from continuing operations 442,419 (1,130) 441,289 Income from discontinued operations, net of income taxes (b) -- 47,148 47,148 ----------- ----------- ----------- Net income $ 442,419 $ 46,018 $ 488,437 =========== =========== =========== Diluted earnings (loss) per common share from continuing operations (e) $ 0.53 $ 0.00 $ 0.53 =========== =========== =========== Diluted earnings per common share from discontinued operations (e) $ -- $ 0.05 $ 0.05 =========== =========== =========== Diluted earnings per common share (e) $ 0.53 $ 0.05 $ 0.58 =========== =========== =========== Shares used in per share calculations: Diluted 835,571 835,571 835,571 =========== =========== ===========
(a) Includes $44 million in interest income related to cash, cash equivalents and marketable securities, which are not part of the Company's strategic investment portfolio. (b) The results of operations related to the Vesper Operating Companies, TowerCo and the SMP licenses, including gains and losses realized on sales transactions, are presented as discontinued operations. (c) The fiscal year 2004 estimated effective tax rate for continuing operations for both total QUALCOMM and QUALCOMM excluding QSI is approximately 30%. (d) Includes $21 million equity in losses of investees and $1 million in other-than-temporary losses on marketable securities, partially offset by $3 million in realized gains on investments and $2 million gain on derivatives. (e) The sum of the earnings per share amounts may not equal total earnings per share due to rounding. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 14 of 19 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 28, 2004 ----------------------------------------------- EXCLUDING TOTAL QSI QSI QUALCOMM ----------- ----------- ----------- Revenues: Equipment and services $ 1,672,444 $ 88 $ 1,672,532 Licensing and royalty fees 749,690 -- 749,690 ----------- ----------- ----------- 2,422,134 88 2,422,222 ----------- ----------- ----------- Operating expenses: Cost of equipment and services revenues 704,865 -- 704,865 Research and development 318,961 -- 318,961 Selling, general and administrative 251,313 8,968 260,281 Amortization of other acquisition-related intangible assets 3,756 -- 3,756 Other (42) (10,551) (10,593) ----------- ----------- ----------- Total operating expenses 1,278,853 (1,583) 1,277,270 ----------- ----------- ----------- Operating income 1,143,281 1,671 1,144,952 Interest expense (904) -- (904) Investment income (expense), net 89,593(a) (20,225)(d) 69,368 ----------- ----------- ----------- Income (loss) from continuing operations before income taxes 1,231,970 (18,554) 1,213,416 Income tax (expense) benefit (370,822)(c) 9,224 (361,598)(c) ----------- ----------- ----------- Income (loss) from continuing operations 861,148 (9,330) 851,818 Loss from discontinued operations, net of income taxes (b) -- (11,088) (11,088) ----------- ----------- ----------- Net income (loss) $ 861,148 $ (20,418) $ 840,730 =========== =========== =========== Diluted earnings (loss) per common share from continuing operations (e) $ 1.04 $ (0.01) $ 1.02 =========== =========== =========== Diluted loss per common share from discontinued operations (e) $ -- $ (0.01) $ (0.01) =========== =========== =========== Diluted earnings (loss) per common share (e) $ 1.04 $ (0.02) $ 1.01 =========== =========== =========== Shares used in per share calculations: Diluted 831,391 831,391 831,391 =========== =========== ===========
(a) Includes $79 million in interest income related to cash, cash equivalents and marketable securities, which are not part of the Company's strategic investment portfolio. (b) The results of operations related to the Vesper Operating Companies, TowerCo and the SMP licenses, including gains and losses realized on sales transactions, are presented as discontinued operations. (c) The fiscal year 2004 estimated effective tax rate for continuing operations for both total QUALCOMM and QUALCOMM excluding QSI is approximately 30%. (d) Includes $36 million equity in losses of investees and $1 million in other-than-temporary losses on marketable securities, partially offset by $12 million in interest income, $4 million in realized gains on investments and $1 million gain on derivatives. (e) The sum of the earnings per share amounts may not equal total earnings per share due to rounding. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 15 of 19 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 28, 2004 ----------------------------------- EXCLUDING TOTAL QSI QSI QUALCOMM --------- --------- --------- Earnings before taxes, depreciation, amortization and other adjustments (1) $ 637,021 $ 7,269 $ 644,290 Working capital changes and taxes paid (2) 131,796 949 132,745 --------- --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 768,817 8,218 777,035 Capital expenditures (54,461) (7) (54,468) --------- --------- --------- FREE CASH FLOW (NET CASH PROVIDED BY OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES) 714,356 8,211 722,567 Net additional share capital 99,890 -- 99,890 Proceeds from put options 5,103 -- 5,103 Dividends paid (56,519) -- (56,519) Net collections of finance receivables 729 -- 729 Other investments (3,489) (2,874) (6,363) Other items (1,143) (10,940) (12,083) Changes in fair value and other changes to marketable securities 3,515 28,052 31,567 Marketable securities pending settlement payment (28,498) -- (28,498) Net cash provided by discontinued operations -- 38,915 38,915 Transfer from QSI (3) 54,628 (54,628) -- Transfer to QSI (4) (16,125) 16,125 -- --------- --------- --------- NET INCREASE IN CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (5) $ 772,447 $ 22,861 $ 795,308 ========= ========= ========= (1) Reconciliation to GAAP: Net income (loss) from continuing operations $ 442,419 $ (1,130) $ 441,289 Non-cash adjustments (a) 219,254 11,521 230,775 Net realized gains on marketable securities and other investments (7,683) (3,122) (10,805) Taxes refunded (16,969) -- (16,969) --------- --------- --------- Earnings (loss) before taxes, depreciation, amortization and other adjustments $ 637,021 $ 7,269 $ 644,290 ========= ========= ========= (2) Reconciliation to GAAP: Increase (decrease) in cash resulting from changes in working capital $ 114,827 $ 949 $ 115,776 Taxes refunded 16,969 -- 16,969 --------- --------- --------- Working capital changes and taxes paid $ 131,796 $ 949 $ 132,745 ========= ========= ========= (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) $ 150,820 $ (229) $ 150,591 Plus: Net purchase (proceeds) of marketable securities 646,610 (4,962) 641,648 Plus: Net increase in fair value and other changes to marketable securities 3,515 28,052 31,567 Plus: Net increase in marketable securities pending settlement receipt (28,498) -- (28,498) --------- --------- --------- Net increase in cash, cash equivalents and marketable securities $ 772,447 $ 22,861 $ 795,308 ========= ========= =========
(a) See detail following the six month cash flow. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 16 of 19 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 28, 2004 ----------------------------------------- EXCLUDING TOTAL QSI QSI QUALCOMM ----------- ----------- ----------- Earnings before taxes, depreciation, amortization and other adjustments (1) $ 1,277,581 $ 15,944 $ 1,293,525 Working capital changes and taxes paid (2) (51,618) 7,260 (44,358) ----------- ----------- ----------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,225,963 23,204 1,249,167 Capital expenditures (117,545) (16) (117,561) ----------- ----------- ----------- FREE CASH FLOW (NET CASH PROVIDED BY OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES) 1,108,418 23,188 1,131,606 Net additional share capital 131,509 -- 131,509 Proceeds from put options 5,103 -- 5,103 Dividends paid (112,562) -- (112,562) Net collections of finance receivables 1,153 193,308 194,461 Other investments (16,058) (33,900) (49,958) Other items (2,181) (27,547) (29,728) Changes in fair value and other changes to marketable securities 12,321 26,131 38,452 Marketable securities pending settlement payment (14,513) -- (14,513) Net cash used by discontinued operations -- (20,257) (20,257) Transfer from QSI (3) 261,674 (261,674) -- Transfer to QSI (4) (109,954) 109,954 -- ----------- ----------- ----------- NET INCREASE IN CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (5) $ 1,264,910 $ 9,203 $ 1,274,113 =========== =========== =========== (1) Reconciliation to GAAP: Net income (loss) from continuing operations $ 861,148 $ (9,330) $ 851,818 Non-cash adjustments (b) 432,301 29,836 462,137 Net realized gains on marketable securities and other investments (11,007) (4,562) (15,569) Taxes refunded (4,861) -- (4,861) ----------- ----------- ----------- Earnings before taxes, depreciation, amortization and other adjustments $ 1,277,581 $ 15,944 $ 1,293,525 =========== =========== =========== (2) Reconciliation to GAAP: (Decrease) increase in cash resulting from changes in working capital $ (56,479) $ 7,260 $ (49,219) Taxes refunded 4,861 -- 4,861 ----------- ----------- ----------- Working capital changes and taxes paid $ (51,618) $ 7,260 $ (44,358) =========== =========== =========== (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 decrease in cash and cash equivalents (GAAP) $ (90,094) $ (8,482) $ (98,576) Plus: Net purchase (proceeds) of marketable securities 1,357,196 (8,446) 1,348,750 Plus: Net increase in fair value and other changes to marketable securities 12,321 26,131 38,452 Plus: Net increase in marketable securities pending settlement receipt (14,513) -- (14,513) ----------- ----------- ----------- Net increase in cash, cash equivalents and marketable securities $ 1,264,910 $ 9,203 $ 1,274,113 =========== =========== ===========
(b) See detail on the following page. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 17 of 19 QUALCOMM INCORPORATED SUPPLEMENTAL DETAIL TO THE CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES (IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED MARCH 28, 2004 ---------------------------------- EXCLUDING TOTAL QSI QSI QUALCOMM --------- --------- --------- (a) Non-cash adjustments are comprised of: Depreciation and amortization $ 38,287 $ 1,325 $ 39,612 Other-than-temporary losses on marketable securities and other investments -- 820 820 Equity in losses of investees 306 20,593 20,899 Non-cash income tax expense (benefit) 171,573 (13,925) 157,648 Other non-cash charges and (credits) 9,088 2,708 11,796 --------- --------- --------- Total non-cash adjustments $ 219,254 $ 11,521 $ 230,775 ========= ========= =========
SIX MONTHS ENDED MARCH 28, 2004 ---------------------------------- EXCLUDING TOTAL QSI QSI QUALCOMM --------- --------- --------- (b) Non-cash adjustments are comprised of: Depreciation and amortization $ 77,631 $ 2,527 $ 80,158 Other-than-temporary losses on marketable securities and other investments -- 1,520 1,520 Equity in losses of investees 592 36,377 36,969 Non-cash income tax expense (benefit) 347,590 (9,223) 338,367 Other non-cash charges and (credits) 6,488 (1,365) 5,123 --------- --------- --------- Total non-cash adjustments $ 432,301 $ 29,836 462,137 ========= ========= =========
QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 18 of 19 QUALCOMM INCORPORATED CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) ASSETS
QUALCOMM EXCLUDING QSI QSI (a) QUALCOMM QUALCOMM MARCH 28, MARCH 28, MARCH 28, SEPTEMBER 28, 2004 2004 2004 2003 ----------- ----------- ----------- ------------- Current assets: Cash and cash equivalents $ 1,946,518 $ -- $ 1,946,518 $ 2,045,094 Marketable securities 3,601,400 58,511 3,659,911 2,516,003 Accounts receivable, net 596,708 76 596,784 483,793 Inventories, net 97,041 -- 97,041 110,351 Deferred tax assets (a) 471,180 -- 471,180 611,536 Other current assets 141,578 1,454 143,032 181,987 ----------- ----------- ----------- ------------- Total current assets 6,854,425 60,041 6,914,466 5,948,764 Marketable securities 914,328 125,107 1,039,435 810,654 Property, plant and equipment, net 549,923 -- 549,923 622,265 Goodwill, net 355,622 -- 355,622 346,464 Deferred tax assets (a) 360,141 -- 360,141 406,746 Other assets 177,918 251,989 429,907 687,543 ----------- ----------- ----------- ------------- Total assets $ 9,212,357 $ 437,137 $ 9,649,494 $ 8,822,436 =========== =========== =========== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 212,736 $ 362 $ 213,098 $ 195,065 Payroll and other benefits related liabilities 138,938 506 139,444 141,000 Unearned revenue 172,032 5 172,037 174,271 Dividends payable 80,890 -- 80,890 -- Current portion of long-term debt -- -- -- 102,625 Other current liabilities 200,186 7,366 207,552 195,241 ----------- ----------- ----------- ------------- Total current liabilities 804,782 8,239 813,021 808,202 Unearned revenue 200,784 -- 200,784 236,732 Long-term debt -- -- -- 123,302 Other liabilities 79,380 -- 79,380 55,628 ----------- ----------- ----------- ------------- Total liabilities 1,084,946 8,239 1,093,185 1,223,864 ----------- ----------- ----------- ------------- Stockholders' equity: Preferred stock, $0.0001 par value -- -- -- -- Common stock, $0.0001 par value 82 -- 82 81 Paid-in capital 6,557,273 -- 6,557,273 6,324,971 Retained earnings 1,944,567 -- 1,944,567 1,297,289 Accumulated other comprehensive (loss) income (27,175) 81,562 54,387 (23,769) ----------- ----------- ----------- ------------- Total stockholders' equity 8,474,747 81,562 8,556,309 7,598,572 ----------- ----------- ----------- ------------- Total liabilities and stockholders' equity $ 9,559,693 $ 89,801 $ 9,649,494 $ 8,822,436 =========== =========== =========== =============
(a) Deferred tax assets and liabilities are not allocated to the Company's segments. Net deferred tax assets and liabilities, if any, of subsidiaries that are consolidated by QSI are reflected as QSI assets and liabilities. QUALCOMM Announces Second Quarter Fiscal 2004 Results Page 19 of 19 QUALCOMM INCORPORATED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED -------------------------- -------------------------- MARCH 28, MARCH 30, MARCH 28, MARCH 30, 2004 2003(a) 2004 2003(a) ----------- ----------- ----------- ----------- Revenues: Equipment and services $ 819,562 $ 763,568 $ 1,672,532 $ 1,592,124 Licensing and royalty fees 396,086 253,561 749,690 493,267 ----------- ----------- ----------- ----------- 1,215,648 1,017,129 2,422,222 2,085,391 ----------- ----------- ----------- ----------- Operating expenses: Cost of equipment and services revenues 335,135 341,205 704,865 692,682 Research and development 169,023 131,801 318,961 244,280 Selling, general and administrative 138,205 121,323 260,281 238,345 Amortization of acquisition-related intangible assets 1,631 1,964 3,756 3,936 Other (4,916) -- (10,593) -- ----------- ----------- ----------- ----------- Total operating expenses 639,078 596,293 1,277,270 1,179,243 ----------- ----------- ----------- ----------- Operating income 576,570 420,836 1,144,952 906,148 Interest expense (580) (383) (904) (1,731) Investment income (expense), net 34,070 (18,447) 69,368 (77,984) ----------- ----------- ----------- ----------- Income from continuing operations before income taxes 610,060 402,006 1,213,416 826,433 Income tax expense (168,771) (144,329) (361,598) (292,437) ----------- ----------- ----------- ----------- Income from continuing operations 441,289 257,677 851,818 533,996 ----------- ----------- ----------- ----------- Income (loss) from discontinued operations 47,148 (154,661) (11,088) (189,646) ----------- ----------- ----------- ----------- Net income $ 488,437 $ 103,016 $ 840,730 $ 344,350 =========== =========== =========== =========== Basic earnings per common share from continuing operations $ 0.55 $ 0.33 $ 1.06 $ 0.68 Basic earnings (loss) per common share from discontinued operations 0.06 (0.20) (0.01) (0.24) ----------- ----------- ----------- ----------- Basic earnings per common share $ 0.61 $ 0.13 $ 1.05 $ 0.44 =========== =========== =========== =========== Diluted earnings per common share from continuing operations $ 0.53 $ 0.32 $ 1.02 $ 0.65 Diluted earnings (loss) per common share from discontinued operations 0.05 (0.19) (0.01) (0.23) ----------- ----------- ----------- ----------- Diluted earnings per common share $ 0.58 $ 0.13 $ 1.01 $ 0.42 =========== =========== =========== =========== Shares used in per share calculations: Basic 806,283 789,026 803,324 786,153 =========== =========== =========== =========== Diluted 835,751 818,088 831,391 816,916 =========== =========== =========== =========== Dividends per share paid $ 0.07 $ -- $ 0.14 $ -- =========== =========== =========== =========== Dividends per share announced $ 0.10 $ 0.05 $ 0.24 $ 0.05 =========== =========== =========== ===========
(a) As adjusted to present results related to Vesper, TowerCo and SMP licenses as discontinued operations.