QUALCOMM Contact: | ||
Bill Davidson | ||
Vice President, Investor Relations | ||
1-(858) 658-4813 (ph) 1-(858) 651-9303 (fax) | ||
e-mail: ir@qualcomm.com |
| Revenues: $1.56 billion, up 40 percent year-over-year and 15 percent sequentially. | |
| Net income: $538 million, up 37 percent year-over-year and down 4 percent sequentially. | |
| Diluted earnings per share: $0.32, up 39 percent year-over-year and down 3 percent sequentially. | |
| Effective tax rate: 32 percent. | |
| Operating cash flow: $945 million, up 23 percent year-over year; 61 percent of revenue. | |
(Defined as net cash provided by operating activities.) | ||
| Return of capital to stockholders: paid $147 million, or $0.09 per share, in cash dividends, up 29 percent year-over-year. |
| Revenues: $5.67 billion, up 16 percent year-over-year. | |
| Net income: $2.14 billion, up 25 percent year-over-year. | |
| Diluted earnings per share: $1.26, up 22 percent year-over-year. | |
| Effective tax rate: 24 percent. |
1 | The New Method of recording royalties is based solely on reports received from licensees for royalty bearing sales of equipment in the prior quarter. The Company adopted this New Method during the fourth quarter of fiscal 2004 on a prospective basis. Under the Prior Method of recording royalties, the Company recorded an estimate of earned royalties in the quarter preceding its receipt of licensee reports. As a result of the change, GAAP results for the fourth quarter of fiscal 2004 reflect only partial economic performance of the Companys licensing business as royalty revenue that would have been recognized in the fourth quarter of fiscal 2004 was recognized in the first quarter of fiscal 2005. Results under the New Method are presented herein under pro forma results to assist investors with evaluating financial performance on a comparable basis. |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 2 of 22 |
| Operating cash flow: $2.69 billion, up 8 percent year-over-year; 47 percent of revenue. | |
| Return of capital to stockholders: $1.48 billion; this includes $524 million of cash dividends, or $0.32 per share, and $953 million to repurchase 27.1 million shares of our common stock. |
| Revenues: $1.56 billion, up 14 percent year-over-year and 15 percent sequentially. | |
| Net income: $543 million, up 9 percent year-over-year and 17 percent sequentially. | |
| Diluted earnings per share: $0.32, up 7 percent year-over-year and 14 percent sequentially. | |
| Effective tax rate: 33 percent. | |
| Free cash flow: $838 million, up 31 percent year-over-year; 54 percent of revenue. (Defined as net cash provided by operating activities less capital expenditures.) |
| Revenues: $5.67 billion, up 13 percent year-over-year. | |
| Net income: $1.97 billion, up 9 percent year-over-year. | |
| Diluted earnings per share: $1.16, up 8 percent year-over-year, excludes $0.06 per share attributable to the QSI segment and $0.04 per share attributable to the one-time tax benefits recorded in the second and third quarters of fiscal 2005. | |
| Effective tax rate: 30 percent. | |
| Free cash flow: $2.24 billion, up 4 percent year-over-year; 39 percent of revenue. |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 3 of 22 |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 4 of 22 |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 5 of 22 |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 6 of 22 |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 7 of 22 |
Current Guidance | ||||
Q105 | Q106 | |||
Results | Estimates | |||
QUALCOMM Pro Forma |
||||
Revenues |
$1.39B | $1.67B-$1.77B | ||
Year-over-year change |
increase 20%-27% | |||
Diluted earnings per share (EPS) |
$0.28 | $0.36-$0.38 | ||
Year-over-year change |
increase 29%-36% | |||
Total QUALCOMM |
||||
Revenues
|
$1.39B | $1.67B-$1.77B | ||
Year-over-year change
|
increase 20%-27% | |||
Diluted earnings per share (EPS)
|
$0.30 | $0.30-$0.32 | ||
Year-over-year change
|
increase 0%-7% | |||
EPS attributable to QSI
|
$0.02 | ($0.02) | ||
EPS attributable to share-based compensation
|
n/a | ($0.04) | ||
Metrics |
||||
MSM Shipments
|
approx. 39M | 46M-48M | ||
CDMA/WCDMA handset units shipped
|
approx. 40M* | 51M-53M* | ||
CDMA/WCDMA handset unit wholesale average selling price
|
approx. $212* | $206* |
Current Guidance | ||||
FY 2005 | FY 2006 | |||
Results | Estimates | |||
QUALCOMM Pro Forma |
||||
Revenues
|
$5.67B | $6.7B-$7.1B | ||
Year-over-year change
|
increase 18%-25% | |||
Diluted earnings per share (EPS)
|
$1.16 | $1.43-$1.47 | ||
Year-over-year change
|
increase 23%-27% | |||
Total QUALCOMM |
||||
Revenues
|
$5.67B | $6.7B-$7.1B | ||
Year-over-year change
|
increase 18%-25% | |||
Diluted earnings per share (EPS)
|
$1.26 | $1.19-$1.23 | ||
Year-over-year change
|
decrease 2%-6% | |||
EPS attributable to QSI
|
$0.06 | ($0.06) | ||
EPS attributable to share-based compensation
|
n/a | ($0.18) | ||
EPS attributable to tax benefit related to prior year
|
$0.04 | n/a | ||
Metrics |
||||
Fiscal year* CDMA/WCDMA handset unit wholesale average selling price
|
approx. $215 | $210 |
Prior Guidance | Current Guidance | Current Guidance | ||||||||||
Calendar 2005 | Calendar 2005 | Calendar 2006 | ||||||||||
CDMA/WCDMA handset unit shipments | Estimates | Estimates | Estimates | |||||||||
March quarter actuals |
approx. 43M | approx. 43M | not provided | |||||||||
June quarter actuals |
approx. 48M | approx. 48M | not provided | |||||||||
September quarter |
not provided | 51M-53M | not provided | |||||||||
December quarter |
not provided | not provided | not provided | |||||||||
Calendar year range |
198M-208M | 200M-205M | 255M-270M | |||||||||
Midpoint | Midpoint | Midpoint | ||||||||||
CDMA/WCDMA units |
203M | 202M | 262M | |||||||||
CDMA units |
158M | 158M | 176M | |||||||||
WCDMA units |
45M | 44M | 86M |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 8 of 22 |
Reconciling | QUALCOMM | Total | ||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (2) | Pro Forma | QSI | QUALCOMM | |||||||||||||||||||||
Revenues |
$ | 912 | $ | 497 | $ | 170 | $ | (19 | ) | $ | 1,560 | $ | | $ | 1,560 | |||||||||||||
Change
from prior year (New Method for QTL (3)) |
7 | % | 23 | % | 10 | % | N/M | 14 | % | 14 | % | |||||||||||||||||
Change from prior quarter |
19 | % | 11 | % | 4 | % | N/M | 15 | % | 15 | % | |||||||||||||||||
Earnings (loss) from continuing operations before taxes |
$ | 266 | $ | 451 | $ | 21 | $ | 75 | $ | 813 | $ | (27 | ) | $ | 786 | |||||||||||||
Change
from prior year (New Method for QTL (3)) |
(3 | %) | 24 | % | 75 | % | N/M | 21 | % | N/M | 15 | % | ||||||||||||||||
Change from prior quarter |
43 | % | 11 | % | 75 | % | N/M | 24 | % | N/M | 15 | % | ||||||||||||||||
Net income
(loss) |
$ | 543 | $ | (5 | ) | $ | 538 | |||||||||||||||||||||
Change
from prior year (New Method for QTL (3)) |
9 | % | N/M | (2 | %) | |||||||||||||||||||||||
Change from prior quarter |
17 | % | N/M | (4 | %) | |||||||||||||||||||||||
Diluted earnings per common share |
$ | 0.32 | $ | | $ | 0.32 | ||||||||||||||||||||||
Change from prior year (New Method for QTL (3)) |
7 | % | N/M | 0 | % | |||||||||||||||||||||||
Change from prior quarter |
14 | % | N/M | (3 | %) |
Reconciling | QUALCOMM | Tax | Total | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (2) | Pro Forma | Adjustment (4) | QSI | QUALCOMM | ||||||||||||||||||||||||
Revenues |
$ | 766 | $ | 448 | $ | 164 | $ | (20 | ) | $ | 1,358 | $ | | $ | | $ | 1,358 | |||||||||||||||
Earnings from continuing operations before taxes |
186 | 407 | 12 | 51 | 656 | | 30 | 686 | ||||||||||||||||||||||||
Net income |
465 | 16 | 79 | 560 | ||||||||||||||||||||||||||||
Diluted earnings per common share |
$ | 0.28 | $ | 0.01 | $ | 0.05 | $ | 0.33 |
Reconciling | QUALCOMM | Total | ||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (2) | Pro Forma | QSI | QUALCOMM | |||||||||||||||||||||
Revenues |
$ | 865 | $ | 400 | $ | 159 | $ | (34 | ) | $ | 1,390 | $ | | $ | 1,390 | |||||||||||||
Earnings from continuing operations before taxes |
242 | 358 | 16 | 48 | 664 | 40 | 704 | |||||||||||||||||||||
Net income |
474 | 39 | 513 | |||||||||||||||||||||||||
Diluted earnings per common share |
$ | 0.28 | $ | 0.02 | $ | 0.30 |
New Method* | Reconciling | QUALCOMM | ||||||||||||||||||
Segments | QCT (1)* | QTL (3) | QWI (1)* | Items (1)(2)* | Pro Forma (1)(3)* | |||||||||||||||
Revenues |
$ | 850 | $ | 404 | $ | 155 | $ | (38 | ) | $ | 1,371 | |||||||||
Earnings from continuing operations before taxes |
273 | 364 | 12 | 24 | 673 | |||||||||||||||
Net income |
499 | |||||||||||||||||||
Diluted earnings per common share |
$ | 0.30 |
Reconciling | QUALCOMM | Tax | ||||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (2) | Pro Forma | Adjustments (4)(5) | QSI | Total QUALCOMM | ||||||||||||||||||||||||
Revenues |
$ | 3,290 | $ | 1,839 | $ | 644 | $ | (100 | ) | $ | 5,673 | $ | | $ | | $ | 5,673 | |||||||||||||||
Change from prior year (New Method for QTL (3)) |
6 | % | 24 | % | 13 | % | N/M | 13 | % | 13 | % | |||||||||||||||||||||
Earnings from continuing operations before taxes |
$ | 852 | $ | 1,663 | $ | 57 | $ | 227 | $ | 2,799 | $ | | $ | 10 | $ | 2,809 | ||||||||||||||||
Change from prior year (New Method for QTL (3)) |
(19 | %) | 24 | % | 200 | % | 177 | % | 12 | % | N/M | 14 | % | |||||||||||||||||||
Net income |
$ | 1,970 | $ | 71 | $ | 102 | $ | 2,143 | ||||||||||||||||||||||||
Change from prior year (New Method for QTL (3)) |
9 | % | N/M | N/M | 18 | % | ||||||||||||||||||||||||||
Diluted earnings per common share |
$ | 1.16 | $ | 0.04 | $ | 0.06 | $ | 1.26 | ||||||||||||||||||||||||
Change from prior year (New Method for QTL (3)) |
8 | % | N/M | N/M | 17 | % |
New Method* | Reconciling | QUALCOMM | ||||||||||||||||||
Segments | QCT (1)* | QTL (3) | QWI (1)* | Items (1)(2)* | Pro Forma (1)(3)* | |||||||||||||||
Revenues |
$ | 3,111 | $ | 1,483 | $ | 571 | $ | (133 | ) | $ | 5,031 | |||||||||
Earnings from continuing operations before taxes |
1,048 | 1,346 | 19 | 82 | 2,495 | |||||||||||||||
Net income |
1,800 | |||||||||||||||||||
Diluted earnings per common share |
$ | 1.07 |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 9 of 22 |
(1) | During the first quarter of fiscal 2005, the Company reorganized its MediaFLO USA business into the QSI segment. The operating expenses related to the MediaFLO USA business were included in reconciling items through the end of fiscal 2004. Also during the first quarter of fiscal 2005, the Company reorganized a division in the QWI segment that develops and sells test tools into 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 not allocated to the segments for management reporting purposes, unallocated net investment income, non-reportable segment results and the elimination of intercompany profit. | |
(3) | QTLs results in the fourth quarter of fiscal 2004 reflect the Companys decision to make the prospective change to the New Method of recording royalties based solely on reports received from licensees for royalty bearing sales of equipment in the prior quarter. This change had the one-time effect of reducing royalty revenues in the fourth quarter of fiscal 2004. Results using the New Method of recording royalties are presented for prior periods to illustrate the differences between the Prior Method of recording royalties and the New Method implemented during the fourth quarter of fiscal 2004. The QTL percentage increases over the prior year quarter on a GAAP basis are as follows: Q4 Revenues, 229% increase; Q4 EBT, 306% increase; year to date revenues, 38% increase; year to date EBT, 39% increase. | |
(4) | During the second quarter of fiscal 2005, the Company decreased its estimate of R&D costs allocable to the Companys foreign operations under an intercompany cost sharing agreement. Due to this change in estimate, the effective tax rate in the second quarter for total QUALCOMM includes a $55 million benefit, or $0.03 diluted earnings per share, related to fiscal 2004 and a $17 million benefit, or $0.01 diluted earnings per share, related to the first quarter of fiscal 2005. For fiscal 2005 pro forma presentation, results have been adjusted to exclude the tax benefit attributable to fiscal 2004. | |
(5) | During the third quarter of fiscal 2005, the Company made an election to compute its California tax on the basis of its U.S. operations only, which resulted in a $38 million tax benefit. Our effective tax rate in the third quarter of fiscal 2005 for total QUALCOMM excluding QSI includes a $16 million tax benefit, or $0.01 diluted earnings per share, for this California tax election related to fiscal 2004. For fiscal 2005 pro forma presentation, results have been adjusted to exclude the tax benefit attributable to fiscal 2004. |
| QCT shipped approximately 40 million MSM chips to customers worldwide during the fourth quarter of fiscal 2005, compared to approximately 39 million units in the same quarter of fiscal 2004 and approximately 36 million units in the third quarter of fiscal 2005. A record quantity for any single quarter, the years cumulative total is also a record with 151 million MSM chips shipped. | |
| QCT announced its second billion chips shipped since the Companys first CDMA solution shipped in 1996. The second billion follow only two years after the first billion were shipped over a period of 8 years from 1996 to 2003. | |
| QCTs CDMA2000 and WCDMA products continue to gain traction worldwide. The highly-integrated, multimedia-rich MSM6500 and MSM6550 solutions for 1xEV-DO networks power more than 120 handset models around the world, and more than 30 wireless device manufacturers have selected QCTs WCDMA/HSDPA chipsets for more than 110 models that are either in design or commercially available. |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 10 of 22 |
| QCTs power management portfolio expands to strengthen offerings for all market segments. The PM6620 provides a cost-effective power management option for chipsets from the Value Platform, while the PM6630 and PM6640 reinforce the Multimedia Platform of integrated solutions. | |
| QCT further expanded its wireless reach by providing chipsets to data card providers for embedded modules in portable computing devices, with three embedded models currently available. The initial chipset utilized in the embedded modules was the MSM6500, allowing devices to utilize 1xEV-DO wireless broadband capabilities on laptops. Other customers have announced plans for both 1xEV-DO and HSDPA enabled-devices. |
| More than 130 major wireless equipment manufacturers are now licensed by QUALCOMM for CDMA2000 products. | |
| More than 60 major wireless equipment manufacturers are now licensed by QUALCOMM for WCDMA and/or TD-SCDMA products. | |
| Licensee information for the third quarter of fiscal 2005 as reported by licensees in the fourth quarter of fiscal 2005: |
° | We estimate WCDMA royalties contributed approximately 41 percent of total royalties reported compared to approximately 26 percent in the year ago quarter and approximately 36 percent reported in the prior quarter. | ||
° | Worldwide shipments of approximately 48 million CDMA2000 and WCDMA subscriber units at an average selling price of approximately $213 were reported. | ||
° | Forty-six subscriber licensees reported sales of CDMA2000 1X products and 17 reported sales of WCDMA products. | ||
° | Twelve infrastructure licensees reported sales of CDMA2000 1X products and 12 reported sales of WCDMA products. |
| As of September 2005, 56 wireless operators were offering BREW services in 29 countries, including customers acquired related to the ELATA acquisition. As of June 2005, BREW publishers and developers have earned more than $350 million to date from the sale of wireless applications and services developed for the BREW solution, compared to the more than $200 million announced in October 2004. |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 11 of 22 |
| Through September 2005, three operators, including ALLTEL, have entered into agreements to license the BREW uiOne user interface offering. | |
| In August 2005, QUALCOMM completed the acquisition of ELATA, Ltd. (ELATA), a developer of mobile content delivery and device management software systems, for a total of approximately $57 million in cash. The acquisition of ELATA will enable QUALCOMM to offer a unified mobile content delivery system to operators who desire an enhanced framework for managing, delivering and marketing rich wireless content. The ELATA single service delivery framework has become part of QUALCOMMs family of BREW product offerings and is being marketed under the brand name deliveryOne. |
| QWBS shipped nearly 11,000 satellite-based systems (OmniTRACS, EutelTRACS and TruckMAIL) in the fourth quarter of fiscal 2005 compared to nearly 13,900 in the fourth quarter of fiscal 2004 and approximately 13,800 in the third quarter of fiscal 2005. This brings the cumulative total satellite-based systems shipped worldwide to more than 566,000. | |
| QWBS shipped nearly 17,500 terrestrial-based systems (OmniExpress, GlobalTRACS and T2 Untethered TrailerTRACS) in the fourth quarter of fiscal 2005 compared to nearly 4,900 terrestrial-based systems in the fourth quarter of fiscal 2004 and more than 19,600 terrestrial-based systems in the third quarter of fiscal 2005. This brings the cumulative total terrestrial-based systems shipped worldwide to more than 85,000. |
| On August 11, 2005, QUALCOMM announced its intention to acquire Flarion Technologies, Inc. (Flarion), a developer of OFDMA technology. The acquisition of Flarion is intended to broaden QUALCOMMs ability to effectively support operators who may prefer an OFDMA or hybrid OFDM/CDMA/WCDMA network alternative for differentiating their services. |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 12 of 22 |
| QUALCOMM and its partners announced the FLO Forum, a non-profit industry association that will work together to promote the development of FLO technology products and services. The FLO Forum, currently comprised of 24 members, will work with regional and global industry consortia, regulatory bodies and designated standards organizations in support of the open standardization of FLO technologies, and develop equipment compliance and certification processes for FLO products. A listing of current members can be found on the FLO Forum website at www.floforum.org. | ||
| MediaFLO conducted the first live, over-the-air demonstration of FLO technology delivering content to a mobile handset. FLO technology, a multicast innovation and key component of the MediaFLO Media Distribution System (MDS), is an air-interface technology designed to increase capacity and coverage and reduce cost for multimedia content delivery to mobile handsets. The demonstration featured over-the-air delivery and viewing of multiple channels of high quality (QVGA) wireless multimedia content, both streaming video and multicast packet data to a mobile handset. |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 13 of 22 |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 14 of 22 |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 15 of 22 |
Three Months Ended September 25, 2005 | ||||||||||||||
Total | ||||||||||||||
Pro Forma | QSI | QUALCOMM | ||||||||||||
Revenues: |
||||||||||||||
Equipment and services |
$ | 1,035 | $ | | $ | 1,035 | ||||||||
Licensing and royalty fees |
525 | | 525 | |||||||||||
1,560 | | 1,560 | ||||||||||||
Operating expenses: |
||||||||||||||
Cost of equipment and services revenues |
441 | | 441 | |||||||||||
Research and development |
255 | 16 | 271 | |||||||||||
Selling, general and administrative |
168 | 10 | 178 | |||||||||||
Total operating expenses |
864 | 26 | 890 | |||||||||||
Operating income (loss) |
696 | (26 | ) | 670 | ||||||||||
Investment income (expense), net |
117 | (a) | (1 | )(b) | 116 | |||||||||
Income (loss) before income taxes |
813 | (27 | ) | 786 | ||||||||||
Income tax (expense) benefit |
(270 | )(c) | 22 | (248 | )(c) | |||||||||
Net income (loss) |
$ | 543 | $ | (5 | ) | $ | 538 | |||||||
Earnings per common share: |
||||||||||||||
Diluted |
$ | 0.32 | $ | | $ | 0.32 | ||||||||
Shares used in per share calculations: |
||||||||||||||
Diluted |
1,686 | 1,686 | 1,686 | |||||||||||
Supplemental Financial Data: |
||||||||||||||
Operating Cash Flow |
$ | 964 | $ | (19 | ) | $ | 945 | |||||||
Operating Cash Flow as a % of Revenue |
62 | % | 61 | % | ||||||||||
Free Cash Flow(d) |
$ | 838 | $ | (31 | ) | $ | 807 | |||||||
Free Cash Flow as a % of Revenue |
54 | % | 52 | % | ||||||||||
(a) | Includes $71 million in interest income related to cash, cash equivalents and marketable securities, which are not part of the Companys strategic investment portfolio, $9 million in net realized gains on investments and $43 million in gains on derivatives related to put options sold in connection with our stock repurchase program, partially offset by $6 million in other-than-temporary losses on marketable securities. | |
(b) | Includes $3 million in net realized gains on investments more than offset by $4 million in equity in losses of investees. | |
(c) | The fourth quarter of fiscal 2005 tax rates of 32% for total QUALCOMM and 33% for QUALCOMM pro forma are higher than the annual effective tax rate primarily as a result of $35 million expense related to the Companys decision during the fourth quarter to repatriate on a one-time basis approximately $0.5 billion of qualifying foreign earnings as provided for under the American Jobs Creation Act of 2004. | |
(d) | Free Cash Flow is calculated as net cash provided by operating activities less capital expenditures. Reconciliation of these amounts is presented in the Condensed Consolidated Statements of Cash Flows and Marketable Securities for the three months ended September 25, 2005, included herein. |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 16 of 22 |
Twelve Months Ended September 25, 2005 | ||||||||||||||||||
Tax | Total | |||||||||||||||||
Pro Forma | Adjustments | QSI | QUALCOMM | |||||||||||||||
Revenues: |
||||||||||||||||||
Equipment and services |
$ | 3,744 | $ | | $ | | $ | 3,744 | ||||||||||
Licensing and royalty fees |
1,929 | | | 1,929 | ||||||||||||||
5,673 | | | 5,673 | |||||||||||||||
Operating expenses: |
||||||||||||||||||
Cost of equipment and services revenues |
1,645 | | | 1,645 | ||||||||||||||
Research and development |
962 | | 49 | 1,011 | ||||||||||||||
Selling, general and administrative |
611 | | 20 | 631 | ||||||||||||||
Total operating expenses |
3,218 | | 69 | 3,287 | ||||||||||||||
Operating income (loss) |
2,455 | | (69 | ) | 2,386 | |||||||||||||
Investment income, net |
344 | (a) | | 79 | (b) | 423 | ||||||||||||
Income before income taxes |
2,799 | | 10 | 2,809 | ||||||||||||||
Income tax (expense) benefit |
(829 | )(c) | 71 | 92 | (666 | )(c) | ||||||||||||
Net income |
$ | 1,970 | $ | 71 | $ | 102 | $ | 2,143 | ||||||||||
Earnings per common share: |
||||||||||||||||||
Diluted |
$ | 1.16 | $ | 0.04 | $ | 0.06 | $ | 1.26 | ||||||||||
Shares used in per share calculations: |
||||||||||||||||||
Diluted |
1,694 | 1,694 | 1,694 | 1,694 | ||||||||||||||
Supplemental Financial Data: |
||||||||||||||||||
Operating Cash Flow |
$ | 2,722 | $ | | $ | (36 | ) | $ | 2,686 | |||||||||
Operating Cash Flow as a % of Revenue |
48 | % | 47 | % | ||||||||||||||
Free Cash Flow(d) |
$ | 2,240 | $ | | $ | (130 | ) | $ | 2,110 | |||||||||
Free Cash Flow as a % of Revenue |
39 | % | 37 | % | ||||||||||||||
(a) | Includes $252 million in interest income related to cash, cash equivalents and marketable securities, which are not part of the Companys strategic investment portfolio, $78 million in net realized gains on investments and $30 million in gains on derivatives primarily related to put options sold in connection with our stock repurchase program, partially offset by $13 million of other-than-temporary losses on marketable securities and $3 million in interest expense. | |
(b) | Includes $101 million in net realized gains on investments, $3 million in gains on derivative instruments and $3 million in interest income, partially offset by $28 million in equity in losses of investees. | |
(c) | The annual effective tax rate for fiscal 2005 for total QUALCOMM is approximately 24% and QUALCOMM pro forma is approximately 30%. | |
(d) | Free Cash Flow is calculated as net cash provided by operating activities less capital expenditures. Reconciliation of these amounts is presented in the Condensed Consolidated Statements of Cash Flows and Marketable Securities for the twelve months ended September 25, 2005, included herein. |
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 17 of 22 |
Three Months Ended September 25, 2005 | ||||||||||||
Total | ||||||||||||
Pro Forma | QSI | QUALCOMM | ||||||||||
Earnings (losses) before taxes, depreciation,
amortization and other adjustments (1) |
$ | 819 | $ | (23 | ) | $ | 796 | |||||
Working
capital changes and taxes paid (2) |
145 | 4 | 149 | |||||||||
Net cash provided by operating activities |
964 | (19 | ) | 945 | ||||||||
Capital expenditures |
(126 | ) | (12 | ) | (138 | ) | ||||||
Free cash flow (Net cash provided by operating
activities less capital expenditures) |
838 | (31 | ) | 807 | ||||||||
Net additional share capital |
150 | | 150 | |||||||||
Proceeds from put options |
8 | | 8 | |||||||||
Dividends paid |
(147 | ) | | (147 | ) | |||||||
Other investments and acquisitions, net of
cash acquired |
(59 | ) | (1 | ) | (60 | ) | ||||||
Other items, net |
| 6 | 6 | |||||||||
Changes in fair value and other changes to
marketable securities |
14 | | 14 | |||||||||
Marketable securities pending settlement |
39 | | 39 | |||||||||
Transfer from QSI (3) |
8 | (8 | ) | | ||||||||
Transfer to QSI (4) |
(35 | ) | 35 | | ||||||||
Net increase in cash, cash equivalents and
marketable securities (5) |
$ | 816 | $ | 1 | $ | 817 | ||||||
(1) Reconciliation to GAAP: |
||||||||||||
Net income |
$ | 543 | $ | (5 | ) | $ | 538 | |||||
Non-cash adjustments (a) |
216 | (15 | ) | 201 | ||||||||
Net realized gains on marketable
securities and other investments |
(10 | ) | (3 | ) | (13 | ) | ||||||
Net taxes paid |
70 | | 70 | |||||||||
Earnings (losses) before taxes, depreciation,
amortization and other adjustments |
$ | 819 | $ | (23 | ) | $ | 796 | |||||
(2) Reconciliation to GAAP: |
||||||||||||
Increase in cash resulting from changes in
working capital |
$ | 215 | $ | 4 | $ | 219 | ||||||
Net taxes paid |
(70 | ) | | (70 | ) | |||||||
Working capital changes and taxes paid |
$ | 145 | $ | 4 | $ | 149 | ||||||
(3) Cash from loan payments and sale of equity
securities |
||||||||||||
(4) Funding for strategic debt and equity
investments and other QSI operating expenses |
||||||||||||
(5) Reconciliation to GAAP cash flow statement: |
||||||||||||
Net increase in cash and cash equivalents (GAAP) |
$ | 710 | $ | | $ | 710 | ||||||
Plus: Net proceeds of marketable securities |
53 | 1 | 54 | |||||||||
Plus: Net increase in fair value and other
changes to marketable securities |
14 | | 14 | |||||||||
Plus: Net increase in marketable securities
pending settlement |
39 | | 39 | |||||||||
Net increase in cash, cash equivalents and
marketable securities |
$ | 816 | $ | 1 | $ | 817 | ||||||
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 18 of 22 |
Twelve Months Ended September 25, 2005 | ||||||||||||||||
Tax | Total | |||||||||||||||
Pro Forma | Adjustments | QSI | QUALCOMM | |||||||||||||
Earnings (losses) before taxes, depreciation, amortization and other adjustments(1) |
$ | 2,899 | $ | | $ | (60 | ) | $ | 2,839 | |||||||
Working capital changes and taxes paid(2) |
(177 | ) | | 24 | (153 | ) | ||||||||||
Net cash provided by operating activities |
2,722 | | (36 | ) | 2,686 | |||||||||||
Capital expenditures |
(482 | ) | | (94 | ) | (576 | ) | |||||||||
Free cash flow (Net cash provided by operating activities less
capital expenditures) |
2,240 | | (130 | ) | 2,110 | |||||||||||
Net additional share capital |
386 | | | 386 | ||||||||||||
Repurchase and retirement of common stock |
(953 | ) | | | (953 | ) | ||||||||||
Proceeds from put options |
37 | | | 37 | ||||||||||||
Dividends paid |
(524 | ) | | | (524 | ) | ||||||||||
Other investments and acquisitions, net of cash acquired |
(236 | ) | | (13 | ) | (249 | ) | |||||||||
Other items, net |
2 | | 20 | 22 | ||||||||||||
Changes in fair value and other changes to marketable securities |
69 | | 126 | 195 | ||||||||||||
Marketable securities pending settlement |
22 | | | 22 | ||||||||||||
Transfer from QSI(3) |
165 | | (165 | ) | | |||||||||||
Transfer to QSI(4) |
(177 | ) | | 177 | | |||||||||||
Net increase in cash, cash equivalents and marketable securities (5) |
$ | 1,031 | $ | | $ | 15 | $ | 1,046 | ||||||||
(1) Reconciliation to GAAP: |
||||||||||||||||
Net income |
$ | 1,970 | $ | 71 | $ | 102 | $ | 2,143 | ||||||||
Non-cash adjustments(b) |
839 | (71 | ) | (61 | ) | 707 | ||||||||||
Net realized gains on marketable securities and other investments |
(78 | ) | | (101 | ) | (179 | ) | |||||||||
Net taxes paid |
168 | | | 168 | ||||||||||||
Earnings (losses) before taxes, depreciation, amortization and other adjustments |
$ | 2,899 | $ | | $ | (60 | ) | $ | 2,839 | |||||||
(2) Reconciliation to GAAP: |
||||||||||||||||
(Decrease) increase in cash resulting from changes in working capital |
$ | (9 | ) | $ | | $ | 24 | $ | 15 | |||||||
Net taxes paid |
(168 | ) | | | (168 | ) | ||||||||||
Working capital changes and taxes paid |
$ | (177 | ) | $ | | $ | 24 | $ | (153 | ) | ||||||
(3) Cash from loan payments and sale of equity securities |
||||||||||||||||
(4) Funding for strategic debt and equity investments and other QSI operating |
||||||||||||||||
expenses |
||||||||||||||||
(5) Reconciliation to GAAP cash flow statement: |
||||||||||||||||
Net increase in cash and cash equivalents (GAAP) |
$ | 856 | $ | | $ | | $ | 856 | ||||||||
Plus: Net purchase (proceeds) of marketable securities |
84 | | (111 | ) | (27 | ) | ||||||||||
Plus: Net increase in fair value and other changes to marketable securities |
69 | | 126 | 195 | ||||||||||||
Plus: Net increase in marketable securities pending settlement |
22 | | | 22 | ||||||||||||
Net increase in cash, cash equivalents and marketable securities |
$ | 1,031 | $ | | $ | 15 | $ | 1,046 | ||||||||
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 19 of 22 |
Three Months Ended September 25, 2005 | ||||||||||||||||
Total | ||||||||||||||||
Pro Forma | QSI | QUALCOMM | ||||||||||||||
(a) | Non-cash adjustments are comprised of: |
|||||||||||||||
Depreciation and amortization |
$ | 55 | $ | 1 | $ | 56 | ||||||||||
Gains on derivative instruments |
(42 | ) | | (42 | ) | |||||||||||
Other-than-temporary losses on marketable securities and other investments |
6 | 1 | 7 | |||||||||||||
Equity in losses of investees |
| 4 | 4 | |||||||||||||
Non-cash income tax expense (benefit) |
201 | (22 | ) | 179 | ||||||||||||
Other non-cash charges and (credits) |
(4 | ) | 1 | (3 | ) | |||||||||||
Total non-cash adjustments | $ | 216 | $ | (15 | ) | $ | 201 | |||||||||
Twelve Months Ended September 25, 2005 | ||||||||||||||||||||
Tax | Total | |||||||||||||||||||
Pro Forma | Adjustments | QSI | QUALCOMM | |||||||||||||||||
(b) | Non-cash adjustments are comprised of: |
|||||||||||||||||||
Depreciation and amortization |
$ | 195 | $ | | $ | 5 | $ | 200 | ||||||||||||
Gains on derivative instruments |
(30 | ) | | (3 | ) | (33 | ) | |||||||||||||
Other-than-temporary losses on marketable securities and other investments |
13 | | 1 | 14 | ||||||||||||||||
Equity in losses of investees |
| | 28 | 28 | ||||||||||||||||
Non-cash income tax expense (benefit) |
661 | (71 | ) | (92 | ) | 498 | ||||||||||||||
Total non-cash adjustments | $ | 839 | $ | (71 | ) | $ | (61 | ) | $ | 707 | ||||||||||
Three Months Ended September 26, 2004 | ||||||||||||
Total | ||||||||||||
Pro Forma | QSI | QUALCOMM | ||||||||||
Net cash provided (used) by operating activities |
$ | 777 | $ | (7 | ) | $ | 770 | |||||
Capital expenditures |
(139 | ) | | (139 | ) | |||||||
Free cash flow (Net cash provided by operating activities less capital expenditures) |
$ | 638 | $ | (7 | ) | $ | 631 | |||||
Twelve Months Ended September 26, 2004 | ||||||||||||
Total | ||||||||||||
Pro Forma | QSI | QUALCOMM | ||||||||||
Net cash provided (used) by operating activities |
$ | 2,480 | $ | 1 | $ | 2,481 | ||||||
Capital expenditures |
(332 | ) | | (332 | ) | |||||||
Free cash flow (Net cash provided by operating activities less capital expenditures) |
$ | 2,148 | $ | 1 | $ | 2,149 | ||||||
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 20 of 22 |
September 25, | September 26, | |||||||
2005 | 2004 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 2,070 | $ | 1,214 | ||||
Marketable securities |
4,478 | 4,768 | ||||||
Accounts receivable, net |
544 | 581 | ||||||
Inventories |
177 | 154 | ||||||
Deferred tax assets |
343 | 409 | ||||||
Other current assets |
179 | 101 | ||||||
Total current assets |
7,791 | 7,227 | ||||||
Marketable securities |
2,133 | 1,653 | ||||||
Property, plant and equipment, net |
1,022 | 675 | ||||||
Goodwill |
571 | 356 | ||||||
Deferred tax assets |
444 | 493 | ||||||
Other assets |
518 | 416 | ||||||
Total assets |
$ | 12,479 | $ | 10,820 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Trade accounts payable |
$ | 376 | $ | 286 | ||||
Payroll and other benefits related liabilities |
196 | 194 | ||||||
Unearned revenue |
163 | 172 | ||||||
Other current liabilities |
335 | 242 | ||||||
Total current liabilities |
1,070 | 894 | ||||||
Unearned revenue |
146 | 170 | ||||||
Other liabilities |
144 | 92 | ||||||
Total liabilities |
1,360 | 1,156 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Preferred stock, $0.0001 par value; issuable in series;
8 shares authorized; none outstanding at
September 25, 2005 and September 26, 2004 |
| | ||||||
Common stock, $0.0001 par value; 6,000 shares authorized;
1,640 and 1,635 shares issued and outstanding at
September 25, 2005 and September 26, 2004, respectively |
| | ||||||
Paid-in capital |
6,753 | 6,940 | ||||||
Retained earnings |
4,328 | 2,709 | ||||||
Accumulated other comprehensive income |
38 | 15 | ||||||
Total stockholders equity |
11,119 | 9,664 | ||||||
Total liabilities and stockholders equity |
$ | 12,479 | $ | 10,820 | ||||
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 21 of 22 |
Three Months Ended | Twelve Months Ended | |||||||||||||||
September 25, | September 26, | September 25, | September 26, | |||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Revenues: |
||||||||||||||||
Equipment and services |
$ | 1,035 | $ | 954 | $ | 3,744 | $ | 3,514 | ||||||||
Licensing and royalty fees |
525 | 164 | 1,929 | 1,366 | ||||||||||||
1,560 | 1,118 | 5,673 | 4,880 | |||||||||||||
Operating expenses: |
||||||||||||||||
Cost of equipment and services revenues |
441 | 410 | 1,645 | 1,484 | ||||||||||||
Research and development |
271 | 208 | 1,011 | 720 | ||||||||||||
Selling, general and administrative |
178 | 138 | 631 | 547 | ||||||||||||
Total operating expenses |
890 | 756 | 3,287 | 2,751 | ||||||||||||
Operating income |
670 | 362 | 2,386 | 2,129 | ||||||||||||
Investment income, net |
116 | 69 | 423 | 184 | ||||||||||||
Income from continuing operations before income taxes |
786 | 431 | 2,809 | 2,313 | ||||||||||||
Income tax expense |
(248 | ) | (44 | ) | (666 | ) | (588 | ) | ||||||||
Income from continuing operations |
538 | 387 | 2,143 | 1,725 | ||||||||||||
Income (loss) from discontinued operations |
| 6 | | (5 | ) | |||||||||||
Net income |
$ | 538 | $ | 393 | $ | 2,143 | $ | 1,720 | ||||||||
Basic earnings per common share from continuing
operations |
$ | 0.33 | $ | 0.24 | $ | 1.31 | $ | 1.07 | ||||||||
Basic loss per common share from
discontinued operations |
| | | (0.01 | ) | |||||||||||
Basic earnings per common share |
$ | 0.33 | $ | 0.24 | $ | 1.31 | $ | 1.06 | ||||||||
Diluted earnings per common share from continuing
operations |
$ | 0.32 | $ | 0.23 | $ | 1.26 | $ | 1.03 | ||||||||
Diluted loss per common share from
discontinued operations |
| | | | ||||||||||||
Diluted earnings per common share |
$ | 0.32 | $ | 0.23 | $ | 1.26 | $ | 1.03 | ||||||||
Shares used in per share calculations: |
||||||||||||||||
Basic |
1,634 | 1,630 | 1,638 | 1,616 | ||||||||||||
Diluted |
1,686 | 1,692 | 1,694 | 1,675 | ||||||||||||
Dividends per share paid |
$ | 0.09 | $ | 0.07 | $ | 0.32 | $ | 0.19 | ||||||||
Dividends per share announced |
$ | 0.09 | $ | 0.07 | $ | 0.32 | $ | 0.19 | ||||||||
QUALCOMM Announces Fourth Quarter and Fiscal 2005 Results | Page 22 of 22 |
Three months ended | Year ended | |||||||
(in millions, except per share data) | September 26, | September 26, | ||||||
2004 | 2004 | |||||||
Prior Method of Recording Royalties |
||||||||
Estimate of estimated licensees for prior period |
$ | 253 | $ | 151 | ||||
Royalties reported by estimated licensees for prior period |
255 | 208 | ||||||
Prior period variance included in reporting period |
2 | 57 | ||||||
Other royalties reported in reporting period |
99 | 1,084 | ||||||
Estimate for estimated licensees for current period |
| | ||||||
Total QTL royalty revenues from external licensees |
101 | 1,141 | ||||||
Intercompany revenue |
36 | 132 | ||||||
License revenue |
14 | 59 | ||||||
Total QTL GAAP revenue (including prospective change to New Method in Q4 04) |
$ | 151 | $ | 1,331 | ||||
New Method of Recording Royalties |
||||||||
Total royalties reported by external licensees (a) |
$ | 354 | $ | 1,292 | ||||
Intercompany revenue |
36 | 132 | ||||||
License revenue |
14 | 59 | ||||||
Total QTL revenue using New Method |
$ | 404 | $ | 1,483 | ||||
Difference between the methods |
$ | (253 | ) | $ | (151 | ) | ||
QTL GAAP earnings before tax (including prospective change to New Method in Q404) |
$ | 111 | $ | 1,195 | ||||
Less: Difference between the royalty methods |
$ | (253 | ) | $ | (151 | ) | ||
QTL earnings before tax using New Method |
$ | 364 | $ | 1,346 | ||||
Total QCOM revenues as reported under GAAP |
$ | 1,118 | $ | 4,880 | ||||
Less: Difference between the royalty methods |
(253 | ) | (151 | ) | ||||
Total QCOM revenues using New Method |
1,371 | 5,031 | ||||||
Total QCOM revenues and QCOM pro forma revenues |
$ | 1,371 | $ | 5,031 | ||||
TOTAL QCOM earnings from continuing operations before taxes as reported under GAAP |
$ | 431 | $ | 2,313 | ||||
Less: Earnings from continuing operations before taxes attributed to difference
between the royalty methods |
$ | (253 | ) | $ | (151 | ) | ||
Total QCOM earnings from continuing operations before taxes using New Method |
$ | 684 | $ | 2,464 | ||||
Less: QSI earnings from continuing operations before taxes (c) |
$ | 11 | $ | (31 | ) | |||
QCOM pro forma earnings from continuing operations before taxes (c) |
$ | 673 | $ | 2,495 | ||||
TOTAL QCOM net income as reported under GAAP |
$ | 393 | $ | 1,720 | ||||
Less: Net income attributed to difference between the royalty methods (b) |
(154 | ) | (92 | ) | ||||
Total QCOM net income using New Method |
547 | 1,812 | ||||||
Less: QSI net income (loss) (c) |
48 | 12 | ||||||
QCOM pro forma net income (c) |
$ | 499 | $ | 1,800 | ||||
QCOM diluted EPS as reported under GAAP |
$ | 0.23 | $ | 1.03 | ||||
EPS attributed to difference between the royalty methods |
$ | (0.09 | ) | $ | (0.06 | ) | ||
Total QCOM diluted EPS using New Method |
$ | 0.32 | $ | 1.08 | ||||
EPS attributed to QSI (c) |
$ | 0.03 | $ | 0.01 | ||||
QCOM pro forma diluted EPS (c) |
$ | 0.30 | $ | 1.07 | ||||
Shares used for diluted EPS |
1,692 | 1,675 |
(a) | Represents royalty revenue that would have been reported during the period if the New Method had been adopted retroactively. Does not represent royalty revenue recognized under GAAP in these periods. | |
(b) | QTLs rounded effective tax rate was 39% in fiscal 2004 . | |
(c) | During the first quarter of 2005, the Company reorganized its MediaFLO USA business into the QSI segment. The operating expenses related to the MediaFLO USA business were included in reconciling items through the end of fiscal 2004. Prior period segment information has been adjusted to conform to the new segment presentation. |