| Revenues: $1.83 billion, up 34 percent year-over-year and 5 percent sequentially. | ||
| Net income: $593 million, up 11 percent year-over-year and down 4 percent sequentially. | ||
| Diluted earnings per share: $0.34, up 10 percent year-over-year and down 6 percent sequentially. | ||
| Effective tax rate: 25 percent for the quarter. Fiscal 2006 estimate of approximately 22 percent. | ||
| Estimated share-based compensation: $78 million, net of tax. | ||
| Operating cash flow: $889 million, up 8 percent year-over-year; 48 percent of revenue. | ||
| Return of capital to stockholders: $298 million in cash dividends paid. |
| Revenues: $1.83 billion, up 34 percent year-over-year and 5 percent sequentially. | ||
| Net income: $706 million, up 45 percent year-over-year and 6 percent sequentially. | ||
| Diluted earnings per share: $0.41, up 41 percent year-over-year and 5 percent sequentially; excludes $0.01 loss per share attributable to the QSI segment, $0.05 loss per share |
QUALCOMM Announces Second Quarter Fiscal 2006 Results
|
Page 2 of 21 |
attributable to estimated share-based compensation and $0.01 loss per share related to acquired in-process R&D expense. | |||
| Effective tax rate: 27 percent for the quarter and estimated for fiscal 2006. | ||
| Free cash flow: $947 million, up 28 percent year-over-year; 52 percent of revenue. (Defined as net cash from operating activities less capital expenditures) |
QUALCOMM Announces Second Quarter Fiscal 2006 Results
|
Page 3 of 21 |
Estimated Share- | Total | |||||||||||||||||||
QUALCOMM Pro | Based | In-Process | QUALCOMM | |||||||||||||||||
($ in millions) | Forma | Compensation | R&D Expense | QSI | (GAAP) | |||||||||||||||
Second quarter fiscal 2006 |
$ | 302 | $ | 52 | $ | 21 | $ | 15 | $ | 390 | ||||||||||
Second quarter fiscal 2005 |
$ | 242 | $ | | $ | | $ | 10 | $ | 252 | ||||||||||
Year-over-year change |
25 | % | 50 | % | 55 | % |
QUALCOMM Announces Second Quarter Fiscal 2006 Results
|
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Estimated Share- | Total | |||||||||||||||
QUALCOMM Pro | Based | QUALCOMM | ||||||||||||||
($ in millions) | Forma | Compensation | QSI | (GAAP) | ||||||||||||
Second quarter fiscal 2006 |
$ | 188 | $ | 58 | $ | 17 | $ | 263 | ||||||||
Second quarter fiscal 2005 |
$ | 149 | $ | | $ | 6 | $ | 155 | ||||||||
Year-over-year change |
26 | % | 183 | % | 70 | % |
QUALCOMM Announces Second Quarter Fiscal 2006 Results
|
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QUALCOMM Announces Second Quarter Fiscal 2006 Results
|
Page 6 of 21 |
Current Guidance | ||||||||
Q305 | Q306 | |||||||
Results | Estimates | |||||||
QUALCOMM Pro Forma |
||||||||
Revenues |
$ | 1.36B | $ | 1.77B-$1.87B | ||||
Year-over-year change |
increase 30% - 38% | |||||||
Diluted earnings per share (EPS) |
$ | 0.28 | $ | 0.36-$0.38 | ||||
Year-over-year change |
increase 29% - 36% | |||||||
Total QUALCOMM (GAAP) |
||||||||
Revenues |
$ | 1.36B | $ | 1.77B-$1.87B | ||||
Year-over-year change |
increase 30% - 38% | |||||||
Diluted earnings per share (EPS) |
$ | 0.33 | $ | 0.30-$0.32 | ||||
Year-over-year change |
decrease 3% - 9% | |||||||
Diluted EPS attributable to QSI |
$ | 0.05 | $ | (0.01 | ) | |||
Diluted EPS attributable to estimated share-based compensation |
n/a | $ | (0.05 | ) | ||||
EPS attributable to tax benefit related to prior years |
$ | 0.01 | n/a | |||||
Metrics |
||||||||
MSM Shipments |
approx. 36M | approx. 50M - 53M | ||||||
CDMA/WCDMA handset units shipped |
approx. 43M* | approx. 62M - 64M | * | |||||
CDMA/WCDMA handset unit wholesale average selling price |
approx. $231* | approx. $203 | * |
* | Shipments in Mar. quarter, reported in Jun. quarter |
Prior Guidance | Current Guidance | |||||||||||
FY 2005 | FY 2006 | FY 2006 | ||||||||||
Results | Estimates | Estimates | ||||||||||
QUALCOMM Pro Forma |
||||||||||||
Revenues |
$ | 5.67B | $ | 6.7B-$7.1B | $ | 7.1B-$7.4B | ||||||
Year-over-year change |
increase 18% - 25% | increase 25% - 30% | ||||||||||
Diluted earnings per share (EPS) |
$ | 1.16 | $ | 1.43-$1.47 | $ | 1.53-$1.57 | ||||||
Year-over-year change |
increase 23% - 27% | increase 32% - 35% | ||||||||||
Total QUALCOMM (GAAP) |
||||||||||||
Revenues |
$ | 5.67B | $ | 6.7B-$7.1B | $ | 7.1B-$7.4B | ||||||
Year-over-year change |
increase 18% - 25% | increase 25% - 30% | ||||||||||
Diluted earnings per share (EPS) |
$ | 1.26 | $ | 1.19-$1.23 | $ | 1.31-$1.35 | ||||||
Year-over-year change |
decrease 2% - 6% | increase 4% - 7% | ||||||||||
Diluted EPS attributable to in-process R&D |
n/a | $ | (0.01 | ) | $ | (0.01 | ) | |||||
Diluted EPS attributable to QSI |
$ | 0.06 | $ | (0.06 | ) | $ | (0.04 | ) | ||||
Diluted EPS attributable to estimated share-based compensation |
n/a | $ | (0.20 | ) | $ | (0.20 | ) | |||||
Diluted EPS attributable to tax benefit related to prior years |
$ | 0.04 | $ | 0.03 | $ | 0.03 | ||||||
Metrics |
||||||||||||
Fiscal year* CDMA/WCDMA handset unit wholesale average selling price |
approx. $215 | approx. $210 | approx. $207 |
* | Shipments in Sep. to June quarters, reported in Dec. to Sep. quarters |
Prior Guidance | Current Guidance | |||||||||||
Calendar 2006 | Calendar 2006 | |||||||||||
CDMA/WCDMA handset unit shipments | Calendar 2005 | Estimates | Estimates | |||||||||
March quarter |
approx. 43M | not provided | approx. 62 - 64M | |||||||||
June quarter |
approx. 48M | not provided | not provided | |||||||||
September quarter |
approx. 52M | not provided | not provided | |||||||||
December quarter |
approx. 67M | not provided | not provided | |||||||||
Calendar year range |
approx. 210M | approx. 255M - 270M | approx. 275M - 290M |
Midpoint | Midpoint | Midpoint | ||||||||||
CDMA/WCDMA units |
approx. 210M | approx. 262M | approx. 283M | |||||||||
CDMA units |
approx. 160M | approx. 176M | approx. 187M | |||||||||
WCDMA units |
approx. 50M | approx. 86M | approx. 96M |
QUALCOMM Announces Second Quarter Fiscal 2006 Results
|
Page 7 of 21 |
Estimated | ||||||||||||||||||||||||||||||||||||
Share-Based | Total | |||||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM Pro | Compensation | In-Process | QUALCOMM | ||||||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Forma | (2) | R&D (3) | QSI (4) | (GAAP) | |||||||||||||||||||||||||||
Revenues |
$ | 1,018 | $ | 679 | $ | 162 | $ | (25 | ) | $ | 1,834 | $ | | $ | | $ | | $ | 1,834 | |||||||||||||||||
Change from prior year |
36 | % | 38 | % | 7 | % | N/M | 34 | % | | | | 34 | % | ||||||||||||||||||||||
Change from prior quarter |
(1 | %) | 20 | % | (2 | %) | N/M | 5 | % | | | | 5 | % | ||||||||||||||||||||||
EBT |
$ | 252 | $ | 626 | $ | 16 | $ | 68 | $ | 962 | $ | (120 | ) | $ | (21 | ) | $ | (36 | ) | $ | 785 | |||||||||||||||
Change from prior year |
59 | % | 40 | % | 100 | % | N/M | 44 | % | N/M | N/M | N/M | 24 | % | ||||||||||||||||||||||
Change from prior quarter |
(16 | %) | 21 | % | (6 | %) | N/M | 6 | % | N/M | N/M | N/M | 7 | % | ||||||||||||||||||||||
Net income (loss) |
706 | (78 | ) | (21 | ) | (14 | ) | $ | 593 | |||||||||||||||||||||||||||
Change from prior year |
45 | % | N/M | N/M | N/M | 11 | % | |||||||||||||||||||||||||||||
Change from prior quarter |
6 | % | N/M | N/M | N/M | (4 | %) | |||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.41 | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.34 | |||||||||||||||||||||||
Change from prior year |
41 | % | N/M | N/M | N/M | 10 | % | |||||||||||||||||||||||||||||
Change from prior quarter |
5 | % | N/M | N/M | N/M | (6 | %) | |||||||||||||||||||||||||||||
Diluted shares used |
1,721 | 1,721 | 1,721 | 1,721 | 1,721 |
Estimated Share- | ||||||||||||||||||||||||||||||||||||
Based | Tax | Total | ||||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM Pro | Compensation | Adjusment | QUALCOMM | ||||||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Forma | (2) | (5) | QSI (4) | (GAAP) | |||||||||||||||||||||||||||
Revenues |
$ | 1,033 | $ | 564 | $ | 166 | $ | (22 | ) | $ | 1,741 | $ | | $ | | $ | | $ | 1,741 | |||||||||||||||||
EBT |
300 | 517 | 17 | 72 | 906 | (122 | ) | | (48 | ) | $ | 736 | ||||||||||||||||||||||||
Net income (loss) |
667 | (82 | ) | 56 | (21 | ) | 620 | |||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.39 | $ | (0.05 | ) | $ | 0.03 | $ | (0.01 | ) | $ | 0.36 | ||||||||||||||||||||||||
Diluted shares used |
1,702 | 1,702 | 1,702 | 1,702 | 1,702 |
Total | ||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM Pro | Tax Adjustments | QUALCOMM | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Forma | (6) | QSI (4) | (GAAP) | ||||||||||||||||||||||||
Revenues |
$ | 746 | $ | 493 | $ | 151 | $ | (25 | ) | $ | 1,365 | $ | | $ | | $ | 1,365 | |||||||||||||||
EBT |
158 | 448 | 8 | 52 | 666 | | (33 | ) | $ | 633 | ||||||||||||||||||||||
Net income (loss) |
487 | 55 | (10 | ) | $ | 532 | ||||||||||||||||||||||||||
Diluted EPS |
$ | 0.29 | $ | 0.03 | $ | (0.01 | ) | $ | 0.31 | |||||||||||||||||||||||
Diluted shares used |
1,704 | 1,704 | 1,704 | 1,704 |
Total | ||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM Pro | Tax Adjustments | QUALCOMM | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Forma | (7) | QSI (4) | (GAAP) | ||||||||||||||||||||||||
Revenues |
$ | 766 | $ | 448 | $ | 164 | $ | (20 | ) | $ | 1,358 | $ | | $ | | $ | 1,358 | |||||||||||||||
EBT |
186 | 407 | 12 | 51 | 656 | | 30 | $ | 686 | |||||||||||||||||||||||
Net income |
465 | 16 | 79 | $ | 560 | |||||||||||||||||||||||||||
Diluted EPS |
$ | 0.28 | $ | 0.01 | $ | 0.05 | $ | 0.33 | ||||||||||||||||||||||||
Diluted shares used |
1,683 | 1,683 | 1,683 | 1,683 |
Total | ||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM Pro | Tax Adjustments | QUALCOMM | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Forma | (6)(7) | QSI (4) | (GAAP) | ||||||||||||||||||||||||
Revenues |
$ | 3,290 | $ | 1,839 | $ | 644 | $ | (100 | ) | $ | 5,673 | $ | | $ | | $ | 5,673 | |||||||||||||||
EBT |
852 | 1,663 | 57 | 227 | 2,799 | | 10 | $ | 2,809 | |||||||||||||||||||||||
Net income |
1,970 | 71 | 102 | $ | 2,143 | |||||||||||||||||||||||||||
Diluted EPS |
$ | 1.16 | $ | 0.04 | $ | 0.06 | $ | 1.26 | ||||||||||||||||||||||||
Diluted shares used |
1,694 | 1,694 | 1,694 | 1,694 |
Estimated | ||||||||||||||||||||||||||||||||||||||||
Share-Based | Tax | Total | ||||||||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM Pro | Compensation | Adjusment | In-Process | QUALCOMM | |||||||||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Forma | (2) | (5) | R&D (3) | QSI (4) | (GAAP) | ||||||||||||||||||||||||||||||
Revenues |
$ | 2,051 | $ | 1,243 | $ | 328 | $ | (47 | ) | $ | 3,575 | $ | | $ | | $ | | $ | | $ | 3,575 | |||||||||||||||||||
Change from prior year |
27 | % | 39 | % | 6 | % | N/M | 30 | % | | | | | 30 | % | |||||||||||||||||||||||||
EBT |
$ | 552 | $ | 1,143 | $ | 34 | $ | 139 | $ | 1,868 | $ | (242 | ) | $ | | $ | (21 | ) | $ | (84 | ) | $ | 1,521 | |||||||||||||||||
Change from prior year |
38 | % | 42 | % | 42 | % | N/M | 41 | % | N/M | | | N/M | 14 | % | |||||||||||||||||||||||||
Net income (loss) |
1,373 | (160 | ) | 56 | (21 | ) | (35 | ) | $ | 1,213 | ||||||||||||||||||||||||||||||
Change from prior year |
43 | % | N/M | N/M | N/M | N/M | 16 | % | ||||||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.80 | $ | (0.09 | ) | $ | 0.03 | $ | (0.01 | ) | $ | (0.02 | ) | $ | 0.71 | |||||||||||||||||||||||||
Change from prior year |
43 | % | N/M | N/M | N/M | N/M | 16 | % | ||||||||||||||||||||||||||||||||
Diluted shares used |
1,711 | 1,711 | 1,711 | 1,711 | 1,711 | 1,711 |
Total | ||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM Pro | Tax Adjustments | QUALCOMM | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Forma | (6) | QSI (4) | (GAAP) | ||||||||||||||||||||||||
Revenues |
$ | 1,611 | $ | 893 | $ | 310 | $ | (60 | ) | $ | 2,754 | $ | | $ | | $ | 2,754 | |||||||||||||||
EBT |
400 | 805 | 24 | 100 | 1,329 | | 8 | 1,337 | ||||||||||||||||||||||||
Net income |
961 | 55 | 29 | 1,045 | ||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.56 | $ | 0.03 | $ | 0.02 | $ | 0.61 | ||||||||||||||||||||||||
Diluted shares used |
1,704 | 1,704 | 1,704 | 1,704 |
QUALCOMM Announces Second Quarter Fiscal 2006 Results
|
Page 8 of 21 |
(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) | During the first quarter of fiscal 2006, the Company adopted the fair value recognition provisions of FAS 123R using a modified prospective application. Under this method, prior periods are not revised for comparative purposes. Share-based compensation is included in operating expenses as part of employee-related costs but is not allocated to our segments as these estimated costs are not considered relevant by management in evaluating segment performance. |
(3) | During the second quarter of fiscal 2006, the Company recorded $21 million of expenses related to acquired in-process R&D associated with the acquisitions of Berkana Wireless Inc. and Flarion Technologies, Inc. For fiscal 2006 pro forma presentation, results have been adjusted to exclude these expenses as they are unrelated to the Companys ongoing core operating businesses and are also not allocated to our segments as these costs are not considered relevant by management in evaluating segment performance. |
(4) | At fiscal year-end, the sum of the quarterly tax provisions for each column, including QSI, will equal the annual tax provisions for each column computed in accordance with GAAP. In interim quarters, the tax provision for the QSI operating segment is computed by subtracting the tax provision for QUALCOMM pro forma, the tax adjustment column and the tax provision related to estimated share based compensation from the tax provision for total QUALCOMM (GAAP). |
(5) | During the first quarter of fiscal 2006, the Company recorded a $56 million tax benefit, or $0.03 per share, related to the expected impact of prior year tax audits completed during the quarter. For fiscal 2006 pro forma presentation, results have been adjusted to exclude this tax benefit attributable to prior years. |
(6) | 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 (GAAP) included a $55 million benefit, or $0.03 diluted earnings per share, related to fiscal 2004. For fiscal 2005 pro forma presentation, results have been adjusted to exclude the tax benefit attributable to fiscal 2004. |
(7) | 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 (GAAP) 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. |
| For the third consecutive quarter, QCT shipped a record number of MSM chips. Approximately 49 million MSM chips were shipped to customers worldwide during the second quarter of fiscal 2006, compared to approximately 37 million units in the same quarter of fiscal 2005 and approximately 47 million units in the first quarter of fiscal 2006. | ||
| More than 30 equipment manufacturers are designing or offering more than 120 WCDMA devices based on our MSM chipsets. We sampled the MSM7200 chipset, which is the first to support HSUPA as well as WCDMA/HSDPA networks. | ||
| More than 250 devices are now in design or have been commercially launched based on our MSM solutions for 1xEV-DO. QCTs 1xEV-DO portfolio was augmented with the sampling of the MSM6800, our first 1xEV-DO Revision A product and the first chipset based on 65nm process technology. | ||
| More than five leading manufacturers are already designing devices featuring the first generation of QUALCOMM Single-Chip (QSC) solutions, which integrate multiple components for slimmer and more cost-efficient handsets. Handsets based on QSC products are expected to launch by the end of calendar year 2006. |
QUALCOMM Announces Second Quarter Fiscal 2006 Results
|
Page 9 of 21 |
| In the second quarter of fiscal 2006, five new licensees entered into CDMA license agreements including two licensed for CDMA2000, two licensed for WCDMA, and one licensed for both WCDMA and CDMA2000. | ||
| We entered into a royalty bearing license agreement with a licensee covering sales by that licensee of OFDM/OFDMA subscriber units and infrastructure equipment. | ||
| Licensee information for the first quarter of fiscal 2006 as reported by licensees in the second quarter of fiscal 2006: |
o | Worldwide shipments of approximately 67 million CDMA2000 and WCDMA subscriber units at an average selling price of approximately $208 were reported. | ||
o | We estimate WCDMA royalties contributed approximately 46 percent of total royalties reported compared to approximately 40 percent reported in the prior quarter and approximately 32 percent in the year ago quarter. |
| QUALCOMM has 66 BREW® customers in 31 countries. | ||
| The BREW solution has driven a number of milestones for operators around the world including Verizon Wireless which stated the company saw a 36 percent growth in gaming downloads over the last year since launching premium BREW 3D games as part of their V CAST service. KDDI announced that as of December 2005, their subscribers have downloaded more than 75 million data applications on more than 20 million BREW devices. | ||
| Asia Pacific Broadband Wireless Communication (APBW) commercially launched BREW services in Taiwan. |
| We shipped approximately 8,200 satellite-based systems (OmniTRACS®, EutelTRACS and TruckMAIL) in the second quarter of fiscal 2006, compared to approximately 8,800 in the second quarter of fiscal 2005 and approximately 11,800 in the first quarter of fiscal 2006. |
QUALCOMM Announces Second Quarter Fiscal 2006 Results
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Page 10 of 21 |
This brings the cumulative total satellite-based systems shipped worldwide to more than 586,000. | |||
| We shipped approximately 8,000 terrestrial-based systems (OmniExpress®, GlobalTRACS® and T2 Untethered TrailerTRACS) in the second quarter of fiscal 2006, compared to approximately 13,800 terrestrial-based systems in the second quarter of fiscal 2005 and approximately 15,100 terrestrial-based systems in the first quarter of fiscal 2006. This brings the cumulative total terrestrial-based systems shipped worldwide to more than 108,000. |
| MediaFLO USA and Network LIVE, a joint venture between AOL, XM Satellite Radio and AEG, announced an agreement to provide Network LIVE content and programming for MediaFLO USAs wireless multimedia service offering. | ||
| We provided city-wide coverage of FLO Technology and conducted live, over-the-air MediaFLO demonstrations at CTIA Wireless 2006 in Las Vegas. These demonstrations included nine channels of live video and datacasting applications on eight proof-of-concept devices (including one UMTS/FLO handset) from leading handset manufacturers including, Kyocera, LG Electronics, Motorola, Pantech, Samsung Electronics Co., Ltd. and Sharp Corporation. | ||
| The FLO Forum announced the ratification of key technical specifications developed by its Test and Certification Committee. The technical and performance requirements captured in the documents assure interoperability and compatibility for FLO based terrestrial mobile multimedia multicast devices and transmitters. | ||
| We announced a joint investment in China with TechFaith to found a new company, TechFaith Software (China) Limited or TechSoft, that will develop application software for 3G CDMA devices. |
| We completed the acquisition of Flarion Technologies, Inc., a developer of OFDMA technology. | ||
| We completed the acquisition of Berkana Wireless Inc., a fabless semiconductor company that develops complementary metal oxide semiconductor (CMOS) radio frequency integrated circuits (RFICs). |
QUALCOMM Announces Second Quarter Fiscal 2006 Results
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QUALCOMM Announces Second Quarter Fiscal 2006 Results
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QUALCOMM Announces Second Quarter Fiscal 2006 Results
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QUALCOMM Announces Second Quarter Fiscal 2006 Results
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QUALCOMM Announces Second Quarter Fiscal 2006 Results | Page 15 of 21 |
Three Months Ended March 26, 2006 | ||||||||||||||||||||
Total | ||||||||||||||||||||
QUALCOMM | Estimated Share- | In-Process | QUALCOMM | |||||||||||||||||
Pro Forma | Based Compensation | R&D | QSI | (GAAP) | ||||||||||||||||
Revenues: |
||||||||||||||||||||
Equipment and services |
$ | 1,122 | $ | | $ | | $ | | $ | 1,122 | ||||||||||
Licensing and royalty
fees |
712 | | | | 712 | |||||||||||||||
1,834 | | | | 1,834 | ||||||||||||||||
Operating expenses: |
||||||||||||||||||||
Cost of equipment and
services revenues |
511 | 10 | | | 521 | |||||||||||||||
Research and
development |
302 | 52 | 21 | 15 | 390 | |||||||||||||||
Selling, general and
administrative |
188 | 58 | | 17 | 263 | |||||||||||||||
Total operating
expenses |
1,001 | 120 | 21 | 32 | 1,174 | |||||||||||||||
Operating income (loss) |
833 | (120 | ) | (21 | ) | (32 | ) | 660 | ||||||||||||
Investment income
(expense), net |
129 | (a) | | | (4 | )(b) | 125 | |||||||||||||
Income (loss) before
income taxes |
962 | (120 | ) | (21 | ) | (36 | ) | 785 | ||||||||||||
Income tax (expense)
benefit |
(256 | )(c) | 42 | | 22 | (d) | (192 | )(c) | ||||||||||||
Net income (loss) |
$ | 706 | $ | (78 | ) | $ | (21 | ) | $ | (14 | ) | $ | 593 | |||||||
Earnings (loss) per
common share: |
||||||||||||||||||||
Diluted |
$ | 0.41 | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.34 | |||||||
Shares used in per
share calculations: |
||||||||||||||||||||
Diluted |
1,721 | 1,721 | 1,721 | 1,721 | 1,721 | |||||||||||||||
Supplemental Financial
Data: |
||||||||||||||||||||
Operating Cash Flow |
$ | 1,072 | $ | (172 | )(f) | $ | | $ | (11 | ) | $ | 889 | ||||||||
Operating Cash Flow as
a % of Revenue |
58 | % | 48 | % | ||||||||||||||||
Free Cash Flow (e) |
$ | 947 | $ | (172 | )(f) | $ | | $ | (47 | ) | $ | 728 | ||||||||
Free Cash Flow as a %
of Revenue |
52 | % | 40 | % |
(a) | Includes $102 million in interest and dividend income related to cash, cash equivalents and marketable securities, which are not part of the Companys strategic investment portfolio, $34 million in net realized gains on investments and $3 million in gains on derivative instruments, partially offset by $9 million in other-than-temporary losses on investments and $1 million of interest expense. | |
(b) | Includes $10 million in equity in losses of investees, partially offset by $6 million in realized gains on investments. | |
(c) | The second quarter of fiscal 2006 tax rate of 25% for total QUALCOMM (GAAP) is higher than the estimated annual effective tax rate of 22% due primarily to $56 million of tax benefits recorded during the first quarter related to the expected impact of prior year tax audits completed in that quarter. The fiscal year 2006 estimated effective tax rate is approximately 22% for total QUALCOMM (GAAP) and approximately 27% for QUALCOMM pro forma. | |
(d) | At fiscal year-end, the sum of the quarterly tax provisions for each column, including QSI, will equal the annual tax provisions for each column computed in accordance with GAAP. In interim quarters, the tax provision for the QSI operating segment is computed by subtracting the tax provision for QUALCOMM pro forma and the tax provision related to estimated share-based compensation from the tax provision for total QUALCOMM (GAAP). | |
(e) | Free Cash Flow is calculated as net cash provided by operating activities less capital expenditures. Reconciliation of these amounts is included in the Condensed Consolidated Statements of Cash Flows and Marketable Securities for the three months ended March 26, 2006, included herein. | |
(f) | Tax benefits from stock options exercised during the quarter. |
QUALCOMM Announces Second Quarter Fiscal 2006 Results | Page 16 of 21 |
Six Months Ended March 26, 2006 | ||||||||||||||||||||||||
Total | ||||||||||||||||||||||||
QUALCOMM Pro | Estimated Share- | Tax | In-Process | QUALCOMM | ||||||||||||||||||||
Forma | Based Compensation | Adjustment | R&D | QSI | (GAAP) | |||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Equipment and services |
$ | 2,271 | $ | | $ | | $ | | $ | | $ | 2,271 | ||||||||||||
Licensing and royalty fees |
1,304 | | | | | 1,304 | ||||||||||||||||||
3,575 | | | | | 3,575 | |||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Cost of equipment and
services revenues |
1,015 | 22 | | | | 1,037 | ||||||||||||||||||
Research and development |
575 | 104 | | 21 | 31 | 731 | ||||||||||||||||||
Selling, general and
administrative |
357 | 116 | | | 29 | 502 | ||||||||||||||||||
Total operating expenses |
1,947 | 242 | | 21 | 60 | 2,270 | ||||||||||||||||||
Operating income (loss) |
1,628 | (242 | ) | | (21 | ) | (60 | ) | 1,305 | |||||||||||||||
Investment income
(expense), net |
240 | (a) | | | | (24 | )(b) | 216 | ||||||||||||||||
Income (loss) before
income taxes |
1,868 | (242 | ) | | (21 | ) | (84 | ) | 1,521 | |||||||||||||||
Income tax (expense)
benefit |
(495 | )(c) | 82 | 56 | | 49 | (d) | (308 | )(c) | |||||||||||||||
Net income (loss) |
$ | 1,373 | $ | (160 | ) | $ | 56 | $ | (21 | ) | $ | (35 | ) | $ | 1,213 | |||||||||
Earnings (loss) per
common share: |
||||||||||||||||||||||||
Diluted |
$ | 0.80 | $ | (0.09 | ) | $ | 0.03 | $ | (0.01 | ) | $ | (0.02 | ) | $ | 0.71 | |||||||||
Shares used in per share
calculations: |
||||||||||||||||||||||||
Diluted |
1,711 | 1,711 | 1,711 | 1,711 | 1,711 | 1,711 | ||||||||||||||||||
Supplemental Financial
Data: |
||||||||||||||||||||||||
Operating Cash Flow |
$ | 1,785 | $ | (273 | )(f) | $ | | $ | | $ | (27 | ) | $ | 1,485 | ||||||||||
Operating Cash Flow as
% of Revenue |
50 | % | 42 | % | ||||||||||||||||||||
Free Cash Flow (e) |
$ | 1,478 | $ | (273 | )(f) | $ | | $ | | $ | (94 | ) | $ | 1,111 | ||||||||||
Free Cash Flow as a % of
Revenue |
41 | % | 31 | % |
(a) | Includes $192 million in interest and dividend income related to cash, cash equivalents and marketable securities, which are not part of the Companys strategic investment portfolio, $54 million in net realized gains on investments and $7 million in gains on derivative instruments, partially offset by $12 million in other-than-temporary losses on investments and $1 million of interest expense. | |
(b) | Includes $30 million in equity in losses of investees, partially offset by $6 million in net realized gains on investments. | |
(c) | The tax rate of 20% for the first six months of fiscal 2006 for total QUALCOMM (GAAP) is lower than the estimated annual effective tax rate of 22% due primarily to $56 million of tax benefits recorded in the first quarter related to the expected impact of prior year tax audits completed in that quarter. | |
(d) | At fiscal year-end, the sum of the quarterly tax provisions for each column, including QSI, will equal the annual tax provisions for each column computed in accordance with GAAP. In interim quarters, the tax provision for the QSI operating segment is computed by subtracting the tax provision for QUALCOMM pro forma, the tax adjustment column and the tax provision related to estimated share-based compensation from the tax provision for total QUALCOMM (GAAP). | |
(e) | Free Cash Flow is calculated as net cash provided by operating activities less capital expenditures. Reconciliation of these amounts is included in the Condensed Consolidated Statements of Cash Flows and Marketable Securities for the six months ended March 26, 2006, included herein. | |
(f) | Tax benefits from stock options exercised during the quarter. |
QUALCOMM Announces Second Quarter Fiscal 2006 Results | Page 17 of 21 |
Three Months Ended March 26, 2006 | ||||||||||||||||||||
Estimated | Total | |||||||||||||||||||
QUALCOMM | Share-Based | In-Process | QUALCOMM | |||||||||||||||||
Pro Forma | Compensation | R&D | QSI | (GAAP) | ||||||||||||||||
Earnings before taxes, depreciation, amortization and other adjustments (1) |
$ | 980 | $ | (172 | ) | $ | | $ | (30 | ) | $ | 778 | ||||||||
Working capital changes and taxes paid (2) |
92 | | | 19 | 111 | |||||||||||||||
Net cash provided (used) by operating activities |
1,072 | (172 | ) | | (11 | ) | 889 | |||||||||||||
Capital expenditures |
(125 | ) | | | (36 | ) | (161 | ) | ||||||||||||
Free cash flow (Net cash provided by operating activities less
capital expenditures) |
947 | (172 | ) | | (47 | ) | 728 | |||||||||||||
Net additional share capital |
287 | | | | 287 | |||||||||||||||
Tax benefits from stock options exercised during the quarter |
| 172 | | | 172 | |||||||||||||||
Dividends paid |
(298 | ) | | | | (298 | ) | |||||||||||||
Other investments and acquisitions, net of cash acquired |
(259 | ) | | | (5 | ) | (264 | ) | ||||||||||||
Other items, net |
(3 | ) | | | 1 | (2 | ) | |||||||||||||
Changes in fair value and other changes to marketable securities |
64 | | | 19 | 83 | |||||||||||||||
Marketable securities pending settlement |
63 | | | | 63 | |||||||||||||||
Transfer from QSI (3) |
13 | | | (13 | ) | | ||||||||||||||
Transfer to QSI (4) |
(49 | ) | | | 49 | | ||||||||||||||
Net increase in cash, cash equivalents and marketable securities (5) |
$ | 765 | $ | | $ | | $ | 4 | $ | 769 | ||||||||||
(1) Reconciliation to GAAP: |
||||||||||||||||||||
Net income (loss) |
$ | 706 | $ | (78 | ) | $ | (21 | ) | $ | (14 | ) | $ | 593 | |||||||
Share-based compensation |
| 78 | | | 78 | |||||||||||||||
Other non-cash adjustments (a) |
232 | (172 | )(b) | 21 | (10 | ) | 71 | |||||||||||||
Net realized gains on marketable securities and other investments |
(34 | ) | | | (6 | ) | (40 | ) | ||||||||||||
Net taxes paid |
76 | | | | 76 | |||||||||||||||
Earnings before taxes, depreciation, amortization and other adjustments |
$ | 980 | $ | (172 | ) | $ | | $ | (30 | ) | $ | 778 | ||||||||
(2) Reconciliation to GAAP: |
||||||||||||||||||||
Increase in cash resulting from changes in working capital |
$ | 168 | $ | | $ | | $ | 19 | $ | 187 | ||||||||||
Net taxes paid |
(76 | ) | | | | (76 | ) | |||||||||||||
Working capital changes and taxes paid |
$ | 92 | $ | | $ | | $ | 19 | $ | 111 | ||||||||||
(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) |
$ | 202 | $ | | $ | | $ | | $ | 202 | ||||||||||
Plus: Net purchases and maturities of marketable securities |
436 | | | (15 | ) | 421 | ||||||||||||||
Plus: Net increase in fair value and other changes to marketable securities |
64 | | | 19 | 83 | |||||||||||||||
Plus: Net increase in marketable securities pending settlement |
63 | | | | 63 | |||||||||||||||
Net increase in cash, cash equivalents and marketable securities |
$ | 765 | $ | | $ | | $ | 4 | $ | 769 | ||||||||||
(a) | See detail below. | |
(b) | Tax benefits from stock options exercised during the quarter. |
QUALCOMM Announces Second Quarter Fiscal 2006 Results | Page 18 of 21 |
Six Months Ended March 26, 2006 | ||||||||||||||||||||||||
Estimated | In- | Total | ||||||||||||||||||||||
QUALCOMM | Share-Based | Tax | Process | QUALCOMM | ||||||||||||||||||||
Pro Forma | Compensation | Adjustment | R&D | QSI | (GAAP) | |||||||||||||||||||
Earnings before taxes, depreciation,
amortization and other adjustments (1) |
$ | 1,907 | $ | (273 | ) | $ | | $ | | $ | (57 | ) | $ | 1,577 | ||||||||||
Working capital changes and taxes paid (2) |
(122 | ) | | | | 30 | (92 | ) | ||||||||||||||||
Net cash provided (used) by operating activities |
1,785 | (273 | ) | | | (27 | ) | 1,485 | ||||||||||||||||
Capital expenditures |
(307 | ) | | | | (67 | ) | (374 | ) | |||||||||||||||
Free cash flow (Net cash provided by operating activities
less capital expenditures) |
1,478 | (273 | ) | | | (94 | ) | 1,111 | ||||||||||||||||
Net additional share capital |
468 | | | | | 468 | ||||||||||||||||||
Tax benefits from stock options exercised during the period |
| 273 | | | | 273 | ||||||||||||||||||
Dividends paid |
(298 | ) | | | | | (298 | ) | ||||||||||||||||
Other investments and acquisitions |
(263 | ) | | | | (7 | ) | (270 | ) | |||||||||||||||
Other items, net |
| | | | 4 | 4 | ||||||||||||||||||
Changes in fair value and other changes to marketable securities |
113 | | | | 25 | 138 | ||||||||||||||||||
Marketable securities pending settlement |
60 | | | | | 60 | ||||||||||||||||||
Transfer from QSI (3) |
21 | | | | (21 | ) | | |||||||||||||||||
Transfer to QSI (4) |
(103 | ) | | | | 103 | | |||||||||||||||||
Net increase in cash, cash equivalents
and marketable securities (5) |
$ | 1,476 | $ | | $ | | $ | | $ | 10 | $ | 1,486 | ||||||||||||
(1) Reconciliation to GAAP: |
||||||||||||||||||||||||
Net income (loss) |
$ | 1,373 | $ | (160 | ) | $ | 56 | $ | (21 | ) | $ | (35 | ) | $ | 1,213 | |||||||||
Share-based compensation |
| 160 | | | | 160 | ||||||||||||||||||
Other non-cash adjustments (a) |
500 | (273 | )(b) | (56 | ) | 21 | (16 | ) | 176 | |||||||||||||||
Net realized gains on marketable securities and other investments |
(54 | ) | | | | (6 | ) | (60 | ) | |||||||||||||||
Net taxes paid |
88 | | | | | 88 | ||||||||||||||||||
Earnings before taxes, depreciation,
amortization and other adjustments |
$ | 1,907 | $ | (273 | ) | $ | | $ | | $ | (57 | ) | $ | 1,577 | ||||||||||
(2) Reconciliation to GAAP: |
||||||||||||||||||||||||
Increase in cash resulting from changes in working capital |
$ | (34 | ) | $ | | $ | | $ | | $ | 30 | $ | (4 | ) | ||||||||||
Net taxes paid |
(88 | ) | | | | | (88 | ) | ||||||||||||||||
Working capital changes and taxes paid |
$ | (122 | ) | $ | | $ | | $ | | $ | 30 | $ | (92 | ) | ||||||||||
(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) |
$ | (291 | ) | $ | | $ | | $ | | $ | | $ | (291 | ) | ||||||||||
Plus: Net purchases and maturities of marketable securities |
1,594 | | | | (15 | ) | 1,579 | |||||||||||||||||
Plus: Net increase in fair value and other changes to
marketable securities |
113 | | | | 25 | 138 | ||||||||||||||||||
Plus: Net increase in marketable securities pending
settlement (receipt) |
60 | | | | | 60 | ||||||||||||||||||
Net increase in cash, cash equivalents and marketable securities |
$ | 1,476 | $ | | $ | | $ | | $ | 10 | $ | 1,486 | ||||||||||||
(a) | See detail below. | |
(b) | Tax benefits from stock options exercised during the period. |
QUALCOMM Announces Second Quarter Fiscal 2006 Results | Page 19 of 21 |
Three Months Ended March 26, 2006 | ||||||||||||||||||||
Estimated | Total | |||||||||||||||||||
QUALCOMM | Share-Based | In-Process | QUALCOMM | |||||||||||||||||
Pro Forma | Compensation | R&D | QSI | (GAAP) | ||||||||||||||||
(a) Other non-cash adjustments are comprised of: |
||||||||||||||||||||
Depreciation and amortization |
$ | 61 | $ | | $ | | $ | 2 | $ | 63 | ||||||||||
Tax benefits from stock options exercised during the quarter |
| (172 | ) | | | (172 | ) | |||||||||||||
Non-cash income tax expense (benefit) |
180 | | | (22 | ) | 158 | ||||||||||||||
Other non-cash charges and (credits) |
(9 | ) | | 21 | 10 | 22 | ||||||||||||||
Total non-cash adjustments |
$ | 232 | $ | (172 | ) | $ | 21 | $ | (10 | ) | $ | 71 | ||||||||
Six Months Ended March 26, 2006 | ||||||||||||||||||||||||
Estimated | Total | |||||||||||||||||||||||
QUALCOMM | Share-Based | Tax | In-Process | QUALCOMM | ||||||||||||||||||||
Pro Forma | Compensation | Adjustment | R&D | QSI | (GAAP) | |||||||||||||||||||
(a) Other non-cash adjustments are comprised of: |
||||||||||||||||||||||||
Depreciation and amortization |
$ | 118 | $ | | $ | | $ | | $ | 3 | $ | 121 | ||||||||||||
Tax benefits
from stock options exercised during the period |
| (273 | ) | | | | (273 | ) | ||||||||||||||||
Non-cash income tax expense (benefit) |
407 | | (56 | ) | | (49 | ) | 302 | ||||||||||||||||
Other non-cash charges and (credits) |
(25 | ) | | | 21 | 30 | 26 | |||||||||||||||||
Total non-cash adjustments |
$ | 500 | $ | (273 | ) | $ | (56 | ) | $ | 21 | $ | (16 | ) | $ | 176 | |||||||||
Three Months Ended March 27, 2005 | ||||||||||||||||
Total | ||||||||||||||||
QUALCOMM | Tax | QUALCOMM | ||||||||||||||
Pro Forma | Adjustment | QSI | (GAAP) | |||||||||||||
Net cash provided by operating activities |
$ | 833 | $ | | $ | (12 | ) | $ | 821 | |||||||
Capital expenditures |
(92 | ) | | (2 | ) | (94 | ) | |||||||||
Free cash flow (Net cash provided by
operating activities less capital expenditures) |
$ | 741 | $ | | $ | (14 | ) | $ | 727 | |||||||
Six Months Ended March 27, 2005 | ||||||||||||||||
Total | ||||||||||||||||
QUALCOMM | Tax | QUALCOMM | ||||||||||||||
Pro Forma | Adjustment | QSI | (GAAP) | |||||||||||||
Net cash provided by operating activities |
$ | 1,220 | $ | | $ | (2 | ) | $ | 1,218 | |||||||
Capital expenditures |
(204 | ) | | (78 | ) | (282 | ) | |||||||||
Free cash flow (Net cash provided by
operating activities less capital expenditures) |
$ | 1,016 | $ | | $ | (80 | ) | $ | 936 | |||||||
QUALCOMM Announces Second Quarter Fiscal 2006 Results | Page 20 of 21 |
March 26, | September 25, | |||||||
2006 | 2005 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,779 | $ | 2,070 | ||||
Marketable securities |
5,686 | 4,478 | ||||||
Accounts receivable, net |
569 | 544 | ||||||
Inventories |
218 | 177 | ||||||
Deferred tax assets |
280 | 343 | ||||||
Other current assets |
130 | 179 | ||||||
Total current assets |
8,662 | 7,791 | ||||||
Marketable securities |
2,702 | 2,133 | ||||||
Property, plant and equipment, net |
1,275 | 1,022 | ||||||
Goodwill |
1,018 | 571 | ||||||
Deferred tax assets |
548 | 444 | ||||||
Other assets |
654 | 518 | ||||||
Total assets |
$ | 14,859 | $ | 12,479 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Trade accounts payable |
$ | 459 | $ | 376 | ||||
Payroll and other benefits related liabilities |
214 | 196 | ||||||
Unearned revenue |
160 | 163 | ||||||
Other current liabilities |
309 | 335 | ||||||
Total current liabilities |
1,142 | 1,070 | ||||||
Unearned revenue |
136 | 146 | ||||||
Other liabilities |
181 | 144 | ||||||
Total liabilities |
1,459 | 1,360 | ||||||
Stockholders equity: |
||||||||
Preferred stock, $0.0001 par value; issuable in series;
8 shares authorized; none outstanding at
March 26, 2006 and September 25, 2005, respectively |
| | ||||||
Common stock, $0.0001 par value; 6,000 shares authorized;
1,673 and 1,640 shares issued and outstanding at
March 26, 2006 and September 25, 2005, respectively |
| | ||||||
Paid-in capital |
8,099 | 6,753 | ||||||
Retained earnings |
5,243 | 4,328 | ||||||
Accumulated other comprehensive income |
58 | 38 | ||||||
Total stockholders equity |
13,400 | 11,119 | ||||||
Total liabilities and stockholders equity |
$ | 14,859 | $ | 12,479 | ||||
QUALCOMM Announces Second Quarter Fiscal 2006 Results | Page 21 of 21 |
Three Months Ended | Six Months Ended | |||||||||||||||
March 26, | March 27, | March 26, | March 27, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenues: |
||||||||||||||||
Equipment and services |
$ | 1,122 | $ | 849 | $ | 2,271 | $ | 1,826 | ||||||||
Licensing and royalty fees |
712 | 516 | 1,304 | 928 | ||||||||||||
1,834 | 1,365 | 3,575 | 2,754 | |||||||||||||
Operating expenses: |
||||||||||||||||
Cost of equipment and services revenues |
521 | 386 | 1,037 | 815 | ||||||||||||
Research and development |
390 | 252 | 731 | 480 | ||||||||||||
Selling, general and administrative |
263 | 155 | 502 | 303 | ||||||||||||
Total operating expenses |
1,174 | 793 | 2,270 | 1,598 | ||||||||||||
Operating income |
660 | 572 | 1,305 | 1,156 | ||||||||||||
Investment income, net |
125 | 61 | 216 | 181 | ||||||||||||
Income before income taxes |
785 | 633 | 1,521 | 1,337 | ||||||||||||
Income tax expense |
(192 | ) | (101 | ) | (308 | ) | (292 | ) | ||||||||
Net income |
$ | 593 | $ | 532 | $ | 1,213 | $ | 1,045 | ||||||||
Basic earnings per common share |
$ | 0.36 | $ | 0.32 | $ | 0.73 | $ | 0.64 | ||||||||
Diluted earnings per common share |
$ | 0.34 | $ | 0.31 | $ | 0.71 | $ | 0.61 | ||||||||
Shares used in per share calculations: |
||||||||||||||||
Basic |
1,664 | 1,646 | 1,655 | 1,643 | ||||||||||||
Diluted |
1,721 | 1,704 | 1,711 | 1,704 | ||||||||||||
Dividends per share paid |
$ | 0.18 | $ | 0.14 | $ | 0.18 | $ | 0.14 | ||||||||
Dividends per share announced |
$ | 0.09 | $ | 0.07 | $ | 0.18 | $ | 0.14 | ||||||||