| Revenues: $1.95 billion, up 44 percent year-over-year and 6 percent sequentially. | ||
| Net income: $643 million, up 15 percent year-over-year and 8 percent sequentially. | ||
| Diluted earnings per share: $0.37, up 12 percent year-over-year and 9 percent sequentially. | ||
| Effective tax rate: 22 percent for the quarter and estimated for fiscal 2006. | ||
| Estimated share-based compensation: $83 million, net of tax. | ||
| Operating cash flow: $816 million, up 56 percent year-over-year; 42 percent of revenue. | ||
| Return of capital to stockholders: $1.37 billion in the third quarter, including $202 million of cash dividends, or $0.12 per share, and $1.17 billion to repurchase 26.4 million shares of our common stock. After the end of the third fiscal quarter, we repurchased an additional 5.6 million shares for $238 million, with fiscal 2006 repurchases to date totaling 32.0 million shares for $1.40 billion. |
| Revenues: $1.95 billion, up 44 percent year-over-year and 6 percent sequentially. | ||
| Net income: $726 million, up 56 percent year-over-year and 3 percent sequentially. |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 2 of 21 |
| Diluted earnings per share: $0.42, up 50 percent year-over-year and 2 percent sequentially; excludes $0.05 loss per share attributable to estimated share-based compensation. | ||
| Effective tax rate: 26 percent for the quarter and estimated for fiscal 2006. | ||
| Free cash flow: $795 million, up 116 percent year-over-year; 41 percent of revenue. (Defined as net cash from operating activities less capital expenditures) |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 3 of 21 |
Estimated | Total | |||||||||||||||
QUALCOMM | Share-Based | QUALCOMM | ||||||||||||||
($ in millions) | Pro Forma | Compensation | QSI | (GAAP) | ||||||||||||
Third quarter fiscal 2006 |
$ | 322 | $ | 56 | $ | 17 | $ | 395 | ||||||||
Third quarter fiscal 2005 |
$ | 246 | $ | | $ | 13 | $ | 259 | ||||||||
Year-over-year change |
31 | % | 31 | % | 53 | % |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 4 of 21 |
Estimated | Total | |||||||||||||||
QUALCOMM | Share-Based | QUALCOMM | ||||||||||||||
($ in millions) | Pro Forma | Compensation | QSI | (GAAP) | ||||||||||||
Third quarter fiscal 2006 |
$ | 214 | $ | 60 | $ | 19 | $ | 293 | ||||||||
Third quarter fiscal 2005 |
$ | 151 | $ | | $ | (1 | ) | $ | 150 | |||||||
Year-over-year change |
42 | % | N/M | 95 | % |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 5 of 21 |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 6 of 21 |
Current Guidance | ||||||||
Q405 | Q406 | |||||||
Results | Estimates | |||||||
QUALCOMM Pro Forma |
||||||||
Revenues
|
$1.56B | $1.88B-$1.98B | ||||||
Year-over-year change
|
increase 21% 27% | |||||||
Diluted earnings per share (EPS)
|
$0.32 | $0.39-$0.41 | ||||||
Year-over-year change
|
increase 22% 28% | |||||||
Total QUALCOMM (GAAP) |
||||||||
Revenues
|
$1.56B | $1.88B-$1.98B | ||||||
Year-over-year change
|
increase 21% 27% | |||||||
Diluted earnings per share (EPS)
|
$0.32 | $0.33-$0.35 | ||||||
Year-over-year change
|
increase 3% 9% | |||||||
Diluted EPS attributable to QSI
|
$0.00 | ($0.01) | ||||||
Diluted EPS attributable to estimated share-based compensation
|
n/a | ($0.05) | ||||||
Metrics |
||||||||
MSM Shipments
|
approx. 40M | approx. 53M 56M | ||||||
CDMA/WCDMA handset units shipped
|
approx. 48M* | approx. 67M 70M* | ||||||
CDMA/WCDMA handset unit wholesale average selling price
|
approx. $213* | approx. $215* | ||||||
*Shipments in June quarter, reported in Sept. quarter |
Prior Guidance | Current Guidance | |||||||||||
FY 2005 | FY 2006 | FY 2006 | ||||||||||
Results | Estimates | Estimates | ||||||||||
QUALCOMM Pro Forma |
||||||||||||
Revenues
|
$5.67B | $7.1B-$7.4B | $7.4B-$7.5B | |||||||||
Year-over-year change
|
increase 25% 30% | increase 30% 32% | ||||||||||
Diluted earnings per share (EPS)
|
$1.16 | $1.53-$1.57 | $1.61-$1.63 | |||||||||
Year-over-year change
|
increase 32% 35% | increase 39% 41% | ||||||||||
Total QUALCOMM (GAAP) |
||||||||||||
Revenues
|
$5.67B | $7.1B-$7.4B | $7.4B-$7.5B | |||||||||
Year-over-year change
|
increase 25% 30% | increase 30% 32% | ||||||||||
Diluted earnings per share (EPS)
|
$1.26 | $1.31-$1.35 | $1.40-$1.42 | |||||||||
Year-over-year change
|
increase 4% 7% | increase 11% 13% | ||||||||||
Diluted EPS attributable to in-process R&D
|
n/a | ($0.01) | ($0.01) | |||||||||
Diluted EPS attributable to QSI
|
$0.06 | ($0.04) | ($0.03) | |||||||||
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. $207 | approx. $213 | |||||||||
*Shipments
in Sept. to June quarters, reported in Dec. to Sept.
quarters |
Prior Guidance | Current Guidance | |||||
Calendar 2006 | Calendar 2006 | |||||
CDMA/WCDMA handset unit shipments | Calendar 2005 | Estimates | Estimates | |||
March quarter actuals
|
approx. 43M | approx. 65M 66M | approx. 66M | |||
June quarter
|
approx. 48M | not provided | approx. 67M 70M | |||
September quarter
|
approx. 52M | not provided | not provided | |||
December quarter
|
approx. 67M | not provided | not provided | |||
Calendar year range
|
approx. 210M | approx. 275M 290M | approx. 285M 295M | |||
Midpoint | Midpoint | Midpoint | ||||
CDMA/WCDMA units
|
approx. 210M | approx. 283M | approx. 290M | |||
CDMA units
|
approx. 160M | approx. 187M | approx. 190M | |||
WCDMA units
|
approx. 50M | approx. 96M | approx. 100M |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 7 of 21 |
Estimated | Total | |||||||||||||||||||||||||||||||
Reconciling | QUALCOMM | Share-Based | QUALCOMM | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Pro Forma | Compensation (2) | QSI (4) | (GAAP) | ||||||||||||||||||||||||
Revenues |
$ | 1,133 | $ | 683 | $ | 162 | $ | (27 | ) | $ | 1,951 | $ | | $ | | $ | 1,951 | |||||||||||||||
Change from prior year |
48 | % | 52 | % | (1 | %) | N/M | 44 | % | | | 44 | % | |||||||||||||||||||
Change from prior quarter |
11 | % | 1 | % | 0 | % | N/M | 6 | % | | | 6 | % | |||||||||||||||||||
EBT |
$ | 303 | $ | 619 | $ | 19 | $ | 35 | $ | 976 | $ | (126 | ) | $ | (26 | ) | $ | 824 | ||||||||||||||
Change from prior year |
63 | % | 52 | % | 58 | % | N/M | 49 | % | N/M | N/M | 20 | % | |||||||||||||||||||
Change from prior quarter |
20 | % | (1 | %) | 19 | % | N/M | 1 | % | N/M | N/M | 5 | % | |||||||||||||||||||
Net income (loss) |
$ | 726 | $ | (83 | ) | $ | | $ | 643 | |||||||||||||||||||||||
Change from prior year |
56 | % | N/M | N/M | 15 | % | ||||||||||||||||||||||||||
Change from prior quarter |
3 | % | N/M | N/M | 8 | % | ||||||||||||||||||||||||||
Diluted EPS |
$ | 0.42 | $ | (0.05 | ) | $ | | $ | 0.37 | |||||||||||||||||||||||
Change from prior year |
50 | % | N/M | N/M | 12 | % | ||||||||||||||||||||||||||
Change from prior quarter |
2 | % | N/M | N/M | 9 | % | ||||||||||||||||||||||||||
Diluted shares used |
1,728 | 1,728 | 1,728 | 1,728 |
Estimated | Total | |||||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM | Share-Based | In-Process | QUALCOMM | ||||||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Pro Forma | Compensation (2) | R&D (3) | QSI (4) | (GAAP) | |||||||||||||||||||||||||||
Revenues |
$ | 1,018 | $ | 679 | $ | 162 | $ | (25 | ) | $ | 1,834 | $ | | $ | | $ | | $ | 1,834 | |||||||||||||||||
EBT |
252 | 626 | 16 | 68 | 962 | (120 | ) | (21 | ) | (36 | ) | 785 | ||||||||||||||||||||||||
Net income (loss) |
706 | (78 | ) | (21 | ) | (14 | ) | 593 | ||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.41 | $ | (0.05 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.34 | |||||||||||||||||||||||
Diluted shares used |
1,721 | 1,721 | 1,721 | 1,721 | 1,721 |
Total | ||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM | Tax | QUALCOMM | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Pro Forma | Adjustments (5) | 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 | QUALCOMM | ||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Pro Forma | QSI (4) | (GAAP) | |||||||||||||||||||||
Revenues |
$ | 912 | $ | 497 | $ | 170 | $ | (19 | ) | $ | 1,560 | $ | | $ | 1,560 | |||||||||||||
EBT |
266 | 451 | 21 | 75 | 813 | (27 | ) | 786 | ||||||||||||||||||||
Net
income (loss) |
543 | (5 | ) | 538 | ||||||||||||||||||||||||
Diluted EPS |
$ | 0.32 | $ | | $ | 0.32 | ||||||||||||||||||||||
Diluted shares used |
1,686 | 1,686 | 1,686 |
Total | ||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM | Tax Adjustments | QUALCOMM | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Pro Forma | (5)(6) | 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 | Total | |||||||||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM | Share-Based | Tax | In-Process | QUALCOMM | |||||||||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Pro Forma | Compensation (2) | Adjustment (7) | R&D (3) | QSI (4) | (GAAP) | ||||||||||||||||||||||||||||||
Revenues |
$ | 3,184 | $ | 1,926 | $ | 491 | $ | (74 | ) | $ | 5,527 | $ | | $ | | $ | | $ | | $ | 5,527 | |||||||||||||||||||
Change from prior year |
34 | % | 44 | % | 4 | % | N/M | 34 | % | | | | | 34 | % | |||||||||||||||||||||||||
EBT |
$ | 855 | $ | 1,762 | $ | 52 | $ | 176 | $ | 2,845 | $ | (368 | ) | $ | | $ | (21 | ) | $ | (110 | ) | $ | 2,346 | |||||||||||||||||
Change from prior year |
46 | % | 45 | % | 41 | % | N/M | 43 | % | N/M | | | N/M | 16 | % | |||||||||||||||||||||||||
Net income (loss) |
$ | 2,098 | $ | (243 | ) | $ | 56 | $ | (21 | ) | $ | (34 | ) | $ | 1,856 | |||||||||||||||||||||||||
Change from prior year |
47 | % | N/M | N/M | N/M | N/M | 16 | % | ||||||||||||||||||||||||||||||||
Diluted EPS |
$ | 1.22 | $ | (0.14 | ) | $ | 0.03 | $ | (0.01 | ) | $ | (0.02 | ) | $ | 1.08 | |||||||||||||||||||||||||
Change from prior year |
45 | % | N/M | N/M | N/M | N/M | 14 | % | ||||||||||||||||||||||||||||||||
Diluted shares used |
1,717 | 1,717 | 1,717 | 1,717 | 1,717 | 1,717 |
Reconciling | QUALCOMM | Tax Adjustments | Total QUALCOMM | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (1) | Pro Forma | (5)(6) | QSI (4) | (GAAP) | ||||||||||||||||||||||||
Revenues |
$ | 2,378 | $ | 1,342 | $ | 473 | $ | (81 | ) | $ | 4,112 | $ | | $ | | $ | 4,112 | |||||||||||||||
EBT |
586 | 1,212 | 37 | 151 | 1,986 | | 37 | 2,023 | ||||||||||||||||||||||||
Net income |
1,427 | 71 | 107 | 1,605 | ||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.84 | $ | 0.04 | $ | 0.06 | $ | 0.95 | ||||||||||||||||||||||||
Diluted shares used |
1,697 | 1,697 | 1,697 | 1,697 |
QUALCOMM Announces Third 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 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. | |
(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 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. |
| For the fourth consecutive quarter, we shipped a record number of MSM chips. Approximately 55 million MSM chips were shipped to customers worldwide during the third quarter of fiscal 2006, compared to approximately 36 million units in the same quarter of fiscal 2005 and approximately 49 million units in the second quarter of fiscal 2006. | ||
| We shipped a record number of cell site modem voice-equivalent channel elements in the quarter. This record was primarily driven by demand for the EV-DO Rev. A CSM6800 solution. | ||
| We sampled the first 65 nanometer (nm) chipset for EV-DO Rev. A ahead of schedule. Commercial devices based on EV-DO Rev. A are expected before the end of calendar year 2006. | ||
| Our WCDMA product portfolio was reinforced by the early sampling of three additional WCDMA/HSDPA chipsets in 65nm, which will help drive the migration of wireless users to 3G. |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 9 of 21 |
| We introduced the Universal Broadcast Modem, or UBM product, that will allow manufacturers to leverage a common platform that supports FLO (Forward Link-Only), DVB-H, and one-segment ISDB-T for mobile TV on wireless devices. | ||
| We announced collaboration with Microsoft which features integrated support for Windows Mobile on Convergence Platform chipsets for EV-DO/EV-DO Rev. A and HSDPA/HSUPA networks. This joint effort will result in a wider range of Windows Mobile Smartphones leveraging MSM solutions to be available by early 2007. |
| In the third quarter of fiscal 2006, five new licensees entered into CDMA license agreements including our first licensee in India. Two companies entered into licenses for CDMA2000 and three companies entered into licenses for WCDMA. In addition, two existing CDMA2000 licensees signed amendments expanding their license to include WCDMA. | ||
| We entered into a royalty bearing license agreement with a licensee covering sales by that licensee of subscriber units implementing OFDM/OFDMA technologies, including WiMax, for a total of two OFDM/OFDMA licensees. | ||
| Licensee information for the second quarter of fiscal 2006 as reported by licensees in the third quarter of fiscal 2006: |
| Worldwide shipments of approximately 66 million CDMA2000 and WCDMA subscriber units at an average selling price of approximately $213 were reported. | ||
| We estimate WCDMA royalties contributed approximately 47 percent of total royalties reported compared to approximately 46 percent reported in the prior quarter and approximately 36 percent in the year ago quarter. |
| QUALCOMM has 69 BREW® customers in 31 countries. In June 2006, we announced that publishers and developers have earned more than $700 million in revenues to date from the sale of BREW applications and services, compared to the more than $350 million announced in June 2005, evidencing the continued growth and success of the entire BREW wireless value chain. |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 10 of 21 |
| We shipped approximately 10,700 satellite-based systems (OmniTRACS®, EutelTRACS and TruckMAIL) in the third quarter of fiscal 2006, compared to approximately 13,800 in the third quarter of fiscal 2005 and approximately 8,200 in the second quarter of fiscal 2006. This brings the cumulative total satellite-based systems shipped worldwide to more than 597,000. | ||
| We shipped approximately 5,500 terrestrial-based systems (OmniExpress®, GlobalTRACS® and T2 Untethered TrailerTRACS) in the third quarter of fiscal 2006, compared to approximately 19,600 terrestrial-based systems in the third quarter of fiscal 2005 and approximately 8,000 terrestrial-based systems in the second quarter of fiscal 2006. This brings the cumulative total terrestrial-based systems shipped worldwide to nearly 114,000. |
| QUALCOMMs subsidiary, MediaFLO USA Inc. (MediaFLO USA), opened its Broadcast Operation Center (BOC) and Network Operations Center (NOC) in San Diego. Currently, MediaFLO USA is using the BOC and NOC to conduct service trials and in preparation for Verizon Wireless expected launch of MediaFLO services. |
| In July 2006, the Telecommunications Industry Association (TIA) officially approved publication of the FLO Air Interface Specification (AIS). The AIS was the first technical specification produced and approved by the FLO Forum, an association of 45 wireless industry leaders committed to advancing the global standardization of FLO technology. The FLO Forum is playing a key role in making FLO specifications open and uniform for developers, which aligns with the TIAs desire to standardize the technologies needed by industry for use in Terrestrial Mobile Multimedia Multicast. | ||
| We entered into a nonbinding letter of intent with British Sky Broadcasting Limited (BSkyB) in May 2006 to conduct technical trials of our MediaFLO technology in the United Kingdom. | ||
| In May 2006, we announced that the issuance of certain patents to our subsidiary QUALCOMM Flarion Technologies triggered the payment of additional consideration valued at approximately $205 million to the former stockholders and option holders of |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 11 of 21 |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 12 of 21 |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 13 of 21 |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 14 of 21 |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 15 of 21 |
Three Months Ended June 25, 2006 | ||||||||||||||||
Estimated | Total | |||||||||||||||
QUALCOMM | Share-Based | QUALCOMM | ||||||||||||||
Pro Forma | Compensation | QSI | (GAAP) | |||||||||||||
Revenues: |
||||||||||||||||
Equipment and services |
$ | 1,240 | $ | | $ | | $ | 1,240 | ||||||||
Licensing and royalty fees |
711 | | | 711 | ||||||||||||
Total revenues |
1,951 | | | 1,951 | ||||||||||||
Operating expenses: |
||||||||||||||||
Cost of equipment and services revenues |
549 | 10 | | 559 | ||||||||||||
Research and development |
322 | 56 | 17 | 395 | ||||||||||||
Selling, general and administrative |
214 | 60 | 19 | 293 | ||||||||||||
Total operating expenses |
1,085 | 126 | 36 | 1,247 | ||||||||||||
Operating income (loss) |
866 | (126 | ) | (36 | ) | 704 | ||||||||||
Investment income, net |
110 | (a) | | 10 | (b) | 120 | ||||||||||
Income (loss) before income taxes |
976 | (126 | ) | (26 | ) | 824 | ||||||||||
Income tax (expense) benefit |
(250 | )(c) | 43 | 26 | (d) | (181 | )(c) | |||||||||
Net income (loss) |
$ | 726 | $ | (83 | ) | $ | | $ | 643 | |||||||
Earnings (loss) per common share: |
||||||||||||||||
Diluted |
$ | 0.42 | $ | (0.05 | ) | $ | | $ | 0.37 | |||||||
Shares used in per share calculations: |
||||||||||||||||
Diluted |
1,728 | 1,728 | 1,728 | 1,728 | ||||||||||||
Supplemental Financial Data: |
||||||||||||||||
Operating Cash Flow |
$ | 954 | $ | (103 | )(f) | $ | (35 | ) | $ | 816 | ||||||
Operating Cash Flow as a % of Revenue |
49 | % | 42 | % | ||||||||||||
Free Cash Flow (e) |
$ | 795 | $ | (103 | )(f) | $ | (58 | ) | $ | 634 | ||||||
Free Cash Flow as a % of Revenue |
41 | % | 32 | % |
(a) | Includes $117 million in interest and dividend income related to cash, cash equivalents and marketable securities, which are not part of the Companys strategic investment portfolio, and $22 million in net realized gains on investments, partially offset by $24 million in losses on derivative instruments, primarily related to the increase in the fair value of the put option liabilities related to our share repurchase program, and $5 million in other-than-temporary losses on investments. | |
(b) | Includes $12 million in net realized gains on investments and $3 million in interest and dividend income, partially offset by $4 million in other-than-temporary losses on investments and $1 million in interest expense. | |
(c) | The third quarter of fiscal 2006 tax rate of 22% for total QUALCOMM (GAAP) and 26% for QUALCOMM pro forma are consistent with the fiscal year 2006 estimated effective tax rates. | |
(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 June 25, 2006, included herein. | |
(f) | Tax benefits from stock options exercised during the quarter. |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 16 of 21 |
Nine Months Ended June 25, 2006 | ||||||||||||||||||||||||
Estimated | Total | |||||||||||||||||||||||
QUALCOMM | Share-Based | Tax | In-Process | QUALCOMM | ||||||||||||||||||||
Pro Forma | Compensation | Adjustment | R&D | QSI | (GAAP) | |||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Equipment and services |
$ | 3,512 | $ | | $ | | $ | | $ | | $ | 3,512 | ||||||||||||
Licensing and royalty fees |
2,015 | | | | | 2,015 | ||||||||||||||||||
Total revenues |
5,527 | | | | | 5,527 | ||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Cost of equipment and services revenues |
1,564 | 32 | | | | 1,596 | ||||||||||||||||||
Research and development |
897 | 160 | | 21 | 48 | 1,126 | ||||||||||||||||||
Selling, general and administrative |
570 | 176 | | | 49 | 795 | ||||||||||||||||||
Total operating expenses |
3,031 | 368 | | 21 | 97 | 3,517 | ||||||||||||||||||
Operating income (loss) |
2,496 | (368 | ) | (21 | ) | (97 | ) | 2,010 | ||||||||||||||||
Investment income (expense), net |
349 | (a) | | | | (13 | )(b) | 336 | ||||||||||||||||
Income (loss) before income taxes |
2,845 | (368 | ) | | (21 | ) | (110 | ) | 2,346 | |||||||||||||||
Income tax (expense) benefit |
(747 | )(c) | 125 | 56 | | 76 | (d) | (490 | )(c) | |||||||||||||||
Net income (loss) |
$ | 2,098 | $ | (243 | ) | $ | 56 | $ | (21 | ) | $ | (34 | ) | $ | 1,856 | |||||||||
Earnings (loss) per common share: |
||||||||||||||||||||||||
Diluted |
$ | 1.22 | $ | (0.14 | ) | $ | 0.03 | $ | (0.01 | ) | $ | (0.02 | ) | $ | 1.08 | |||||||||
Shares used in per share calculations: |
||||||||||||||||||||||||
Diluted |
1,717 | 1,717 | 1,717 | 1,717 | 1,717 | 1,717 | ||||||||||||||||||
Supplemental Financial Data: |
||||||||||||||||||||||||
Operating Cash Flow |
$ | 2,739 | $ | (376 | )(f) | $ | | $ | | $ | (62 | ) | $ | 2,301 | ||||||||||
Operating Cash Flow as a % of Revenue |
50 | % | 42 | % | ||||||||||||||||||||
Free Cash Flow (e) |
$ | 2,273 | $ | (376 | )(f) | $ | | $ | | $ | (152 | ) | $ | 1,745 | ||||||||||
Free Cash Flow as a % of Revenue |
41 | % | 32 | % |
(a) | Includes $309 million in interest and dividend income related to cash, cash equivalents and marketable securities, which are not part of the Companys strategic investment portfolio, and $76 million in net realized gains on investments, partially offset by $17 million in losses on derivative instruments, primarily related to the increase in the fair values of the put option liabilities related to our share repurchase program, $17 million in other-than-temporary losses on investments and $2 million of interest expense. | |
(b) | Includes $30 million in equity in losses of investees, $3 million in other-than-temporary losses on investments and $1 million of interest expense, partially offset by $18 million in net realized gains on investments and $3 million in interest and dividend income. | |
(c) | The tax rate of 21% for the first nine 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 nine months ended June 25, 2006, included herein. | |
(f) | Tax benefits from stock options exercised during the quarter. |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 17 of 21 |
Three Months Ended June 25, 2006 | ||||||||||||||||
Estimated | Total | |||||||||||||||
QUALCOMM | Share-Based | QUALCOMM | ||||||||||||||
Pro Forma | Compensation | QSI | (GAAP) | |||||||||||||
Earnings before taxes, depreciation, amortization and other adjustments (1) |
$ | 1,035 | $ | (103 | ) | $ | (29 | ) | $ | 903 | ||||||
Working capital changes and taxes paid (2) |
(81 | ) | | (6 | ) | (87 | ) | |||||||||
Net cash provided (used) by operating activities |
954 | (103 | ) | (35 | ) | 816 | ||||||||||
Capital expenditures |
(159 | ) | | (23 | ) | (182 | ) | |||||||||
Free cash flow (Net cash provided by operating activities less
capital expenditures) |
795 | (103 | ) | (58 | ) | 634 | ||||||||||
Net additional share capital |
155 | | | 155 | ||||||||||||
Repurchase and retirement of common stock |
(1,165 | ) | | | (1,165 | ) | ||||||||||
Tax benefits from stock options exercised during the quarter |
| 103 | | 103 | ||||||||||||
Dividends paid |
(202 | ) | | | (202 | ) | ||||||||||
Other investments and acquisitions, net of cash acquired |
(113 | ) | | (7 | ) | (120 | ) | |||||||||
Other items, net |
11 | | 5 | 16 | ||||||||||||
Changes in fair value and other changes to marketable securities |
(102 | ) | | 23 | (79 | ) | ||||||||||
Marketable securities pending settlement |
(31 | ) | | | (31 | ) | ||||||||||
Transfer from QSI (3) |
20 | | (20 | ) | | |||||||||||
Transfer to QSI (4) |
(67 | ) | | 67 | | |||||||||||
Net (decrease) increase in cash, cash equivalents and marketable securities (5) |
$ | (699 | ) | $ | | $ | 10 | $ | (689 | ) | ||||||
(1) Reconciliation to GAAP: |
||||||||||||||||
Net income (loss) |
$ | 726 | $ | (83 | ) | $ | | $ | 643 | |||||||
Share-based compensation, net of tax benefit |
| 83 | | 83 | ||||||||||||
Other non-cash adjustments (a) |
305 | (103 | )(b) | (17 | ) | 185 | ||||||||||
Net realized gains on marketable securities and other investments |
(22 | ) | | (12 | ) | (34 | ) | |||||||||
Net taxes paid |
26 | | | 26 | ||||||||||||
Earnings before taxes, depreciation, amortization and other adjustments |
$ | 1,035 | $ | (103 | ) | $ | (29 | ) | $ | 903 | ||||||
(2) Reconciliation to GAAP: |
||||||||||||||||
Increase in cash resulting from changes in working capital |
(55 | ) | $ | | $ | (6 | ) | $ | (61 | ) | ||||||
Net taxes paid |
(26 | ) | | | (26 | ) | ||||||||||
Working capital changes and taxes paid |
$ | (81 | ) | $ | | $ | (6 | ) | $ | (87 | ) | |||||
(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 decrease in cash and cash equivalents (GAAP) |
$ | (624 | ) | $ | | $ | | $ | (624 | ) | ||||||
Net purchases and maturities of marketable securities |
58 | | (13 | ) | 45 | |||||||||||
Net
(decrease) increase in fair value and other changes to marketable securities |
(102 | ) | | 23 | (79 | ) | ||||||||||
Net decrease in marketable securities pending settlement |
(31 | ) | | | (31 | ) | ||||||||||
Net (decrease) increase in cash, cash equivalents and marketable securities |
$ | (699 | ) | $ | | $ | 10 | $ | (689 | ) | ||||||
(a) | See detail below. | |
(b) | Tax benefits from stock options exercised during the quarter. |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 18 of 21 |
Nine Months Ended June 25, 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) |
$ | 2,942 | $ | (376 | ) | $ | | $ | | $ | (86 | ) | $ | 2,480 | ||||||||||
Working capital changes and taxes paid (2) |
(203 | ) | | | | 24 | (179 | ) | ||||||||||||||||
Net cash provided (used) by operating activities |
2,739 | (376 | ) | | | (62 | ) | 2,301 | ||||||||||||||||
Capital expenditures |
(466 | ) | | | | (90 | ) | (556 | ) | |||||||||||||||
Free cash flow (Net cash provided by operating activities
less capital expenditures) |
2,273 | (376 | ) | | | (152 | ) | 1,745 | ||||||||||||||||
Net additional share capital |
623 | | | | | 623 | ||||||||||||||||||
Repurchase and retirement of common stock |
(1,165 | ) | | | | | (1,165 | ) | ||||||||||||||||
Tax benefits from stock options exercised during the period |
| 376 | | | | 376 | ||||||||||||||||||
Dividends paid |
(500 | ) | | | | | (500 | ) | ||||||||||||||||
Other investments and acquisitions, net of cash acquired |
(376 | ) | | | | (14 | ) | (390 | ) | |||||||||||||||
Other items, net |
11 | | | | 9 | 20 | ||||||||||||||||||
Changes in fair value and other changes to marketable securities |
11 | | | | 48 | 59 | ||||||||||||||||||
Marketable securities pending settlement |
29 | | | | | 29 | ||||||||||||||||||
Transfer from QSI (3) |
41 | | | | (41 | ) | | |||||||||||||||||
Transfer to QSI (4) |
(170 | ) | | | | 170 | | |||||||||||||||||
Net increase in cash, cash equivalents
and marketable securities (5) |
$ | 777 | $ | | $ | | $ | | $ | 20 | $ | 797 | ||||||||||||
(1) Reconciliation to GAAP: |
||||||||||||||||||||||||
Net income (loss) |
$ | 2,098 | $ | (243 | ) | $ | 56 | $ | (21 | ) | $ | (34 | ) | $ | 1,856 | |||||||||
Share-based compensation, net of tax benefit |
| 243 | | | | 243 | ||||||||||||||||||
Other non-cash adjustments (a) |
806 | (376) | (b) | (56 | ) | 21 | (34 | ) | 361 | |||||||||||||||
Net realized gains on marketable securities and other investments |
(76 | ) | | | | (18 | ) | (94 | ) | |||||||||||||||
Net taxes paid |
114 | | | | | 114 | ||||||||||||||||||
Earnings before taxes, depreciation,
amortization and other adjustments |
$ | 2,942 | $ | (376 | ) | $ | | $ | | $ | (86 | ) | $ | 2,480 | ||||||||||
(2) Reconciliation to GAAP: |
||||||||||||||||||||||||
Increase in cash resulting from changes in working capital |
$ | (89 | ) | $ | | $ | | $ | | $ | 24 | $ | (65 | ) | ||||||||||
Net taxes paid |
(114 | ) | | | | | (114 | ) | ||||||||||||||||
Working capital changes and taxes paid |
$ | (203 | ) | $ | | $ | | $ | | $ | 24 | $ | (179 | ) | ||||||||||
(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 decrease in cash and cash equivalents (GAAP) |
$ | (915 | ) | $ | | $ | | $ | | $ | | $ | (915 | ) | ||||||||||
Net purchases and maturities of marketable securities |
1,652 | | | | (28 | ) | 1,624 | |||||||||||||||||
Net increase in fair value and other changes to
marketable securities |
11 | | | | 48 | 59 | ||||||||||||||||||
Net increase in marketable securities pending
settlement |
29 | | | | | 29 | ||||||||||||||||||
Net increase in cash, cash equivalents and marketable securities |
$ | 777 | $ | | $ | | $ | | $ | 20 | $ | 797 | ||||||||||||
(a) | See detail below. | |
(b) | Tax benefits from stock options exercised during the period. |
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 19 of 21 |
Three Months Ended June 25, 2006 | ||||||||||||||||||
Estimated | Total | |||||||||||||||||
QUALCOMM | Share-Based | QUALCOMM | ||||||||||||||||
Pro Forma | Compensation | QSI | (GAAP) | |||||||||||||||
(a) |
Other non-cash adjustments are comprised of: | |||||||||||||||||
Depreciation and amortization | $ | 66 | $ | | $ | 3 | $ | 69 | ||||||||||
Tax benefits from stock options exercised during the quarter | | (103 | ) | | (103 | ) | ||||||||||||
Non-cash income tax expense (benefit) | 224 | | (26 | ) | 198 | |||||||||||||
Other non-cash charges | 15 | | 6 | 21 | ||||||||||||||
Total non-cash adjustments | $ | 305 | $ | (103 | ) | $ | (17 | ) | $ | 185 | ||||||||
Nine Months Ended June 25, 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 | $ | 184 | $ | | $ | | $ | | $ | 6 | $ | 190 | ||||||||||||||
Tax benefits from stock options exercised during the period | | (376 | ) | | | | (376 | ) | ||||||||||||||||||
Non-cash income tax expense (benefit) | 632 | | (56 | ) | | (76 | ) | 500 | ||||||||||||||||||
Other non-cash charges and (credits) | (10 | ) | | | 21 | 36 | 47 | |||||||||||||||||||
Total non-cash adjustments | $ | 806 | $ | (376 | ) | $ | (56 | ) | $ | 21 | $ | (34 | ) | $ | 361 | |||||||||||
Three Months Ended June 26, 2005 | ||||||||||||
Total | ||||||||||||
QUALCOMM | QUALCOMM | |||||||||||
Pro Forma | QSI | (GAAP) | ||||||||||
Net cash provided by operating activities |
$ | 520 | $ | 3 | $ | 523 | ||||||
Capital expenditures |
(152 | ) | (4 | ) | (156 | ) | ||||||
Free cash flow (Net cash provided by
operating activities less capital expenditures) |
$ | 368 | $ | (1 | ) | $ | 367 | |||||
Nine Months Ended June 26, 2005 | ||||||||||||
Total | ||||||||||||
QUALCOMM | QUALCOMM | |||||||||||
Pro Forma | QSI | (GAAP) | ||||||||||
Net cash provided by operating activities |
$ | 1,741 | $ | | $ | 1,741 | ||||||
Capital expenditures |
(356 | ) | (82 | ) | $ | (438 | ) | |||||
Free cash flow (Net cash provided by
operating activities less capital expenditures) |
$ | 1,385 | $ | (82 | ) | $ | 1,303 | |||||
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 20 of 21 |
June 25, | September 25, | |||||||
2006 | 2005 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,155 | $ | 2,070 | ||||
Marketable securities |
4,716 | 4,478 | ||||||
Accounts receivable, net |
695 | 544 | ||||||
Inventories |
259 | 177 | ||||||
Deferred tax assets |
316 | 343 | ||||||
Other current assets |
133 | 179 | ||||||
Total current assets |
7,274 | 7,791 | ||||||
Marketable securities |
3,607 | 2,133 | ||||||
Property, plant and equipment, net |
1,420 | 1,022 | ||||||
Goodwill |
1,236 | 571 | ||||||
Deferred tax assets |
483 | 444 | ||||||
Other assets |
693 | 518 | ||||||
Total assets |
$ | 14,713 | $ | 12,479 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Trade accounts payable |
$ | 501 | $ | 376 | ||||
Payroll and other benefits related liabilities |
241 | 196 | ||||||
Unearned revenue |
176 | 163 | ||||||
Other current liabilities |
418 | 335 | ||||||
Total current liabilities |
1,336 | 1,070 | ||||||
Unearned revenue |
144 | 146 | ||||||
Other liabilities |
235 | 144 | ||||||
Total liabilities |
1,715 | 1,360 | ||||||
Stockholders equity: |
||||||||
Preferred stock, $0.0001 par value; issuable in series;
8 shares authorized; none outstanding at
June 25, 2006 and September 25, 2005, respectively |
| | ||||||
Common stock, $0.0001 par value; 6,000 shares authorized;
1,656 and 1,640 shares issued and outstanding at
June 25, 2006 and September 25, 2005, respectively |
| | ||||||
Paid-in capital |
7,325 | 6,753 | ||||||
Retained earnings |
5,684 | 4,328 | ||||||
Accumulated other comprehensive (loss) income |
(11 | ) | 38 | |||||
Total stockholders equity |
12,998 | 11,119 | ||||||
Total liabilities and stockholders equity |
$ | 14,713 | $ | 12,479 | ||||
QUALCOMM Announces Third Quarter Fiscal 2006 Results | Page 21 of 21 |
Three Months Ended | Nine Months Ended | |||||||||||||||
June 25, | June 26, | June 25, | June 26, | |||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenues: |
||||||||||||||||
Equipment and services |
$ | 1,240 | $ | 882 | $ | 3,512 | $ | 2,708 | ||||||||
Licensing and royalty fees |
711 | 476 | 2,015 | 1,404 | ||||||||||||
Total revenues |
1,951 | 1,358 | 5,527 | 4,112 | ||||||||||||
Operating expenses: |
||||||||||||||||
Cost of equipment and services revenues |
559 | 389 | 1,596 | 1,204 | ||||||||||||
Research and development |
395 | 259 | 1,126 | 740 | ||||||||||||
Selling, general and administrative |
293 | 150 | 795 | 452 | ||||||||||||
Total operating expenses |
1,247 | 798 | 3,517 | 2,396 | ||||||||||||
Operating income |
704 | 560 | 2,010 | 1,716 | ||||||||||||
Investment income, net |
120 | 126 | 336 | 307 | ||||||||||||
Income before income taxes |
824 | 686 | 2,346 | 2,023 | ||||||||||||
Income tax expense |
(181 | ) | (126 | ) | (490 | ) | (418 | ) | ||||||||
Net income |
$ | 643 | $ | 560 | $ | 1,856 | $ | 1,605 | ||||||||
Basic earnings per common share |
$ | 0.38 | $ | 0.34 | $ | 1.12 | $ | 0.98 | ||||||||
Diluted earnings per common share |
$ | 0.37 | $ | 0.33 | $ | 1.08 | $ | 0.95 | ||||||||
Shares used in per share calculations: |
||||||||||||||||
Basic |
1,675 | 1,633 | 1,661 | 1,640 | ||||||||||||
Diluted |
1,728 | 1,683 | 1,717 | 1,697 | ||||||||||||
Dividends per share paid |
$ | 0.12 | $ | 0.09 | $ | 0.30 | $ | 0.23 | ||||||||
Dividends per share announced |
$ | 0.12 | $ | 0.09 | $ | 0.30 | $ | 0.23 | ||||||||