SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): May 24, 1999 QUALCOMM INCORPORATED (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation) 0-19528 95-3685934 (Commission File No.) (IRS Employer Identification No.) 6455 LUSK BOULEVARD SAN DIEGO, CALIFORNIA 92121 (Address of principal executive offices and zip code) Registrant's telephone number, including area code: (619) 587-1121 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On May 24, 1999 (the "Closing Date"), QUALCOMM Incorporated ("QUALCOMM") sold certain of its assets related to its terrestrial CDMA wireless infrastructure business (the "Assets") to Telefonaktiebolaget LM Ericsson (publ), a Swedish company ("Ericsson") pursuant to that certain Asset Purchase Agreement dated March 24, 1999 between QUALCOMM and Ericsson (the "Asset Purchase Agreement"). QUALCOMM received $98,097,000 in cash on the Closing Date. Total consideration will be based on a final determination of net assets as of the Closing Date. A description of the transaction is set forth in the Press Release issued by QUALCOMM dated May 24, 1999, a copy of which is attached hereto as Exhibit 99.1. 2 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Not applicable. (b) PRO FORMA FINANCIAL INFORMATION. (1) UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF QUALCOMM INCORPORATED. The following unaudited pro forma condensed consolidated financial information is being filed herewith:
Page: Unaudited Pro Forma Condensed Consolidated Balance Sheet at March 28, 1999 4 Unaudited Pro Forma Condensed Consolidated Statement of Income for the Six Months ended March 28, 1999 5 Unaudited Pro Forma Condensed Consolidated Statement of Income for the Year ended September 30, 1998 6 Notes to Unaudited Pro Forma Condensed Consolidated Financial Information 7
(c) EXHIBITS. 2.1 Asset Purchase Agreement dated March 24, 1999 between QUALCOMM Incorporated and Telefonaktiebolaget LM Ericsson (publ) (incorporated herein by reference to QUALCOMM's Form 10-Q for the three month period ended March 28, 1999 and filed with the Securities and Exchange Commission on May 11, 1999). 2.2 Amendment No. 1 dated as of May 24, 1999 to the Asset Purchase Agreement dated as of March 24, 1999 between QUALCOMM Incorporated and Telefonaktiebolaget LM Ericsson (publ).(1) 99.1 Press Release dated May 24, 1999. - --------------- (1) Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment. Omitted portions will be filed separately with the Securities and Exchange Commission. 3 QUALCOMM INCORPORATED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS, EXCEPT PER SHARE DATA)
MARCH 28, 1999 ----------------------------------------------- PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA(a) ---------- ----------- ------------ ASSETS Current assets: Cash and cash equivalents .................... $ 121,253 $ 98,097(b) $ 219,350 Investments .................................. 83,395 0 83,395 Accounts receivable, net ..................... 814,213 (2,164)(c) 812,049 Finance receivables .......................... 59,457 0 59,457 Inventories, net ............................. 254,477 (68,586)(d) 185,891 Other current assets ......................... 215,514 (2,905)(e) 212,609 ----------- ----------- ----------- Total current assets ....................... 1,548,309 24,442 1,572,751 Property, plant and equipment, net ........... 557,899 (76,780)(f) 481,119 Finance receivables, net ..................... 352,525 (27,469)(g) 325,056 Other assets ................................. 162,663 (3,550)(h) 159,113 ----------- ----------- ----------- Total assets .............................. $ 2,621,396 $ (83,357) $ 2,538,039 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities...... $ 662,781 $ (5,064)(i) $ 657,717 Unearned revenue ............................. 62,858 (1,998)(j) 60,860 Bank lines of credit ......................... 64,000 0 64,000 Current portion of long-term debt ............ 3,062 0 3,062 ----------- ----------- ----------- Total current liabilities .................. 792,701 (7,062) 785,639 Long-term debt ............................... 2,360 0 2,360 Other liabilities ............................ 44,411 0 44,411 ----------- ----------- ----------- Total liabilities .......................... 839,472 (7,062) 832,410 Minority interest in consolidated subsidiaries 45,073 0 45,073 ----------- ----------- ----------- Company-obligated mandatorily redeemable trust convertible preferred securities of a subsidiary trust holding solely debt securities of the Company ................... 660,000 0 660,000 ----------- ----------- ----------- Stockholders' equity: Preferred stock, $0.0001 par value ......... -- 0 -- Common stock, $0.0001 par value (q) ........ 15 0 15 Paid-in capital (q) ........................ 1,102,305 0 1,102,305 Retained earnings (deficit) ................ 5,910 (76,295)(b)-(j) (70,385) Accumulated other comprehensive loss ....... (31,379) 0 (31,379) ----------- ----------- ----------- Total stockholders' equity ............... 1,076,851 (76,295) 1,000,556 ----------- ----------- ----------- Total liabilities and stockholders' equity ... $ 2,621,396 $ (83,357) $ 2,538,039 =========== =========== ===========
See accompanying notes to unaudited pro forma condensed consolidated financial information 4 QUALCOMM INCORPORATED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED MARCH 28, 1999 ---------------------------------------------------- PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA(a) ----------- ----------- ----------- Revenues: Communications systems .................. $ 1,591,362 $ (47,618)(k) $ 1,543,744 Contract services ....................... 161,266 0 161,266 License, royalty and development fees ... 120,990 0 120,990 ----------- ----------- ----------- Total revenues ........................ 1,873,618 (47,618) 1,826,000 ----------- ----------- ----------- Operating expenses: Communications systems .................. 1,153,365 (57,942)(l) 1,095,423 Contract services ....................... 112,800 0 112,800 Research and development ................ 203,075 (61,729)(m) 141,346 Selling and marketing ................... 123,364 (25,124)(n) 98,240 General and administrative .............. 102,053 (13,401)(o) 88,652 Other ................................... 95,824 0 95,824 ----------- ----------- ----------- Total operating expenses ............. 1,790,481 (158,196) 1,632,285 ----------- ----------- ----------- Operating income .......................... 83,137 110,578 193,715 Interest income ........................... 14,035 0 14,035 Interest expense .......................... (8,774) 0 (8,774) Net gain on sale of investments ........... 5,663 0 5,663 Loss on cancellation of warrants .......... (3,273) 0 (3,273) Other ..................................... (52,531) 0 (52,531) Distributions on trust convertible preferred securities of subsidiary trust (19,703) 0 (19,703) Minority interest in income of consolidated subsidiaries ............................ (6,543) 0 (6,543) Equity in losses of investees ............. (5,995) 0 (5,995) ----------- ----------- ----------- Income before income taxes ................ 6,016 110,578 116,594 Income tax expense ........................ (106) (44,200)(p) (44,306) ----------- ----------- ----------- Net income ................................ $ 5,910 $ 66,378 $ 72,288 =========== =========== =========== Net earnings per common share (q): Basic ................................... $ 0.04 $ 0.51 =========== =========== Diluted ................................. $ 0.04 $ 0.48 =========== =========== Shares used in per share calculation: Basic ................................... 143,030 143,030 =========== =========== Diluted ................................. 146,526 152,040 =========== ===========
See accompanying notes to unaudited pro forma condensed consolidated financial information 5 QUALCOMM INCORPORATED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED SEPTEMBER 30, 1998 ---------------------------------------------------- PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA(a) ----------- ----------- ----------- Revenues: Communications systems .................. $ 2,863,092 $ (218,073)(k) $ 2,645,019 Contract services ....................... 270,388 0 270,388 License, royalty and development fees ... 214,390 0 214,390 ----------- ----------- ----------- Total revenues ........................ 3,347,870 (218,073) 3,129,797 ----------- ----------- ----------- Operating expenses: Communications systems .................. 2,136,297 (166,079)(l) 1,970,218 Contract services ....................... 197,102 0 197,102 Research and development ................ 349,483 (143,880)(m) 205,603 Selling and marketing ................... 246,975 (65,995)(n) 180,980 General and administrative .............. 163,372 (24,687)(o) 138,685 Other ................................... 11,976 0 11,976 ----------- ----------- ----------- Total operating expenses .............. 3,105,205 (400,641) 2,704,564 ----------- ----------- ----------- Operating income .......................... 242,665 182,568 425,233 Interest income ........................... 39,484 0 39,484 Interest expense .......................... (8,058) 0 (8,058) Net gain on sale of investments ........... 2,950 0 2,950 Write-off of investment in other entity ... (20,000) 0 (20,000) Distributions on trust convertible preferred securities of subsidiary trust (39,270) 0 (39,270) Minority interest in income of consolidated subsidiaries ............................ (48,366) 0 (48,366) Equity in losses of investees ............. (20,731) 0 (20,731) ----------- ----------- ----------- Income before income taxes ................ 148,674 182,568 331,242 Income tax expense ........................ (40,142) (82,418)(p) (122,560) ----------- ----------- ----------- Net income ................................ $ 108,532 $ 100,150 $ 208,682 =========== =========== =========== Net earnings per common share (q): Basic ................................... $ 0.78 $ 1.49 =========== =========== Diluted ................................. $ 0.73 $ 1.40 =========== =========== Shares used in per share calculation: Basic ................................... 138,406 156,574 =========== =========== Diluted ................................. 147,924 166,092 =========== ===========
See accompanying notes to unaudited pro forma condensed consolidated financial information 6 QUALCOMM INCORPORATED NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS) (a) The unaudited pro forma condensed consolidated financial statements give retroactive effect to the sale of certain assets related to QUALCOMM's terrestrial CDMA wireless infrastructure business to Telefonaktiebolaget LM Ericsson ("Ericsson") as if the sale had occurred as of March 28, 1999. (b) Reflects the cash proceeds received by QUALCOMM on the closing date. Total consideration will be based on a final determination of net assets as of the closing date. (c) Reflects accounts receivable, net of reserves, to be sold to Ericsson. (d) Reflects inventories, net of reserves, to be sold to Ericsson. (e) Reflects prepaid expenses, other current assets and the current portion of deferred costs to be sold to Ericsson. (f) Reflects property and equipment, net of accumulated depreciation, to be sold to Ericsson. (g) Reflects revenue recognized in connection with customer contracts to be assumed by Ericsson under the percent of completion method in excess of amounts billed for which financing terms will be extended. (h) Reflects the noncurrent portion of deferred costs and other noncurrent assets to be sold to Ericsson. (i) Reflects accrued contract losses and accrued warranty costs related to customer contract obligations to be assumed by Ericsson. (j) Reflects cash collected in advance of revenues recognized on customer contracts which will be assumed by Ericsson and for which financing terms have not been extended. (k) Reflects revenues related to customer contracts and ancillary products sold by the terrestrial CDMA wireless infrastructure business to be assumed by Ericsson. (l) Reflects cost of sales related to customer contracts and ancillary products sold by the terrestrial CDMA wireless infrastructure business to be assumed by Ericsson. (m) Reflects research and development expenses related to the terrestrial CDMA wireless infrastructure business to be assumed by Ericsson. (n) Reflects selling and marketing expenses related to the terrestrial CDMA wireless infrastructure business to be assumed by Ericsson. (o) Reflects general and administrative expense related to the terrestrial CDMA wireless infrastructure business to be assumed by Ericsson. (p) Pro forma adjustments have been tax effected at a 45% incremental income tax rate for the year ended September 30, 1998 and at a 40% incremental income tax rate for the six months ended March 28, 1999. 7 (q) On April 14, 1999, QUALCOMM's Board of Directors declared a two-for-one stock split of QUALCOMM's common stock. The stock dividend was distributed on May 10, 1999 to stockholders of record on April 21, 1999. Historical and pro forma net earnings (loss) per common share, common stock and paid-in-capital are presented giving retroactive effect to the stock split. Pro forma net earnings per common share for the year ended September 30, 1998 are calculated assuming conversion of 18,168,000 shares of trust convertible preferred securities into common stock as such conversion is dilutive. 8 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. QUALCOMM INCORPORATED Dated: June 8, 1999 By: /S/ ANTHONY S. THORNLEY --------------------------------- Anthony S. Thornley Executive Vice President and Chief Financial Officer 9 INDEX TO EXHIBITS 2.1 Asset Purchase Agreement dated March 24, 1999 between QUALCOMM Incorporated and Telefonaktiebolaget LM Ericsson (publ) (incorporated herein by reference to QUALCOMM's Form 10-Q for the three month period ended March 28, 1999 and filed with the Securities and Exchange Commission on May 11, 1999). 2.2 Amendment No. 1 dated as of May 24, 1999 to the Asset Purchase Agreement dated as of March 24, 1999 between QUALCOMM Incorporated and Telefonaktiebolaget LM Ericsson (publ).(1) 99.1 Press Release dated May 24, 1999. - ---------------- (1) Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment. Omitted portions will be filed separately with the Securities and Exchange Commission. 10