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