| Revenues: $2.71 billion, down 2 percent year-over-year and up 2 percent sequentially. | ||
| Operating income: $792 million, down 11 percent year-over-year and up 2 percent sequentially. | ||
| Net income: $767 million, up 4 percent year-over-year and down 1 percent sequentially. | ||
| Diluted earnings per share: $0.47, up 7 percent year-over-year and 2 percent sequentially. | ||
| Effective tax rate: 21 percent for the quarter. | ||
| Operating cash flow: $951 million, down 13 percent year-over-year; 35 percent of revenues. |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 2 of 17 |
| Return of capital to stockholders: $1.49 billion, including $309 million, or $0.19 per share, of cash dividends paid, and $1.18 billion to repurchase 32.4 million shares of our common stock. |
| Revenues: $2.70 billion, down 2 percent year-over-year and up 1 percent sequentially. | ||
| Operating income: $991 million, down 12 percent year-over-year and 7 percent sequentially. | ||
| Net income: $936 million, up 4 percent year-over-year and down 5 percent sequentially. | ||
| Diluted earnings per share: $0.57, up 6 percent year-over-year and down 3 percent sequentially. The current quarter excludes $0.07 loss per share attributable to certain share-based compensation and $0.03 loss per share attributable to certain tax items. | ||
| Effective tax rate: 19 percent for the quarter. | ||
| Free cash flow: $954 million, down 8 percent year-over-year; 35 percent of revenues (defined as net cash from operating activities less capital expenditures). |
| CDMA-based Mobile Station ModemTM (MSMTM) shipments: approximately 103 million units, up 10 percent year-over-year and 11 percent sequentially. | ||
| March quarter total reported device sales: approximately $25.2 billion, up 19 percent year-over-year and down 9 percent sequentially. |
| March quarter estimated CDMA-based device shipments: approximately 134 to 138 million units at an estimated average selling price of approximately $183 to $189 per unit. |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 3 of 17 |
Share-Based | In-Process | |||||||||||||||||||
($ in millions) | Pro Forma | Compensation | R&D | QSI | GAAP | |||||||||||||||
Third quarter fiscal 2010 |
$ | 546 | $ | 74 | $ | | $ | 29 | $ | 649 | ||||||||||
As a % of revenues |
20 | % | N/M | 24 | % | |||||||||||||||
Third quarter fiscal 2009 |
$ | 523 | $ | 72 | $ | | $ | 23 | $ | 618 | ||||||||||
As a % of revenues |
19 | % | N/M | 22 | % | |||||||||||||||
Year-over-year change ($) |
4 | % | 3 | % | N/M | 26 | % | 5 | % |
Share-Based | ||||||||||||||||
($ in millions) | Pro Forma | Compensation | QSI | GAAP | ||||||||||||
Third quarter fiscal 2010 |
$ | 321 | $ | 65 | $ | (26 | ) | $ | 360 | |||||||
As a % of revenues |
12 | % | N/M | 13 | % | |||||||||||
Third quarter fiscal 2009 |
$ | 285 | $ | 68 | $ | 24 | $ | 377 | ||||||||
As a % of revenues |
10 | % | N/M | 14 | % | |||||||||||
Year-over-year change ($) |
13 | % | (4 | %) | (208 | %) | (5 | %) |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 4 of 17 |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 5 of 17 |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 6 of 17 |
Q4 FY09 | Current Guidance | |||||||
Results | Q4 FY10 Estimates | |||||||
Pro Forma |
||||||||
Revenues |
$ | 2.68B | $2.67B - $2.93B | |||||
Year-over-year change |
even - increase 9% | |||||||
Diluted earnings per share (EPS) |
$ | 0.48 | $0.55 - $0.59 | |||||
Year-over-year change |
increase 15% - 23% | |||||||
GAAP |
||||||||
Revenues |
$ | 2.69B | $2.67B - $2.93B | |||||
Year-over-year change |
decrease 1% - increase 9% | |||||||
Diluted EPS |
$ | 0.48 | $0.39 - $0.43 | |||||
Year-over-year change |
decrease 10% - 19% | |||||||
Diluted EPS attributable to QSI |
($0.05 | ) | ($0.07 | ) | ||||
Diluted EPS attributable to share-based compensation |
($0.05 | ) | ($0.07 | ) | ||||
Diluted EPS attributable to certain tax items (1) |
$ | 0.09 | ($0.02 | ) | ||||
Metrics |
||||||||
MSM shipments |
approx. 91M | approx. 106M - 111M | ||||||
Year-over-year change |
increase 16% - 22% | |||||||
Total reported device sales (2) |
$ | 24.9B | * | $26.5B - $28.5B | * | |||
Est. CDMA-based devices shipped (2) |
approx. 120M- 124M | * | not provided | |||||
Est. CDMA-based device average selling price (2) |
approx. $200-$206 | * | not provided |
* | Est. sales in June quarter, reported in September quarter |
FY 2009 | Prior Guidance | Current Guidance | ||||||||||
Results | FY 2010 Estimates | FY 2010 Estimates | ||||||||||
Pro Forma |
||||||||||||
Revenues |
$ | 10.39B | $10.4B - $11.0B | $10.7B - $11.0B | ||||||||
Year-over-year change |
even - increase 6% | increase 3% - 6% | ||||||||||
Diluted EPS |
$ | 1.31 | $2.21 - $2.32 | $2.33 - $2.37 | ||||||||
Year-over-year change |
increase 69% - 77% | increase 78% - 81% | ||||||||||
GAAP |
||||||||||||
Revenues |
$ | 10.42B | $10.4B - $11.0B | $10.7B - $11.0B | ||||||||
Year-over-year change |
even - increase 6% | increase 3% - 6% | ||||||||||
Diluted EPS |
$ | 0.95 | $1.71 - $1.82 | $1.82 - $1.86 | ||||||||
Year-over-year change |
increase 80% - 92% | increase 92% - 96% | ||||||||||
Diluted EPS attributable to QSI |
($0.15 | ) | ($0.15 | ) | ($0.15 | ) | ||||||
Diluted EPS attributable to share-based compensation |
($0.27 | ) | ($0.27 | ) | ($0.27 | ) | ||||||
Diluted EPS attributable to certain tax items (1) |
$ | 0.07 | ($0.08 | ) | ($0.09 | ) | ||||||
Metrics |
||||||||||||
Est. fiscal year* CDMA-based device average selling price range (2) |
approx. $202 - $208 | approx. $182 - $188 | approx. $184 - $188 |
* | Shipments in Sept. to June quarters, reported in Dec. to Sept. quarters |
Prior Guidance | Current Guidance | ||||||||||||
Calendar 2009 | Calendar 2010 | Calendar 2010 | |||||||||||
Estimates | Estimates | Estimates | |||||||||||
Est. CDMA-based device shipments |
|||||||||||||
March quarter |
approx. 106M - 110M | not provided | approx. 134M - 138M | ||||||||||
June quarter |
approx. 120M - 124M | not provided | not provided | ||||||||||
September quarter |
approx. 126M - 130M | not provided | not provided | ||||||||||
December quarter |
approx. 148M - 152M | not provided | not provided | ||||||||||
Est. Calendar year range (approx.) |
500M - 516M | 600M - 650M | 600M - 650M | ||||||||||
Midpoint | Midpoint | Midpoint | |||||||||||
Est. total CDMA-based units |
approx. 508M | approx. 625M | approx. 625M | ||||||||||
Est. CDMA units |
approx. 213M | approx. 236M | approx. 236M | ||||||||||
Est. WCDMA units |
approx. 295M | approx. 389M | approx. 389M |
(1) | The estimate of our fiscal 2010 GAAP effective tax rate includes tax expense of approximately $130 million that arises because deferred revenue related to the 2008 license and settlement agreements with Nokia is taxable in fiscal 2010 but the resulting deferred tax asset will reverse in future years when our state tax rate will be lower as a result of California tax legislation enacted in 2009. | |
(2) | Total reported device sales is the sum of all reported sales in U.S. dollars (as reported to us by our licensees) of all licensed CDMA-based subscriber devices (including handsets, modules, modem cards and other subscriber devices) by our licensees during a particular period. The reported quarterly estimated ranges of ASPs and unit shipments are determined based on the information as reported to us by our licensees during the relevant period and our own estimates of the selling prices and unit shipments for licensees that do not provide such information. Not all licensees report sales, selling prices and/or unit shipments the same (e.g., some licensees report selling prices net of permitted deductions, such as transportation, insurance and packing costs, while other licensees report selling prices and then identify the amount of permitted deductions in their reports), and the way in which licensees report such information may change from time to time. Total reported device sales, estimated unit shipments and estimated ASPs for a particular period may include prior period activity that is reported with the activity for the particular period. For results using assumptions in effect for quarters prior to the second quarter of fiscal 2010, please refer to the Changes to QTL Metrics table of our April 21, 2010 earnings release that was furnished to the Securities and Exchange Commission on Form 8-K. |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 7 of 17 |
Pro Forma | ||||||||||||||||||||||||||||||||||||||||
Reconciling Items | Pro Forma | Share-Based | Tax Items | In-Process | ||||||||||||||||||||||||||||||||||||
SEGMENTS | QCT | QTL | QWI | (1)(5) | (5) | Compensation (2) | (3) | R&D | QSI (4) | GAAP (5) | ||||||||||||||||||||||||||||||
Q3 FISCAL 2010 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 1,691 | $ | 847 | $ | 162 | $ | | $ | 2,700 | $ | | $ | | $ | | $ | 6 | $ | 2,706 | ||||||||||||||||||||
Change from prior year |
(5 | %) | 5 | % | 9 | % | N/M | (2 | %) | (33 | %) | (2 | %) | |||||||||||||||||||||||||||
Change from prior quarter |
10 | % | (13 | %) | 7 | % | N/M | 1 | % | 200 | % | 2 | % | |||||||||||||||||||||||||||
Operating income (loss) |
$ | 991 | ($149 | ) | $ | | $ | | ($50 | ) | $ | 792 | ||||||||||||||||||||||||||||
Change from prior year |
(12 | %) | 1 | % | N/A | 35 | % | (11 | %) | |||||||||||||||||||||||||||||||
Change from prior quarter |
(7 | %) | 3 | % | N/M | 62 | % | 2 | % | |||||||||||||||||||||||||||||||
EBT |
$ | 404 | $ | 673 | $ | 6 | $ | 78 | $ | 1,161 | ($149 | ) | $ | | $ | | ($41 | ) | $ | 971 | ||||||||||||||||||||
Change from prior year |
(26 | %) | 2 | % | N/M | N/M | (3 | %) | 1 | % | N/A | 38 | % | (1 | %) | |||||||||||||||||||||||||
Change from prior quarter |
17 | % | (18 | %) | N/M | N/M | (8 | %) | 3 | % | N/M | 70 | % | 1 | % | |||||||||||||||||||||||||
EBT as a % of revenues |
24 | % | 79 | % | 4 | % | N/M | 43 | % | N/M | N/M | N/M | 36 | % | ||||||||||||||||||||||||||
Net income (loss) |
$ | 936 | ($111 | ) | ($54 | ) | $ | | ($4 | ) | $ | 767 | ||||||||||||||||||||||||||||
Change from prior year |
4 | % | 13 | % | N/A | N/A | 90 | % | 4 | % | ||||||||||||||||||||||||||||||
Change from prior quarter |
(5 | %) | (13 | %) | N/M | N/M | 95 | % | (1 | %) | ||||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.57 | ($0.07 | ) | ($0.03 | ) | $ | | $ | | $ | 0.47 | ||||||||||||||||||||||||||||
Change from prior year |
6 | % | 13 | % | N/A | N/A | N/M | 7 | % | |||||||||||||||||||||||||||||||
Change from prior quarter |
(3 | %) | (17 | %) | N/M | N/M | N/M | 2 | % | |||||||||||||||||||||||||||||||
Diluted shares used |
1,642 | 1,642 | 1,642 | 1,642 | 1,642 | 1,642 | ||||||||||||||||||||||||||||||||||
Q2 FISCAL 2010 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 1,537 | $ | 974 | $ | 152 | ($2 | ) | $ | 2,661 | $ | | $ | | $ | | $ | 2 | $ | 2,663 | ||||||||||||||||||||
Operating income (loss) |
1,065 | (154 | ) | | (3 | ) | (132 | ) | 776 | |||||||||||||||||||||||||||||||
EBT |
344 | 821 | (1 | ) | 94 | 1,258 | (154 | ) | | (3 | ) | (136 | ) | 965 | ||||||||||||||||||||||||||
Net income (loss) |
989 | (98 | ) | (33 | ) | (3 | ) | (81 | ) | 774 | ||||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.59 | ($0.06 | ) | ($0.02 | ) | $ | | ($0.05 | ) | $ | 0.46 | ||||||||||||||||||||||||||||
Diluted shares used |
1,678 | 1,678 | 1,678 | 1,678 | 1,678 | 1,678 | ||||||||||||||||||||||||||||||||||
Q3 FISCAL 2009 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 1,786 | $ | 807 | $ | 148 | $ | 3 | $ | 2,744 | $ | | $ | | $ | | $ | 9 | $ | 2,753 | ||||||||||||||||||||
Operating income (loss) |
1,122 | (151 | ) | | | (77 | ) | 894 | ||||||||||||||||||||||||||||||||
EBT |
548 | 663 | (3 | ) | (7 | ) | 1,201 | (151 | ) | | | (66 | ) | 984 | ||||||||||||||||||||||||||
Net income (loss) |
903 | (127 | ) | | | (39 | ) | 737 | ||||||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.54 | ($0.08 | ) | $ | | $ | | ($0.02 | ) | $ | 0.44 | ||||||||||||||||||||||||||||
Diluted shares used |
1,675 | 1,675 | 1,675 | 1,675 | 1,675 | 1,675 | ||||||||||||||||||||||||||||||||||
Q4 FISCAL 2009 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 1,699 | $ | 837 | $ | 146 | $ | 1 | $ | 2,683 | $ | | $ | | $ | | $ | 7 | $ | 2,690 | ||||||||||||||||||||
Operating income (loss) |
831 | (148 | ) | | | (86 | ) | 597 | ||||||||||||||||||||||||||||||||
EBT |
508 | 693 | (5 | ) | (211 | ) | 985 | (148 | ) | | | (95 | ) | 742 | ||||||||||||||||||||||||||
Net income (loss) |
811 | (85 | ) | 155 | | (78 | ) | 803 | ||||||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.48 | ($0.05 | ) | $ | 0.09 | $ | | ($0.05 | ) | $ | 0.48 | ||||||||||||||||||||||||||||
Diluted shares used |
1,688 | 1,688 | 1,688 | 1,688 | 1,688 | 1,688 | ||||||||||||||||||||||||||||||||||
9 MONTHS FISCAL 2010 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 4,835 | $ | 2,738 | $ | 456 | $ | 1 | $ | 8,030 | $ | | $ | | $ | | $ | 9 | $ | 8,039 | ||||||||||||||||||||
Change from prior year |
9 | % | (1 | %) | (8 | %) | N/M | 4 | % | (59 | %) | 4 | % | |||||||||||||||||||||||||||
Operating income (loss) |
$ | 3,189 | ($453 | ) | $ | | ($3 | ) | ($286 | ) | $ | 2,447 | ||||||||||||||||||||||||||||
Change from prior year |
37 | % | (4 | %) | N/M | (14 | %) | 50 | % | |||||||||||||||||||||||||||||||
EBT |
$ | 1,173 | $ | 2,266 | $ | 14 | $ | 274 | $ | 3,727 | ($453 | ) | $ | | ($3 | ) | ($283 | ) | $ | 2,988 | ||||||||||||||||||||
Change from prior year |
26 | % | (5 | %) | (44 | %) | N/M | 83 | % | (4 | %) | N/M | (6 | %) | 124 | % | ||||||||||||||||||||||||
Net income (loss) |
$ | 2,967 | ($322 | ) | ($119 | ) | ($3 | ) | ($141 | ) | $ | 2,382 | ||||||||||||||||||||||||||||
Change from prior year |
116 | % | 13 | % | N/M | N/M | 19 | % | 202 | % | ||||||||||||||||||||||||||||||
Diluted EPS |
$ | 1.78 | ($0.19 | ) | ($0.07 | ) | $ | | ($0.08 | ) | $ | 1.43 | ||||||||||||||||||||||||||||
Change from prior year |
117 | % | 14 | % | N/M | N/M | 20 | % | 204 | % | ||||||||||||||||||||||||||||||
Diluted shares used |
1,670 | 1,670 | 1,670 | 1,670 | 1,670 | 1,670 | ||||||||||||||||||||||||||||||||||
9 MONTHS FISCAL 2009 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 4,436 | $ | 2,769 | $ | 494 | $ | 5 | $ | 7,704 | $ | | $ | | $ | | $ | 22 | $ | 7,726 | ||||||||||||||||||||
Operating income (loss) |
2,323 | (436 | ) | | (6 | ) | (251 | ) | 1,630 | |||||||||||||||||||||||||||||||
EBT |
933 | 2,376 | 25 | (1,292 | ) | 2,042 | (436 | ) | | (6 | ) | (266 | ) | 1,334 | ||||||||||||||||||||||||||
Net income (loss) |
1,376 | (370 | ) | (36 | ) | (6 | ) | (174 | ) | 790 | ||||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.82 | ($0.22 | ) | ($0.02 | ) | $ | | ($0.10 | ) | $ | 0.47 | ||||||||||||||||||||||||||||
Diluted shares used |
1,668 | 1,668 | 1,668 | 1,668 | 1,668 | 1,668 | ||||||||||||||||||||||||||||||||||
FISCAL YEAR 2009 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 6,135 | $ | 3,605 | $ | 641 | $ | 6 | $ | 10,387 | $ | | $ | | $ | | $ | 29 | $ | 10,416 | ||||||||||||||||||||
Operating income (loss) |
3,153 | (584 | ) | | (6 | ) | (337 | ) | 2,226 | |||||||||||||||||||||||||||||||
EBT |
1,441 | 3,068 | 20 | (1,502 | ) | 3,027 | (584 | ) | | (6 | ) | (361 | ) | 2,076 | ||||||||||||||||||||||||||
Net income (loss) |
2,187 | (455 | ) | 118 | (6 | ) | (252 | ) | 1,592 | |||||||||||||||||||||||||||||||
Diluted EPS |
$ | 1.31 | ($0.27 | ) | $ | 0.07 | $ | | ($0.15 | ) | $ | 0.95 | ||||||||||||||||||||||||||||
Diluted shares used |
1,673 | 1,673 | 1,673 | 1,673 | 1,673 | 1,673 |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 8 of 17 |
(1) | Pro forma reconciling items related to revenues consist primarily of other nonreportable segment revenues less intersegment eliminations. Pro forma reconciling items related to earnings before taxes consist primarily of certain investment income or losses, research and development expenses, sales and marketing expenses and other operating expenses that are not allocated to the segments for management reporting purposes, nonreportable segment results and the elimination of intersegment profit. | |
(2) | Certain share-based compensation is included in operating expenses as part of employee-related costs but is not allocated to the Companys segments as such costs are not considered relevant by management in evaluating segment performance. | |
(3) | During the first, second and third quarters of fiscal 2010, the Company recorded $32 million, $33 million and $32 million in state tax expense, respectively, or $0.02 diluted loss per share for each quarter, that arises because deferred revenue related to the license and settlement agreements with Nokia is taxable in fiscal 2010 but the resulting deferred tax asset will reverse in future years when the Companys state tax rate will be lower. During the third quarter of fiscal 2010, the Company recorded $22 million of tax expense, or $0.01 diluted loss per share, as a result of prior year tax audits completed during the third quarter. | |
(4) | At fiscal year-end, the sum of the quarterly tax provisions for each column, including QSI, equals 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 pro forma tax provision, the tax items column and the tax provision related to share-based compensation from the GAAP tax provision. | |
(5) | Fiscal 2009 results included a $783 million charge related to a litigation settlement and patent agreement with Broadcom Corporation, including $748 million recorded in the second quarter of fiscal 2009 and $35 million recorded in the fourth quarter of 2009. The fourth quarter of fiscal 2009 results also included a $230 million charge related to a fine that had been announced by the Korea Fair Trade Commission. | |
N/M Not Meaningful | ||
Sums may not equal totals due to rounding. |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 9 of 17 |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 10 of 17 |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 11 of 17 |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 12 of 17 |
Three Months Ended June 27, 2010 | ||||||||||||||||||||
Share-Based | ||||||||||||||||||||
Pro Forma | Compensation | Tax Items | QSI | GAAP | ||||||||||||||||
Revenues: |
||||||||||||||||||||
Equipment and services |
$ | 1,766 | $ | | $ | | $ | 6 | $ | 1,772 | ||||||||||
Licensing and royalty fees |
934 | | | | 934 | |||||||||||||||
Total revenues |
2,700 | | | 6 | 2,706 | |||||||||||||||
Operating expenses: |
||||||||||||||||||||
Cost of equipment and services revenues |
842 | 10 | | 53 | 905 | |||||||||||||||
Research and development |
546 | 74 | | 29 | 649 | |||||||||||||||
Selling, general and administrative |
321 | 65 | | (26 | ) | 360 | ||||||||||||||
Total operating expenses |
1,709 | 149 | | 56 | 1,914 | |||||||||||||||
Operating income (loss) |
991 | (149 | ) | | (50 | ) | 792 | |||||||||||||
Investment income (loss), net |
170 | (a) | | | 9 | (b) | 179 | |||||||||||||
Income (loss) before income taxes |
1,161 | (149 | ) | | (41 | ) | 971 | |||||||||||||
Income tax (expense) benefit |
(225 | )(c) | 38 | (h) | (54 | )(e) | 37 | (d) | (204 | )(c) | ||||||||||
Net income (loss) |
$ | 936 | $ | (111 | ) | $ | (54 | ) | $ | (4 | ) | $ | 767 | |||||||
Earnings (loss) per common share: |
||||||||||||||||||||
Diluted |
$ | 0.57 | $ | (0.07 | ) | $ | (0.03 | ) | $ | (0.00 | ) | $ | 0.47 | |||||||
Shares used in per share calculations: |
||||||||||||||||||||
Diluted |
1,642 | 1,642 | 1,642 | 1,642 | 1,642 | |||||||||||||||
Supplemental Financial Data: |
||||||||||||||||||||
Operating Cash Flow |
$ | 1,051 | $ | (3 | )(g) | $ | | $ | (97 | ) | $ | 951 | ||||||||
Operating Cash Flow as a % of Revenues |
39 | % | N/M | 35 | % | |||||||||||||||
Free Cash Flow (f) |
$ | 954 | $ | (3 | )(g) | $ | | $ | (117 | ) | $ | 834 | ||||||||
Free Cash Flow as a % of Revenues |
35 | % | N/M | 31 | % |
(a) | Included $127 million in interest and dividend income related to cash, cash equivalents and marketable securities, which were not part of the Companys strategic investment portfolio, and $78 million in net realized gains on investments, partially offset by $28 million in other-than-temporary losses on investments, $5 million in interest expense and $2 million in losses on derivatives. | |
(b) | Included $14 million in net realized gains on investments, $4 million in interest and dividend income related to cash, cash equivalents and marketable securities and $1 million in equity in earnings of investees, partially offset by $9 million in interest expense and $1 million in other-than-temporary losses on investments. | |
(c) | The third quarter of fiscal 2010 effective tax rates were 21% for GAAP and 19% for pro forma. | |
(d) | At fiscal year-end, the sum of the quarterly tax provisions for each column, including QSI, equals 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 pro forma tax provision, the tax items column and the tax provision related to share-based compensation from the GAAP tax provision. | |
(e) | During the third quarter of fiscal 2010, the Company recorded (i) a $32 million state tax expense, or $0.02 diluted loss per share, that arises because deferred revenue related to the license and settlement agreements with Nokia is taxable in fiscal 2010 but the resulting deferred tax asset will reverse in future years when the Companys state tax rate will be lower, and (ii) a $22 million tax expense, or $0.01 diluted loss per share, as a result of prior year tax audits completed during the third quarter of fiscal 2010. | |
(f) | Free Cash Flow is calculated as net cash provided by operating activities less capital expenditures. Reconciliation of these amounts is included in the Reconciliation of Pro Forma Free Cash Flows to Net Cash Provided by Operating Activities (GAAP) and other supplemental disclosures for the three months ended June 27, 2010, included herein. | |
(g) | Incremental tax benefits from stock options exercised during the period. | |
(h) | The third quarter of fiscal 2010 tax benefit related to share-based compensation includes a $2 million tax benefit as a result of prior year tax audits completed during the third quarter of fiscal 2010. |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 13 of 17 |
Nine Months Ended June 27, 2010 | ||||||||||||||||||||||||
Share-Based | Tax | In-Process | ||||||||||||||||||||||
Pro Forma | Compensation | Items | R&D | QSI | GAAP | |||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Equipment and services |
$ | 5,021 | $ | | $ | | $ | | $ | 9 | $ | 5,030 | ||||||||||||
Licensing and royalty fees |
3,009 | | | | | 3,009 | ||||||||||||||||||
Total revenues |
8,030 | | | | 9 | 8,039 | ||||||||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Cost of equipment and services revenues |
2,345 | 30 | | | 154 | 2,529 | ||||||||||||||||||
Research and development |
1,594 | 221 | | 3 | 74 | 1,892 | ||||||||||||||||||
Selling, general and administrative |
902 | 202 | | | 67 | 1,171 | ||||||||||||||||||
Total operating expenses |
4,841 | 453 | | 3 | 295 | 5,592 | ||||||||||||||||||
Operating income (loss) |
3,189 | (453 | ) | | (3 | ) | (286 | ) | 2,447 | |||||||||||||||
Investment income (loss), net |
538 | (a) | | | | 3 | (b) | 541 | ||||||||||||||||
Income (loss) before income taxes |
3,727 | (453 | ) | | (3 | ) | (283 | ) | 2,988 | |||||||||||||||
Income tax (expense) benefit |
(760 | )(c) | 131 | (h) | (119 | )(e) | | 142 | (d) | (606 | )(c) | |||||||||||||
Net income (loss) |
$ | 2,967 | $ | (322 | ) | $ | (119 | ) | $ | (3 | ) | $ | (141 | ) | $ | 2,382 | ||||||||
Earnings (loss) per common share: |
||||||||||||||||||||||||
Diluted |
$ | 1.78 | $ | (0.19 | ) | $ | (0.07 | ) | $ | (0.00 | ) | $ | (0.08 | ) | $ | 1.43 | ||||||||
Shares used in per share calculations: |
||||||||||||||||||||||||
Diluted |
1,670 | 1,670 | 1,670 | 1,670 | 1,670 | 1,670 | ||||||||||||||||||
Supplemental Financial Data: |
||||||||||||||||||||||||
Operating Cash Flow |
$ | 3,297 | $ | (34 | ) (g) | $ | | $ | | $ | (280 | ) | $ | 2,983 | ||||||||||
Operating Cash Flow as a % of Revenues |
41 | % | N/M | 37 | % | |||||||||||||||||||
Free Cash Flow (f) |
$ | 3,048 | $ | (34 | )(g) | $ | | $ | | $ | (344 | ) | $ | 2,670 | ||||||||||
Free Cash Flow as a % of Revenues |
38 | % | N/M | 33 | % |
(a) | Included $401 million in interest and dividend income related to cash, cash equivalents and marketable securities, which were not part of the Companys strategic investment portfolio, and $249 million in net realized gains on investments, partially offset by $94 million in other-than-temporary losses on investments, $15 million in interest expense and $3 million in losses on derivatives. | |
(b) | Included $25 million in net realized gains on investments and $4 million in interest and dividend income related to cash, cash equivalents and marketable securities, partially offset by $15 million in interest expense, $8 million in other-than-temporary losses on investments and $3 million in equity in losses of investees. | |
(c) | The effective tax rates for the first nine months of fiscal 2010 were 20% for both GAAP and pro forma. | |
(d) | At fiscal year-end, the sum of the quarterly tax provisions for each column, including QSI, equals 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 pro forma tax provision, the tax items column and the tax provision related to share-based compensation from the GAAP tax provision. | |
(e) | During the first nine months of fiscal 2010, the Company recorded (i) a $97 million state tax expense, or $0.06 diluted loss per share, that arises because deferred revenue related to the license and settlement agreements with Nokia is taxable in fiscal 2010 but the resulting deferred tax asset will reverse in future years when the Companys state tax rate will be lower, and (ii) a $22 million tax expense, or $0.01 diluted loss per share, as a result of prior year tax audits completed during the third quarter of fiscal 2010. | |
(f) | Free Cash Flow is calculated as net cash provided by operating activities less capital expenditures. Reconciliation of these amounts is included in the Reconciliation of Pro Forma Free Cash Flows to Net Cash Provided by Operating Activities (GAAP) and other supplemental disclosures for the nine months ended June 27, 2010, included herein. | |
(g) | Incremental tax benefits from stock options exercised during the period. | |
(h) | The first nine months of fiscal 2010 tax benefit related to share-based compensation includes a $2 million tax benefit as a result of prior year tax audits completed during the third quarter of fiscal 2010. |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 14 of 17 |
Three Months Ended June 27, 2010 | ||||||||||||||||||||||||
Share-Based | Tax | In-Process | ||||||||||||||||||||||
Pro Forma | Compensation | Items | R&D | QSI | GAAP | |||||||||||||||||||
Net cash provided (used) by
operating activities |
$ | 1,051 | $ | (3 | ) (a) | $ | | $ | | $ | (97 | ) | $ | 951 | ||||||||||
Less: capital expenditures |
(97 | ) | | | | (20 | ) | (117 | ) | |||||||||||||||
Free cash flow |
$ | 954 | $ | (3 | ) | $ | | $ | | $ | (117 | ) | $ | 834 | ||||||||||
Other supplemental cash disclosures: |
||||||||||||||||||||||||
Cash transfers from QSI (1) |
$ | 104 | $ | | $ | | $ | | $ | (104 | ) | $ | | |||||||||||
Cash transfers to QSI (2) |
(133 | ) | | | | 133 | | |||||||||||||||||
Net cash transfers |
$ | (29 | ) | $ | | $ | | $ | | $ | 29 | $ | | |||||||||||
Nine Months Ended June 27, 2010 | ||||||||||||||||||||||||
Share-Based | Tax | In-Process | ||||||||||||||||||||||
Pro Forma | Compensation | Items | R&D | QSI | GAAP | |||||||||||||||||||
Net cash provided (used) by
operating activities |
$ | 3,297 | $ | (34 | ) (a) | $ | | $ | | $ | (280 | ) | $ | 2,983 | ||||||||||
Less: capital expenditures |
(249 | ) | | | | (64 | ) | (313 | ) | |||||||||||||||
Free cash flow |
$ | 3,048 | $ | (34 | ) | $ | | $ | | $ | (344 | ) | $ | 2,670 | ||||||||||
Other supplemental cash disclosures: |
||||||||||||||||||||||||
Cash transfers from QSI (1) |
$ | 117 | $ | | $ | | $ | | $ | (117 | ) | $ | | |||||||||||
Cash transfers to QSI (2) |
(376 | ) | | | | 376 | | |||||||||||||||||
Net cash transfers |
$ | (259 | ) | $ | | $ | | $ | | $ | 259 | $ | | |||||||||||
(1) | Cash from sale of equity investments and Australia spectrum license. | |
(2) | Funding for strategic debt and equity investments, capital expenditures and other QSI operating expenses. |
Three Months Ended June 28, 2009 | ||||||||||||||||||||||||
Share-Based | Tax | In-Process | ||||||||||||||||||||||
Pro Forma | Compensation | Items | R&D | QSI | GAAP | |||||||||||||||||||
Net cash provided (used)
by operating activities |
$ | 1,157 | $ | (22 | ) (a) | $ | | $ | | $ | (48 | ) | $ | 1,087 | ||||||||||
Less: capital expenditures |
(118 | ) | | | | (31 | ) | (149 | ) | |||||||||||||||
Free cash flow |
$ | 1,039 | $ | (22 | ) | $ | | $ | | $ | (79 | ) | $ | 938 | ||||||||||
Nine Months Ended June 28, 2009 | ||||||||||||||||||||||||
Share-Based | Tax | In-Process | ||||||||||||||||||||||
Pro Forma | Compensation | Items | R&D | QSI | GAAP | |||||||||||||||||||
Net cash provided (used)
by operating activities |
$ | 6,145 | $ | (54 | ) (a) | $ | | $ | | $ | (240 | ) | $ | 5,851 | ||||||||||
Less: capital expenditures |
(533 | ) | | | | (84 | ) | (617 | ) | |||||||||||||||
Free cash flow |
$ | 5,612 | $ | (54 | ) | $ | | $ | | $ | (324 | ) | $ | 5,234 | ||||||||||
(a) | Incremental tax benefits from stock options exercised during the period. |
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 15 of 17 |
June 27, | September 27, | |||||||
2010 | 2009 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 2,541 | $ | 2,717 | ||||
Marketable securities |
7,427 | 8,352 | ||||||
Accounts receivable, net |
798 | 700 | ||||||
Inventories |
446 | 453 | ||||||
Deferred tax assets |
213 | 149 | ||||||
Other current assets |
189 | 199 | ||||||
Total current assets |
11,614 | 12,570 | ||||||
Marketable securities |
7,618 | 6,673 | ||||||
Deferred tax assets |
1,774 | 843 | ||||||
Property, plant and equipment, net |
2,382 | 2,387 | ||||||
Goodwill |
1,476 | 1,492 | ||||||
Other intangible assets, net |
3,040 | 3,065 | ||||||
Other assets |
1,497 | 415 | ||||||
Total assets |
$ | 29,401 | $ | 27,445 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Trade accounts payable |
$ | 640 | $ | 636 | ||||
Payroll and other benefits related liabilities |
433 | 480 | ||||||
Unearned revenues |
601 | 441 | ||||||
Loan payable to banks |
1,061 | | ||||||
Income taxes payable |
1,135 | 29 | ||||||
Other current liabilities |
1,320 | 1,227 | ||||||
Total current liabilities |
5,190 | 2,813 | ||||||
Unearned revenues |
3,587 | 3,464 | ||||||
Other liabilities |
738 | 852 | ||||||
Total liabilities |
9,515 | 7,129 | ||||||
Stockholders equity: |
||||||||
Preferred stock, $0.0001 par value; issuable in series;
8 shares authorized; none outstanding at
June 27, 2010 and September 27, 2009 |
| | ||||||
Common stock, $0.0001 par value; 6,000 shares authorized;
1,609 and 1,669 shares issued and outstanding at
June 27, 2010 and September 27, 2009, respectively |
| | ||||||
Paid-in capital |
6,611 | 8,493 | ||||||
Retained earnings |
12,746 | 11,235 | ||||||
Accumulated other comprehensive income |
529 | 588 | ||||||
Total stockholders equity |
19,886 | 20,316 | ||||||
Total liabilities and stockholders equity |
$ | 29,401 | $ | 27,445 | ||||
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 16 of 17 |
Three Months Ended | Nine Months Ended | |||||||||||||||
June 27, | June 28, | June 27, | June 28, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues: |
||||||||||||||||
Equipment and services |
$ | 1,772 | $ | 1,862 | $ | 5,030 | $ | 4,698 | ||||||||
Licensing and royalty fees |
934 | 891 | 3,009 | 3,028 | ||||||||||||
Total revenues |
2,706 | 2,753 | 8,039 | 7,726 | ||||||||||||
Operating expenses: |
||||||||||||||||
Cost of equipment and services revenues |
905 | 864 | 2,529 | 2,357 | ||||||||||||
Research and development |
649 | 618 | 1,892 | 1,826 | ||||||||||||
Selling, general and administrative |
360 | 377 | 1,171 | 1,165 | ||||||||||||
Litigation settlement, patent license
and other related items |
| | | 748 | ||||||||||||
Total operating expenses |
1,914 | 1,859 | 5,592 | 6,096 | ||||||||||||
Operating income |
792 | 894 | 2,447 | 1,630 | ||||||||||||
Investment income (loss), net |
179 | 90 | 541 | (296 | ) | |||||||||||
Income before income taxes |
971 | 984 | 2,988 | 1,334 | ||||||||||||
Income tax expense |
(204 | ) | (247 | ) | (606 | ) | (544 | ) | ||||||||
Net income |
$ | 767 | $ | 737 | $ | 2,382 | $ | 790 | ||||||||
Basic earnings per common share |
$ | 0.47 | $ | 0.45 | $ | 1.44 | $ | 0.48 | ||||||||
Diluted earnings per common share |
$ | 0.47 | $ | 0.44 | $ | 1.43 | $ | 0.47 | ||||||||
Shares used in per share calculations: |
||||||||||||||||
Basic |
1,629 | 1,656 | 1,654 | 1,653 | ||||||||||||
Diluted |
1,642 | 1,675 | 1,670 | 1,668 | ||||||||||||
Dividends per share paid |
$ | 0.19 | $ | 0.17 | $ | 0.53 | $ | 0.49 | ||||||||
Dividends per share announced |
$ | 0.19 | $ | 0.17 | $ | 0.53 | $ | 0.49 | ||||||||
Qualcomm Announces Third Quarter Fiscal 2010 Results | Page 17 of 17 |
Three Months Ended | Nine Months Ended | |||||||||||||||
June 27, 2010 | June 28, 2009 | June 27, 2010 | June 28, 2009 | |||||||||||||
Operating Activities: |
||||||||||||||||
Net income |
$ | 767 | $ | 737 | $ | 2,382 | $ | 790 | ||||||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||||||||||
Depreciation and amortization |
166 | 154 | 495 | 460 | ||||||||||||
Revenues related to non-monetary exchanges |
(31 | ) | (29 | ) | (99 | ) | (86 | ) | ||||||||
Income tax provision in excess of income tax payments |
86 | 56 | 80 | 222 | ||||||||||||
Non-cash portion of share-based compensation expense |
149 | 151 | 453 | 436 | ||||||||||||
Incremental tax benefit from stock options exercised |
(3 | ) | (22 | ) | (34 | ) | (54 | ) | ||||||||
Net realized gains on marketable securities and other investments |
(92 | ) | (90 | ) | (274 | ) | (57 | ) | ||||||||
Impairment losses on marketable securities and other investments |
29 | 116 | 102 | 717 | ||||||||||||
Other items, net |
(66 | ) | (1 | ) | (70 | ) | (22 | ) | ||||||||
Changes in assets and liabilities, net of effects of acquisitions: |
||||||||||||||||
Accounts receivable, net |
(126 | ) | (133 | ) | (91 | ) | 2,691 | |||||||||
Inventories |
(45 | ) | 30 | 7 | 143 | |||||||||||
Other assets |
(1 | ) | 13 | (71 | ) | (17 | ) | |||||||||
Trade accounts payable |
104 | 95 | 23 | (8 | ) | |||||||||||
Payroll, benefits and other liabilities |
78 | 27 | (161 | ) | 737 | |||||||||||
Unearned revenues |
(64 | ) | (17 | ) | 241 | (101 | ) | |||||||||
Net cash provided by operating activities |
951 | 1,087 | 2,983 | 5,851 | ||||||||||||
Investing Activities: |
||||||||||||||||
Capital expenditures |
(117 | ) | (149 | ) | (313 | ) | (617 | ) | ||||||||
Advance payment on spectrum |
(1,064 | ) | | (1,064 | ) | | ||||||||||
Purchases of available-for-sale securities |
(2,569 | ) | (2,201 | ) | (7,049 | ) | (6,497 | ) | ||||||||
Proceeds from sale of available-for-sale securities |
3,113 | 1,145 | 7,354 | 3,606 | ||||||||||||
Cash received for partial settlement of investment receivables |
| 32 | 33 | 349 | ||||||||||||
Other investments and acquisitions, net of cash acquired |
(17 | ) | (7 | ) | (45 | ) | (47 | ) | ||||||||
Change in collateral held under securities lending |
| | | 173 | ||||||||||||
Other items, net |
85 | | 88 | 6 | ||||||||||||
Net cash used by investing activities |
(569 | ) | (1,180 | ) | (996 | ) | (3,027 | ) | ||||||||
Financing Activities: |
||||||||||||||||
Borrowing under loan payable to banks |
1,064 | | 1,064 | | ||||||||||||
Proceeds from issuance of common stock |
35 | 175 | 519 | 276 | ||||||||||||
Incremental tax benefit from stock options exercised |
3 | 22 | 34 | 54 | ||||||||||||
Repurchase and retirement of common stock |
(1,178 | ) | | (2,893 | ) | (285 | ) | |||||||||
Dividends paid |
(309 | ) | (282 | ) | (872 | ) | (810 | ) | ||||||||
Change in obligations under securities lending |
| | | (173 | ) | |||||||||||
Other items, net |
(1 | ) | 3 | (2 | ) | | ||||||||||
Net cash used by financing activities |
(386 | ) | (82 | ) | (2,150 | ) | (938 | ) | ||||||||
Effect of exchange rate changes on cash |
(8 | ) | 4 | (13 | ) | (5 | ) | |||||||||
Net (decrease) increase in cash and cash equivalents |
(12 | ) | (171 | ) | (176 | ) | 1,881 | |||||||||
Cash and cash equivalents at beginning of period |
2,553 | 3,892 | 2,717 | 1,840 | ||||||||||||
Cash and cash equivalents at end of period |
$ | 2,541 | $ | 3,721 | $ | 2,541 | $ | 3,721 | ||||||||