| Revenues: $3.88 billion, up 46 percent year-over-year (y-o-y) and 16 percent sequentially. | ||
| Operating income: $1.07 billion, up 38 percent y-o-y and down 3 percent sequentially. | ||
| Net income:1 $999 million, up 29 percent y-o-y and down 15 percent sequentially. | ||
| Diluted earnings per share:1 $0.59, up 28 percent y-o-y and down 17 percent sequentially. | ||
| Effective tax rate: 21 percent for the quarter. | ||
| Operating cash flow: $1.77 billion, up 123 percent y-o-y; 46 percent of revenues. |
1 | Net income and diluted earnings per share throughout this news release are attributable to Qualcomm (i.e., after adjustment for noncontrolling interests), unless otherwise stated. |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 2 of 19 |
| Return of capital to stockholders: $316 million, or $0.19 per share, of cash dividends paid. |
| Revenues: $3.87 billion, up 45 percent y-o-y and 16 percent sequentially. | ||
| Operating income: $1.65 billion, up 55 percent y-o-y and 17 percent sequentially. | ||
| Net income: $1.45 billion, up 47 percent y-o-y and 8 percent sequentially. | ||
| Diluted earnings per share: $0.86, up 46 percent y-o-y and 5 percent sequentially. The current quarter excludes $0.18 loss per share attributable to the QSI segment and $0.09 loss per share attributable to certain share-based compensation. | ||
| Effective tax rate: 22 percent for the quarter. | ||
| Free cash flow: $1.85 billion, up 125 percent y-o-y; 48 percent of revenues (defined as net cash from operating activities less capital expenditures). |
| CDMA-based Mobile Station ModemTM (MSMTM) shipments: approximately 118 million units, up 27 percent y-o-y and flat sequentially. |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 3 of 19 |
| December quarter total reported device sales: approximately $40.0 billion, up 44 percent y-o-y and 18 percent sequentially. |
| December quarter estimated CDMA-based device shipments: approximately 195 to 200 million units, at an estimated average selling price of approximately $200 to $206 per unit. |
Share-Based | In-Process | |||||||||||||||||||
($ in millions) | Non-GAAP | Compensation | R&D | QSI | GAAP | |||||||||||||||
Second quarter fiscal 2011 |
$ | 633 | $ | 98 | $ | 6 | $ | 3 | $ | 740 | ||||||||||
As a % of revenues |
16 | % | N/M | 19 | % | |||||||||||||||
Second quarter fiscal 2010 |
$ | 547 | $ | 75 | $ | 3 | $ | 23 | $ | 648 | ||||||||||
As a % of revenues |
21 | % | N/M | 24 | % | |||||||||||||||
Year-over-year change ($) |
16 | % | 31 | % | N/M | (87 | %) | 14 | % |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 4 of 19 |
Share-Based | ||||||||||||||||
($ in millions) | Non-GAAP | Compensation | QSI | GAAP | ||||||||||||
Second quarter fiscal 2011 |
$ | 432 | $ | 87 | $ | 66 | $ | 585 | ||||||||
As a % of revenues |
11 | % | N/M | 15 | % | |||||||||||
Second quarter fiscal 2010 |
$ | 305 | $ | 69 | $ | 56 | $ | 430 | ||||||||
As a % of revenues |
11 | % | N/M | 16 | % | |||||||||||
Year-over-year change ($) |
42 | % | 26 | % | 18 | % | 36 | % |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 5 of 19 |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 6 of 19 |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 7 of 19 |
Q3 FY10 | Current Guidance | |||||||
Results | Q3 FY11 Estimates | |||||||
Non-GAAP |
||||||||
Revenues |
$2.70B | $3.35B - $3.65B | ||||||
Year-over-year change |
increase 24% - 35% | |||||||
Diluted earnings per share (EPS) |
$0.57 | $0.68 - $0.72 | ||||||
Year-over-year change |
increase 19% - 26% | |||||||
GAAP |
||||||||
Revenues |
$2.71B | $3.35B - $3.65B | ||||||
Year-over-year change |
increase 24% - 35% | |||||||
Diluted EPS |
$0.47 | $0.60 - $0.64 | ||||||
Year-over-year change |
increase 28% - 36% | |||||||
Diluted EPS attributable to QSI |
$0.00 | $0.00 | ||||||
Diluted EPS attributable to share-based compensation |
($0.07 | ) | ($0.08 | ) | ||||
Diluted EPS attributable to certain tax items |
($0.03 | ) | $0.00 | |||||
Metrics |
||||||||
MSM shipments |
approx. 103M | approx. 115M - 119M | ||||||
Year-over-year change |
increase 12% - 16% | |||||||
Total reported device sales (1) |
$25.2B | * | $35.5B - $38.5B | * | ||||
Year-over-year change |
increase 41% - 53% | |||||||
Est. CDMA-based devices shipped (1) |
approx. 134M - 138M | * | not provided | |||||
Est. CDMA-based device average selling price (1) |
approx. $183 - $189 | * | not provided |
* | Est. sales in March quarter, reported in June quarter |
FY 2010 | Prior Guidance | Current Guidance | ||||||||||
Results | FY 2011 Estimates | FY 2011 Estimates | ||||||||||
Non-GAAP |
||||||||||||
Revenues |
$10.98B | $13.6B - $14.2B | $14.1B - $14.7B | |||||||||
Year-over-year change |
increase 24% - 29% | increase 28% - 34% | ||||||||||
Diluted EPS |
$2.46 | $2.91 - $3.05 | $3.05 - $3.13 | |||||||||
Year-over-year change |
increase 18% - 24% | increase 24% - 27% | ||||||||||
GAAP |
||||||||||||
Revenues |
$10.99B | $13.6B - $14.2B | $14.1B - $14.7B | |||||||||
Year-over-year change |
increase 24% - 29% | increase 28% - 34% | ||||||||||
Diluted EPS |
$1.96 | $2.32 - $2.46 | $2.51 - $2.59 | |||||||||
Year-over-year change |
increase 18% - 26% | increase 28% - 32% | ||||||||||
Diluted EPS attributable to QSI |
($0.13 | ) | ($0.27 | ) | ($0.22 | ) | ||||||
Diluted EPS attributable to
share-based compensation |
($0.27 | ) | ($0.33 | ) | ($0.33 | ) | ||||||
Diluted EPS attributable to certain
tax items |
($0.10 | ) | $0.01 | $0.01 | ||||||||
Diluted EPS attributable to
in-process R&D |
$0.00 | $0.00 | $0.00 | |||||||||
Metrics |
||||||||||||
Est. fiscal year* CDMA-based
device average selling price range
(1) |
approx. $183 - $189 | approx. $190 - $200 | approx. $199 - $209 |
* | Shipments in Sept. to June quarters, reported in Dec. to Sept. quarters |
Prior Guidance | Current Guidance | Prior Guidance | Current Guidance | |||||
Calendar 2010 | Calendar 2010 | Calendar 2011 | Calendar 2011 | |||||
Estimates | Estimates | Estimates | Estimates | |||||
Est. CDMA-based device shipments |
||||||||
March quarter
|
approx. 134M - 138M | approx. 134M - 138M | not provided | not provided | ||||
June quarter
|
approx. 153M - 157M | approx. 153M - 157M | not provided | not provided | ||||
September quarter
|
approx. 165M - 169M | approx. 165M - 169M | not provided | not provided | ||||
December quarter
|
not provided | approx. 195M - 200M | not provided | not provided | ||||
Est. Calendar year range (2) (approx.)
|
640M - 660M | 646M - 663M | 750M - 800M | 750M - 800M | ||||
Midpoint | Midpoint | Midpoint | Midpoint | |||||
Est. total CDMA-based units
|
approx. 650M | approx. 655M | approx. 775M | approx. 775M | ||||
Est. CDMA units
|
approx. 238M | approx. 238M | approx. 250M | approx. 250M | ||||
Est. WCDMA units
|
approx. 412M | approx. 417M | approx. 525M | approx. 525M |
(1) | 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 way (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. | |
(2) | Sums may not equal totals due to rounding. |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 8 of 19 |
Non-GAAP | In- | |||||||||||||||||||||||||||||||||||||||
Reconciling | Share-Based | Process | ||||||||||||||||||||||||||||||||||||||
SEGMENTS | QCT | QTL | QWI | Items (1) | Non-GAAP | Compensation | Tax Items (2) | R&D | QSI (3) | GAAP | ||||||||||||||||||||||||||||||
Q2 FISCAL 2011 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 1,962 | $ | 1,746 | $ | 157 | $ | 5 | $ | 3,870 | $ | | $ | | $ | | $ | 5 | $ | 3,875 | ||||||||||||||||||||
Change from prior year |
28 | % | 79 | % | 3 | % | N/M | 45 | % | 150 | % | 46 | % | |||||||||||||||||||||||||||
Change from prior quarter |
(7 | %) | 65 | % | (9 | %) | N/M | 16 | % | N/M | 16 | % | ||||||||||||||||||||||||||||
Operating income (loss) |
$ | 1,652 | ($202 | ) | $ | | ($6 | ) | ($371 | ) | $ | 1,073 | ||||||||||||||||||||||||||||
Change from prior year |
55 | % | (31 | %) | N/M | (181 | %) | 38 | % | |||||||||||||||||||||||||||||||
Change from prior quarter |
17 | % | (17 | %) | N/A | (177 | %) | (3 | %) | |||||||||||||||||||||||||||||||
EBT |
$ | 417 | $ | 1,575 | $ | (135 | ) | $ | 13 | $ | 1,870 | ($202 | ) | $ | | ($6 | ) | ($404 | ) | $ | 1,258 | |||||||||||||||||||
Change from prior year |
21 | % | 92 | % | N/M | N/M | 49 | % | (31 | %) | N/M | (197 | %) | 30 | % | |||||||||||||||||||||||||
Change from prior quarter |
(35 | %) | 77 | % | N/M | N/M | 13 | % | (17 | %) | N/A | (154 | %) | (5 | %) | |||||||||||||||||||||||||
EBT as a % of revenues |
21 | % | 90 | % | N/M | N/M | 48 | % | N/M | N/M | N/M | 32 | % | |||||||||||||||||||||||||||
Net income (loss) |
$ | 1,450 | ($146 | ) | ($3 | ) | ($6 | ) | ($296 | ) | $ | 999 | ||||||||||||||||||||||||||||
Change from prior year |
47 | % | (49 | %) | N/M | N/M | (265 | %) | 29 | % | ||||||||||||||||||||||||||||||
Change from prior quarter |
8 | % | (26 | %) | N/M | N/A | (240 | %) | (15 | %) | ||||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.86 | ($0.09 | ) | $ | | $ | | ($0.18 | ) | $ | 0.59 | ||||||||||||||||||||||||||||
Change from prior year |
46 | % | (50 | %) | N/M | N/M | (260 | %) | 28 | % | ||||||||||||||||||||||||||||||
Change from prior quarter |
5 | % | (29 | %) | N/M | N/A | (260 | %) | (17 | %) | ||||||||||||||||||||||||||||||
Diluted shares used |
1,689 | 1,689 | 1,689 | 1,689 | 1,689 | 1,689 | ||||||||||||||||||||||||||||||||||
Q1 FISCAL 2011 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 2,116 | $ | 1,057 | $ | 172 | $ | 3 | $ | 3,348 | $ | | $ | | $ | | $ | | $ | 3,348 | ||||||||||||||||||||
Operating income (loss) |
1,416 | (172 | ) | | | (134 | ) | 1,110 | ||||||||||||||||||||||||||||||||
EBT |
640 | 892 | | 128 | 1,660 | (172 | ) | | | (159 | ) | 1,329 | ||||||||||||||||||||||||||||
Net income (loss) |
1,345 | (116 | ) | 28 | | (87 | ) | 1,170 | ||||||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.82 | ($0.07 | ) | $ | 0.02 | $ | | ($0.05 | ) | $ | 0.71 | ||||||||||||||||||||||||||||
Diluted shares used |
1,648 | 1,648 | 1,648 | 1,648 | 1,648 | 1,648 | ||||||||||||||||||||||||||||||||||
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 2010 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 1,691 | $ | 847 | $ | 162 | $ | | $ | 2,700 | $ | | $ | | $ | | $ | 6 | $ | 2,706 | ||||||||||||||||||||
Operating income (loss) |
991 | (149 | ) | | | (50 | ) | 792 | ||||||||||||||||||||||||||||||||
EBT |
404 | 673 | 6 | 78 | 1,161 | (149 | ) | | | (41 | ) | 971 | ||||||||||||||||||||||||||||
Net income (loss) |
936 | (111 | ) | (54 | ) | | (4 | ) | 767 | |||||||||||||||||||||||||||||||
Diluted EPS |
$ | 0.57 | ($0.07 | ) | ($0.03 | ) | $ | | $ | | $ | 0.47 | ||||||||||||||||||||||||||||
Diluted shares used |
1,642 | 1,642 | 1,642 | 1,642 | 1,642 | 1,642 | ||||||||||||||||||||||||||||||||||
6 MONTHS FISCAL 2011 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 4,078 | $ | 2,803 | $ | 329 | $ | 7 | $ | 7,217 | $ | | $ | | $ | | $ | 5 | $ | 7,222 | ||||||||||||||||||||
Change from prior year |
30 | % | 48 | % | 12 | % | N/M | 35 | % | 25 | % | 35 | % | |||||||||||||||||||||||||||
Operating income (loss) |
$ | 3,067 | ($373 | ) | | ($6 | ) | ($506 | ) | $ | 2,182 | |||||||||||||||||||||||||||||
Change from prior year |
40 | % | (23 | %) | N/M | N/M | (114 | %) | 32 | % | ||||||||||||||||||||||||||||||
EBT |
$ | 1,057 | $ | 2,467 | ($135 | ) | $ | 139 | $ | 3,528 | ($373 | ) | | ($6 | ) | ($563 | ) | $ | 2,586 | |||||||||||||||||||||
Change from prior year |
37 | % | 55 | % | N/M | N/M | 37 | % | (23 | %) | N/M | N/M | (132 | %) | 28 | % | ||||||||||||||||||||||||
Net income (loss) |
$ | 2,794 | ($262 | ) | $ | 25 | ($6 | ) | ($383 | ) | $ | 2,168 | ||||||||||||||||||||||||||||
Change from prior year |
38 | % | (24 | %) | N/M | N/M | (182 | %) | 34 | % | ||||||||||||||||||||||||||||||
Diluted EPS |
$ | 1.67 | ($0.16 | ) | $ | 0.01 | $ | | ($0.23 | ) | $ | 1.30 | ||||||||||||||||||||||||||||
Change from prior year |
38 | % | (23 | %) | N/M | N/M | (188 | %) | 35 | % | ||||||||||||||||||||||||||||||
Diluted shares used |
1,669 | 1,669 | 1,669 | 1,669 | 1,669 | 1,669 | ||||||||||||||||||||||||||||||||||
6 MONTHS FISCAL 2010 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 3,144 | $ | 1,891 | $ | 294 | $ | | $ | 5,329 | $ | | $ | | $ | | $ | 4 | $ | 5,333 | ||||||||||||||||||||
Operating income (loss) |
2,198 | (304 | ) | | (3 | ) | (236 | ) | 1,655 | |||||||||||||||||||||||||||||||
EBT |
769 | 1,594 | 8 | 195 | 2,566 | (304 | ) | | (3 | ) | (243 | ) | 2,016 | |||||||||||||||||||||||||||
Net income (loss) |
2,030 | (211 | ) | (65 | ) | (3 | ) | (136 | ) | 1,615 | ||||||||||||||||||||||||||||||
Diluted EPS |
$ | 1.21 | ($0.13 | ) | ($0.04 | ) | $ | | ($0.08 | ) | $ | 0.96 | ||||||||||||||||||||||||||||
Diluted shares used |
1,685 | 1,685 | 1,685 | 1,685 | 1,685 | 1,685 | ||||||||||||||||||||||||||||||||||
12 MONTHS FISCAL 2010 |
||||||||||||||||||||||||||||||||||||||||
Revenues |
$ | 6,695 | $ | 3,659 | $ | 628 | $ | | $ | 10,982 | $ | | $ | | $ | | $ | 9 | $ | 10,991 | ||||||||||||||||||||
Operating income (loss) |
4,316 | (614 | ) | | (3 | ) | (416 | ) | 3,283 | |||||||||||||||||||||||||||||||
EBT |
1,693 | 3,020 | 12 | 361 | 5,086 | (614 | ) | | (3 | ) | (435 | ) | 4,034 | |||||||||||||||||||||||||||
Net income (loss) |
4,071 | (442 | ) | (159 | ) | (3 | ) | (220 | ) | 3,247 | ||||||||||||||||||||||||||||||
Diluted EPS |
$ | 2.46 | ($0.27 | ) | ($0.10 | ) | $ | | ($0.13 | ) | $ | 1.96 | ||||||||||||||||||||||||||||
Diluted shares used |
1,658 | 1,658 | 1,658 | 1,658 | 1,658 | 1,658 |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 9 of 19 |
(1) | Non-GAAP reconciling items related to revenues consist primarily of other nonreportable segment revenues less intersegment eliminations. Non-GAAP reconciling items related to earnings before taxes consist primarily of certain investment income or losses, interest expense, 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) | During the first quarter of fiscal 2011, we recorded a tax benefit of $32 million, or $0.02 diluted earnings per share, related to fiscal 2010 due to the retroactive reenactment of the federal R&D tax credit. Also, during each of the first and second quarters of fiscal 2011, we recorded $3 million in state tax expense because deferred revenue related to the license agreement signed in the first quarter of fiscal 2010 with Samsung is taxable in fiscal 2011 but the resulting deferred tax asset will reverse in future years when our state tax rate will be lower. Our first and second quarter fiscal 2011 Non-GAAP results exclude these items. | |
(3) | At fiscal year-end, the sum of the quarterly tax provisions for each column, including QSI, equals the annual tax provisions for each column computed in accordance with GAAP. In interim quarters, the tax provision for the QSI operating segment is computed by subtracting the Non-GAAP tax provision, the tax items column and the tax provision related to share-based compensation from the GAAP tax provision. |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 10 of 19 |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 11 of 19 |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 12 of 19 |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 13 of 19 |
Non-GAAP | Share-Based | Tax | In-process | GAAP | ||||||||||||||||||||
($ in millions except per share data) | Results | Compensation | Items | R&D | QSI | Results | ||||||||||||||||||
R&D |
$ | 633 | $ | 98 | $ | | $ | 6 | $ | 3 | $ | 740 | ||||||||||||
SG&A |
432 | 87 | | | 66 | 585 | ||||||||||||||||||
Operating income (loss) |
1,652 | (a) | (202 | ) | | (6 | ) | (371 | ) | 1,073 | ||||||||||||||
Investment income (loss), net |
217 | (b) | | | | (32 | )(c) | 185 | ||||||||||||||||
Tax rate |
22 | % | N/M | N/M | N/M | N/M | 21 | % | ||||||||||||||||
Net income (loss) |
$ | 1,450 | $ | (146 | ) | $ | (3 | )(d) | $ | (6 | ) | $ | (296 | ) | $ | 999 | ||||||||
Diluted earnings (loss) per share (EPS) |
$ | 0.86 | $ | (0.09 | ) | $ | | $ | | $ | (0.18 | ) | $ | 0.59 | ||||||||||
Operating cash flow |
$ | 1,926 | $ | (87 | ) | $ | | $ | | $ | (71 | ) | $ | 1,768 | ||||||||||
Operating cash flow as % of revenues |
50 | % | N/A | N/A | N/M | 46 | % | |||||||||||||||||
Free cash flow (e) |
$ | 1,851 | $ | (87 | ) | $ | | $ | | $ | (75 | ) | $ | 1,689 | ||||||||||
Free cash flow as a % of revenues |
48 | % | N/A | N/A | N/M | 44 | % |
(a) | During the second quarter of fiscal 2011, we recorded impairment charges of $120 million related to our Firethorn division, including $114 million in goodwill impairment. | |
(b) | Included $122 million in interest and dividend income related to cash, cash equivalents and marketable securities, which were not part of the Companys strategic investments, and $102 million in net realized gains on investments, partially offset by $4 million in other-than-temporary losses on investments and $3 million in interest expense. | |
(c) | Included $31 million in interest expense, $4 million in equity in losses of investees and $1 million in other-than-temporary losses on investments, partially offset by $4 million in interest and dividend income related to cash, cash equivalents and marketable securities. | |
(d) | During the second quarter of fiscal 2011, we recorded $3 million in state tax expense because deferred revenue related to the license agreement signed in the first quarter of fiscal 2010 with Samsung is taxable in fiscal 2011 but the resulting deferred tax asset will reverse in future years when our state tax rate will be lower. Our second quarter fiscal 2011 Non-GAAP results exclude this item. | |
(e) | Free cash flow is calculated as net cash provided by operating activities less capital expenditures. Reconciliation of these amounts is included in the Reconciliation of Non-GAAP Free Cash Flows to Net Cash Provided by Operating Activities (GAAP) and Other Supplemental Disclosures for the three months ended March 27, 2011, included herein. |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 14 of 19 |
Non-GAAP | Share-Based | Tax | In-process | GAAP | ||||||||||||||||||||
($ in millions except per share data) | Results | Compensation | Items | R&D | QSI | Results | ||||||||||||||||||
R&D |
$ | 1,193 | $ | 184 | $ | | $ | 6 | $ | 28 | $ | 1,411 | ||||||||||||
SG&A |
774 | 159 | | | 89 | 1,022 | ||||||||||||||||||
Operating income (loss) |
3,067 | (a) | (373 | ) | | (6 | ) | (506 | ) | 2,182 | ||||||||||||||
Investment income (loss), net |
462 | (b) | | | | (58 | )(c) | 404 | ||||||||||||||||
Tax rate |
21 | % | N/M | N/M | N/M | N/M | 16 | % | ||||||||||||||||
Net income (loss) |
$ | 2,794 | $ | (262 | ) | $ | 25 | (d) | $ | (6 | ) | $ | (383 | ) | $ | 2,168 | ||||||||
Diluted earnings (loss) per share (EPS) |
$ | 1.67 | $ | (0.16 | ) | $ | 0.01 | $ | | $ | (0.23 | ) | $ | 1.30 | ||||||||||
Operating cash flow |
$ | 2,153 | $ | (132 | ) | $ | | $ | | $ | (205 | ) | $ | 1,816 | ||||||||||
Operating cash flow as % of revenues |
30 | % | N/A | N/A | N/M | 25 | % | |||||||||||||||||
Free cash flow (e) |
$ | 1,978 | $ | (132 | ) | $ | | $ | | $ | (211 | ) | $ | 1,635 | ||||||||||
Free cash flow as a % of revenues |
27 | % | N/A | N/A | N/M | 23 | % |
(a) | During the first six months of fiscal 2011, we recorded impairment charges of $120 million related to our Firethorn division, including $114 million in goodwill impairment. | |
(b) | Included $251 million in interest and dividend income related to cash, cash equivalents and marketable securities, which were not part of our strategic investments, and $230 million in net realized gains on investments, partially offset by $11 million in other-than-temporary losses on investments and $8 million in interest expense. | |
(c) | Included $54 million in interest expense, $5 million in other-than-temporary losses on investments and $5 million in equity in losses of investees, partially offset by $5 million in interest and dividend income related to cash, cash equivalents and marketable securities and $1 million in net realized gains on investments. | |
(d) | During the first six months of fiscal 2011, we recorded a tax benefit of $32 million, or $0.02 diluted earnings per share, related to fiscal 2010 due to the retroactive reenactment of the federal R&D tax credit. Also, during the first six months of fiscal 2011, we recorded $6 million in state tax expense because deferred revenue related to the license agreement signed in the first quarter of fiscal 2010 with Samsung is taxable in fiscal 2011 but the resulting deferred tax asset will reverse in future years when our state tax rate will be lower. Our Non-GAAP results for the first six months of fiscal 2011 excluded these items. | |
(e) | 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 Non-GAAP Free Cash Flows to Net Cash Provided by Operating Activities (GAAP) and Other Supplemental Disclosures for the six months ended March 27, 2011, included herein. |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 15 of 19 |
Three Months Ended March 27, 2011 | ||||||||||||||||
Share-Based | ||||||||||||||||
Non-GAAP | Compensation | QSI | GAAP | |||||||||||||
Net cash provided (used) by
operating activities |
$ | 1,926 | $ | (87 | )(a) | $ | (71 | ) | $ | 1,768 | ||||||
Less: capital expenditures |
(75 | ) | | (4 | ) | (79 | ) | |||||||||
Free cash flow |
$ | 1,851 | $ | (87 | ) | $ | (75 | ) | $ | 1,689 | ||||||
Revenues |
$ | 3,870 | $ | | $ | 5 | $ | 3,875 | ||||||||
Free cash flow as a % of revenues |
48 | % | N/A | N/M | 44 | % | ||||||||||
Other supplemental cash disclosures: |
||||||||||||||||
Cash transfers from QSI (1) |
$ | 63 | $ | | $ | (63 | ) | $ | | |||||||
Cash transfers to QSI (2) |
(87 | ) | | 87 | | |||||||||||
Net cash transfers |
$ | (24 | ) | $ | | $ | 24 | $ | | |||||||
Six Months Ended March 27, 2011 | ||||||||||||||||
Share-Based | ||||||||||||||||
Non-GAAP | Compensation | QSI | GAAP | |||||||||||||
Net cash provided (used) by
operating activities |
$ | 2,153 | $ | (132 | )(a) | $ | (205 | ) | $ | 1,816 | ||||||
Less: capital expenditures |
(175 | ) | | (6 | ) | (181 | ) | |||||||||
Free cash flow |
$ | 1,978 | $ | (132 | ) | $ | (211 | ) | $ | 1,635 | ||||||
Revenues |
$ | 7,217 | $ | | $ | 5 | $ | 7,222 | ||||||||
Free cash flow as a % of revenues |
27 | % | N/A | N/M | 23 | % | ||||||||||
Other supplemental cash disclosures: |
||||||||||||||||
Cash transfers from QSI (1) |
$ | 71 | $ | | $ | (71 | ) | $ | | |||||||
Cash transfers to QSI (2) |
(241 | ) | | 241 | | |||||||||||
Net cash transfers |
$ | (170 | ) | $ | | $ | 170 | $ | | |||||||
Three Months Ended March 28, 2010 | ||||||||||||||||
Share-Based | ||||||||||||||||
Non-GAAP | Compensation | QSI | GAAP | |||||||||||||
Net cash provided (used) by
operating activities |
$ | 908 | $ | (18 | )(a) | $ | (97 | ) | $ | 793 | ||||||
Less: capital expenditures |
(85 | ) | | (23 | ) | (108 | ) | |||||||||
Free cash flow |
$ | 823 | $ | (18 | ) | $ | (120 | ) | $ | 685 | ||||||
Six Months Ended March 28, 2010 | ||||||||||||||||
Share-Based | ||||||||||||||||
Non-GAAP | Compensation | QSI | GAAP | |||||||||||||
Net cash provided (used) by
operating activities |
$ | 2,246 | $ | (31 | )(a) | $ | (183 | ) | $ | 2,032 | ||||||
Less: capital expenditures |
(152 | ) | | (44 | ) | (196 | ) | |||||||||
Free cash flow |
$ | 2,094 | $ | (31 | ) | $ | (227 | ) | $ | 1,836 | ||||||
(a) | Incremental tax benefits from stock options exercised during the period. | |
(1) | Cash primarily from the issuance of subsidiary shares to noncontrolling interests. | |
(2) | Primarily funding for strategic debt and equity investments and QSI operating expenses. |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 16 of 19 |
Three Months Ended March 27, 2011 | ||||||||||||||||||||||||
Non-GAAP | Share-Based | Tax Items | In-Process | GAAP | ||||||||||||||||||||
Results | Compensation | (a) | R&D | QSI (b) | Results | |||||||||||||||||||
Income (loss) before income taxes |
$ | 1,870 | $ | (202 | ) | $ | | $ | (6 | ) | $ | (404 | ) | $ | 1,258 | |||||||||
Income tax (expense) benefit |
(420 | ) | 56 | (3 | ) | | 104 | (263 | ) | |||||||||||||||
Net income (loss) |
1,450 | (146 | ) | (3 | ) | (6 | ) | (300 | ) | 995 | ||||||||||||||
Net loss attributable to
noncontrolling interests |
| | | | 4 | 4 | ||||||||||||||||||
Net income attributable to
Qualcomm |
$ | 1,450 | $ | (146 | ) | $ | (3 | ) | $ | (6 | ) | $ | (296 | ) | $ | 999 | ||||||||
Tax rate |
22 | % | 28 | % | N/A | N/M | N/M | 21 | % |
Six Months Ended March 27, 2011 | ||||||||||||||||||||||||
Non-GAAP | Share-Based | Tax Items | In-Process | GAAP | ||||||||||||||||||||
Results | Compensation | (a) | R&D | QSI (b) | Results | |||||||||||||||||||
Income (loss) before income taxes |
$ | 3,528 | $ | (373 | ) | $ | | $ | (6 | ) | $ | (563 | ) | $ | 2,586 | |||||||||
Income tax (expense) benefit |
(734 | ) | 111 | 25 | | 176 | (422 | ) | ||||||||||||||||
Net income (loss) |
2,794 | (262 | ) | 25 | (6 | ) | (387 | ) | 2,164 | |||||||||||||||
Net loss attributable to
noncontrolling interests |
| | | | 4 | 4 | ||||||||||||||||||
Net income attributable to
Qualcomm |
$ | 2,794 | $ | (262 | ) | $ | 25 | $ | (6 | ) | $ | (383 | ) | $ | 2,168 | |||||||||
Tax rate |
21 | % | 30 | % | N/M | N/M | N/M | 16 | % |
(a) | During the first quarter of fiscal 2011, we recorded a tax benefit of $32 million, or $0.02 diluted earnings per share, related to fiscal 2010 due to the retroactive reenactment of the federal R&D tax credit. Also, during each of the first and second quarters of fiscal 2011, we recorded $3 million in state tax expense because deferred revenue related to the license agreement signed in the first quarter of fiscal 2010 with Samsung is taxable in fiscal 2011 but the resulting deferred tax asset will reverse in future years when our state tax rate will be lower. Our Non-GAAP results excluded these items. | |
(b) | 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 Non-GAAP tax provision, the tax items column and the tax provision related to share-based compensation from the GAAP tax provision. |
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 17 of 19 |
March 27, | September 26, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 6,367 | $ | 3,547 | ||||
Marketable securities |
6,658 | 6,732 | ||||||
Accounts receivable, net |
715 | 730 | ||||||
Inventories |
606 | 528 | ||||||
Deferred tax assets |
330 | 321 | ||||||
Other current assets |
174 | 275 | ||||||
Total current assets |
14,850 | 12,133 | ||||||
Marketable securities |
9,081 | 8,123 | ||||||
Deferred tax assets |
1,917 | 1,922 | ||||||
Assets held for sale |
746 | | ||||||
Property, plant and equipment, net |
2,114 | 2,373 | ||||||
Goodwill |
1,417 | 1,488 | ||||||
Other intangible assets, net |
2,174 | 3,022 | ||||||
Other assets |
1,525 | 1,511 | ||||||
Total assets |
$ | 33,824 | $ | 30,572 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Trade accounts payable |
$ | 666 | $ | 764 | ||||
Payroll and other benefits related liabilities |
558 | 467 | ||||||
Unearned revenues |
518 | 623 | ||||||
Loans payable |
1,100 | 1,086 | ||||||
Income taxes payable |
69 | 1,443 | ||||||
Other current liabilities |
1,474 | 1,085 | ||||||
Total current liabilities |
4,385 | 5,468 | ||||||
Unearned revenues |
3,733 | 3,485 | ||||||
Other liabilities |
705 | 761 | ||||||
Total liabilities |
8,823 | 9,714 | ||||||
Stockholders equity: |
||||||||
Qualcomm Incorporated (Qualcomm) Stockholders equity: |
||||||||
Preferred stock, $0.0001 par value; issuable in series;
8 shares authorized; none outstanding at
March 27, 2011 and September 26, 2010 |
| | ||||||
Common stock, $0.0001 par value; 6,000 shares authorized;
1,666 and 1,612 shares issued and outstanding at
March 27, 2011 and September 26, 2010, respectively |
| | ||||||
Paid-in capital |
9,325 | 6,856 | ||||||
Retained earnings |
14,840 | 13,305 | ||||||
Accumulated other comprehensive income |
802 | 697 | ||||||
Total Qualcomm stockholders equity |
24,967 | 20,858 | ||||||
Noncontrolling interests |
34 | | ||||||
Total stockholders equity |
25,001 | 20,858 | ||||||
Total liabilities and stockholders equity |
$ | 33,824 | $ | 30,572 | ||||
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 18 of 19 |
Three Months Ended | Six Months Ended | |||||||||||||||
March 27, | March 28, | March 27, | March 28, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: |
||||||||||||||||
Equipment and services |
$ | 2,044 | $ | 1,595 | $ | 4,257 | $ | 3,257 | ||||||||
Licensing and royalty fees |
1,831 | 1,068 | 2,965 | 2,076 | ||||||||||||
Total revenues |
3,875 | 2,663 | 7,222 | 5,333 | ||||||||||||
Operating expenses: |
||||||||||||||||
Cost of equipment and services revenues |
1,363 | 809 | 2,493 | 1,624 | ||||||||||||
Research and development |
740 | 648 | 1,411 | 1,244 | ||||||||||||
Selling, general and administrative |
585 | 430 | 1,022 | 810 | ||||||||||||
Goodwill impairment |
114 | | 114 | | ||||||||||||
Total operating expenses |
2,802 | 1,887 | 5,040 | 3,678 | ||||||||||||
Operating income |
1,073 | 776 | 2,182 | 1,655 | ||||||||||||
Investment income, net |
185 | 189 | 404 | 361 | ||||||||||||
Income before income taxes |
1,258 | 965 | 2,586 | 2,016 | ||||||||||||
Income tax expense |
(263 | ) | (191 | ) | (422 | ) | (401 | ) | ||||||||
Net income |
995 | 774 | 2,164 | 1,615 | ||||||||||||
Net loss attributable to noncontrolling
interests |
4 | | 4 | | ||||||||||||
Net income attributable to Qualcomm |
$ | 999 | $ | 774 | $ | 2,168 | $ | 1,615 | ||||||||
Earnings per common share attributable to Qualcomm: |
||||||||||||||||
Basic |
$ | 0.60 | $ | 0.47 | $ | 1.32 | $ | 0.97 | ||||||||
Diluted |
$ | 0.59 | $ | 0.46 | $ | 1.30 | $ | 0.96 | ||||||||
Shares used in per share calculations: |
||||||||||||||||
Basic |
1,654 | 1,662 | 1,639 | 1,667 | ||||||||||||
Diluted |
1,689 | 1,678 | 1,669 | 1,685 | ||||||||||||
Dividends per share paid |
$ | 0.19 | $ | 0.17 | $ | 0.38 | $ | 0.34 | ||||||||
Dividends per share announced |
$ | 0.19 | $ | 0.17 | $ | 0.38 | $ | 0.34 | ||||||||
Qualcomm Announces Second Quarter Fiscal 2011 Results | Page 19 of 19 |
Three Months Ended | Six Months Ended | |||||||||||||||
March 27, | March 28, | March 27, | March 28, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Operating Activities: |
||||||||||||||||
Net income |
$ | 995 | $ | 774 | $ | 2,164 | $ | 1,615 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||||||
Depreciation and amortization |
434 | 167 | 635 | 329 | ||||||||||||
Goodwill impairment |
114 | | 114 | | ||||||||||||
Revenues related to non-monetary exchanges |
(31 | ) | (31 | ) | (62 | ) | (68 | ) | ||||||||
Income tax provision in excess (less than) of income tax payments |
140 | (38 | ) | (1,334 | ) | (6 | ) | |||||||||
Non-cash portion of share-based compensation expense |
201 | 153 | 375 | 304 | ||||||||||||
Incremental tax benefit from stock options exercised |
(87 | ) | (18 | ) | (132 | ) | (31 | ) | ||||||||
Net realized gains on marketable securities and other investments |
(102 | ) | (80 | ) | (231 | ) | (182 | ) | ||||||||
Impairment losses on marketable securities and other investments |
5 | 16 | 16 | 73 | ||||||||||||
Other items, net |
18 | (8 | ) | 19 | (4 | ) | ||||||||||
Changes in assets and liabilities, net of effects of acquisitions: |
||||||||||||||||
Accounts receivable, net |
(53 | ) | (52 | ) | 23 | 35 | ||||||||||
Inventories |
(36 | ) | (49 | ) | (81 | ) | 52 | |||||||||
Other assets |
4 | (38 | ) | (19 | ) | (70 | ) | |||||||||
Trade accounts payable |
89 | 145 | (145 | ) | (81 | ) | ||||||||||
Payroll, benefits and other liabilities |
248 | (115 | ) | 269 | (239 | ) | ||||||||||
Unearned revenues |
(171 | ) | (33 | ) | 205 | 305 | ||||||||||
Net cash provided by operating activities |
1,768 | 793 | 1,816 | 2,032 | ||||||||||||
Investing Activities: |
||||||||||||||||
Capital expenditures |
(79 | ) | (108 | ) | (181 | ) | (196 | ) | ||||||||
Purchases of available-for-sale securities |
(3,536 | ) | (2,382 | ) | (5,845 | ) | (4,480 | ) | ||||||||
Proceeds from sale of available-for-sale securities |
2,443 | 2,228 | 5,467 | 4,241 | ||||||||||||
Cash received for partial settlement of investment receivables |
18 | 25 | 18 | 33 | ||||||||||||
Other investments and acquisitions, net of cash acquired |
(23 | ) | (22 | ) | (89 | ) | (28 | ) | ||||||||
Other items, net |
(2 | ) | 4 | 5 | 3 | |||||||||||
Net cash used by investing activities |
(1,179 | ) | (255 | ) | (625 | ) | (427 | ) | ||||||||
Financing Activities: |
||||||||||||||||
Borrowing under loans payable |
177 | | 1,260 | | ||||||||||||
Repayment of loans payable |
(177 | ) | | (1,260 | ) | | ||||||||||
Proceeds from issuance of common stock |
1,233 | 332 | 2,024 | 484 | ||||||||||||
Proceeds from issuance of subsidiary shares to noncontrolling
interests |
62 | | 62 | | ||||||||||||
Incremental tax benefit from stock options exercised |
87 | 18 | 132 | 31 | ||||||||||||
Repurchase and retirement of common stock |
| (1,715 | ) | | (1,715 | ) | ||||||||||
Dividends paid |
(316 | ) | (279 | ) | (625 | ) | (563 | ) | ||||||||
Change in obligation under securities lending |
(8 | ) | | 30 | | |||||||||||
Other items, net |
| | (4 | ) | (1 | ) | ||||||||||
Net cash provided (used) by financing activities |
1,058 | (1,644 | ) | 1,619 | (1,764 | ) | ||||||||||
Effect of exchange rate changes on cash |
9 | (1 | ) | 10 | (5 | ) | ||||||||||
Net increase (decrease) in cash and cash equivalents |
1,656 | (1,107 | ) | 2,820 | (164 | ) | ||||||||||
Cash and cash equivalents at beginning of period |
4,711 | 3,660 | 3,547 | 2,717 | ||||||||||||
Cash and cash equivalents at end of period |
$ | 6,367 | $ | 2,553 | $ | 6,367 | $ | 2,553 | ||||||||