EXHIBIT 99.1
FOR IMMEDIATE RELEASE | QUALCOMM Contact: | |
Bill Davidson | ||
Vice President, Investor Relations | ||
1-(858) 658-4813 (ph) 1-(858)651-9303 (fax) | ||
e-mail: ir@qualcomm.com |
QUALCOMM Announces Third Quarter Fiscal 2005 Results
Revenues $1.36 Billion, EPS $0.33
Pro Forma Revenues $1.36 Billion, EPS $0.28
SAN DIEGO July 20, 2005 QUALCOMM Incorporated (NASDAQ: QCOM), a pioneer and innovator of Code Division Multiple Access (CDMA) and other advanced wireless technologies, today announced results for its third fiscal quarter ended June 26, 2005.
Total QUALCOMM Third Quarter Results:
| Revenues: $1.36 billion, up 1 percent year-over-year and down 1 percent sequentially. | |||
| Net income: $560 million, up 15 percent year-over-year and 5 percent sequentially. | |||
| Diluted earnings per share: $0.33, up 14 percent year-over-year and 6 percent sequentially. | |||
| Effective tax rate: approximately 18 percent for the quarter. Fiscal 2005 estimated tax rate is approximately 22 percent. | |||
| Operating cash flow: $523 million, up 13 percent year-over year; 39 percent of revenue. | |||
| Dividends: paid $147 million in cash dividends. | |||
| Stock repurchase: in the third quarter, repurchased 20.9 million shares of stock at a net cost of $723 million; year-to-date, repurchased 27.1 million shares at a net cost of $953 million. Two outstanding put options, if exercised, will require us to repurchase an additional 11.5 million shares for a net cost of $389 million. |
Pro Forma Defined
Consistent with the second quarter of 2005, pro forma results exclude the QUALCOMM Strategic Initiatives (QSI) segment and one-time tax benefits recorded in the second and third quarters of fiscal 2005, and are presented as if the New Method1 of recording royalties had been in use in the prior year.
1 The New Method of recording royalties is based solely on reports received from licensees for royalty bearing sales of equipment in the prior quarter. The Company adopted this New Method during the fourth quarter of fiscal 2004 on a prospective basis. Under the Prior Method of recording royalties, the Company recorded an estimate of earned royalties in the quarter preceding its receipt of licensee reports. Results under the New Method are presented herein to assist investors with evaluating financial performance on a comparable basis. |
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QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 2 of 21 |
QUALCOMM Pro Forma Third Quarter Results:
| Revenues: $1.36 billion, up 2 percent year-over-year, and down 1 percent sequentially. | |||
| Net income: $465 million, down 4 percent year-over-year and 5 percent sequentially. | |||
| Diluted earnings per share: $0.28, down 3 percent year-over-year and sequentially, excludes $0.05 per share attributable to the QSI segment and $0.01 per share attributable to a one-time tax benefit recorded in the third quarter of fiscal 2005. (The sum of pro forma earnings per share and items excluded do not equal total QUALCOMM earnings per share due to rounding.) | |||
| Effective tax rate: approximately 29 percent for the quarter. Fiscal 2005 estimated tax rate of approximately 28 percent. | |||
| Free cash flow: $368 million, down 6 percent year-over-year; 27 percent of revenue. (Defined as net cash from operating activities less capital expenditures.) |
Detailed reconciliations between total QUALCOMM results and QUALCOMM pro forma results and cash flows are included at the end of this news release. Prior period reconciliations are presented on our Investor Relations web page at www.qualcomm.com.
We are pleased to increase our fiscal year earnings projections, primarily as a result of greater shipments of higher priced WCDMA handsets reflected in our June results. Volume shipments of WCDMA and 1xEV-DO MSMs have increased substantially year-over-year and sequentially, and we look forward to further increases in the quarters ahead. We are projecting continued acceleration in WCDMA and 1xEV-DO shipments toward the end of 2005 and beyond as exciting new handsets in a broad range of price points enable operators to address a larger segment of their subscriber base, said Dr. Paul E. Jacobs, CEO of QUALCOMM.
QUALCOMMs third generation (3G) products and technologies have helped create a wireless value chain that has grown revenues for QUALCOMM and our partners: wireless content providers, application developers, manufacturers and wireless operators. With the launch of MSM7500, we are providing our partners with an even more powerful hardware platform to build new services that will change the way consumers think about their wireless phone.
We have increased our research and development investment year-over-year to capitalize on the opportunities afforded by the continued and significant transition to 3G. Our efforts have resulted in
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 3 of 21 |
extensive enhancements to fundamental CDMA performance through the development and use of inventions related to diversity receivers, interference cancellation, equalizers, and multi-carrier radios. In addition, we have continued our long history of innovation by developing compelling new technologies, such as 1xEV-DO Gold Multicast, Platinum Multicast and the FLO air interface, that can greatly improve the efficient use of operators spectrum and enable multimedia services to be made available to the mass market at affordable prices. QUALCOMM remains focused on bringing new services and features to market through innovation in technologies, products and services, and driving down the costs of this innovation through integration in our chips.
Cash and Marketable Securities
QUALCOMMs cash, cash equivalents and marketable securities totaled approximately $7.9 billion at the end of the third quarter of fiscal 2005, compared to $7.6 billion on September 26, 2004 and $7.0 billion on June 27, 2004. During the third quarter of fiscal 2005, we paid cash dividends of $147 million and repurchased shares of stock at a net cost of $723 million.
Research and Development
Research and development expenses were $259 million in the third fiscal quarter, up 34 percent year-over-year and 3 percent sequentially, largely attributable to increased headcount related to development of integrated circuit products and initiatives to support lower cost solutions, multimedia applications, high-speed wireless Internet access and multimode, multiband, multinetwork products, including CDMA2000 1xEV-DO, WCDMA and HSDPA. R&D expenses include $13 million attributable to MediaFLO USA in the QUALCOMM Strategic Initiatives (QSI) segment, as compared to $7 million in the prior year quarter.
Selling, General and Administrative
Selling, general and administrative (SG&A) expenses were $150 million in the third fiscal quarter, down 4 percent year-over-year and 3 percent sequentially.
Effective Income Tax Rate
Our fiscal 2005 effective income tax rate for total QUALCOMM is now estimated to be approximately 22 percent, compared to our previous estimate of approximately 24 percent. The decrease in our estimated annual effective tax rate for total QUALCOMM is primarily the result of
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 4 of 21 |
our increased ability to use capital loss carryforwards as well as an election to compute our California tax on the basis of our U.S. operations only. Since these benefits were recorded in the third quarter of fiscal 2005, the rate for the third quarter of fiscal 2005 of approximately 18% for total QUALCOMM is lower than the estimated annual effective tax rate. Our fiscal 2005 pro forma effective tax rate is estimated to be approximately 28 percent, consistent with our previous estimate. For fiscal 2005 pro forma presentation we excluded $0.01 diluted earnings per share, for the benefit related to the California tax election attributable to fiscal 2004.
QUALCOMM Strategic Initiatives (QSI)
The QSI segment includes our strategic investments and related income and expenses. The third quarter of fiscal 2005 results consisted primarily of a $48 million gain on our minority investment in a wireless publisher and $10 million of other income, partially offset by $22 million of operating expenses primarily related to MediaFLO USA and $7 million in equity in losses of investees. Total QUALCOMM results for the third quarter of fiscal 2005 include $0.05 diluted earnings per share for the QSI segment, compared to break-even QSI results in the third quarter of fiscal 2004.
Business Outlook
The following statements are forward-looking and actual results may differ materially. Please see Note Regarding Forward-Looking Statements at the end of this news release for a description of certain risk factors and QUALCOMMs annual and quarterly reports on file with the Securities and Exchange Commission (SEC) for a more complete description of risks. Due to their nature, certain income and expense items such as realized investment gains or losses in QSI and asset impairments cannot be accurately forecast. Accordingly, the Company excludes forecasts of such items from its business outlook, and actual results may vary materially from the business outlook if the Company incurs any such income or expense items.
A pro forma outlook is provided consistent with the presentation of pro forma results provided elsewhere herein. Total QUALCOMM outlook for fiscal 2005 is compared to total QUALCOMM results for fiscal 2004 which reflect only partial economic performance of the Companys licensing business in the fourth quarter of fiscal 2004 due to the prospective change to the New Method during that period.
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 5 of 21 |
Our updated guidance, compared to our prior guidance, reflects an increase in the midpoint of our pro forma earnings per share estimates of $0.02 for fiscal 2005. In addition, we are decreasing the estimate for calendar 2005 handset shipments by approximately 5 percent which is largely attributable to our expectations that the sale of WCDMA handsets in Europe in the second half of the calendar year will be less than previously estimated for the year. Our handset shipment forecast will be discussed in more detail during our third quarter conference call. This call is scheduled for 2:30pm (PDT) on Wednesday July 20, 2005. Refer to conference call dial-in information included at the end of this press release.
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 6 of 21 |
The following estimates are approximations and are based on the current business outlook:
Business Outlook Summary
FISCAL YEAR
Prior Year | Prior Guidance | Current Guidance | ||||||||||
FY 2004 | FY 2005 | FY 2005 | ||||||||||
Results | Estimates | Estimates | ||||||||||
QUALCOMM Pro Forma |
||||||||||||
Revenues |
$ | 5.0B | $ | 5.5B-$5.7B | $ | 5.55B-$5.65B | ||||||
Year-over-year change |
increase 9% - 13 | % | increase 10% - 12 | % | ||||||||
Diluted earnings per share (EPS) |
$ | 1.07 | $ | 1.10-$1.14 | $ | 1.13-$1.15 | ||||||
Year-over-year change |
increase 3% -7 | % | increase 6% - 7 | % | ||||||||
Total QUALCOMM |
||||||||||||
Revenues |
$ | 4.9B | $ | 5.5B-$5.7B | $ | 5.55B-$5.65B | ||||||
Year-over-year change |
increase 13% - 17 | % | increase 14% - 16 | % | ||||||||
Diluted earnings per share (EPS) |
$ | 1.03 | $ | 1.14-$1.18 | $ | 1.22-$1.24 | ||||||
Year-over-year change |
increase 11% - 15 | % | increase 18% - 20 | % | ||||||||
EPS attributable to QSI |
$ | 0.01 | $ | 0.01 | $ | 0.05 | ||||||
EPS attributable to tax benefits related to 2004 |
$ | 0.03 | $ | 0.04 | ||||||||
Metrics |
||||||||||||
Fiscal year* CDMA/WCDMA handset unit wholesale average selling price |
approx. $205 | $ | 211 | $ | 215 |
* Shipments in Sep. to June quarters, reported Dec. to Sep. |
FOURTH QUARTER
Prior Year | Current Guidance | |||||||
Q404 | Q405 | |||||||
Results | Estimates | |||||||
QUALCOMM Pro Forma |
||||||||
Revenues |
$ | 1.4B | $ | 1.43B-$1.53B | ||||
Year-over-year change |
increase 4% - 12 | % | ||||||
Diluted earnings per share (EPS) |
$ | 0.30 | $ | 0.29-$0.31 | ||||
Year-over-year change |
decrease 3% - increase 3 | % | ||||||
Total QUALCOMM |
||||||||
Revenues |
$ | 1.1B | $ | 1.43B-$1.53B | ||||
Year-over-year change |
increase 28% - 37 | % | ||||||
Diluted earnings per share (EPS) |
$ | 0.23 | $ | 0.28-$0.30 | ||||
Year-over-year change |
increase 22% - 30 | % | ||||||
EPS attributable to QSI |
$ | 0.03 | ($0.01 | ) | ||||
Metrics |
||||||||
MSM Shipments |
approx. 39M | 38M - 40M | ||||||
CDMA/WCDMA handset units shipped |
approx. 40M (Jun Qtr | ) | 43M - 45M (Jun Qtr | ) | ||||
CDMA/WCDMA handset unit wholesale average selling price |
approx. $212 (Jun Qtr | ) | $215(JunQtr | ) |
CALENDAR YEAR handset estimates
Prior Guidance | |||||||||||||
Calendar 2005 | Current Guidance | ||||||||||||
CDMA/WCDMA handset unit shipments | Calendar 2004 | Estimates | Calendar 2005 Estimates | ||||||||||
March quarter actuals |
approx. 38M | 40M-42M | approx. 43M | ||||||||||
June quarter |
approx. 40M | not provided | 43M - 45M | ||||||||||
September quarter |
approx. 40M | not provided | not provided | ||||||||||
December quarter |
approx. 52M | not provided | not provided | ||||||||||
Calendar year range |
approx. 170M | 208M - 218M | 198M - 208M | ||||||||||
Midpoint |
Midpoint |
||||||||||||
CDMA/WCDMA units |
approx. 170M | 213M | 203M | ||||||||||
CDMA units |
approx. 148M | 163M | 158M | ||||||||||
WCDMA units |
approx. 22M | 50M | 45M |
Sums may not equal totals due to rounding
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 7 of 21 |
Results of Business Segments The following tables, which present segment information, have been adjusted to reflect the 2005 segment presentation (Note 1), as well as to present QTL results for fiscal year 2004 as if the New Method of recognizing QTL revenues had been in effect for the entire year (Note 4.) GAAP equivalents and reconciliations for fiscal 2004 periods are included at the end of this news release (dollars in millions, except per share data):
Third Quarter - Fiscal Year 2005
Reconciling | QUALCOMM | Tax Adjustment | Total | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (2) | Pro Forma | (6) | QSI | QUALCOMM | ||||||||||||||||||||||||
Revenues |
766 | 448 | 164 | (20 | ) | 1,358 | | | 1,358 | |||||||||||||||||||||||
Change from prior year quarter (New Method for QTL (4)) |
(4%) | 7% | 15% | N/M | 2% | 2% | ||||||||||||||||||||||||||
Change from prior quarter |
3% | (9%) | 9% | N/M | (1%) | (1%) | ||||||||||||||||||||||||||
Earnings before taxes |
186 | 407 | 12 | 51 | 656 | | 30 | 686 | ||||||||||||||||||||||||
Change from prior year quarter (New Method for QTL (4)) |
(27%) | 7% | 1100% | N/M | (1%) | N/M | 5% | |||||||||||||||||||||||||
Change from prior quarter |
18% | (9%) | 50% | N/M | (2%) | N/M | 8% | |||||||||||||||||||||||||
Net income |
465 | 16 | 79 | 560 | ||||||||||||||||||||||||||||
Change from prior year quarter (New Method for QTL (4)) |
(4%) | N/M | N/M | 18% | ||||||||||||||||||||||||||||
Change from prior quarter |
(5%) | N/M | N/M | 5% | ||||||||||||||||||||||||||||
Diluted earnings per common share |
0.28 | 0.01 | 0.05 | 0.33 | ||||||||||||||||||||||||||||
Change from prior year quarter (New Method for QTL (4)) |
(3%) | N/M | N/M | 18% | ||||||||||||||||||||||||||||
Change from prior quarter |
(3%) | N/M | N/M | 6% |
Second Quarter - Fiscal Year 2005
Reconciling | QUALCOMM | Tax Adjustment | Total | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (2) | Pro Forma | (5) | QSI | QUALCOMM | ||||||||||||||||||||||||
Revenues |
746 | 493 | 151 | (25) | 1,365 | | | 1,365 | ||||||||||||||||||||||||
Earnings (loss) before taxes |
158 | 448 | 8 | 52 | 666 | | (33) | 633 | ||||||||||||||||||||||||
Net income (loss) |
487 | 55 | (10) | 532 | ||||||||||||||||||||||||||||
Diluted earnings (loss) per common share |
0.29 | 0.03 | (0.01) | 0.31 |
Third Quarter - Fiscal Year 2004
QUALCOMM | ||||||||||||||||||||
New Method | Reconciling | Pro Forma | ||||||||||||||||||
Segments | QCT(1)* | QTL (4)* | QWI(1)* | Items (1)(2)* | (1)(4)* | |||||||||||||||
Revenues |
794 | 420 | 143 | (32) | 1,325 | |||||||||||||||
Earnings from continuing operations before taxes |
255 | 382 | 1 | 26 | 664 | |||||||||||||||
Net income |
482 | |||||||||||||||||||
Diluted earnings per common share (3) |
0.29 |
Nine Months - Fiscal Year 2005
Tax | ||||||||||||||||||||||||||||||||
Reconciling | QUALCOMM | Adjustments(5) | Total | |||||||||||||||||||||||||||||
Segments | QCT | QTL | QWI | Items (2) | Pro Forma | (6) | QSI | QUALCOMM | ||||||||||||||||||||||||
Revenues |
2,378 | 1,342 | 473 | (81) | 4,112 | | | 4,112 | ||||||||||||||||||||||||
Change from prior year (New Method for QTL (4)) |
5% | 24% | 13% | N/M | 12% | 12% | ||||||||||||||||||||||||||
Earnings from continuing operations before taxes |
586 | 1,212 | 37 | 151 | 1,986 | | 37 | 2,023 | ||||||||||||||||||||||||
Change from prior year (New Method for QTL (4)) |
(24%) | 23% | 429% | N/M | 9% | N/M | 14% | |||||||||||||||||||||||||
Net income |
1,427 | 71 | 107 | 1,605 | ||||||||||||||||||||||||||||
Change from prior year (New Method for QTL (4)) |
10% | N/M | N/M | 27% | ||||||||||||||||||||||||||||
Diluted earnings per common share |
0.84 | 0.04 | 0.06 | 0.95 | ||||||||||||||||||||||||||||
Change from prior year (New Method for QTL (4)) |
8% | N/M | N/M | 25% |
Nine Months - Fiscal Year 2004
QUALCOMM | ||||||||||||||||||||
New Method | Reconciling | Pro Forma | ||||||||||||||||||
Segments | QCT(1)* | QTL (4)* | QWI(1)* | Items (1)(2)* | (1)(4)* | |||||||||||||||
Revenues |
2,261 | 1,078 | 417 | (95) | 3,661 | |||||||||||||||
Earnings from continuing operations before taxes |
776 | 982 | 7 | 56 | 1,821 | |||||||||||||||
Net income |
1,302 | |||||||||||||||||||
Diluted earnings per common share (3) |
0.78 |
(1) | During the first quarter of fiscal 2005, the Company reorganized its MediaFLO USA business into the QSI segment. The operating expenses related to the MediaFLO USA business were included in reconciling items through the end of fiscal 2004. Also during the first quarter of fiscal 2005, the Company reorganized a division in the QWI segment that develops and sells test tools into the QCT segment. Prior period segment information has been adjusted to conform to the new segment presentation. | |
(2) | Reconciling items related to revenues consist primarily of other non-reportable segment revenues less intersegment eliminations. Reconciling items related to earnings before taxes consist primarily of corporate expenses not allocated to the segments for management reporting purposes, unallocated net investment income, non-reportable segment results and the elimination of intercompany profit. |
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 8 of 21 |
(3) | The Company effected a two-for-one stock split in August 2004. All references to number of shares and per share amounts reflect the stock split. | |
(4) | QTLs results in the fourth quarter of fiscal 2004 reflect the Companys decision to make the prospective change to the New Method of recording royalties based solely on reports received from licensees for royalty bearing sales of equipment in the prior quarter. This change had the one-time effect of reducing royalty revenues in the fourth quarter of fiscal 2004. Results using the New Method of recording royalties are presented for prior periods to illustrate the differences between the Prior Method of recording royalties and the New Method implemented during the fourth quarter of fiscal 2004. The QTL percentage increases over the prior year quarter on a GAAP basis are as follows: Q3 Revenues, 3% increase, Q3 EBT, 2% increase, year to date revenues, 14% increase, year to date EBT, 12% increase. | |
(5) | During the second quarter of fiscal 2005, the Company decreased its estimate of R&D costs allocable to the Companys foreign operations under an intercompany cost sharing agreement. Due to this change in estimate, the effective tax rate in the second quarter for total QUALCOMM includes a $55 million benefit, or $0.03 diluted earnings per share, related to fiscal 2004 and a $17 million benefit, or $0.01 diluted earnings per share, related to the first quarter of fiscal 2005. For fiscal 2005 pro forma presentation, results have been adjusted to exclude the tax benefit attributable to fiscal 2004. | |
(6) | During the third quarter of fiscal 2005, the Company made an election to compute its California tax on the basis of its U.S. operations only, which resulted in a $38 million tax benefit. Our effective tax rate in the third quarter of fiscal 2005 for total QUALCOMM excluding QSI includes a $16 million tax benefit, or $0.01 diluted earnings per share, for this California tax election related to fiscal 2004. For fiscal 2005 pro forma presentation, results have been adjusted to exclude the tax benefit attributable to fiscal 2004. | |
* | As adjusted as described in the notes above. |
N/M Not Meaningful
Sums may not equal totals due to rounding.
Business Segment Information
QUALCOMM CDMA Technologies (QCT)
| QCT shipped approximately 36 million MSM phone chips to customers worldwide during the third fiscal quarter of 2005, compared to approximately 35 million units in the same quarter of 2004 and approximately 37 million units in the second quarter of fiscal 2005. | |||
| Strong global traction continues for QCTs CDMA2000 1xEV-DO chipsets with more than 30 1xEV-DO phones based on the MSM6500 Multimedia Platform chipsets launched, delivering mainstream wireless multimedia to Korea, Japan, North America and Latin America. Handsets based on our MSM6550 Enhanced Multimedia Platform chipset were introduced in Korea and Japan. The highly-integrated, multimedia-rich MSM6550 chipset progressed from sampling to commercial availability in a handset in less than a year. | |||
| QCT continues to increase its WCDMA customer base. More than 30 wireless device manufacturers have selected QCTs chipset solutions for WCDMA/HSDPA networks worldwide. Several of these manufacturers have MSM6250-based handsets and data cards commercially available with more than 90 WCDMA/HSDPA devices either currently in design or commercially available based on QCT chipsets. | |||
| QCT sampled the dual-CPU MSM7500 Convergence Platform single-chip solution, with the capability to transform the wireless device into the ultimate personal multimedia experience. |
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 9 of 21 |
This chip will enable devices from high-end PDAs and Smartphones to cost-effective wireless computers to portable video players, music centers, gaming consoles and more. | ||||
| QCT announced the first products in the QUALCOMM Single Chip (QSC) family, targeted to deliver affordable voice and basic multimedia solutions to multiple segments within the entry-level market. This architecture combines baseband modem, multimedia engines, radio transceiver and power management functionality, plus built-in security in the industrys first single-chip CDMA2000 1X solutions. |
QUALCOMM Technology Licensing (QTL)
| During the quarter, four major Chinese manufacturers entered into WCDMA subscriber unit license agreements at QUALCOMMs standard royalty rates; increasing the total number of such licensees to five plus an additional Chinese manufacturer that has entered into an interim agreement at QUALCOMMs standard royalty rates. | |||
| Approximately 125 major wireless equipment manufacturers are now licensed by QUALCOMM for CDMA2000 products. | |||
| Approximately 60 major wireless equipment manufacturers are now licensed by QUALCOMM for WCDMA and TD-SCDMA products. | |||
| Licensee information for the second quarter of fiscal 2005 as reported by licensees and included in revenue in the third quarter of fiscal 2005: |
o | We estimate WCDMA royalties contributed approximately 36 percent of total royalties compared to approximately 25 percent of total royalties in the year ago quarter and approximately 32 percent of total royalties in the prior quarter. | |||
o | World-wide shipments of approximately 43 million subscriber units at an average selling price of approximately $231 occurred in the quarter ended March 2005. | |||
o | Forty-two subscriber licensees reported sales of CDMA2000 1X products and 14 subscriber licensees reported sales of WCDMA products, as compared to 11 WCDMA subscriber licensees that reported in the year ago period. | |||
o | Twelve infrastructure licensees reported sales of CDMA2000 1X products and 13 infrastructure licensees reported sales of WCDMA products, as compared to 11 WCDMA infrastructure licensees that reported in the year ago period. |
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 10 of 21 |
QUALCOMM Wireless & Internet Group (QWI)
QUALCOMM Internet Services (QIS)
| As of July 2005, 45 wireless operators were offering BREW services in 24 countries. As of June 2005, BREW publishers and developers have earned more than $350 million to date from the sale of wireless applications and services developed for the BREW solution, compared to the more than $200 million announced in October 2004. | |||
| Through July, three operators, including ALLTEL, have entered into agreements to license the BREW uiOne user interface offering. |
QUALCOMM Wireless Business Solutions® (QWBS)
| QWBS shipped nearly 13,800 satellite-based systems (OmniTRACS, TruckMAIL) in the third quarter of fiscal 2005 compared to nearly 10,200 in the third quarter of fiscal 2004 and approximately 8,800 in the second quarter of fiscal 2005. This brings cumulative total satellite-based systems shipped worldwide to nearly 556,000. | |||
| QWBS shipped more than 19,600 terrestrial-based systems (OmniExpress, GlobalTRACS, T2 Untethered TrailerTRACS and LINQ) in the third quarter of fiscal 2005 compared to nearly 2,300 terrestrial-based systems in the third quarter of fiscal 2004 and nearly 13,800 terrestrial-based systems in the second quarter of fiscal 2005. This brings the cumulative total terrestrial-based systems shipped worldwide to nearly 68,000. |
Conference
Call
QUALCOMMs third quarter fiscal 2005 earnings conference call will be broadcast live on July 20,
2005 beginning at 2:30 p.m. (PDT) on the Companys web site at: www.qualcomm.com. This
conference call may contain forward-looking financial information. The conference call will
include a discussion of non-GAAP financial measures as that term is defined in Regulation G.
The most directly comparable GAAP financial measures and information reconciling these non-GAAP
financial measures to the Companys financial results prepared in accordance with GAAP, as well
as the other material financial and statistical information to be discussed in the conference
call, will be posted on the Companys Investor Relations web site at www.qualcomm.com immediately
prior to commencement of the call. A taped audio replay will be available via
telephone on July 20, 2005 beginning at approximately 5:00 p.m. (PDT) through August 4, 2005 at
5:00 p.m. (PDT). To listen to the replay, U.S. callers may dial (800) 633-8284 and international
callers may dial (402) 977-9140. U.S. and international callers should use reservation number
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 11 of 21 |
21245566. An audio replay of the conference call will be available on the Companys web site at www.qualcomm.com for two weeks following the live call.
Editors Note: if you would like additional information on QUALCOMM, please view the QUALCOMM press room at http://www.qualcomm.com/press/index.html .
QUALCOMM Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on CDMA and other advanced technologies. Headquartered in San Diego, Calif., QUALCOMM is included in the S&P 500 Index and is a 2005 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Note
Regarding Use of Non-GAAP Financial Measures
Pro forma financial measurements are used by management to evaluate, assess and benchmark the
Companys operating results, and the Company believes that pro forma reporting represents
relevant and useful information that is widely used by analysts, investors, and other interested
parties in our industry. The Company presents pro forma financial information
excluding the QUALCOMM Strategic Initiatives (QSI) segment to facilitate evaluation of its
ongoing core operating businesses, including QUALCOMM CDMA Technologies (QCT), QUALCOMM
Technology Licensing (QTL) and QUALCOMM Wireless & Internet (QWI). QSI results relate to
strategic investments for which the Company has exit strategies of varying durations. Management
believes that the information excluding QSI presents a more representative view of the operating
and liquidity performance of the Company because it excludes the effect of fluctuations in value
of investments that are unrelated to the Companys operational performance.
The Company presents pro forma financial results as though the New Method of recording royalties had been in effect for prior periods to facilitate evaluation by management, investors and analysts of the results for these periods on a comparable basis to the Companys current results, current guidance and future periods. The Company believes that this presentation is useful in evaluating performance on a consistent and comparable basis.
The Company presents pro forma results for fiscal 2005 excluding one-time tax benefits related to fiscal 2004 to provide management, as well as investors, a clearer understanding of its ongoing tax
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 12 of 21 |
rate and after tax earnings. The Company believes that this presentation is useful in evaluating performance on a consistent and comparable basis.
The Companys management uses pro forma cash flow information including marketable securities to analyze increases and decreases in certain of its liquid assets, comprised of cash, cash equivalents and marketable securities. Management views certain marketable securities as liquid assets available to fund operations, which result from cash management strategies designed to increase yields. However, these instruments do not meet the definition of cash equivalents in accordance with Statement of Financial Accounting Standards No. 95, Statement of Cash Flows and must be excluded from the GAAP statements of cash flows. Since the GAAP statements of cash flows reconcile the Companys beginning and ending cash and cash equivalents balances, the purchases and sales of marketable securities are presented as inflows and outflows. For internal analysis of the Companys cash position, management does not view these transactions as inflows and outflows from the business, but as cash management transactions. If required, such investments could be settled relatively quickly as additional cash resources are needed. The Company believes that this non-GAAP presentation is a helpful measure of the Companys liquidity.
The non-GAAP pro forma financial information presented herein should be considered in addition, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, pro forma is not a term defined by GAAP and, as a result, the Companys measure of pro forma results might be different than similarly titled measures used by other companies. Reconciliations between total QUALCOMM results and QUALCOMM pro forma results and total QUALCOMM cash flow and QUALCOMM pro forma changes in cash, cash equivalents and marketable securities are presented herein.
Note
Regarding Forward-Looking Statements
In addition to the historical information contained herein, this news release contains
forward-looking statements that are subject to risks and uncertainties. Actual results may
differ substantially from those referred to herein due to a number of factors, including but not
limited to risks associated with: the rate of development, deployment and commercial acceptance
of CDMA based networks and CDMA based technology, including CDMA2000 1X, 1xEV-DO and
WCDMA, both domestically and internationally; our dependence on major customers and licensees;
fluctuations in the demand for CDMA based products, services or applications; foreign
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 13 of 21 |
currency fluctuations; strategic loans, investments and transactions the Company has or may pursue; our dependence on third party manufacturers and suppliers; our ability to maintain and improve operational efficiencies and profitability; developments in current and future litigation, as well as the other risks detailed from time-to-time in the Companys SEC reports.
###
QUALCOMM®, QUALCOMM Wireless Business Solutions®, Mobile Station Modem, MSM, FLO, MediaFLO, gpsOne®, CSM, QUALCOMM Single Chip, QSC, MSM6500, MSM6250, MSM6550, MSM7500, BREW®, uiOne , TruckMAIL, OmniTRACS®, OmniExpress®, GlobalTRACS®, T2, LINQ and Untethered TrailerTRACS® are trademarks and/or service marks of QUALCOMM Incorporated. CDMA2000®is a registered trademark of the Telecommunications Industry Association. All other trademarks are the property of their respective owners.
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 14 of 21 |
QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
PRO FORMA RESULTS TO TOTAL QUALCOMM RESULTS
(In millions, except per share data)
(Unaudited)
Three Months Ended June 26, 2005 | ||||||||||||||||
Total | ||||||||||||||||
Pro Forma | Tax Adjustment | QSI | QUALCOMM | |||||||||||||
Revenues: |
||||||||||||||||
Equipment and services |
$ | 882 | $ | | $ | | $ | 882 | ||||||||
Licensing and royalty fees |
476 | | | 476 | ||||||||||||
1,358 | | | 1,358 | |||||||||||||
Operating expenses: |
||||||||||||||||
Cost of equipment and services revenues |
389 | | | 389 | ||||||||||||
Research and development |
246 | | 13 | 259 | ||||||||||||
Selling, general and administrative |
151 | | (1 | )(a) | 150 | |||||||||||
Total operating expenses |
786 | | 12 | 798 | ||||||||||||
Operating income (loss) |
572 | | (12 | ) | 560 | |||||||||||
Investment income (expense), net |
84 | (b) | | 42 | (c) | 126 | ||||||||||
Income (loss) before income taxes |
656 | | 30 | 686 | ||||||||||||
Income tax (expense) benefit |
(191 | )(d) | 16 | 49 | (126 | )(d) | ||||||||||
Net income (loss) |
$ | 465 | $ | 16 | $ | 79 | $ | 560 | ||||||||
Earnings per common share: |
||||||||||||||||
Diluted (e) |
$ | 0.28 | $ | 0.01 | $ | 0.05 | $ | 0.33 | ||||||||
Shares used in per share calculations: |
||||||||||||||||
Diluted |
1,683 | 1,683 | 1,683 | 1,683 | ||||||||||||
Supplemental Financial Data: |
||||||||||||||||
Operating Cash Flow |
$ | 520 | $ | | $ | 3 | $ | 523 | ||||||||
Operating Cash Flow as a % of Revenue |
38 | % | 39 | % | ||||||||||||
Free Cash Flow (f) |
$ | 368 | $ | | $ | (1 | ) | $ | 367 | |||||||
Free Cash Flow as a % of Revenue |
27 | % | 27 | % |
(a) | Includes $9 million of SG&A expenses more than offset by $10 million of other income. | |
(b) | Includes $68 million in interest income related to cash, cash equivalents and marketable securities, which are not part of the Companys strategic investment portfolio, and $28 million in net realized gains on investments, partially offset by $9 million in losses on derivatives, $2 million in interest expense and $1 million in other-than-temporary losses on marketable securities. | |
(c) | Includes $46 million in net realized gains on investments and $2 million in interest income, partially offset by $7 million in equity in losses of investees. | |
(d) | The estimated effective tax rate for fiscal 2005 for total QUALCOMM is approximately 22% and QUALCOMM pro forma is approximately 28%. The third quarter of fiscal 2005 tax rate of 18% for total QUALCOMM is lower than the estimated annual effective tax rate primarily as a result of a $42 million benefit in the QSI segment from an increase in the forecast of our ability to use capital loss carryforwards and a $38 million benefit from an election to compute our California tax on the basis of our U.S. operations only. | |
(e) | Sums of diluted earnings per share amounts may not equal totals due to rounding. | |
(f) | Free Cash Flow is calculated as net cash provided by operating activities less capital expenditures. Reconciliation of these amounts is included in the Condensed Consolidated Statements of Cash Flows and Marketable Securities for the three months ended June 26, 2005, included herein. |
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 15 of 21 |
QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
PRO FORMA RESULTS TO TOTAL QUALCOMM RESULTS
(In millions, except per share data)
(Unaudited)
Nine Months Ended June 26, 2005 | ||||||||||||||||
Tax | Total | |||||||||||||||
Pro Forma | Adjustments | QSI | QUALCOMM | |||||||||||||
Revenues: |
||||||||||||||||
Equipment and services |
$ | 2,708 | $ | | $ | | $ | 2,708 | ||||||||
Licensing and royalty fees |
1,404 | | | 1,404 | ||||||||||||
4,112 | | | 4,112 | |||||||||||||
Operating expenses: |
||||||||||||||||
Cost of equipment and services revenues |
1,204 | | | 1,204 | ||||||||||||
Research and development |
707 | | 33 | 740 | ||||||||||||
Selling, general and administrative |
442 | | 10 | 452 | ||||||||||||
Total operating expenses |
2,353 | | 43 | 2,396 | ||||||||||||
Operating income (loss) |
1,759 | | (43 | ) | 1,716 | |||||||||||
Investment income (expense), net |
227 | (a) | | 80 | (b) | 307 | ||||||||||
Income before income taxes |
1,986 | | 37 | 2,023 | ||||||||||||
Income tax (expense) benefit |
(559 | )(c) | 71 | 70 | (418 | )(c) | ||||||||||
Net income (loss) |
$ | 1,427 | $ | 71 | $ | 107 | $ | 1,605 | ||||||||
Earnings per common share: |
||||||||||||||||
Diluted |
$ | 0.84 | $ | 0.04 | $ | 0.06 | $ | 0.95 | ||||||||
Shares used in per share calculations: |
||||||||||||||||
Diluted |
1,697 | 1,697 | 1,697 | 1,697 | ||||||||||||
Supplemental Financial Data: |
||||||||||||||||
Operating Cash Flow |
$ | 1,741 | $ | | $ | | $ | 1,741 | ||||||||
Operating Cash Flow as a % of Revenue |
42 | % | 42 | % | ||||||||||||
Free Cash Flow (d) |
$ | 1,385 | $ | | $ | (82 | ) | $ | 1,303 | |||||||
Free Cash Flow as a % of Revenue |
34 | % | 32 | % |
(a) | Includes $181 million in interest income related to cash, cash equivalents and marketable securities, which are not part of the Companys strategic investment portfolio, and $68 million in net realized gains on investments, partially offset by $12 million in derivative losses, $7 million of other-than-temporary losses on marketable securities and $3 million in interest expense. | |
(b) | Includes $98 million in net realized gains on investments and a $3 million gain on derivative instruments, partially offset by $24 million in equity in losses of investees. | |
(c) | The estimated effective tax rate for fiscal 2005 for total QUALCOMM is approximately 22% and QUALCOMM pro forma is approximately 28%. The 21% tax rate for the first nine months of fiscal 2005 for total QUALCOMM is lower than the estimated annual effective tax rate primarily as a result of certain tax items recorded during the first nine months. | |
(d) | Free Cash Flow is calculated as net cash provided by operating activities less capital expenditures. Reconciliation of these amounts is included in the Condensed Consolidated Statements of Cash Flows and Marketable Securities for the nine months ended June 26, 2005, included herein. |
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 16 of 21 |
QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING PRO FORMA CASH FLOWS FROM CASH,
CASH EQUIVALENTS AND MARKETABLE SECURITIES TO TOTAL QUALCOMM CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended June 26, 2005 | ||||||||||||||||
Tax | Total | |||||||||||||||
Pro Forma | Adjustment | QSI | QUALCOMM | |||||||||||||
Earnings (losses) before taxes, depreciation, amortization and other adjustments (1) |
$ | 666 | $ | | $ | (7 | ) | $ | 659 | |||||||
Working capital changes and taxes paid (2) |
(146 | ) | | 10 | (136 | ) | ||||||||||
Net cash provided by operating activities |
520 | | 3 | 523 | ||||||||||||
Capital expenditures |
(152 | ) | | (4 | ) | (156 | ) | |||||||||
Free cash flow (Net cash provided by operating activities less
capital expenditures) |
368 | | (1 | ) | 367 | |||||||||||
Net additional share capital |
54 | | | 54 | ||||||||||||
Repurchase and retirement of common stock |
(723 | ) | | | (723 | ) | ||||||||||
Proceeds from put options |
15 | | | 15 | ||||||||||||
Dividends paid |
(147 | ) | | | (147 | ) | ||||||||||
Other investments |
| | (4 | ) | (4 | ) | ||||||||||
Other items, net |
| | 4 | 4 | ||||||||||||
Changes in fair value and other changes to marketable securities |
31 | | 35 | 66 | ||||||||||||
Marketable securities pending settlement payment |
(68 | ) | | | (68 | ) | ||||||||||
Transfer from QSI (3) |
74 | | (74 | ) | | |||||||||||
Transfer to QSI (4) |
(7 | ) | | 7 | | |||||||||||
Net decrease in cash, cash equivalents and marketable securities (5) |
$ | (403 | ) | $ | | $ | (33 | ) | $ | (436 | ) | |||||
(1) Reconciliation to GAAP: |
||||||||||||||||
Net income |
$ | 465 | $ | 16 | $ | 79 | $ | 560 | ||||||||
Non-cash adjustments (a) |
238 | (16 | ) | (40 | ) | 182 | ||||||||||
Net realized gains on marketable securities and other investments |
(28 | ) | | (46 | ) | (74 | ) | |||||||||
Net taxes paid |
(9 | ) | | | (9 | ) | ||||||||||
Earnings (losses) before taxes, depreciation, amortization and other adjustments |
$ | 666 | $ | | $ | (7 | ) | $ | 659 | |||||||
(2) Reconciliation to GAAP: |
||||||||||||||||
(Decrease) increase in cash resulting from changes in working capital |
$ | (155 | ) | $ | | $ | 10 | $ | (145 | ) | ||||||
Net taxes paid |
9 | | | 9 | ||||||||||||
Working capital changes and taxes paid |
$ | (146 | ) | $ | | $ | 10 | $ | (136 | ) | ||||||
(3) Cash from loan payments and sale of equity securities. |
||||||||||||||||
(4) Funding for strategic debt and equity investments and other QSI
operating expenses. |
||||||||||||||||
(5) Reconciliation to GAAP cash flow statement: |
||||||||||||||||
Net decrease in cash and cash equivalents (GAAP) |
$ | (278 | ) | $ | | $ | | $ | (278 | ) | ||||||
Plus: Net proceeds of marketable securities |
(88 | ) | | (68 | ) | (156 | ) | |||||||||
Plus: Net increase in fair value and other changes to marketable securities |
31 | | 35 | 66 | ||||||||||||
Plus: Net decrease in marketable securities pending settlement receipt |
(68 | ) | | | (68 | ) | ||||||||||
Net decrease in cash, cash equivalents and marketable securities |
$ | (403 | ) | $ | | $ | (33 | ) | $ | (436 | ) | |||||
(a) See detail on the following pages. |
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 17 of 21 |
QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING PRO FORMA CASH FLOWS FROM CASH,
CASH EQUIVALENTS AND MARKETABLE SECURITIES TO TOTAL QUALCOMM CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended June 26, 2005 | ||||||||||||||||
Tax | Total | |||||||||||||||
Pro Forma | Adjustments | QSI | QUALCOMM | |||||||||||||
Earnings (losses) before taxes, depreciation, amortization and other adjustments (1) |
$ | 1,884 | $ | | $ | (37 | ) | $ | 1,847 | |||||||
Working capital changes and taxes paid (2) |
(143 | ) | | 37 | (106 | ) | ||||||||||
Net cash provided by operating activities |
1,741 | | | 1,741 | ||||||||||||
Capital expenditures |
(356 | ) | | (82 | ) | (438 | ) | |||||||||
Free cash flow (Net cash provided by operating activities less
capital expenditures) |
1,385 | | (82 | ) | 1,303 | |||||||||||
Net additional share capital |
236 | | | 236 | ||||||||||||
Repurchase and retirement of common stock |
(953 | ) | | | (953 | ) | ||||||||||
Proceeds from put options |
29 | | | 29 | ||||||||||||
Dividends paid |
(377 | ) | | | (377 | ) | ||||||||||
Net collections of finance receivables |
1 | | | 1 | ||||||||||||
Issuance of note receivable |
| | (14 | ) | (14 | ) | ||||||||||
Other investments and acquisitions, net of cash acquired |
(177 | ) | | (12 | ) | (189 | ) | |||||||||
Other items, net |
1 | | 28 | 29 | ||||||||||||
Changes in fair value and other changes to marketable securities |
55 | | 126 | 181 | ||||||||||||
Marketable securities pending settlement payment |
(17 | ) | | | (17 | ) | ||||||||||
Transfer from QSI (3) |
158 | | (158 | ) | | |||||||||||
Transfer to QSI (4) |
(126 | ) | | 126 | | |||||||||||
Net increase in cash, cash equivalents and marketable securities (5) |
$ | 215 | $ | | $ | 14 | $ | 229 | ||||||||
(1) Reconciliation to GAAP: |
||||||||||||||||
Net income |
$ | 1,427 | $ | 71 | $ | 107 | $ | 1,605 | ||||||||
Non-cash adjustments (b) |
623 | (71 | ) | (46 | ) | 506 | ||||||||||
Net realized gains on marketable securities and other investments |
(68 | ) | | (98 | ) | (166 | ) | |||||||||
Net taxes paid |
(98 | ) | | | (98 | ) | ||||||||||
Earnings (losses) before taxes, depreciation, amortization and other adjustments |
$ | 1,884 | $ | | $ | (37 | ) | $ | 1,847 | |||||||
(2) Reconciliation to GAAP: |
||||||||||||||||
(Decrease) increase in cash resulting from changes in working capital |
$ | (241 | ) | $ | | $ | 37 | $ | (204 | ) | ||||||
Net taxes paid |
98 | | | 98 | ||||||||||||
Working capital changes and taxes paid |
$ | (143 | ) | $ | | $ | 37 | $ | (106 | ) | ||||||
(3) Cash from loan payments and sale of equity securities. |
||||||||||||||||
(4) Funding for strategic debt and equity investments, and other QSI
operating expenses. |
||||||||||||||||
(5) Reconciliation to GAAP cash flow statement: |
||||||||||||||||
Net increase in cash and cash equivalents (GAAP) |
$ | 146 | $ | | $ | | $ | 146 | ||||||||
Plus: Net purchase (proceeds) of marketable securities |
31 | | (112 | ) | (81 | ) | ||||||||||
Plus: Net increase in fair value and other changes to marketable securities |
55 | | 126 | 181 | ||||||||||||
Plus: Net decrease in marketable securities pending settlement receipt |
(17 | ) | | | (17 | ) | ||||||||||
Net increase in cash, cash equivalents and marketable securities |
$ | 215 | $ | | $ | 14 | $ | 229 | ||||||||
(b) See detail on the following page. |
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 18 of 21 |
QUALCOMM Incorporated
SUPPLEMENTAL DETAIL TO THE
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
(In millions)
(Unaudited)
Three Months Ended June 26, 2005 | ||||||||||||||||
Tax | Total | |||||||||||||||
Pro Forma | Adjustment | QSI | QUALCOMM | |||||||||||||
(a) Non-cash adjustments are comprised of: |
||||||||||||||||
Depreciation and amortization |
$ | 49 | $ | | $ | 2 | $ | 51 | ||||||||
Losses on derivative instruments |
8 | | | 8 | ||||||||||||
Other-than-temporary losses on marketable securities and other investments |
1 | | | 1 | ||||||||||||
Equity in losses of investees |
| | 7 | 7 | ||||||||||||
Non-cash income tax expense (benefit) |
182 | (16 | ) | (50 | ) | 116 | ||||||||||
Other non-cash charges and (credits) |
(2 | ) | | 1 | (1 | ) | ||||||||||
Total non-cash adjustments |
$ | 238 | $ | (16 | ) | $ | (40 | ) | $ | 182 | ||||||
Nine Months Ended June 26, 2005 | ||||||||||||||||
Tax | Total | |||||||||||||||
Pro Forma | Adjustments | QSI | QUALCOMM | |||||||||||||
(b) Non-cash adjustments are comprised of: |
||||||||||||||||
Depreciation and amortization |
$ | 140 | $ | | $ | 4 | $ | 144 | ||||||||
(Gains) or losses on derivative instruments |
12 | | (3 | ) | 9 | |||||||||||
Other-than-temporary losses on marketable securities and other investments |
7 | | | 7 | ||||||||||||
Equity in losses of investees |
| | 24 | 24 | ||||||||||||
Non-cash income tax expense (benefit) |
460 | (71 | ) | (70 | ) | 319 | ||||||||||
Other non-cash charges and (credits) |
4 | | (1 | ) | 3 | |||||||||||
Total non-cash adjustments |
$ | 623 | $ | (71 | ) | $ | (46 | ) | $ | 506 | ||||||
Three Months Ended June 27, 2004 | ||||||||||||
Total | ||||||||||||
Pro Forma | QSI | QUALCOMM | ||||||||||
Net cash provided (used) by operating activities |
$ | 466 | $ | (4 | ) | $ | 462 | |||||
Capital expenditures |
(76 | ) | | (76 | ) | |||||||
Free cash flow (Net cash provided by operating activities less capital expenditures) |
$ | 390 | $ | (4 | ) | $ | 386 | |||||
QUALCOMM Announces Third Quarter Fiscal 2005 Results | Page 19 of 21 |
QUALCOMM Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
ASSETS
June 26, | September 26, | |||||||
2005 | 2004 | |||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 1,360 | $ | 1,214 | ||||
Marketable securities |
4,357 | 4,768 | ||||||
Accounts receivable, net |
634 | 581 | ||||||
Inventories |
187 | 154 | ||||||
Deferred tax assets |
418 | 409 | ||||||
Other current assets |
143 | 101 | ||||||
Total current assets |
7,099 | 7,227 | ||||||
Marketable securities |
2,147 | 1,653 | ||||||
Property, plant and equipment, net |
905 | 675 | ||||||
Goodwill |
525 | 356 | ||||||
Deferred tax assets |
385 | 493 | ||||||
Other assets, net |
517 | 416 | ||||||
Total assets |
$ | 11,578 | $ | 10,820 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Trade accounts payable |
$ | 259 | $ | 286 | ||||
Payroll and other benefits related liabilities |
173 | 194 | ||||||
Unearned revenue |
173 | 172 | ||||||
Other current liabilities |
228 | 242 | ||||||
Total current liabilities |
833 | 894 | ||||||
Unearned revenue |
158 | 170 | ||||||
Other liabilities |
140 | 92 | ||||||
Total liabilities |
1,131 | 1,156 | ||||||
Commitments and contingencies |
||||||||
Stockholders equity: |
||||||||
Preferred stock, $0.0001 par value; issuable in series;
8 shares authorized; none outstanding at
June 26, 2005 and September 26, 2004 |
| | ||||||
Common stock, $0.0001 par value; 6,000 shares authorized;
1,628 and 1,635 shares issued and outstanding at
June 26, 2005 and September 26, 2004, respectively |
| | ||||||
Paid-in capital |
6,471 | 6,940 | ||||||
Retained earnings |
3,938 | 2,709 | ||||||
Accumulated other comprehensive income |
38 | 15 | ||||||
Total stockholders equity |
10,447 | 9,664 | ||||||
Total liabilities and stockholders equity |
$ | 11,578 | $ | 10,820 | ||||
QUALCOMM Announces Third Quarter Fiscal 2005 Results
|
Page 21 of 21 |
QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
June 26, | June 27, | June 26, | June 27, | |||||||||||||
2005 | 2004 (a) | 2005 | 2004 (a) | |||||||||||||
Revenues: |
||||||||||||||||
Equipment and services |
$ | 882 | $ | 888 | $ | 2,708 | $ | 2,560 | ||||||||
Licensing and royalty fees |
476 | 453 | 1,404 | 1,203 | ||||||||||||
1,358 | 1,341 | 4,112 | 3,763 | |||||||||||||
Operating expenses: |
||||||||||||||||
Cost of equipment and services revenues |
389 | 369 | 1,204 | 1,074 | ||||||||||||
Research and development |
259 | 194 | 740 | 513 | ||||||||||||
Selling, general and administrative |
150 | 156 | 452 | 409 | ||||||||||||
Total operating expenses |
798 | 719 | 2,396 | 1,996 | ||||||||||||
Operating income |
560 | 622 | 1,716 | 1,767 | ||||||||||||
Investment income, net |
126 | 46 | 307 | 114 | ||||||||||||
Income from continuing operations before income taxes |
686 | 668 | 2,023 | 1,881 | ||||||||||||
Income tax expense |
(126 | ) | (182 | ) | (418 | ) | (543 | ) | ||||||||
Income from continuing operations |
560 | 486 | 1,605 | 1,338 | ||||||||||||
Loss from discontinued operations |
| | | (11 | ) | |||||||||||
Net income |
$ | 560 | $ | 486 | $ | 1,605 | $ | 1,327 | ||||||||
Basic earnings per common share from continuing
operations |
$ | 0.34 | $ | 0.30 | $ | 0.98 | $ | 0.83 | ||||||||
Basic loss per common share from
discontinued operations |
| | | (0.01 | ) | |||||||||||
Basic earnings per common share |
$ | 0.34 | $ | 0.30 | $ | 0.98 | $ | 0.82 | ||||||||
Diluted earnings per common share from continuing
operations |
$ | 0.33 | $ | 0.29 | $ | 0.95 | $ | 0.80 | ||||||||
Diluted loss per common share from
discontinued operations |
| | | | ||||||||||||
Diluted earnings per common share |
$ | 0.33 | $ | 0.29 | $ | 0.95 | $ | 0.80 | ||||||||
Shares used in per share calculations: |
||||||||||||||||
Basic |
1,633 | 1,622 | 1,640 | 1,612 | ||||||||||||
Diluted |
1,683 | 1,682 | 1,697 | 1,669 | ||||||||||||
Dividends per share paid |
$ | 0.09 | $ | 0.05 | $ | 0.23 | $ | 0.12 | ||||||||
Dividends per share announced |
$ | 0.09 | $ | | $ | 0.23 | $ | 0.12 | ||||||||
(a) | We effected a two-for-one stock split in August 2004. All references to number of shares and per share amounts reflect the stock split. |
QUALCOMM Announces Third Quarter Fiscal 2005 Results
|
Page 22 of 21 |
QUALCOMM Incorporated
Reconciliation of Pro Forma Results to GAAP Results
for 2004 Periods for Comparative Purposes
Nine months | ||||||||||||||||
Three months ended | ended | Year ended | ||||||||||||||
September 26, | June 27, | June 27, | September 26, | |||||||||||||
(in millions, except per share data) | 2004 | 2004 | 2004 | 2004 | ||||||||||||
Prior Method of Recording Royalties |
||||||||||||||||
Estimate of estimated licensees for prior period |
$ | 253 | $ | 237 | $ | 151 | $ | 151 | ||||||||
Royalties reported by estimated licensees for prior period |
255 | 264 | 208 | 208 | ||||||||||||
Prior period variance included in reporting period |
2 | 27 | 57 | 57 | ||||||||||||
Other royalties reported in reporting period |
99 | 109 | 731 | 1,084 | ||||||||||||
Estimate for estimated licensees for current period |
| 253 | 253 | | ||||||||||||
Total QTL royalty revenues from external licensees |
101 | 389 | 1,041 | 1,141 | ||||||||||||
Intercompany revenue |
36 | 33 | 95 | 132 | ||||||||||||
License revenue |
14 | 15 | 45 | 59 | ||||||||||||
Total QTL revenue using Prior Method |
$ | 436 | $ | 1,180 | ||||||||||||
Total QTL revenue including prospective change to New Method in Q4 04 |
$ | 151 | $ | 1,331 | ||||||||||||
New Method of Recording Royalties |
||||||||||||||||
Total royalties reported by external licensees (a) |
$ | 354 | $ | 373 | $ | 939 | $ | 1,292 | ||||||||
Intercompany revenue |
36 | 33 | 95 | 132 | ||||||||||||
License revenue |
14 | 15 | 45 | 59 | ||||||||||||
Total QTL revenue using New Method |
$ | 404 | $ | 420 | $ | 1,078 | $ | 1,483 | ||||||||
Difference between the methods |
$ | (253 | ) | $ | 16 | $ | 102 | $ | (151 | ) | ||||||
QTL earnings before tax using Prior Method |
$ | 398 | $ | 1,084 | ||||||||||||
QTL earnings before tax including prospective change to New Method in Q404 |
$ | 111 | $ | 1,195 | ||||||||||||
Less: Difference between the royalty methods |
$ | (253 | ) | $ | 16 | $ | 102 | $ | (151 | ) | ||||||
QTL earnings before tax using New Method |
$ | 364 | $ | 382 | $ | 982 | $ | 1,346 | ||||||||
Total QCOM revenues as reported under GAAP |
$ | 1,118 | $ | 1,341 | $ | 3,763 | $ | 4,880 | ||||||||
Less: Difference between the royalty methods |
(253 | ) | 16 | 102 | (151 | ) | ||||||||||
Total QCOM revenues using New Method |
1,371 | 1,325 | 3,661 | 5,031 | ||||||||||||
Total QCOM revenues and QCOM pro forma revenues |
$ | 1,371 | $ | 1,325 | $ | 3,661 | $ | 5,031 | ||||||||
TOTAL QCOM earnings from continuing operations before taxes as reported under
GAAP |
$ | 431 | $ | 668 | $ | 1,881 | $ | 2,313 | ||||||||
Less: earnings from continuing operations before taxes attributed to difference
between the royalty methods |
$ | (253 | ) | $ | 16 | $ | 102 | $ | (151 | ) | ||||||
Total QCOM earnings from continuing operations before taxes using New Method |
$ | 684 | $ | 652 | $ | 1,779 | $ | 2,464 | ||||||||
Less: QSI earnings from continuing operations before taxes (c) |
$ | 11 | $ | (12 | ) | $ | (42 | ) | $ | (31 | ) | |||||
QCOM pro forma earnings from continuing operations before taxes (c) |
$ | 673 | $ | 664 | $ | 1,821 | $ | 2,495 | ||||||||
TOTAL QCOM net income as reported under GAAP |
$ | 393 | $ | 486 | $ | 1,327 | $ | 1,720 | ||||||||
Less: Net income attributed to difference between the royalty methods (b) |
(154 | ) | 10 | 62 | (92 | ) | ||||||||||
Total QCOM net income using New Method |
547 | 476 | 1,265 | 1,812 | ||||||||||||
Less: QSI net income (loss) (c) |
48 | (4 | ) | (36 | ) | 12 | ||||||||||
QCOM pro forma net income (c) |
$ | 499 | $ | 482 | $ | 1,302 | $ | 1,800 | ||||||||
QCOM diluted EPS as reported under GAAP |
$ | 0.23 | $ | 0.29 | $ | 0.80 | $ | 1.03 | ||||||||
EPS attributed to difference between the royalty methods |
$ | (0.09 | ) | $ | 0.01 | $ | 0.04 | $ | (0.06 | ) | ||||||
Total QCOM diluted EPS using New Method |
$ | 0.32 | $ | 0.28 | $ | 0.76 | $ | 1.08 | ||||||||
EPS attributed to QSI (c) |
$ | 0.03 | $ | (0.00 | ) | $ | (0.02 | ) | $ | 0.01 | ||||||
QCOM pro forma diluted EPS (c) |
$ | 0.30 | $ | 0.29 | $ | 0.78 | $ | 1.07 | ||||||||
Shares previously used for diluted EPS |
n/a | 841 | 835 | n/a | ||||||||||||
Adjusted for stock split |
1,692 | 1,682 | 1,669 | 1,675 |
(a) | Represents royalty revenue that would have been reported
during the period if the New Method had been adopted
retroactively. Does not represent royalty revenue recognized under GAAP in these periods. |
|||
(b) | QTLs rounded effective tax rate was 39% in fiscal 2004 . | |||
(c) | During the first quarter of 2005, the Company reorganized its MediaFLO USA business into the QSI segment. The operating expenses related to the MediaFLO USA business were included in reconciling items through the end of fiscal 2004. Prior period segment information has been adjusted to conform to the new segment presentation. | |||
All EPS amounts have been adjusted to reflect the 2:1 stock split that was effected during the fourth quarter of fiscal 2004. | ||||
QTL revenues as reported under GAAP and using the New Method are presented to illustrate the difference between the Prior Method used for royalties prior to the fourth quarter of fiscal 2004 and the New Method implemented starting in the fourth quarter of fiscal 2004. | ||||
Sums may not equal totals due to rounding. |