SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 21, 2000
QUALCOMM INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-19528 95-3685934
(Commission File No.) (IRS Employer Identification No.)
5775 MOREHOUSE DRIVE
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (858) 587-1121
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 21, 2000 (the "Closing Date"), QUALCOMM Incorporated
("QUALCOMM") and QUALCOMM Personal Electronics sold certain assets related to
their terrestrial-based wireless CDMA consumer phone business (the "Assets") to
Kyocera Wireless Corp. ("KWC"), formerly known as KII Acquisition Company,
pursuant to that certain Asset Purchase Agreement dated December 22, 1999 among
QUALCOMM, KWC and Kyocera International, Inc., as amended by that certain First
Amendment to Asset Purchase Agreement, dated as of February 20, 2000 (as
amended, the "Asset Purchase Agreement"). QUALCOMM received $216,144,412 in cash
on February 22, 2000 and will receive an additional $19,363,176, plus interest
from February 22, 2000, in cash on consummation of that aspect of the sale
relating to certain foreign business operations and assets (the "Second Closing
Date"). The Second Closing Date is expected to occur in March 2000. Initial
consideration for the Assets will total $235,507,588, provided however, that the
total consideration to be paid for the Assets will be based on a final
determination made after the Closing Date of the value of the net assets
actually sold.
A description of the transaction is set forth in the Press Release
issued by QUALCOMM dated February 22, 2000, a copy of which is attached hereto
as Exhibit 99.1.
2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION.
(1) UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION OF QUALCOMM INCORPORATED.
The following unaudited pro forma condensed
consolidated financial information is being filed
herewith:
Page:
-----
Unaudited Pro Forma Condensed Consolidated Balance Sheet
at December 26, 1999 4
Unaudited Pro Forma Condensed Consolidated Statement of
Income for the three months ended December 26, 1999 5
Unaudited Pro Forma Condensed Consolidated Statement of
Income for the year ended September 30, 1999 6
Notes to Unaudited Pro Forma Condensed Consolidated
Financial Information 7
(c) EXHIBITS.
2.2 Asset Purchase Agreement dated December 22, 1999
among QUALCOMM Incorporated, Kyocera Wireless Corp.,
formerly known as KII Acquisition Company, and
Kyocera International, Inc. (incorporated herein by
reference to QUALCOMM's Form 10-Q for the fiscal
quarter ended December 26, 1999 and filed with the
Securities and Exchange Commission on January 28,
2000).
2.3 First Amendment to Asset Purchase Agreement dated as
of February 20, 2000 among QUALCOMM Incorporated,
Kyocera Wireless Corp., formerly known as KII
Acquisition Company, and Kyocera International, Inc.
(1)
99.1 Press Release dated February 22, 2000.
- ---------------
(1) Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment. Omitted portions will be filed separately with the
Securities and Exchange Commission.
3
QUALCOMM INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 26, 1999
--------------------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA (a)
---------- ----------- -------------
ASSETS
Current Assets:
Cash and cash equivalents $ 303,978 $ 235,508(b) $ 539,486
Investments 1,087,164 0 1,087,164
Accounts receivable, net 998,200 0 998,200
Finance receivables 24,167 0 24,167
Inventories, net 259,968 (209,790)(c) 50,178
Other current assets 201,825 0 201,825
---------- ---------- ----------
Total current assets 2,875,302 25,718 2,901,020
Property, plant and equipment, net 537,482 (92,099)(d) 445,383
Investments 165,338 0 165,338
Finance receivables, net 680,090 0 680,090
Other assets 727,223 0 727,223
---------- ---------- ----------
Total assets $4,985,435 $ (66,381) $4,919,054
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued
liabilities $ 715,546 $ (58,471)(e) $ 657,075
Unearned revenue 64,625 0 64,625
Bank lines of credit 124,000 0 124,000
Current portion of long-term debt 3,109 0 3,109
---------- ---------- ----------
Total current liabilities 907,280 (58,471) 848,809
Other liabilities 64,587 0 64,587
---------- ---------- ----------
Total liabilities 971,867 (58,471) 913,396
---------- ---------- ----------
Minority interest in consolidated
subsidiaries 54,910 0 54,910
---------- ---------- ----------
Company-obligated mandatorily
redeemable Trust Convertible
Preferred Securities of a subsidiary
trust holding solely debt securities
of the Company 269,895 0 269,895
---------- ---------- ----------
Stockholders' Equity:
Preferred stock, $0.0001 par value --- 0 ---
Common stock, $0.0001 par value 70 0 70
Paid-in capital 3,196,953 0 3,196,953
Retained earnings 377,998 (7,910)(b)-(e) 370,088
Accumulated other comprehensive
income 113,742 0 113,742
---------- ---------- ----------
Total stockholders' equity 3,688,763 (7,910) 3,680,853
---------- ---------- ----------
Total liabilities and
stockholders' equity $4,985,435 $ (66,381) $4,919,054
========== ========== ==========
See accompanying notes to unaudited pro forma condensed consolidated financial
information
4
QUALCOMM INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA (a)
----------- ----------- -------------
Revenues $ 1,120,073 $ (356,377)(f) $ 763,696
----------- ----------- -----------
Operating Expenses:
Cost of revenues 648,748 (316,685)(g) 332,063
Research and development 83,404 (16,681)(h) 66,723
Selling, general and administrative 101,848 (44,263)(i) 57,585
Other 26,152 (26,152)(j) --
----------- ----------- -----------
Total operating expenses 860,152 (403,781) 456,371
=========== =========== ===========
Operating income 259,921 47,404 307,325
Interest expense (2,673) 2,119(k) (554)
Investment income, net 36,247 2,614(l) 38,861
Distributions on Trust Convertible
Preferred Securities of subsidiary trust (11,045) 0 (11,045)
----------- ----------- -----------
Income before income taxes 282,450 52,137 334,587
Income tax expense (105,331) (19,812)(m) (125,143)
----------- ----------- -----------
Net income $ 177,119 $ 32,325 $ 209,444
=========== =========== ===========
Net earnings per common share:
Basic $ 0.27 $ 0.32
=========== ===========
Diluted $ 0.23 $ 0.27
=========== ===========
Shares used in per share calculation:
Basic 664,586 664,586
=========== ===========
Diluted 790,827 790,827
=========== ===========
See accompanying notes to unaudited pro forma condensed consolidated
financial information
5
QUALCOMM INCORPORATED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED SEPTEMBER 30, 1999
-----------------------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA (a)
----------- ----------- --------------
Revenues $ 3,937,299 $(1,365,486)(f) $ 2,571,813
----------- ----------- -----------
Operating expenses:
Cost of revenues 2,485,072 (1,187,293)(g) 1,297,779
Research and development 381,139 (85,642)(h) 295,497
Selling, general and administrative 425,941 (140,655)(i) 285,286
Other 240,007 0 240,007
----------- ----------- -----------
Total operating expenses 3,532,159 (1,413,590) 2,118,569
----------- ----------- -----------
Operating income 405,140 48,104 453,244
Interest expense (14,698) 3,095(k) (11,603)
Investment income, net 24,576 11,791(l) 36,367
Distributions on Trust Convertible
Preferred Securities of subsidiary trust (39,297) 0 (39,297)
Other (69,035) 0 (69,035)
----------- ----------- -----------
Income before income taxes 306,686 62,990 369,676
Income tax expense (105,807) (22,047)(m) (127,854)
----------- ----------- -----------
Net income $ 200,879 $ 40,943 $ 241,822
=========== =========== ===========
Net earnings per common share (n):
Basic $ 0.34 $ 0.41
=========== ===========
Diluted $ 0.31 $ 0.37
=========== ===========
Shares used in per share calculation:
Basic 594,714 594,714
=========== ===========
Diluted 649,889 649,889
=========== ===========
See accompanying notes to unaudited pro forma condensed consolidated
financial information
6
QUALCOMM INCORPORATED
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(a) The unaudited pro forma condensed consolidated balance sheet give
retroactive effect to the sale of certain assets related to QUALCOMM's
terrestrial-based wireless CDMA consumer phone business to Kyocera
Wireless Corp. ("KWC") as if the sale had occurred as of December 26,
1999. The unaudited pro forma condensed consolidated statements of
income give retroactive effect as if the sale had occurred as of the
beginning of the periods represented. The Company estimates that
additional charges in the second quarter of fiscal 2000 relating to the
disposition of the terrestrial-based wireless CDMA phone business will
total approximately $50 million. The additional charges will primarily
relate to KWC's right under the agreement to exclude certain properties
and equipment and employee termination charges. Such charges are not
considered in these unaudited pro forma condensed consolidated
financial statements.
(b) Reflects the initial cash proceeds to be received by QUALCOMM. Total
consideration will be based on a final determination of net assets as
of the closing date.
(c) Reflects inventories, net of reserves, to be sold to KWC.
(d) Reflects property and equipment, net of accumulated depreciation, to be
sold to KWC.
(e) Reflects accrued liabilities to be assumed by KWC, primarily comprised
of warranty reserves and accrued cooperative advertising.
(f) Reflects revenues related to the terrestrial-based wireless CDMA
consumer phone business to be assumed by KWC, including $19 million in
sales by QUALCOMM Personal Electronics ("QPE") to Sony Electronics Inc.
("Sony Electronics"), offset by royalty revenue from third parties and
billings to KWC for services provided by QUALCOMM employees as a result
of the sale. QPE, a joint venture general partnership formed by
QUALCOMM and Sony Electronics, manufactured the terrestrial-based
wireless CDMA consumer phones sold by QUALCOMM. Sony Electronics' 49%
interest in QPE is presented as a minority interest in these unaudited
pro forma condensed consolidated financial statements.
(g) Reflects cost of revenues related to the terrestrial-based wireless
CDMA consumer phone business to be assumed by KWC, offset by the cost
of revenues related to services provided by QUALCOMM employees as a
result of the sale.
(h) Reflects research and development expenses related to the
terrestrial-based wireless CDMA consumer phone business to be assumed
by KWC.
(i) Reflects selling, general and administrative expenses related to the
terrestrial-based wireless CDMA consumer phone business to be assumed
by KWC.
(j) Reflects nonrecurring charges primarily related to the estimated
difference between the carrying value of property and equipment and the
consideration to be received from KWC, less costs to sell.
(k) Reflects interest expense incurred by QPE in connection with the
terrestrial-based wireless CDMA consumer phone business to be assumed
by KWC.
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(l) Reflects Sony Electronics' minority interest in the earnings of QPE.
(m) Pro forma adjustments have been tax effected at QUALCOMM's annual
effective tax rate, expected to be 38% for fiscal 2000. QUALCOMM's
annual effective tax rate was 35% for fiscal 1999.
(n) QUALCOMM effected a four-for-one stock split in December 1999. Pro
forma net earnings per common share for the year ended September 30,
1999 are presented giving retroactive effect to the stock split.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
QUALCOMM INCORPORATED
Dated: March 7, 2000 By: /s/ Steven R. Altman
---------------------------------
Steven R. Altman
Executive Vice President and
General Counsel
9
INDEX TO EXHIBITS
2.2 Asset Purchase Agreement dated December 22, 1999 among
QUALCOMM Incorporated, Kyocera Wireless Corp., formerly known
as KII Acquisition Company, and Kyocera International, Inc.
(incorporated herein by reference to QUALCOMM's Form 10-Q for
the fiscal quarter ended December 26, 1999 and filed with the
Securities and Exchange Commission on January 28, 2000).
2.3 First Amendment to Asset Purchase Agreement dated as of
February 20, 2000 among QUALCOMM Incorporated, Kyocera
Wireless Corp., formerly known as KII Acquisition Company, and
Kyocera International, Inc. (1)
99.1 Press Release dated February 22, 2000.
- ----------------
(1) Certain portions of this exhibit have been omitted pursuant to a request for
confidential treatment. Omitted portions will be filed separately with the
Securities and Exchange Commission.