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. 7 (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. 8 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. QUALCOMM INCORPORATED Dated: 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.