Qualcomm Announces First Quarter Fiscal 2013 Results

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Revenues $6.0 Billion

GAAP EPS $1.09, Non-GAAP EPS $1.26

- Record Quarterly Revenues and Non-GAAP EPS; Raising Fiscal 2013 Guidance -

SAN DIEGO, Jan. 30, 2013 /PRNewswire/ -- Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for the first quarter of fiscal 2013 ended December 30, 2012.

"We are pleased to report record quarterly revenues, Non-GAAP EPS and MSM chip shipments, driven by the growing global demand for smartphones and our industry-leading portfolio of 3G/LTE chipsets," said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm.  "Our broad licensing partnerships and extensive chipset roadmap, including our recently announced best-in-class Qualcomm Snapdragon 800 and 600 processors, position us well for strong growth, and we are pleased to be raising our revenue and earnings guidance for fiscal 2013."

First Quarter Results (GAAP)

  • Revenues: 1 $6.02 billion, up 29 percent year-over-year (y-o-y) and 24 percent sequentially.
  • Operating income: 1 $2.09 billion, up 35 percent y-o-y and 69 percent sequentially.
  • Net income: 2 $1.91 billion, up 36 percent y-o-y and 50 percent sequentially.
  • Diluted earnings per share: 2 $1.09, up 35 percent y-o-y and 49 percent sequentially. 
  • Effective tax rate: 1 18 percent for the quarter.
  • Operating cash flow:  $1.98 billion, up 11 percent y-o-y; 33 percent of revenues.
  • Return of capital to stockholders:  $678 million, including $428 million, or $0.25 per share, of cash dividends paid, and $250 million through repurchases of 4.3 million shares of common stock.

1 Throughout this news release, fiscal 2012 results for FLO TV are presented as discontinued operations. Revenues, operating expenses, operating income, earnings before tax (EBT) and effective tax rates are from continuing operations (i.e., before adjustments for noncontrolling interests and, for fiscal 2012, discontinued operations), unless otherwise stated.
2 Throughout this news release, net income and diluted earnings per share are attributable to Qualcomm (i.e., after adjustments for noncontrolling interests and discontinued operations), unless otherwise stated.

Non-GAAP First Quarter Results

Non-GAAP results exclude the QSI segment, certain share-based compensation, certain acquisition-related items and certain tax items. 

  • Revenues:  $6.02 billion, up 29 percent y-o-y and 24 percent sequentially.
  • Operating income:  $2.45 billion, up 31 percent y-o-y and 52 percent sequentially.
  • Net income:  $2.20 billion, up 32 percent y-o-y and 42 percent sequentially.
  • Diluted earnings per share:  $1.26, up 30 percent y-o-y and 42 percent sequentially.  Excludes $0.01 loss per share attributable to QSI, $0.12 loss per share attributable to certain share-based compensation and $0.04 loss per share attributable to certain acquisition-related items.
  • Effective tax rate: 18 percent for the quarter. 
  • Free cash flow (defined as net cash from operating activities less capital expenditures):  $1.85 billion, up 24 percent y-o-y; 31 percent of revenues.

Detailed reconciliations between results reported in accordance with generally accepted accounting principles (GAAP) and Non-GAAP results are included within this news release.  

First Quarter Key Business Metrics

  • MSMTM chip shipments:  182 million units, up 17 percent y-o-y and 29 percent sequentially.
  • September quarter total reported device sales:  approximately $53.3 billion, up 29 percent y-o-y and 15 percent sequentially.
    • September quarter estimated 3G/4G device shipments:  approximately 233 to 237 million units, at an estimated average selling price of approximately $224 to $230 per unit.   

Cash and Marketable Securities

Our cash, cash equivalents and marketable securities totaled $28.4 billion at the end of the first quarter of fiscal 2013, compared to $22.0 billion a year ago and $26.8 billion at the end of the fourth quarter of fiscal 2012.  On January 15, 2013, we announced a cash dividend of $0.25 per share payable on March 27, 2013 to stockholders of record as of March 8, 2013.

Research and Development

($ in millions)

Non-GAAP

QSI

Share-Based

Compensation

GAAP








First quarter fiscal 2013

$        949

$    1

$     156

$ 1,106

As % of revenues

16%




18%

First quarter fiscal 2012

$        746

$    1

$     126

$   873

As % of revenues

16%




19%

Year-over-year change ($)

27%

 N/M 

24%

27%








N/M - Not Meaningful






Non-GAAP research and development (R&D) expenses increased 27 percent y-o-y primarily due to an increase in costs related to the development of CDMA-based 3G, OFDMA-based 4G LTE and other technologies for integrated circuit and related software products and to expand our intellectual property portfolio.  

Selling, General and Administrative

($ in millions)

Non-GAAP

QSI

Share-Based

Compensation

Acquisition-

Related Items

GAAP










First quarter fiscal 2013

$         468

$        7

$           105

$            7

$     587

As % of revenues

8%






10%

First quarter fiscal 2012

$         381

$      12

$           101

$            9

$     503

As % of revenues

8%






11%

Year-over-year change ($)

23%

 N/M 

4%

 N/M 

17%










N/M - Not Meaningful








Non-GAAP selling, general and administrative (SG&A) expenses increased 23 percent y-o-y primarily due to increases in employee-related expenses and costs relating to legal matters.    

Effective Income Tax Rates

In the first quarter of fiscal 2013, the effective income tax rates for GAAP and Non-GAAP were both 18 percent.  Starting in the second quarter of fiscal 2013, our fiscal 2013 annual effective income tax rates are estimated to be approximately 16 percent for GAAP and approximately 17 to 18 percent for Non-GAAP, which include the recent retroactive extension of the federal R&D tax credit.  The R&D tax credit benefit related to fiscal 2012 that will be recorded in the second quarter of fiscal 2013 will be excluded from Non-GAAP results.

QSI Segment

QSI makes strategic investments, many of which are in early-stage companies, and holds wireless spectrum.  GAAP results for the first quarter of fiscal 2013 included $0.01 loss per share for QSI.

Business Outlook

The following statements are forward looking, and actual results may differ materially.  The "Note Regarding Forward-Looking Statements" in this news release provides a description of certain risks that we face, and our annual and quarterly reports on file with the Securities and Exchange Commission (SEC) provide a more complete description of risks. 

Our outlook does not include provisions for future asset impairments or for pending legal matters, other than future legal amounts that are probable and estimable.  Further, due to their nature, certain income and expense items, such as realized investment and certain derivative gains or losses, cannot be accurately forecast.  Accordingly, we only include such items in our business outlook to the extent they are reasonably certain; however, actual results may vary materially from the business outlook.

The following table summarizes GAAP and Non-GAAP guidance based on the current business outlook.  The Non-GAAP business outlook presented below is consistent with the presentation of Non-GAAP results included elsewhere herein.

 

Qualcomm's Business Outlook Summary

SECOND FISCAL QUARTER




Q2 FY12

Current Guidance




Results (1)

Q2 FY13 Estimates







Revenues

$4.94B

$5.8B - $6.3B

  Year-over-year change


increase 17% - 27%

Non-GAAP Diluted earnings per share (EPS)

$1.01

$1.10 - $1.18

  Year-over-year change


increase 9% - 17%

         Diluted EPS attributable to QSI

$0.41

$0.00

         Diluted EPS attributable to share-based compensation

($0.11)

($0.12)

         Diluted EPS attributable to acquisition-related items

($0.03)

($0.04)

         Diluted EPS attributable to tax items (2)

N/A

$0.04

GAAP Diluted EPS

$1.28

$0.98 - $1.06

  Year-over-year change


decrease 17% - 23%







Metrics




MSM chip shipments

152M 

163M - 173M 

  Year-over-year change


increase 7% - 14%

Total reported device sales (3)

 approx. $51.7B*

  approx. $57.5B - $62.5B*

  Year-over-year change


increase 11% - 21%

*Est. sales in December quarter, reported in March quarter















FISCAL YEAR






FY 2012

Prior Guidance

Current Guidance



Results (1)

FY 2013 Estimates

FY 2013 Estimates

Revenues

$19.12B 

$23.0B - $24.0B

$23.4B - $24.4B

  Year-over-year change

increase 20% - 26%

increase 22% - 28%

Non-GAAP Diluted EPS

$3.71

$4.12 - $4.32

$4.25 - $4.45

  Year-over-year change

increase 11% - 16%

increase 15% - 20%

         Diluted EPS attributable to QSI

$0.40

($0.04)

($0.02)

         Diluted EPS attributable to share-based compensation

($0.47)

($0.53)

($0.51)

         Diluted EPS attributable to acquisition-related items

($0.14)

($0.15)

($0.15)

         Diluted EPS attributable to tax items (2)

$0.01

N/A

$0.04

GAAP Diluted EPS

$3.51

$3.40 - $3.60

$3.61 - $3.81

  Year-over-year change

decrease 3% - increase 3%

increase 3% - 9%







Metrics




Est. fiscal year* 3G/4G device average selling price range (3)

approx. $216 - $222

approx. $214 - $226

approx. $214 - $226

*Shipments in Sept. to June quarters, reported in Dec. to Sept. quarters








CALENDAR YEAR Device Estimates (3)





Prior Guidance

Calendar 2012
Estimates

Current Guidance

Calendar 2012
Estimates

Prior Guidance
Calendar 2013
Estimates

Current Guidance
Calendar 2013
Estimates

Est. 3G/4G device shipments




March quarter

approx. 206M - 211M

approx. 206M - 211M

not provided

not provided

June quarter

approx. 210M - 214M

approx. 210M - 214M

not provided

not provided

September quarter

not provided

approx. 233M - 237M

not provided

not provided

December quarter

not provided

not provided

not provided

not provided

Est. calendar year range (approx.)

880M - 930M

915M - 940M

1,000M - 1,070M

1,000M - 1,070M

Est. calendar year midpoint (approx.) (4)

905M

928M

1,035M

1,035M


(1)

Q2 FY12 and FY 2012 results for QSI and GAAP included $0.44 EPS related to a $1.2 billion gain associated with the sale of substantially all of our 700 MHz spectrum, which was recognized in discontinued operations and was excluded from Non-GAAP results.

(2)

In the second quarter of fiscal 2013, we expect to record a tax benefit as a result of the retroactive extension of the federal R&D tax credit related to fiscal 2012 of approximately $0.04 per share, which will be excluded from Non-GAAP results.

(3)

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, OFDMA-based and multimode CDMA/OFDMA subscriber devices (including handsets, modules, modem cards and other subscriber devices) by our licensees during a particular period (collectively, 3G/4G devices).  The reported quarterly estimated ranges of average selling prices (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 was not reported by the licensee until such particular period.

(4)

The midpoints of the estimated calendar year ranges are identified for comparison purposes only and do not indicate a higher degree of confidence in the midpoints.




N/A – Not Applicable

Sums may not equal totals due to rounding.

Results of Business Segments

The following table reconciles our Non-GAAP results to our GAAP results (in millions, except per share data):

SEGMENTS

QCT

QTL

QWI 

Non-GAAP

Reconciling

Items (1)

Non-GAAP

(2)

QSI (2)


Share-Based

Compensation (2)

Acquisition-

Related Items

(2)

Tax Items

GAAP

Q1 - FISCAL 2013









Revenues 

$4,120

$1,757

$146

($5)

$6,018

$  -

$  -

$  -

$  -

$6,018

  Change from prior year

34%

22%

(4%)

N/M

29%



29%

  Change from prior quarter 

32%

12%

(9%)

N/M

24%



24%

Operating income (loss)



$2,447

($8)

($281)

($70)

$  -

$2,088

  Change from prior year



31%

38%

(14%)

(17%)

35%

  Change from prior quarter 



52%

(100%)

1%

21%

69%

EBT

$1,068

$1,532

($3)

$98

$2,695

($17)

($281)

($70)

$  -

$2,327

  Change from prior year

45%

21%

N/M

78%

31%

50%

(14%)

(17%)

35%

  Change from prior quarter 

120%

12%

N/M

51%

40%

19%

1%

21%

52%

EBT as % of revenues

26%

87%

N/M

N/M

45%



39%

Net income (loss) 



$2,204

($12)

($219)

($67)

$  -

$1,906

  Change from prior year



32%

45%

(13%)

(22%)

N/A

36%

  Change from prior quarter 



42%

N/M

1%

14%

N/M

50%

Diluted EPS



$1.26

($0.01)

($0.12)

($0.04)

$  -

$1.09

  Change from prior year



30%

0%

(9%)

(33%)

N/A

35%

  Change from prior quarter 



42%

N/M

8%

0%

N/M

49%

Diluted shares used



1,751

1,751

1,751

1,751

1,751

1,751

Q4 - FISCAL 2012









Revenues 

$3,129

$1,572

$161

$9

$4,871

$  -

$  -

$  -

$  -

$4,871

Operating income (loss)



1,612

(4)

(284)

(89)

-

1,235

EBT

$486

$1,370

($1)

$65

1,920

(21)

(284)

(89)

-

1,526

Discontinued operations, net of tax


-

23

-

-

-

23

Net income (loss)



1,547

14

(222)

(78)

10

1,271

Diluted EPS



$0.89

$0.01

($0.13)

($0.04)

$0.01

$0.73

Diluted shares used



1,745

1,745

1,745

1,745

1,745

1,745

Q2 - FISCAL 2012









Revenues 

$3,059

$1,723

$159

$2

$4,943

$  -

$  -

$  -

$  -

$4,943

Operating income (loss)



1,900

(89)

(240)

(57)

-

1,514

EBT

$599

$1,540

($10)

$1

2,130

(99)

(240)

(57)

-

1,734

Discontinued operations, net of tax


-

761

-

-

-

761

Net income (loss)



1,759

707

(184)

(52)

-

2,230

Diluted EPS



$1.01

$0.41

($0.11)

($0.03)

$  -

$1.28

Diluted shares used



1,743

1,743

1,743

1,743

1,743

1,743

Q1 - FISCAL 2012









Revenues 

$3,085

$1,440

$152

$4

$4,681

$  -

$  -

$  -

$  -

$4,681

Operating income (loss)



1,871

(13)

(247)

(60)

-

1,551

EBT

$739

$1,267

$1

$55

2,062

(34)

(247)

(60)

-

1,721

Discontinued operations, net of tax


-

(5)

-

-

-

(5)

Net income (loss)



1,672

(22)

(194)

(55)

-

1,401

Diluted EPS



$0.97

($0.01)

($0.11)

($0.03)

$  -

$0.81

Diluted shares used



1,721

1,721

1,721

1,721

1,721

1,721

12 MONTHS - FISCAL 2012








Revenues 

$12,141

$6,327

$633

$20

$19,121

$  -

$  -

$  -

$  -

$19,121

Operating income (loss)



7,100

(116)

(1,035)

(267)

-

5,682

EBT

$2,296

$5,585

($15)

$168

8,034

(170)

(1,035)

(267)

-

6,562

Discontinued operations, net of tax


-

777

(1)

-

-

776

Net income (loss)



6,463

690

(811)

(243)

10

6,109

Diluted EPS



$3.71

$0.40

($0.47)

($0.14)

$0.01

$3.51

Diluted shares used



1,741

1,741

1,741

1,741

1,741

1,741


(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 costs of equipment and services revenues, research and development expenses, sales and marketing expenses, other operating expenses and certain investment income or losses and interest expense that are not allocated to the segments for management reporting purposes; nonreportable segment results; and the elimination of intersegment profit.

(2)

At fiscal year end, the sum of the quarterly tax provision (benefit) for each column equals the annual tax provision (benefit) for each column computed in accordance with GAAP.  In interim quarters, the sum of these provisions (benefits) may not equal the total GAAP tax provision, and this difference is allocated to tax provisions (benefits) among the columns.   

N/M – Not Meaningful

N/A – Not Applicable

Sums may not equal totals due to rounding.

Conference Call

Qualcomm's first quarter fiscal 2013 earnings conference call will be broadcast live on January 30, 2013, beginning at 1:45 p.m. Pacific Time (PT) at http://investor.qualcomm.com/events.cfm.  This conference call will include a discussion of "Non-GAAP financial measures" as defined in Regulation G.  The most directly comparable GAAP financial measures and GAAP reconciliation information, as well as the other material financial and statistical information to be discussed on the conference call, will be posted at www.qualcomm.com/investor immediately prior to commencement of the call.  An audio replay will be available at http://investor.qualcomm.com/events.cfm and via telephone for 30 days shortly following the live call.  To listen to the replay via telephone, U.S. callers may dial (855) 859-2056, and international callers may dial (404) 537-3406.  Callers should use reservation number 85067601.

Note Regarding Use of Non-GAAP Financial Measures

The Non-GAAP financial information presented herein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.  In addition, "Non-GAAP" is not a term defined by GAAP, and as a result, the Company's measure of Non-GAAP results might be different than similarly titled measures used by other companies.  Reconciliations between GAAP and Non-GAAP results are presented herein.

The Company uses Non-GAAP financial information (i) to evaluate, assess and benchmark the Company's operating results on a consistent and comparable basis; (ii) to measure the performance and efficiency of the Company's ongoing core operating businesses, including the QCT, QTL and QWI segments; and (iii) to compare the performance and efficiency of these segments against each other and against competitors outside the Company.  Non-GAAP measurements of the following financial data are used by the Company:  revenues, cost of revenues, R&D expenses, SG&A expenses, other operating expenses, operating income (loss), net investment income (loss), income (loss) before income taxes, effective tax rate, net income (loss), diluted earnings (loss) per share, operating cash flow and free cash flow.  The Company is able to assess what it believes is a more meaningful and comparable set of financial performance measures for the Company and its business segments by using Non-GAAP information.  As a result, management compensation decisions and the review of executive compensation by the Compensation Committee of the Board of Directors focus primarily on Non-GAAP financial measures applicable to the Company and its business segments.  The Company presents Non-GAAP financial information to provide greater transparency to investors with respect to its use of such information in financial and operational decision-making.

Non-GAAP information used by management excludes QSI, certain share-based compensation, certain acquisition-related items and certain tax items. 

  • QSI is excluded because the Company expects to exit its strategic investments at various times, and the effects of fluctuations in the value of such investments and realized gains or losses are viewed by management as unrelated to the Company's operational performance. 
  • Share-based compensation expense primarily relates to restricted stock units and stock options.  Certain share-based compensation is excluded because management views such expenses as unrelated to the operating activities of the Company's ongoing core business.  Further, the fair values of share-based awards are affected by factors that are variable on each grant date, which may include the Company's stock price, stock market volatility, expected award life, risk-free interest rates and expected dividend payouts in future years. 
  • Acquisition-related items relate to amortization and impairment charges of certain intangible assets, recognition of the step-up of inventories to fair value and the related tax effects of these items starting with acquisitions completed in the third quarter of fiscal 2011, as well as any tax effects from restructuring the ownership of such acquired assets.  Additionally, starting with acquisitions completed in the fourth quarter of fiscal 2012, the Company began excluding expenses related to the termination of contract(s) that limit the use of the acquired intellectual property.  These certain acquisition-related items are excluded and are not allocated to the Company's segments because management views such expenses as unrelated to the operating activities of the Company's ongoing core business.  In addition, these charges are impacted by the size and timing of acquisitions, potentially obscuring period to period comparisons of the Company's operating businesses.  
  • Certain tax items that were recorded in each fiscal year presented, but that were unrelated to the fiscal year in which they were recorded, are excluded in order to provide a clearer understanding of the Company's ongoing Non-GAAP tax rate and after tax earnings. 

The Company presents free cash flow, defined as net cash provided by operating activities less capital expenditures, to facilitate an understanding of the amount of cash flow generated that is available to grow its business and to create long-term stockholder value.  The Company believes that this presentation is useful in evaluating its operating performance and financial strength.  In addition, management uses this measure to evaluate the Company's performance and to compare its operating performance with other companies in the industry. 

About Qualcomm

Qualcomm Incorporated (Nasdaq:  QCOM) is a world leader in 3G, 4G and next-generation wireless technologies.  Qualcomm Incorporated includes Qualcomm's licensing business, QTL, and the vast majority of its patent portfolio. Qualcomm Technologies, Inc., a wholly-owned subsidiary of Qualcomm Incorporated, operates, along with its subsidiaries, substantially all of Qualcomm's engineering, research and development functions, and substantially all of its products and services businesses, including its semiconductor business, QCT.  For more than 25 years, Qualcomm ideas and inventions have driven the evolution of digital communications, linking people everywhere more closely to information, entertainment and each other.  For more information, visit www.qualcomm.com.

Note Regarding Forward-Looking Statements

In addition to the historical information contained herein, this news release contains forward-looking statements that are inherently subject to risks and uncertainties, including but not limited to statements regarding the Company's broad licensing partnerships and extensive chipset roadmap positioning it for strong growth; the Company's business outlook; estimates and guidance related to revenues, GAAP and Non-GAAP diluted earnings per share, effective income tax rates, MSM chip shipments, total reported device sales, 3G/4G device average selling price ranges and 3G/4G device shipment ranges and midpoints; and the treatment of the tax credit benefit resulting from the retroactive extension of the federal R&D tax credit.  Forward-looking statements are generally identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "guidance" and similar expressions.  Actual results may differ materially from those referred to in the forward-looking statements due to a number of important factors, including but not limited to risks associated with the commercial deployment of our technologies and our customers' and licensees' sales of equipment, products and services based on these technologies; competition; our dependence on a small number of customers and licensees; attacks on our licensing business model, including current and future legal proceedings and actions of governmental or quasi-governmental bodies; our dependence on third-party suppliers, including the potential impact of supply constraints; the enforcement and protection of our intellectual property rights; claims by third parties that we infringe their intellectual property; global economic conditions that impact the communications industry and the potential impact on demand for our products and our customers' and licensees' products; our stock price and earnings volatility; strategic transactions and investments; the commercial success of our QMT division's display technology; foreign currency fluctuations; and failures, defects or errors in our products and services or in the products of our customers and licensees.  These and other risks are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2012 and Quarterly Report on Form 10-Q for the fiscal quarter ended December 30, 2012 filed with the SEC.  Our reports filed with the SEC are available on our website at www.qualcomm.com.  We undertake no obligation to update, or continue to provide information with respect to, any forward-looking statement or risk factor, whether as a result of new information, future events or otherwise.

Qualcomm, Snapdragon and MSM are trademarks of Qualcomm Incorporated, registered in the United States and other countries.  All other trademarks are the property of their respective owners.

Qualcomm Incorporated

Supplemental Information for the Three Months Ended December 30, 2012

(Unaudited)






























Acquisition-


Non-GAAP

Share-Based

Related

GAAP


Results

QSI

Compensation

Items (a)

Results

 ($ in millions, except per share data)




















Cost of equipment and services revenues

$     2,154

$           -

$               20

$          63

$     2,237












R&D 

949

1

156

-

1,106












SG&A

468

7

105

7

587












Operating income (loss)

2,447

(8)

(281)

(70)

2,088












Investment income (loss), net

$        248

(b)

$         (9)

(c)

$                 -

$             -

$        239












Tax rate

18%

12%

22%

4%

18%












Net income (loss)

$     2,204

$       (12)

$           (219)

$         (67)

$     1,906












Diluted earnings (loss) per share (EPS)

$       1.26

$    (0.01)

$          (0.12)

$      (0.04)

$       1.09












Operating cash flow

$     2,046

$       (10)

$             (61)

$             -

$     1,975

Operating cash flow as % of revenues

34%

N/A

N/A

N/A

33%












Free cash flow(d)

$     1,853

$       (22)

$             (61)

$             -

$     1,770

Free cash flow as % of revenues

31%

N/A

N/A

N/A

29%













(a)  

Included amortization and impairment charges of certain intangible assets, expense associated with the termination of a contract of an acquiree and the recognition of the step-up of inventories to fair value.

(b)   

Included $164 million in interest and dividend income and $91 million in net realized gains on investments, partially offset by $4 million in other-than-temporary losses on investments, $2 million in interest expense and $1 million in losses on derivatives. 

(c)   

Included $6 million in other-than-temporary losses on investments, $6 million in interest expense and $3 million in equity in losses of investees, partially offset by $5 million in net realized gains on investments and $1 million in interest and dividend income.

(d)   

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 December 30, 2012 included herein.

N/A – Not Applicable

Sums may not equal totals due to rounding.

 

Qualcomm Incorporated

Reconciliation of Non-GAAP Free Cash Flows to 

Net Cash Provided by Operating Activities (GAAP)

and Other Supplemental Disclosures 

(In millions)

(Unaudited)











Three Months Ended December 30, 2012






Share-Based



Non-GAAP

QSI

Compensation

GAAP

Net cash provided (used) by operating activities

$       2,046

$        (10)

$                  (61)

 (a) 

$       1,975

Less:  capital expenditures

(193)

(12)

-

(205)

Free cash flow

$       1,853

$        (22)

$                  (61)

$       1,770









Revenues

$       6,018

$          -

$                    -

$       6,018

Free cash flow as % of revenues

31%

 N/A 

 N/A 

29%









Other supplemental cash disclosures:







   Cash transfers from QSI (b)

$              7

$          (7)

$                    -

$            -

   Cash transfers to QSI (c)

(103)

103

-

-

   Net cash transfers

$           (96)

$         96

$                    -

$            -




















Three Months Ended December 25, 2011






Share-Based



Non-GAAP

QSI

Compensation

GAAP

Net cash provided (used) by operating activities

$       1,850

$        (48)

$                  (23)

 (a) 

$       1,779

Less:  capital expenditures

(359)

-

-

(359)

Free cash flow

$       1,491

$        (48)

$                  (23)

$       1,420


(a)

Incremental tax benefits from share-based compensation during the period.

(b)

Primarily cash from sale of equity securities and other investments.

(c)

Primarily funding for strategic debt and equity investments, other investing activities and QSI operating and capital expenditures.

N/A - Not Applicable

 

Qualcomm Incorporated

Reconciliation of Non-GAAP Tax Rates to GAAP Tax Rates (a)

(in millions)

(Unaudited)











Three Months Ended December 30, 2012







Acquisition-


Non-GAAP


Share-Based

Related

GAAP

Results

QSI

 Compensation

Items

Results










Income (loss) from continuing operations

before income taxes

$      2,695

$          (17)

$         (281)

$        (70)

$     2,327

Income tax (expense) benefit

(491)

2

62

3

(424)

  Income (loss) from continuing operations

$      2,204

$          (15)

$         (219)

$        (67)

$     1,903










Tax rate

18%

12%

22%

4%

18%


(a)

At fiscal year end, the sum of the quarterly tax provision (benefit) for each column equals the annual tax provision (benefit) for each column computed in accordance with GAAP. In interim quarters, the sum of these provisions (benefits) may not equal the total GAAP tax provision, and this difference is allocated to tax provisions (benefits) among the columns.  

Sums may not equal totals due to rounding.

 

Qualcomm Incorporated

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)

(Unaudited)

ASSETS


December 30,

September 30,


2012

2012

Current assets:



  Cash and cash equivalents

$          4,293

$          3,807

  Marketable securities

8,982

8,567

  Accounts receivable, net

1,647

1,459

  Inventories

1,277

1,030

  Deferred tax assets

309

309

  Other current assets 

595

473

          Total current assets

17,103

15,645

Marketable securities

15,096

14,463

Deferred tax assets

1,327

1,412

Assets held for sale

1,037

1,109

Property, plant and equipment, net

2,874

2,851

Goodwill

3,929

3,917

Other intangible assets, net

2,826

2,938

Other assets

649

677

          Total assets

$        44,841

$        43,012





LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:



  Trade accounts payable

$          1,657

$          1,298

  Payroll and other benefits related liabilities

618

664

  Unearned revenues

733

545

  Liabilities held for sale

524

1,072

  Other current liabilities

1,473

1,723

         Total current liabilities

5,005

5,302

Unearned revenues

3,516

3,739

Liabilities held for sale

526

-

Other liabilities

440

426

         Total liabilities

9,487

9,467










Stockholders' equity:



Qualcomm stockholders' equity:



  Preferred stock, $0.0001 par value; 8 shares authorized; none outstanding

-

-

  Common stock, $0.0001 par value; 6,000 shares authorized; 1,716



    and 1,706 shares issued and outstanding, respectively

-

-

  Paid-in capital

12,282

11,956

  Retained earnings

22,172

20,701

  Accumulated other comprehensive income

880

866

         Total Qualcomm stockholders' equity

35,334

33,523

Noncontrolling interests

20

22

         Total stockholders' equity

35,354

33,545

            Total liabilities and stockholders' equity

$        44,841

$        43,012



Qualcomm Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)










Three Months Ended



December 30,

December 25,



2012

2011








Revenues:





  Equipment and services

$         4,199

$         3,167

  Licensing

1,819

1,514

   Total revenues

6,018

4,681








Operating expenses:




  Cost of equipment and services revenues

2,237

1,754

  Research and development

1,106

873

  Selling, general and administrative

587

503

      Total operating expenses

3,930

3,130








Operating income 

2,088

1,551








Investment income, net

239

170

  Income from continuing operations before income taxes

2,327

1,721

Income tax expense 

(424)

(321)

  Income from continuing operations

1,903

1,400

Discontinued operations, net of income taxes

-

(5)

  Net income

1,903

1,395

Net loss attributable to noncontrolling interests

3

6

  Net income attributable to Qualcomm

$         1,906

$         1,401








Basic earnings per share attributable to Qualcomm:




  Continuing operations

$           1.12

$           0.83

  Discontinued operations

-

-

  Net income

$           1.12

$           0.83

Diluted earnings per share attributable to Qualcomm:




  Continuing operations

$           1.09

$           0.81

  Discontinued operations

-

-

  Net income

$           1.09

$           0.81

Shares used in per share calculations:




  Basic

1,709

1,684

  Diluted

1,751

1,721








Dividends per share announced

$         0.250

$         0.215



Qualcomm Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)








Three Months Ended


December 30,
2012

December 25,
2011

Operating Activities:




Net income

$            1,903

$              1,395

Adjustments to reconcile net income to net cash provided by




       operating activities:




   Depreciation and amortization

241

208

   Revenues related to non-monetary exchanges

(31)

(31)

   Income tax provision in excess of income tax payments

195

118

   Non-cash portion of share-based compensation expense

283

247

   Incremental tax benefit from share-based compensation

(61)

(23)

   Net realized gains on marketable securities and other investments

(96)

(44)

   Losses (gains) on derivative instruments

1

(45)

   Net impairment losses on marketable securities and other investments

10

20

   Other items, net

28

6

Changes in assets and liabilities, net of effects of acquisitions:




   Accounts receivable, net

(185)

(38)

   Inventories

(247)

50

   Other assets

(51)

(24)

   Trade accounts payable

376

26

   Payroll, benefits and other liabilities

(387)

(43)

   Unearned revenues

(4)

(43)

    Net cash provided by operating activities

1,975

1,779

Investing Activities:




   Capital expenditures

(205)

(359)

   Purchases of available-for-sale securities

(3,289)

(2,027)

   Proceeds from sale of available-for-sale securities

2,226

1,603

   Purchases of trading securities

(970)

(1,137)

   Proceeds from sale of trading securities

1,024

148

   Acquisitions and other investments, net of cash acquired

(39)

(300)

   Other items, net

26

4

    Net cash used by investing activities

(1,227)

(2,068)

Financing Activities:




   Proceeds from issuance of common stock

340

228

   Incremental tax benefit from share-based compensation

61

23

   Repurchases and retirements of common stock

(250)

(99)

   Dividends paid

(428)

(362)

   Change in obligation under securities lending

3

20

   Other items, net

(1)

(1)

  Net cash used by financing activities

(275)

(191)

  Changes in cash and cash equivalents held for sale

13

-

  Effect of exchange rate changes on cash and cash equivalents

-

(18)

   Net increase (decrease) in cash and cash equivalents

486

(498)

Cash and cash equivalents at beginning of period

3,807

5,462

   Cash and cash equivalents at end of period

$            4,293

$              4,964

 

Qualcomm Contact:
Warren Kneeshaw
Phone: 1-858-658-4813
e-mail: ir@qualcomm.com

 

SOURCE Qualcomm Incorporated

Released January 30, 2013