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Qualcomm Announces First Quarter Fiscal 2008 Results
SAN DIEGO, January 23 /PRNewswire/ --
- Revenues US$2.44 Billion, Diluted EPS US$0.46
- Pro Forma Diluted EPS US$0.52, up 21 percent year-over-year
- Reaffirms Fiscal 2008 Pro Forma Earnings Guidance
Qualcomm Incorporated (Nasdaq: QCOM) today announced results for the
first fiscal quarter of 2008 ended December 30, 2007.
Total Qualcomm (GAAP) First Quarter Results
Total Qualcomm results are reported in accordance with generally accepted
accounting principles (GAAP).
-- Revenues: US$2.44 billion, up 21 percent year-over-year and 6 percent
sequentially.
-- Net income: US$767 million, up 18 percent year-over-year and down 32
percent sequentially.(i)
-- Diluted earnings per share: US$0.46, up 21 percent year-over-year and
down 31 percent sequentially.(i)
-- Effective tax rate: 18 percent for the quarter. Fiscal 2008 estimated
tax rate of approximately 17 percent.
-- Estimated share-based compensation: US$85 million, net of tax, down 2
percent year-over-year and up 9 percent sequentially.
-- Operating cash flow: US$880 million, up 12 percent year-over-year; 36
percent of revenues.
-- Return of capital to stockholders: In the quarter, dividends
announced totaled US$228 million, or US$0.14 per share, which were
paid January 4, 2008 and US$900 million related to the repurchase of
common stock.
(i) The sequential decrease in net income and diluted earnings per share
for total Qualcomm (GAAP) is due to a US$331 million tax benefit recorded in
the fourth fiscal quarter of 2007 as a result of completing audits of prior
years' tax returns.
Qualcomm Pro Forma First Quarter Results
Pro forma results exclude the Qualcomm Strategic Initiatives (QSI)
segment, certain estimated share-based compensation, certain tax items
related to prior years and acquired in-process research and development (R&D)
expense.
-- Revenues: US$2.44 billion, up 21 percent year-over-year and 6 percent
sequentially.
-- Net income: US$872 million, up 21 percent year-over-year and down 4
percent sequentially.
-- Diluted earnings per share: US$0.52, up 21 percent year-over-year and
down 4 percent sequentially; excludes US$0.01 loss per share
attributable to the QSI segment and US$0.05 loss per share
attributable to certain estimated share-based compensation.
-- Effective tax rate: 22 percent for the quarter. Fiscal 2008
estimated tax rate of approximately 21 percent.
-- Free cash flow: US$908 million, up 67 percent year-over-year; 37
percent of revenues (defined as net cash from operating activities
less capital expenditures).
Detailed reconciliations between total Qualcomm (GAAP) results and cash
flow and Qualcomm pro forma results and cash flow 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 report another strong quarter as the demand for
CDMA-based devices, applications and services continues to accelerate
around the world," said Dr. Paul E. Jacobs, chief executive officer of
Qualcomm. "We continue to work closely with our partners to successfully
provide the innovative wireless products and services consumers demand. Our
results reflect another record quarter of chipset shipments and a 21 percent
year-over-year growth in both revenues and pro forma earnings per share."
"Our continued focus on execution allows us to deliver excellent
financial results despite the impact of defending our business model. The
fundamental drivers of our business remain strong, and based on our current
business outlook, we are pleased to reaffirm our fiscal 2008 pro forma
earnings per share guidance."
Cash and Marketable Securities
Qualcomm's cash, cash equivalents and marketable securities totaled
approximately US$11.3 billion at the end of the first quarter of fiscal 2008,
compared to US$11.8 billion at the end of the fourth quarter of fiscal 2007
and US$10.5 billion a year ago. As of December 30, 2007, US$670 million
remained authorized for repurchases under our stock repurchase program, net
of a put option outstanding which could require us to repurchase 2.5 million
shares of our common stock for approximately US$94 million. Since December
30, 2007, we have repurchased and retired more than 17.7 million shares of
our common stock for approximately US$668 million. On January 16, 2008, we
announced a cash dividend of US$0.14 per share payable on March 28, 2008 to
stockholders of record at the close of business on February 29, 2008.
Estimated Share-Based Compensation
Total Qualcomm (GAAP) net income for the first quarter of fiscal 2008
included estimated share-based compensation, net of tax, of US$85 million or
US$0.05 per diluted share. This compares to US$87 million, or US$0.05 per
diluted share, in the prior year quarter.
Research and Development
(All figures in US$ unless otherwise noted)
Estimated
Share-
Qualcomm Based Total
Pro Compensa- In-Process Qualcomm
($ in millions) Forma tion R&D QSI (GAAP)
First quarter fiscal 2008 $430 $57 $2 $22 $511
As a % of revenue 18% N/M 21%
First quarter fiscal 2007 $365 $58 $- $17 $440
As a % of revenue 18% 22%
Year-over-year change ($) 18% (2%) 16%
Pro forma R&D expenses increased 18 percent year-over-year, primarily due
to additional engineering resources for the development of integrated circuit
products, next generation CDMA and OFDMA technologies, the expansion of our
intellectual property portfolio and other initiatives to support the
acceleration of advanced wireless products and services, including lower cost
devices, the integration of wireless with consumer electronics and computing,
the convergence of multiband, multimode, multinetwork products and
technologies, third party operating systems and services platforms. QSI R&D
expenses were related to MediaFLO USA.
Selling, General and Administrative
Estimated
Share- Total
Qualcomm Based Qualcomm
Pro Forma Compensation QSI (GAAP)
($ in millions)
First quarter fiscal 2008 $308 $58 $23 $389
As a % of revenue 13% N/M 16%
First quarter fiscal 2007 $282 $62 $25 $369
As a % of revenue 14% 18%
Year-over-year change ($) 9% (6%) 5%
Pro forma selling, general and administrative (SG&A) expenses increased 9
percent year-over-year, primarily attributable to an increase in employee
related expenses, partially offset by a decrease in bad debt expense. QSI
SG&A expenses were primarily related to MediaFLO USA.
Effective Income Tax Rate
Our fiscal 2008 effective income tax rates are estimated to be 17 percent
for total Qualcomm (GAAP) and 21 percent for Qualcomm pro forma, consistent
with our prior guidance. The first quarter Qualcomm (GAAP) and pro forma
effective tax rates of 18 percent and 22 percent, respectively, are higher
than the expected annual effective tax rates primarily due to the revaluation
of deferred tax assets.
Qualcomm Strategic Initiatives
The QSI segment includes our strategic investments, including our
MediaFLO USA subsidiary, and related income and expenses. Total Qualcomm
(GAAP) results for the first quarter of fiscal 2008 included $0.01 loss per
share for the QSI segment. The first quarter of fiscal 2008 QSI results
included $66 million in operating expenses, primarily related to MediaFLO
USA.
Business Outlook
The following statements are forward looking and actual results may
differ materially. The "Note Regarding Forward-Looking Statements" at the end
of 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. Due to their
nature, certain income and expense items, such as realized investment gains
or losses, gains and losses on certain derivative instruments or asset
impairments, cannot be accurately forecast. Accordingly, we exclude forecasts
of such items from our business outlook, and actual results may vary
materially from the business outlook if we incur any such income or expense
items. In addition, our outlook does not include provisions for the
consequences of injunctions or significant possible damages or costs related
to litigation matters unless damages have been awarded by a court.
We are engaged in multiple disputes with Nokia Corp., including
arbitration over Nokia's obligation to pay royalties for the use of certain
of our patents. As a result, under generally accepted accounting principles,
we are not recording royalty revenue attributable to Nokia's sales after
April 9, 2007 until an arbitrator (or court) awards damages or the disputes
are otherwise resolved by agreement with Nokia. We have excluded from our
fiscal 2008 revenue and earnings guidance our estimate of royalties which we
believe Nokia is required to report and pay to us under our existing license
agreement in fiscal 2008.
We continue to be engaged in litigation with Broadcom Corporation in
various forums. On December 31, 2007, the Federal District Court in Santa
Ana, California issued an injunction as to certain of our products, while
enjoining but mandating a limited license with respect to other products. We
continue the effort to design products to avoid the claims of the patents
found by the jury to infringe Broadcom's patents. We have already announced
that we expect devices to be available before the end of the first calendar
quarter of 2008 that incorporate our chipsets which do not include the
accused function of the 6,847,686 patent. We have filed a motion for stay and
a motion asking that the judge clarify certain portions of his ruling, and we
intend to appeal the adverse findings in this case. We have included our
estimate of the impact of this ruling in our outlook for fiscal 2008.
The following table summarizes total Qualcomm (GAAP) and Qualcomm pro
forma guidance for the second fiscal quarter and fiscal year 2008 based on
the current business outlook. The pro forma business outlook provided below
is presented in a manner that is consistent with the presentation of pro
forma results provided elsewhere herein.
The following estimates are approximations and are based on the current
business outlook:
Business Outlook Summary
SECOND FISCAL QUARTER
Current
Guidance
Q2'07 Q2'08
Results Estimates
Qualcomm Pro Forma
Revenues $2.22B $2.4B - $2.5B
Year-over-year change increase 8% - 13%
Diluted earnings per
share (EPS) $0.50 $0.50 - $0.52
Year-over-year change even - increase 4%
Total Qualcomm (GAAP)
Revenues $2.22B $2.4B - $2.5B
Year-over-year change increase 8% - 13%
Diluted earnings per
share (EPS) $0.43 $0.42 - $0.44
Year-over-year change decrease 2% - increase 2%
Diluted EPS attributable
to QSI ($0.01) ($0.02)
Diluted EPS attributable to
estimated share-based
compensation ($0.05) ($0.06)
Diluted EPS attributable
to in-process R&D ($0.01) n/a
Metrics
MSM shipments approx. 61M approx. 80M - 85M
CDMA/WCDMA devices
shipped (1) approx. 88M(a)(2) approx. 112M -118M(a)
CDMA/WCDMA device
wholesale average
selling price (1) approx. $213(a)(2) approx. $216(a)
(a) Shipments in Dec.
quarter, reported
in Mar. quarter
FISCAL YEAR
Prior Current
Guidance Guidance
FY 2007 FY 2008 FY 2008
Results (3) Estimates(4) Estimates(4)
Qualcomm Pro Forma
Revenues $8.87B $9.5B - $9.9B $9.6B - $10.0B
Year-over-year change increase 7% - 12% increase 8% - 13%
Diluted earnings per
share (EPS) $2.01 $2.01 - $2.07 $2.01 - $2.07
Year-over-year change even - increase 3% even - increase 3%
Total Qualcomm (GAAP)
Revenues $8.87B $9.5B - $9.9B $9.6B - $10.0B
Year-over-year change increase 7% - 12% increase 8% - 13%
Diluted earnings
per share (EPS) $1.95 $1.66 - $1.72 $1.67 - $1.73
Year-over-year change decrease 12% - 15% decrease 11% - 14%
Diluted EPS
attributable to QSI ($0.08) ($0.14) ($0.12)
Diluted EPS
attributable to
estimated share-based
compensation ($0.19) ($0.21) ($0.22)
Diluted EPS attributable
to in-process R&D ($0.01) n/a $0.00
Diluted EPS
attributable to tax
items related to
prior years $0.22 n/a n/a
Metrics
Fiscal year(b) CDMA/
WCDMA device
wholesale average
selling
price (1) approx. $214 (2) approx. $199 approx. $203
(b) Shipments in Sept.
to June quarters,
reported in Dec.
to Sept.
quarters
CALENDAR YEAR Device Estimates (1)(2)
Prior Current Prior Current
Guidance Guidance Guidance Guidance
Calendar Calendar Calendar Calendar
2007 2007 2008 2008
Estimates Estimates Estimates Estimates
CDMA/WCDMA
device
shipments
March
quarter approx. 86M approx. 86M not not
provided provided
June
quarter approx. 89M approx. 89M not not
provided provided
September
quarter approx. 95M - 98M approx. 95M not not
provided provided
December
quarter not approx. 112M - 118M not not
provided provided provided
Calendar
year range
(approx.) 385M - 395M 382M - 388M 492M - 522M 492M - 522M
Midpoint Midpoint Midpoint Midpoint
CDMA/WCDMA
units approx. 390M approx. 385M approx. 507M approx. 507M
CDMA units approx. 208M approx. 208M approx. 223M approx. 223M
WCDMA
units approx. 182M approx. 177M approx. 284M approx. 284M
(1)CDMA/WCDMA device shipments and average selling prices are estimated
for the total market.
(2)We perform periodic audits of the royalties payable by our
licensees. As a result of our audit process, we determined during
the fourth quarter of fiscal 2007 that total CDMA-based device
shipments and average selling prices (ASPs) should be adjusted for
certain periods. The adjustments related only to device shipments
and ASPs and did not impact the amount or timing of our revenue.
Historical units presented herein have been adjusted to reflect
these adjustments.
(3)Our fiscal 2007 results do not include royalty revenue attributable
to Nokia's sales after April 9, 2007 which, as of November 14, 2007,
we estimated to be approximately $0.05 diluted earnings per share.
(4)We have excluded from our fiscal 2008 revenue and earnings guidance
our estimate of royalties which we believe Nokia is required to
report and pay to us under our existing license agreement in fiscal
2008 which, as of December 20, 2007, we estimated to be
approximately $0.25-$0.30 diluted earnings per share.
Sums may not equal totals due to rounding.
Results of Business Segments (in millions, except per share data):
First Quarter - Fiscal Year 2008
Qualcomm
Reconciling Pro
Segments QCT QTL QWI Items (1) Forma
Revenues $1,574 $650 $210 $5 $2,439
Change from prior year 28% 8% 12% N/M 21%
Change from prior quarter 11% 0% (14%) N/M 6%
EBT $470 $541 $24 $76 $1,111
Change from prior year 49% 9% 20% N/M 17%
Change from prior quarter 11% 1% (23%) N/M (2%)
EBT as a % of revenues 30% 83% 11% N/M 46%
Net income (loss) $872
Change from prior year 21%
Change from prior quarter (4%)
Diluted EPS $0.52
Change from prior year 21%
Change from prior quarter (4%)
Diluted shares used 1,664
Estimated
Share- In- Total
Based Process Qualcomm
Compensation R&D QSI(3) (GAAP)
Segments (2)
Revenues $- $- $1 $2,440
Change from prior year N/M 21%
Change from prior quarter 0% 6%
EBT $(124) $(2) $(55) $930
Change from prior year 5% N/A (28%) 19%
Change from prior quarter (6%) N/A 14% (2%)
EBT as a % of revenues N/A N/A N/M 38%
Net income (loss) $(84) $(1) $(20) $767
Change from prior year 2% N/A 5% 18%
Change from prior quarter (9%) N/A 41% (32%)
Diluted EPS $(0.05) $- $(0.01) $0.46
Change from prior year 0% N/A 0% 21%
Change from prior quarter 0% N/A 50% (31%)
Diluted shares used 1,664 1,664 1,664 1,664
Fourth Quarter - Fiscal Year 2007
Qualcomm
Reconciling Pro
Segments QCT QTL QWI Items (1) Forma
Revenues $1,419 $647 $245 $(6) $2,305
EBT 424 537 31 137 1,129
Net income (loss) 911
Diluted EPS $0.54
Diluted shares used 1,689
Estimated
Share- Total
Based Tax Qualcomm
Compensation Items QSI (3) (GAAP)
Segments (2) (4)
Revenues $- $- $1 $2,306
EBT (117) - (64) 948
Net income (loss) (77) 331 (34) 1,131
Diluted EPS $(0.05) $0.20 $(0.02) $0.67
Diluted shares used 1,689 1,689 1,689 1,689
First Quarter - Fiscal Year 2007
Qualcomm
Reconciling Pro
Segments QCT QTL QWI Items (1) Forma
Revenues $1,230 $600 $188 $1 $2,019
EBT 316 498 20 118 952
Net income (loss) 722
Diluted EPS $0.43
Diluted shares used 1,685
Estimated
Share- Total
Based Tax Qualcomm
Compensation Items QSI (3) (GAAP)
Segments (2)
Revenues $- $- $- $2,019
EBT (130) - (43) 779
Net income (loss) (86) 33 (21) 648
Diluted EPS $(0.05) $0.02 $(0.01) $0.38
Diluted shares used 1,685 1,685 1,685 1,685
Second Quarter - Fiscal Year 2007
Qualcomm
Reconciling Pro
Segments QCT QTL QWI Items (1) Forma
Revenues $1,259 $759 $198 $5 $2,221
EBT 368 636 20 82 1,106
Net income (loss) 838
Diluted EPS $0.50
Diluted shares used 1,693
Estimated
Share- In- Total
Based Process Qualcomm
Compensation R&D QSI(3) (GAAP)
Segments (2)
Revenues $- $- $- $2,221
EBT (126) (10) (42) 928
Net income (loss) (83) (9) (20) 726
Diluted EPS $(0.05) $(0.01) $(0.01) $0.43
Diluted shares used 1,693 1,693 1,693 1,693
Twelve Months - Fiscal Year 2007
Qualcomm
Reconciling Pro
Segments QCT QTL QWI Items (1) Forma
Revenues $5,275 $2,772 $828 $(5) $8,870
EBT 1,547 2,340 88 388 4,363
Net income (loss) 3,406
Diluted EPS $2.01
Diluted shares used 1,693
Estimated
Share- In- Total
Based Tax Process Qualcomm
Segments Compensation(2) Items(4) R&D QSI (GAAP)
Revenues $- $- $- $1 $8,871
EBT (487) - (10) (240) 3,626
Net income (loss) (321) 364 (9) (137) 3,303
Diluted EPS $(0.19) $0.22 $(0.01) $(0.08) $1.95
Diluted shares used 1,693 1,693 1,693 1,693 1,693
(1) Reconciling items related to revenues consist primarily of other
nonreportable segment revenues less intersegment eliminations.
Reconciling items related to earnings before taxes consist primarily
of certain investment income, research and development expenses and
marketing expenses that are not allocated to the segments for
management reporting purposes, nonreportable segment results and the
elimination of intersegment profit.
(2) Certain share-based compensation is included in operating expenses
as part of employee-related costs but is not allocated to the
Company's segments as such costs are not considered relevant by
management in evaluating segment performance.
(3) At fiscal year-end, the sum of the quarterly tax provisions for each
column, including QSI, equals the annual tax provisions for each
column computed in accordance with GAAP. In interim quarters, the
tax provision for the QSI operating segment is computed by
subtracting the tax provision for Qualcomm pro forma, the tax items
column and the tax provisions related to estimated share-based
compensation and in-process R&D from the tax provision for total
Qualcomm (GAAP).
(4) During the fourth quarter of fiscal 2007, the Company recorded a
$331 million tax benefit, or $0.20 diluted earnings per share,
related to tax expense recorded in prior years resulting from the
completion of tax audits during the fourth fiscal quarter. The
fiscal 2007 Qualcomm pro forma results excluded this tax benefit
attributable to prior years.
N/M - Not Meaningful
N/A - Not Applicable
Sums may not equal totals due to rounding.
Conference Call
Qualcomm's first quarter fiscal 2008 earnings conference call will be
broadcast live on January 23, 2008 beginning at 1:45 p.m. Pacific Standard
Time (PST) on the Company's 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
Company's 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 Company's 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 January 23, 2008 beginning at
approximately 5:30 p.m. (PST) through February 23, 2008 at 9:00 p.m. (PST).
To listen to the replay, U.S. callers may dial +1-800-642-1687 and
international callers may dial +1-706-645-9291. U.S. and international
callers should use reservation number 28814084. An audio replay of the
conference call will be available on the Company's web site at
www.qualcomm.com for two weeks following the live call.
Editor's Note: To view the web slides that accompany this earnings
release and conference call, please go to the Qualcomm Investor Relations
website at http://investor.qualcomm.com/results.cfm.
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 2007
FORTUNE 500(R) company traded on The Nasdaq Stock Market(R) under the ticker
symbol QCOM.
Note Regarding Use of Non-GAAP Financial Measures
The Company presents pro forma financial information that is used by
management (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 Qualcomm CDMA Technologies, Qualcomm Technology Licensing and Qualcomm
Wireless & Internet segments, and (iii) to compare the performance and
efficiency of these segments against each other and against competitors
outside the Company. Pro forma measurements of the following financial data
are used by the Company's management: revenues, R&D expenses, SG&A expenses,
total operating expenses, operating income, net investment income, income
before income taxes, effective tax rate, net income, diluted earnings per
share, operating cash flow and free cash flow. Management 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 pro
forma 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 pro forma financial measures applicable to
the Company and its business segments.
Pro forma information used by management excludes the Qualcomm Strategic
Initiatives (QSI) segment, certain estimated share-based compensation,
certain tax items related to prior years and acquired in-process R&D. The QSI
segment 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 are viewed by management as unrelated to the Company's
operational performance. Estimated share-based compensation, other than
amounts related to share-based awards granted under a bonus program that may
result in the issuance of unrestricted shares of the Company's common stock,
is excluded because management views the valuation of options and other
share-based compensation as theoretical and unrelated to the Company's
operational performance. Further, share-based compensation is affected by
factors that are subject to change, including the Company's stock price,
stock market volatility, expected option life, risk-free interest rates and
expected dividend payouts in future years. Moreover, it is generally not an
expense that requires or will require cash payment by the Company. Certain
tax items related to prior years are excluded in order to provide a clearer
understanding of the Company's ongoing tax rate and after tax earnings.
Acquired in-process R&D is excluded because such expense is viewed by
management as unrelated to the operating activities of the Company's ongoing
core businesses.
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 shareholder 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, to value the Company and to compare its operating
performance with other companies in the industry.
The non-GAAP pro forma 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, "pro forma" is not
a term defined by GAAP, and, as a result, the Company's measure of pro forma
results might be different than similarly titled measures used by other
companies. Reconciliations between total Qualcomm (GAAP) results and Qualcomm
pro forma results and between total Qualcomm (GAAP) cash flow and Qualcomm
pro forma cash flow 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 deployment of our technologies in wireless
networks and of 3G wireless communications, equipment and services, including
CDMA2000 1X, 1xEV-DO, WCDMA, HSPA and OFDMA both domestically and
internationally; attacks on our business model, including results of current
and future litigation and arbitration proceedings as well as actions of
governmental or quasi-governmental bodies, and the costs we incur in
connection therewith, including potentially damaged relationships with
customers and operators who may be impacted by the results of these
proceedings; fluctuations in the demand for products, services or
applications based on our technologies; our dependence on major customers and
licensees; foreign 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; the development, deployment and commercial
acceptance of the MediaFLO USA network and FLO(TM) technology; as well as the
other risks detailed from time-to-time in the Company's SEC reports.
(C) 2008 Qualcomm Incorporated. All rights reserved. Qualcomm is a
registered trademark of Qualcomm Incorporated. MediaFLO and FLO are
trademarks of Qualcomm Incorporated. CDMA2000 is a registered trademark of
the Telecommunications Industry Association. All other trademarks are the
property of their respective owners.
Qualcomm Incorporated
CONSOLIDATED STATEMENTS OF OPERATIONS
This schedule is to assist the reader in reconciling from Qualcomm
Pro Forma results to Total Qualcomm (GAAP) results
(In millions, except per share data)
(Unaudited)
Three Months Ended December 30, 2007
Qualcomm Estimated Total
Pro Share-Based In-Process Qualcomm
Forma Compensation(a) R&D QSI (GAAP)
Revenues:
Equipment and
services $1,702 $- $- $1 $1,703
Licensing and
royalty fees 737 - - - 737
Total
revenues 2,439 - - 1 2,440
Operating
expenses:
Cost of
equipment
and services
revenues 753 9 - 21 783
Research and
development 430 57 2 22 511
Selling, general
and
administrative 308 58 - 23 389
Total
operating
expenses 1,491 124 2 66 1,683
Operating income
(loss) 948 (124) (2) (65) 757
Investment
income, net 163(b) - - 10(c) 173
Income (loss)
before
income taxes 1,111 (124) (2) (55) 930
Income tax
(expense)
benefit (239)(d) 40 1 35(e) (163)(d)
Net income
(loss) $872 $(84) $(1) $(20) $767
Earnings (loss) per
common share:
Diluted $0.52 $(0.05) $(0.00) $(0.01) $0.46
Shares used
in per
share
calculations:
Diluted 1,664 1,664 1,664 1,664 1,664
Supplemental Financial Data:
Operating Cash
Flow $1,014 $(48)(g) $(2) $(84) $880
Operating Cash
Flow as a %
of Revenues 42% N/M 36%
Free Cash Flow(f) $908 $(48)(g) $(2) $(105) $753
Free Cash Flow
as a % of
Revenues 37% N/M 31%
(a) Estimated share-based compensation presented above and excluded from
pro forma results did not include $1 million, net of tax, related to
share-based awards granted under a bonus program that may result in
the issuance of unrestricted shares of the Company's common stock.
(b) Included $152 million in interest and dividend income related to
cash, cash equivalents and marketable securities, which were not
part of the Company's strategic investment portfolio, $71 million in
net realized gains on investments and $2 million in gains on
derivative instruments from net decreases in the fair value of the
put option liabilities related to our share repurchase program,
partially offset by $57 million in other-than-temporary losses on
investments and $5 million in interest expense.
(c) Included $11 million in net realized gains on investments and $1
million in interest and dividend income, partially offset by $2
million in interest expense.
(d) The first quarter of fiscal 2008 tax rates were approximately 18%
for total Qualcomm (GAAP) and approximately 22% for Qualcomm pro
forma.
(e) At fiscal year-end, the sum of the quarterly tax provisions for each
column, including QSI, equals the annual tax provisions for each
column computed in accordance with GAAP. In interim quarters, the
tax provision for the QSI operating segment is computed by
subtracting the tax provision for Qualcomm pro forma, the tax items
column and the tax provisions related to estimated share-based
compensation and in-process R&D from the tax provision for total
Qualcomm (GAAP).
(f) 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 Pro Forma Free Cash
Flows to Total Qualcomm (GAAP) net cash provided by operating
activities and other supplemental disclosures for the three months
ended December 30, 2007, included herein.
(g) Incremental tax benefits from stock options exercised during the
period.
Qualcomm Incorporated
Reconciliation of Pro Forma Free Cash Flows to
Total Qualcomm (GAAP) net cash provided by operating activities
and other supplemental disclosures
(In millions)
(Unaudited)
Three Months Ended December 30, 2007
Qualcomm Estimated Total
Pro Share-Based In-Process Qualcomm
Forma Compensation R&D QSI (GAAP)
Net cash
provided
(used) by
operating
activities $1,014 $(48)(a) $(2) $(84) $880
Less: capital
expenditures (106) - - (21) (127)
Free cash flow $908 $(48) $(2) $(105) $753
Other
supplemental
cash
disclosures:
Cash transfers
from QSI(1) $4 $- $- $(4) $-
Cash transfers
to QSI (2) (113) - - 113 -
Net cash
transfers $(109) $- $- $109 $-
(1) Cash from loan payments and sale of equity securities.
(2) Funding for strategic debt and equity investments, capital
expenditures and other QSI operating expenses.
Three Months Ended December 31, 2006
Estimated Total
Qualcomm Share-Based Qualcomm
Pro Forma Compensation QSI (GAAP)
Net cash provided
(used) by operating
activities $834 $(32)(a) $(13) $789
Less: capital
expenditures (290) - (32) (322)
Free cash flow $544 $(32) $(45) $467
(a) Incremental tax benefits from stock options exercised during the
period.
Qualcomm Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
ASSETS
December 30, September 30,
2007 2007
Current assets:
Cash and cash equivalents $2,968 $2,411
Marketable securities 4,100 4,170
Accounts receivable, net 703 715
Inventories 522 469
Deferred tax assets 327 435
Collateral held under
securities lending 283 421
Other current assets 195 200
Total current assets 9,098 8,821
Marketable securities 4,265 5,234
Property, plant and equipment,
net 1,794 1,788
Goodwill 1,499 1,325
Deferred tax assets 606 318
Other assets 1,086 1,009
Total assets $18,348 $18,495
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $536 $635
Payroll and other benefits
related liabilities 299 311
Dividends payable 228 -
Unearned revenues 206 218
Income taxes payable 52 119
Obligations under securities
lending 283 421
Other current liabilities 513 554
Total current liabilities 2,117 2,258
Unearned revenues 137 142
Income taxes payable 194 -
Other liabilities 290 260
Total liabilities 2,738 2,660
Stockholders' equity:
Preferred stock, $0.0001 par
value; issuable in series;
8 shares authorized; none
outstanding at December 30, 2007 and
September 30, 2007 - -
Common stock, $0.0001 par
value; 6,000 shares
authorized; 1,629 and 1,646 shares
issued and outstanding at
December 30, 2007 and September 30,
2007, respectively - -
Paid-in capital 6,400 7,057
Retained earnings 9,076 8,541
Accumulated other
comprehensive income 134 237
Total stockholders' equity 15,610 15,835
Total liabilities and
stockholders' equity $18,348 $18,495
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended
December 30, December 31,
2007 2006
Revenues:
Equipment and services $1,703 $1,342
Licensing and royalty fees 737 677
Total revenues 2,440 2,019
Operating expenses:
Cost of equipment and
services revenues 783 634
Research and development 511 440
Selling, general and
administrative 389 369
Total operating expenses 1,683 1,443
Operating income 757 576
Investment income, net 173 203
Income before income taxes 930 779
Income tax expense (163) (131)
Net income $767 $648
Basic earnings per common share $0.47 $0.39
Diluted earnings per common share $0.46 $0.38
Shares used in per share
calculations:
Basic 1,635 1,653
Diluted 1,664 1,685
Dividends per share paid $- $-
Dividends per share announced $0.14 $0.12
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
December 30, December 31,
2007 2006
Operating Activities:
Net income $767 $648
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 108 91
Non-cash income tax expense 72 54
Non-cash portion of share-based
compensation expense 125 130
Incremental tax benefits from
stock options exercised (48) (32)
Net realized gains on marketable
securities and other investments (82) (64)
Other-than-temporary losses on
marketable securities
and other investments 57 1
Other items, net 4 4
Changes in assets and liabilities,
net of effects of acquisitions:
Accounts receivable, net 43 (9)
Inventories (47) (81)
Other assets 11 (98)
Trade accounts payable (77) 47
Payroll, benefits and other liabilities (35) 38
Unearned revenues (18) 60
Net cash provided by operating activities 880 789
Investing Activities:
Capital expenditures (127) (322)
Purchases of available-for-sale
securities (1,684) (1,673)
Proceeds from sale of available-
for-sale securities 2,492 2,436
Other investments and acquisitions,
net of cash acquired (229) (220)
Change in collateral held under
securities lending 138 -
Other items, net - (2)
Net cash provided by investing
activities 590 219
Financing Activities:
Proceeds from issuance of common
stock 77 97
Incremental tax benefits from stock
options exercised 48 32
Repurchase and retirement of common stock (900) (96)
Change in obligations under
securities lending (138) -
Other items, net (1) -
Net cash (used) provided by
financing activities (914) 33
Effect of exchange rate changes on cash 1 1
Net increase in cash and cash
equivalents 557 1,042
Cash and cash equivalents at
beginning of period 2,411 1,607
Cash and cash equivalents at end of period $2,968 $2,649
Qualcomm Contact:
John Gilbert
Vice President of Investor and Industry Analyst Relations
+1-858-658-4813 (ph) +1-858-651-9303 (fax)
e-mail: ir@qualcomm.com
Web site: http://www.qualcomm.com
