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Qualcomm Announces First Quarter Fiscal 2009 Results
SAN DIEGO, January 28 /PRNewswire/ --
- Revenues US$2.5 Billion, EPS US$0.20
- Pro Forma EPS US$0.31
- Operating Income Exceeds Prior Guidance
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 2009 ended December 28, 2008, noting
that first quarter fiscal 2009 revenues were at the high end of prior
guidance and operating income exceeded prior guidance. However, net income
and diluted EPS for the quarter were adversely impacted by
other-than-temporary impairments to its marketable securities portfolio.
Total Qualcomm (GAAP) First Quarter Results
Total Qualcomm results are reported in accordance with generally accepted
accounting principles (GAAP).
(All amounts in US dollars unless otherwise noted)
-- Revenues: $2.52 billion, up 3 percent year-over-year and down 25
percent sequentially.
-- Operating income: $745 million, down 2 percent year-over-year and 44
percent sequentially.
-- Net income: $341 million, down 56 percent year-over-year and 61
percent sequentially.
-- Diluted earnings per share: $0.20, down 57 percent year-over-year and
62 percent sequentially.
-- Effective tax rate: 24 percent for the quarter. Fiscal 2009 estimated
tax rate of approximately 22 percent.
-- Estimated share-based compensation: $99 million, net of tax, up 16
percent year-over-year and 1 percent sequentially.
-- Operating cash flow: $3.5 billion; included a payment of $2.5 billion
received in October 2008 related to the execution of new license and
settlement agreements with Nokia Corporation/Nokia Inc. (Nokia).
-- Return of capital to stockholders: In the quarter, dividends announced
totaled $264 million, or $0.16 per share, which were paid January 7,
2009, and $284 million related to the repurchase of common stock.
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: $2.51 billion, up 3 percent year-over-year and down 25
percent sequentially.
-- Operating income: $986 million, up 4 percent year-over-year and down
38 percent sequentially.
-- Net income: $520 million, down 40 percent year-over-year and 51
percent sequentially.
-- Diluted earnings per share: $0.31, down 40 percent year-over-year and
51 percent sequentially; excludes $0.05 loss per share attributable to
the QSI segment and $0.06 loss per share attributable to certain
estimated share-based compensation.
-- Effective tax rate: 25 percent for the quarter and estimated for
fiscal 2009.
-- Free cash flow: $3.42 billion; included a payment of $2.5 billion
received in October 2008 related to the execution of new license and
settlement agreements with Nokia. (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 Qualcomm's
Investor Relations web page at www.qualcomm.com.
"Despite weak economic conditions, wireless subscribers continue to
migrate from second-generation to third-generation CDMA networks around the
world. Our first quarter revenues were at the high end of prior guidance and
operating income exceeded our prior guidance driven primarily by the mix of
higher-end chipsets, higher-priced data capable devices and improved expense
management," said Dr. Paul E. Jacobs, chief executive officer of Qualcomm. "I
am particularly pleased to see healthy demand for 3G as CDMA-based device
shipments in the September quarter were at the high end of our prior
expectations and reflect more than 30 percent year-over-year growth. While
our operating performance was strong, the distress in the global financial
markets continued, resulting in additional impairments of our marketable
securities portfolio."
"The CDMA inventory channel has contracted as we expected, and the
business environment continues to remain uncertain. Reduced visibility in the
marketplace makes it difficult to forecast future inventory levels or predict
when a recovery will begin. As a result, while we continue to estimate
healthy growth in the CDMA-device market, we have lowered our shipment
estimate for calendar year 2009. Although we are not providing earnings per
share guidance due to the volatility of financial markets and the impact it
has had and may have on our investment portfolio and net income, we are
providing revenue, operating income and our other standard guidance. Qualcomm
is very fortunate to have a strong balance sheet and operating cash flows in
these difficult times and we are committed to supporting our partners and
driving the market forward."
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled
approximately $13.1 billion at the end of the first quarter of fiscal 2009,
compared to $11.3 billion at both the end of the fourth quarter of fiscal
2008 and the year ago quarter. On January 16, 2009, we announced a cash
dividend of $0.16 per share payable on March 27, 2009 to stockholders of
record at the close of business on February 27, 2009.
The distress in global financial markets has continued to suppress the
value of our marketable securities portfolio. As a result, in evaluating the
recorded values of our marketable securities at December 28, 2008, we
determined that $388 million, or approximately 3 percent of the recorded
values of our cash, cash equivalents and marketable securities, were
other-than-temporarily impaired. In addition, at December 28, 2008 and
January 23, 2009, we had net unrealized losses on marketable securities of
$1.1 billion.
Research and Development
Qualcomm Estimated In- Total
Pro Share-Based Process Qualcomm
($ in millions) Forma Compensation R&D QSI (GAAP)
First quarter fiscal 2009 $511 $69 $- $24 $604
As a % of revenues 20% N/M 24%
First quarter fiscal 2008 $430 $57 $2 $22 $511
As a % of revenues 18% N/M 21%
Year-over-year change ($) 19% 21% 9% 18%
Pro forma R&D expenses increased 19 percent year-over-year, primarily due
to an increase in costs related to 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 technologies 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
Qualcomm Estimated Total
Pro Share-Based Qualcomm
($ in millions) Forma Compensation QSI (GAAP)
First quarter fiscal 2009 $305 $66 $42 $413
As a % of revenues 12% N/M 16%
First quarter fiscal 2008 $308 $58 $23 $389
As a % of revenues 13% N/M 16%
Year-over-year change ($) (1%) 14% 83% 6%
Pro forma selling, general and administrative (SG&A) expenses decreased
by 1 percent year-over-year due to a decrease in costs related to litigation
and legal matters partially offset by an increase in employee-related
expenses in the first quarter of fiscal 2009. QSI SG&A expenses were
primarily related to MediaFLO USA.
Effective Income Tax Rate
Our fiscal 2009 effective income tax rates are estimated to be 22 percent
for total Qualcomm (GAAP) and 25 percent for Qualcomm pro forma. The first
quarter total Qualcomm (GAAP) effective tax rate of 24 percent is higher than
the estimated annual effective tax rate primarily due to amounts recorded
during the quarter for a valuation allowance on capital losses, partially
offset by a tax benefit related to fiscal 2008 as a result of the retroactive
reenactment of the federal R&D credit.
Qualcomm Strategic Initiatives
The QSI segment is composed of our strategic investments, including our
MediaFLO USA subsidiary. Total Qualcomm (GAAP) results for the first quarter
of fiscal 2009 included a $0.05 loss per share for the QSI segment. The first
quarter of fiscal 2009 QSI results included $102 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.
The continuing global financial crisis and the resulting slowdown in the
worldwide economy is causing contraction in the CDMA-based channel inventory,
resulting in lower demand for CDMA-based MSM integrated circuits, adversely
affecting our revenues and operating results. In addition, the financial
crisis has had, and may continue to have, an impact on the value of our
marketable securities portfolio and net investment income (loss), including
other-than-temporary impairments in the first quarter of fiscal 2009. While
we do not forecast impairments, we do have net unrealized losses on
marketable securities that could be recognized in future periods if market
conditions do not improve. Given the unprecedented daily market volatility
and the significant judgments involved, accurately forecasting
other-than-temporary impairments associated with our marketable securities
portfolio is extremely difficult and actual results could vary materially. As
a result, while we are providing revenue, operating income and our other
standard guidance, we are not providing earnings per share guidance.
Moreover, our outlook does not include provisions for the consequences of
injunctions or significant possible damages related to litigation matters,
unless damages or injunctions have been awarded by a court. In addition, 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.
The following table summarizes total Qualcomm (GAAP) and Qualcomm pro
forma guidance based on the current business outlook. The pro forma business
outlook provided below is presented consistent with the presentation of pro
forma results elsewhere herein.
The following estimates are approximations and are based on the current
business outlook:
Business Outlook Summary
SECOND FISCAL QUARTER
Q2'08 Current Guidance
Results (2) Q2'09 Estimates (3)
Qualcomm Pro Forma
Revenues $2.60B $2.25B - $2.45B
Year-over-year change decrease 6% - 14%
Operating income $1.02B $0.75B - $0.85B
Year-over-year change decrease 16% - 26%
Total Qualcomm (GAAP)
Revenues $2.61B $2.25B - $2.45B
Year-over-year change decrease 6% - 14%
Operating income $0.81B $0.50B - $0.60B
Year-over-year change decrease 26% - 38%
Operating income (loss) attributable
to QSI ($0.07B) ($0.10B)
Operating income (loss) attributable
to estimated share-based compensation ($0.13B) ($0.15B)
Operating Income (loss) attributable
to in-process R&D (4) n/a not provided
Metrics
MSM shipments approx. 85M approx. 60M - 65M
CDMA/WCDMA devices shipped (1) approx. 112M* approx. 116M - 121M*
CDMA/WCDMA device wholesale average
selling price (1) approx. $222* approx. $207*
* Shipments in December
quarter, reported in
March quarter
FISCAL YEAR
Prior Current
Guidance Guidance
FY 2008 FY 2009 FY 2009
Results Estimates(3) Estimates(3)
Qualcomm Pro Forma
Revenues $11.13B $10.2B - $10.8B $9.3B - $9.8B
Year-over-year change decrease 3% - 8% decrease 12% - 16%
Operating income $4.60B $3.7B - $3.9B $3.2B - $3.5B
Year-over-year change decrease 15% - 20% decrease 24% - 30%
Total Qualcomm (GAAP)
Revenues $11.14B $10.2B - $10.8B $9.3B - $9.8B
Year-over-year change decrease 3% - 8% decrease 12% - 17%
Operating income $3.73B $2.6B - $2.8B $2.2B - $2.5B
Year-over-year change decrease 25% - 30% decrease 33% - 41%
Operating income (loss)
attributable to QSI ($0.32B) ($0.45B) ($0.40B)
Operating income (loss)
attributable to estimated
share-based compensation ($0.54B) ($0.65B) ($0.60B)
Operating income (loss)
attributable to in-process
R&D (4) ($0.01B) n/a not provided
Metrics
Fiscal year* CDMA/WCDMA
device wholesale
average selling
price (1) approx. $219 approx. $195 approx. $202
* Shipments in Sept.
to June quarters,
reported in Dec.
to Sept. quarters
CALENDAR YEAR Device Estimates (1)
Prior Current Prior Current
Guidance Guidance Guidance Guidance
Calendar Calendar Calendar Calendar
CDMA/WCDMA device 2008 2008 2009 2009
shipments Estimates Estimates Estimates Estimates
March quarter approx. 107M approx. 107M not provided not provided
June quarter approx. 119M approx. 119M not provided not provided
September
quarter approx. 121M - 126M approx. 125M not provided not provided
December
quarter not provided approx. not provided not provided
116M - 121M
Calendar year
range (approx.) 475M - 485M 468M - 473M 580M - 620M 540M - 590M
Midpoint Midpoint Midpoint Midpoint
CDMA/WCDMA
units approx. 480M approx. 471M approx. 600M approx. 565M
CDMA units approx. 213M approx. 209M approx. 230M approx. 212M
WCDMA units approx. 267M approx. 262M approx. 370M approx. 353M
(1) CDMA/WCDMA device shipments and average selling prices are for
estimated worldwide device shipments, including shipments not
reported to Qualcomm.
(2) Our Q2'08 results do not include royalty revenues attributable to
Nokia's sales.
(3) While we do not forecast impairments, we do have net unrealized
losses on marketable securities that could be recognized in future
periods if market conditions do not improve.
(4) In January 2009, we acquired handheld graphics and multimedia assets
from Advanced Micro Devices. We are still in the process of
finalizing the accounting for the acquisition, which may include
in-process R&D.
Sums may not equal totals due to rounding.
Results of Business Segments (in millions, except per share data):
First Quarter - Fiscal Year 2009
Pro Forma
Reconciling
Segments QCT QTL QWI Items (1)
Revenues $1,334 $1,006 $170 $1
Change from prior year (15%) 55% (19%) N/M
Change from prior quarter (24%) (27%) (11%) N/M
Operating income (loss)
Change from prior year
Change from prior quarter
EBT $168 $874 $3 $(351)
Change from prior year (64%) 62% (88%) N/M
Change from prior quarter (63%) (30%) N/M N/M
EBT as a % of revenues 13% 87% 2% N/M
Net income (loss)
Change from prior year
Change from prior quarter
Diluted EPS
Change from prior year
Change from prior quarter
Diluted shares used
Qualcomm Estimated Total
Pro Share-Based Qualcomm
Segments Forma Compensation(2) QSI (3) (GAAP)
Revenues $2,511 $- $6 $2,517
Change from prior year 3% 500% 3%
Change from prior quarter (25%) 20% (25%)
Operating income (loss) $986 $(145) $(96) $745
Change from prior year 4% (17%) (48%) (2%)
Change from prior quarter (38%) 1% 1% (44%)
EBT $694 $(145) $(98) $451
Change from prior year (38%) (17%) (78%) (52%)
Change from prior quarter (49%) 1% 6% (59%)
EBT as a % of revenues 28% N/M N/M 18%
Net income (loss) $520 $(99) $(80) $341
Change from prior year (40%) (18%) (300%) (56%)
Change from prior quarter (51%) (1%) 2% (61%)
Diluted EPS $0.31 $(0.06) $(0.05) $0.20
Change from prior year (40%) (20%) (400%) (57%)
Change from prior quarter (51%) 0% 0% (62%)
Diluted shares used 1,667 1,667 1,667 1,667
Fourth Quarter - Fiscal Year 2008
Pro Forma
Reconciling
Segments QCT QTL QWI Items (1)
Revenues $1,761 $1,374 $190 $4
Operating income (loss)
EBT 449 1,247 (24) (315)
Net income (loss)
Diluted EPS
Diluted shares used
Qualcomm Estimated Total
Pro Share-Based Qualcomm
Segments Forma Compensation(2) QSI (3) (GAAP)
Revenues $3,329 $- $5 $3,334
Operating income (loss) 1,578 (146) (97) 1,335
EBT 1,357 (146) (104) 1,107
Net income (loss) 1,058 (98) (82) 878
Diluted EPS $0.63 $(0.06) $(0.05) $0.52
Diluted shares used 1,678 1,678 1,678 1,678
First Quarter - Fiscal Year 2008
Pro Forma
Reconciling
Segments QCT QTL QWI Items (1)
Revenues $1,574 $650 $210 $5
Operating income (loss)
EBT 470 541 24 76
Net income (loss)
Diluted EPS
Diluted shares used
Qualcomm Estimated In- Total
Pro Share-Based Process Qualcomm
Segments Forma Compensation(2) R&D QSI (3) (GAAP)
Revenues $2,439 $- $- $1 $2,440
Operating income (loss) 948 (124) (2) (65) 757
EBT 1,111 (124) (2) (55) 930
Net income (loss) 872 (84) (1) (20) 767
Diluted EPS $0.52 $(0.05) $- $(0.01) $0.46
Diluted shares used 1,664 1,664 1,664 1,664 1,664
Second Quarter - Fiscal Year 2008
Pro Forma
Reconciling
Segments QCT QTL QWI Items (1)
Revenues $1,620 $795 $ 194 $(5)
Operating income (loss)
EBT 427 684 - (12)
Net income (loss)
Diluted EPS
Diluted shares used
Qualcomm Estimated Total
Pro Share-Based Qualcomm
Segments Forma Compensation(2) QSI (3) (GAAP)
Revenues $2,604 $- $2 $2,606
Operating income (loss) 1,017 (130) (74) 813
EBT 1,099 (130) (63) 906
Net income (loss) 894 (88) (40) 766
Diluted EPS $0.54 $(0.05) $(0.02) $0.47
Diluted shares used 1,643 1,643 1,643 1,643
Twelve Months - Fiscal Year 2008
Pro Forma
Reconciling
Segments QCT QTL QWI Items (1)
Revenues $6,717 $3,622 $785 $6
Operating income (loss)
EBT 1,833 3,142 (1) (290)
Net income (loss)
Diluted EPS
Diluted shares used
Qualcomm Estimated In- Total
Pro Share-Based Process Qualcomm
Segments Forma Compensation(2) R&D QSI (3) (GAAP)
Revenues $11,130 $- $- $12 $11,142
Operating income (loss) 4,604 (540) (14) (320) 3,730
EBT 4,684 (540) (14) (304) 3,826
Net income (loss) 3,740 (365) (13) (202) 3,160
Diluted EPS $2.25 $(0.22) $(0.01) $(0.12) $1.90
Diluted shares used 1,660 1,660 1,660 1,660 1,660
(1) Pro forma reconciling items related to revenues consist primarily of
other nonreportable segment revenues less intersegment eliminations.
Pro forma 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).
N/M - Not Meaningful
Sums may not equal totals due to rounding.
Conference Call
Qualcomm's first quarter fiscal 2009 earnings conference call will be
broadcast live on January 28, 2009 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 28, 2009, beginning
at approximately 5:30 p.m. PST through February 28, 2009 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 80271812. 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 (Nasdaq: QCOM) 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 100 Index, the S&P 500 Index and is a
2008 FORTUNE 500(R) company. For more information, please visit
www.qualcomm.com.
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 (loss),
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 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
such share-based compensation as unrelated to the Company's operational
performance. Moreover, it is generally not an expense that requires or will
require cash payment by the Company. Further, share-based compensation
related to options 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.
Certain tax items related to prior years are excluded in order to provide a
clearer understanding of the Company's ongoing pro forma tax rate and after
tax earnings. The Company decided to include the benefit of the retroactive
extension of the federal research and development tax credit in pro forma
results starting in fiscal 2009 because it recurs with relative frequency and
would have been included in the Company's pro forma results for the prior
year if it had been reenacted in the prior fiscal year. 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; the current uncertainty of global economic conditions and
its potential impact on demand for our products, services or applications and
our marketable securities portfolio; 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; our dependence on major customers and licensees; foreign
currency fluctuations; strategic loans, investments and transactions we have
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 our SEC reports.
Qualcomm is a registered trademark of Qualcomm Incorporated. FLO is a
trademark of Qualcomm Incorporated. CDMA2000 is a registered trademark of the
Telecommunications Industry Association (TIA USA). All other trademarks are
the property of their respective owners.
Qualcomm Contact:
John Gilbert
Phone: +1-858-658-4813
e-mail: ir@qualcomm.com
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 28, 2008
Qualcomm Estimated Total
Pro Share-Based Qualcomm
Forma Compensation QSI (GAAP)
Revenues:
Equipment and services $1,417 $- $6 $1,423
Licensing and royalty
fees 1,094 - - 1,094
Total revenues 2,511 - 6 2,517
Operating expenses:
Cost of equipment and
services revenues 709 10 36 755
Research and
development 511 69 24 604
Selling, general and
administrative 305 66 42 413
Total operating
expenses 1,525 145 102 1,772
Operating income (loss) 986 (145) (96) 745
Investment loss, net (292)(a) - (2)(b) (294)
Income (loss) before
income taxes 694 (145) (98) 451
Income tax (expense)
benefit (174)(c) 46 18(d) (110)(c)
Net income (loss) $520 $(99) $(80) $341
Earnings (loss) per
common share:
Diluted $0.31 $(0.06) $(0.05) $0.20
Shares used in per
share calculations:
Diluted 1,667 1,667 1,667 1,667
Supplemental Financial Data:
Operating Cash Flow $3,629 $(16)(f) $(112) $3,501
Operating Cash Flow
as a % of Revenues 145% N/M 139%
Free Cash Flow(e) $3,419 $(16)(f) $(136) $3,267
Free Cash Flow
as a % of Revenues 136% N/M 130%
(a) Included $388 million in other-than-temporary losses on investments,
which were not part of the Company's strategic investment portfolio,
$38 million in net realized losses on investments and $1 million in
interest expense, partially offset by $135 million in interest and
dividend income related to cash, cash equivalents and marketable
securities.
(b) Included $4 million in other-than-temporary losses on investments,
$2 million in interest expense and $1 million in equity in losses of
investees, partially offset by $5 million in net realized gains on
investments.
(c) The first quarter of fiscal 2009 effective tax rates were
approximately 24% for total Qualcomm (GAAP) and 25% for Qualcomm pro
forma, which included a tax benefit of $38 million and $37 million,
respectively, related to fiscal 2008 as a result of the retroactive
reenactment of the federal R&D credit. Historically, similar tax
benefits have been excluded from Qualcomm pro forma results.
(d) 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).
(e) 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 28, 2008, included herein.
(f) 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 28, 2008
Qualcomm Estimated Total
Pro Share-Based Qualcomm
Forma Compensation QSI (GAAP)
Net cash provided (used)
by operating activities $3,629 $(16)(a) $(112) $3,501
Less: capital expenditures (210) - (24) (234)
Free cash flow $3,419 $(16) $(136) $3,267
Other supplemental cash
disclosures:
Cash transfers from QSI (1) $11 $- $(11) $-
Cash transfers to QSI (2) (152) - 152 -
Net cash transfers $(141) $- $141 $-
(1) Cash from sale of strategic debt and equity investments and partial
settlement of investment receivables.
(2) Funding for strategic debt and equity investments, capital
expenditures and other QSI operating expenses.
Three Months Ended December 30, 2007
Qualcomm Estimated In- Total
Pro Share-Based 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
(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 September
28, 2008 28, 2008
Current assets:
Cash and cash equivalents $3,826 $1,840
Marketable securities 5,183 4,571
Accounts receivable, net 943 4,038
Inventories 458 521
Deferred tax assets 299 289
Collateral held under securities
lending 11 173
Other current assets 290 291
Total current assets 11,010 11,723
Marketable securities 4,048 4,858
Deferred tax assets 996 830
Property, plant and equipment, net 2,262 2,162
Goodwill 1,494 1,517
Other intangible assets, net 3,080 3,104
Other assets 565 369
Total assets $23,455 $24,563
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $376 $570
Payroll and other benefits related
liabilities 347 406
Dividends payable 264 -
Income taxes payable 48 20
Unearned revenues 403 394
Obligations under securities lending 11 173
Other current liabilities 633 728
Total current liabilities 2,082 2,291
Unearned revenues 3,666 3,768
Income taxes payable 240 227
Other liabilities 330 333
Total liabilities 6,318 6,619
Stockholders' equity:
Preferred stock, $0.0001 par value;
issuable in series;
8 shares authorized; none outstanding
at December 28, 2008 and
September 28, 2008 - -
Common stock, $0.0001 par value; 6,000
shares authorized; 1,649 and 1,656
shares issued and outstanding at
December 28, 2008 and September 28,
2008, respectively - -
Paid-in capital 7,413 7,511
Retained earnings 10,794 10,717
Accumulated other comprehensive loss (1,070) (284)
Total stockholders' equity 17,137 17,944
Total liabilities and stockholders'
equity $23,455 $24,563
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended
December December
28, 2008 30, 2007
Revenues:
Equipment and services $1,423 $1,703
Licensing and royalty fees 1,094 737
Total revenues 2,517 2,440
Operating expenses:
Cost of equipment and services
revenues 755 783
Research and development 604 511
Selling, general and
administrative 413 389
Total operating expenses 1,772 1,683
Operating income 745 757
Investment (loss) income, net (294) 173
Income before income taxes 451 930
Income tax expense (110) (163)
Net income $341 $767
Basic earnings per common share $0.21 $0.47
Diluted earnings per common
share $0.20 $0.46
Shares used in per share
calculations:
Basic 1,653 1,635
Diluted 1,667 1,664
Dividends per share paid $- $-
Dividends per share announced $0.16 $0.14
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
December December
28, 2008 30, 2007
Operating Activities:
Net income $341 $767
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 152 108
Revenues related to
non-monetary exchanges (29) -
Non-cash portion of income tax expense 45 72
Non-cash portion of share-based
compensation expense 145 125
Incremental tax benefit from
stock options exercised (16) (48)
Net realized losses (gains) on
marketable securities and
other investments 33 (82)
Other-than-temporary losses on
marketable securities and
other investments 392 57
Other items, net (14) 4
Changes in assets and
liabilities, net of effects of acquisitions:
Accounts receivable, net 2,716 43
Inventories 65 (47)
Other assets (19) 11
Trade accounts payable (192) (77)
Payroll, benefits and other
liabilities (54) (35)
Unearned revenues (64) (18)
Net cash provided by operating activities 3,501 880
Investing Activities:
Capital expenditures (234) (127)
Purchases of available-for-sale
securities (2,586) (1,684)
Proceeds from sale of
available-for-sale securities 1,373 2,492
Cash received for partial
settlement of investment receivables 202 -
Other investments and
acquisitions, net of cash acquired (14) (229)
Change in collateral held under
securities lending 162 138
Other items, net (4) -
Net cash (used) provided by
investing activities (1,101) 590
Financing Activities:
Proceeds from issuance of
common stock 26 77
Incremental tax benefit from
stock options exercised 16 48
Repurchase and retirement of
common stock (285) (900)
Change in obligations under
securities lending (162) (138)
Other items, net (1) (1)
Net cash used by financing activities (406) (914)
Effect of exchange rate changes
on cash (8) 1
Net increase in cash and cash
equivalents 1,986 557
Cash and cash equivalents at
beginning of period 1,840 2,411
Cash and cash equivalents at
end of period $3,826 $2,968
