EXHIBIT 99.1
QUALCOMM Contact:
Julie Cunningham
Sr. Vice President, Investor Relations
1-(858) 658-4224 (ph) 1-(858) 651-9303 (fax)
e-mail: juliec@qualcomm.com
QUALCOMM ANNOUNCES THIRD QUARTER FISCAL 2003 RESULTS
REVENUES $922 MILLION, EPS $0.23
REVENUES $891 MILLION, EPS $0.33 EXCLUDING QSI SEGMENT
SAN DIEGO - July 23, 2003 - QUALCOMM Incorporated (NASDAQ: QCOM) today announced
its third quarter fiscal 2003 results ended June 29, 2003. Revenues were $922
million in the third fiscal quarter, up 20 percent year-over-year. Third quarter
net income was $192 million, compared to a loss of $14 million year-over-year.
Earnings per share were $0.23, compared to a loss of $0.02 per share
year-over-year.
Revenues excluding the QUALCOMM Strategic Initiatives (QSI) segment were $891
million in the third fiscal quarter, up 24 percent year-over-year. Net income
excluding the QSI segment was $267 million, up 38 percent year-over-year.
Earnings per share excluding the QSI segment were $0.33, up 38 percent
year-over-year. Detailed reconciliations between total QUALCOMM results and
results excluding QSI are included at the end of this news release. Prior period
reconciliations are presented on our Investor Relations web page at
www.qualcomm.com.
"Our business generates excellent positive cash flows at the same time revenues
and earnings continue to grow. As a result, our Board approved a 40 percent
increase in cash dividends to return value to our shareholders," said Dr. Irwin
Mark Jacobs, chairman and CEO of QUALCOMM. "During the third quarter, we
announced several new multimode chips and the industry-leading MSM7xxx family of
chips to further strengthen our product road map and support our customers."
"The China and India markets are gaining momentum, and we are encouraged by the
performance of CDMA operators in the Americas, Japan and South Korea. During the
quarter, Reliance Infocomm launched the first CDMA2000 1X nationwide commercial
service in India, bringing advanced 3G wireless voice and data services to more
than 250 cities. Reliance, Tata and the other CDMA operators in India totaled
over three million subscribers at the end of June. China Unicom launched its
prepaid service in several cities. VIVO in Brazil and China Unicom launched
commercial
- more -
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 2 of 18
BREW(TM) services, and BellSouth International has announced plans to
commercially launch BREW in Latin America. Verizon Wireless in the U.S. reported
impressive data revenues with its BREW-based Get It Now(sm) service. We believe
these events, along with initial deployments of WCDMA in Japan and Europe, will
set the stage for CDMA to capture a greater share of the total wireless market
over the next year," Jacobs said.
Research and development (R&D) expenses were $136 million, including $1 million
for QSI, in the third fiscal quarter, up 15 percent year-over year. The increase
in R&D expenses compared to the year ago quarter was primarily related to QCT
new product development efforts.
Selling, general and administrative (SG&A) expenses were $117 million, including
$8 million for QSI, in the third fiscal quarter, down 23 percent year-over-year.
The decrease in SG&A expense compared to the year ago quarter was primarily due
to reduced expenses at Vesper, including the effects of foreign currency
fluctuations.
Our fiscal 2003 effective income tax rate is now estimated to be 45 percent,
compared to 22 percent in fiscal 2002. The change in the estimated 2003
effective tax rate from 43 percent used in the second quarter of fiscal 2003
results in a 48 percent effective tax rate in the third quarter of fiscal 2003.
Excluding the QSI segment, our fiscal 2003 effective tax rate estimate remains
at 33 percent, compared to 35 percent in fiscal 2002.
QUALCOMM STRATEGIC INITIATIVES
The QUALCOMM Strategic Initiatives (QSI) segment includes our strategic
investments and related income and expenses. Vesper losses before taxes were $20
million in the third fiscal quarter compared to $35 million in the year ago
quarter. The balance of the net loss before taxes in QSI was $7 million for the
third fiscal quarter compared to $250 million in the year ago quarter. The third
quarter of fiscal 2003 net loss included asset impairment charges related to the
valuation of our Australian wireless licenses, other-than-temporary losses on
investments, our share of equity losses from our investment in Inquam and
impairment of a note receivable. Significant offsetting gains included the
realization of value of a portion of our Auction Discount Voucher transferred to
two wireless operators, realized interest income from our Pegaso investment and
realized gains on the sale of marketable securities.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 3 of 18
BUSINESS OUTLOOK
The following statements are forward-looking and actual results may differ
materially. Please see Note Regarding Forward-Looking Statements at the end of
this news release for a description of certain risk factors and QUALCOMM's
annual and quarterly reports on file with the Securities and Exchange Commission
(SEC) for a more complete description of risks.
FOURTH QUARTER FISCAL 2003
- Based on the current business outlook, we anticipate that revenues
excluding the QSI segment in the fourth fiscal quarter will increase
by approximately 2-6 percent year-over-year. We anticipate that
earnings per share excluding the QSI segment will be approximately
$0.27-$0.29 in the fourth fiscal quarter, compared to $0.31 in the
year ago quarter. This estimate assumes shipments of approximately
19-21 million MSM phone chips during the quarter.
- Based on the current business outlook, we anticipate that total
QUALCOMM revenues in the fourth quarter will increase by
approximately 2-6 percent year-over-year. We anticipate that total
QUALCOMM earnings per share will be approximately $0.19-$0.21 in the
fourth fiscal quarter, including an estimated $0.08 loss per share
attributed to the QSI segment, compared to $0.23 per share in the
year ago quarter. Due to their nature, certain income and expense
items such as realized gains or losses, gains or losses on
derivatives, income related to the use of our FCC Auction Discount
Voucher and asset impairments cannot be accurately forecast.
Accordingly, the Company excludes such items from its business
outlook, and actual results may vary materially from the business
outlook if the Company incurs any such income or expense items.
FISCAL 2003
- Based on the current business outlook, we anticipate that revenues
excluding the QSI segment will grow by approximately 31-33 percent
year-over-year and earnings per share excluding the QSI segment to
be in the range of $1.40-$1.42 for fiscal 2003, up 43-45 percent
year-over-year. We estimate the CDMA phone market to be 103-108
million units in calendar 2003, and we estimate a decrease of
approximately five percent in average selling prices of CDMA phones
for fiscal 2003, upon which royalties are calculated.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 4 of 18
- Based on the current business outlook, we anticipate that total
QUALCOMM revenues will grow by approximately 30-31 percent
year-over-year and total QUALCOMM earnings per share to be in the
range of $0.84-$0.86 for fiscal 2003, up 91-95 percent
year-over-year, including an estimated $0.56 loss per share
attributed to the QSI segment. Due to their nature, certain income
and expense items such as realized gains or losses, gains or losses
on derivatives, income related to the use of our FCC Auction
Discount Voucher and asset impairments cannot be accurately
forecast. Accordingly, the Company excludes such items from its
business outlook, and actual results may vary materially from the
business outlook if the Company incurs any such income or expense
items.
CASH AND MARKETABLE SECURITIES
QUALCOMM's cash, cash equivalents and marketable securities totaled
approximately $5.0 billion at the end of the third quarter of fiscal 2003,
compared to $4.4 billion on March 30, 2003, $3.9 billion on December 29, 2002
and $3.2 billion on September 29, 2002. We have invested $158 million in net
stock repurchases and have paid $79 million in cash dividends since the
inception of these programs in February 2003. QSI businesses required funding of
$40 million in the third quarter of fiscal 2003, consistent with the second
quarter of fiscal 2003. Collection of finance receivables from our Pegaso
investment totaled $285 million in the third quarter of fiscal 2003. Detailed
reconciliations between total QUALCOMM cash and cash equivalents and cash and
cash equivalents including marketable securities and excluding the QSI segment
are included at the end of this news release.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 5 of 18
RESULTS OF BUSINESS SEGMENTS
THE FOLLOWING TABLES PRESENT SEGMENT INFORMATION (IN THOUSANDS):
THIRD QUARTER - FISCAL YEAR 2003
QUALCOMM
RECONCILING EXCLUDING TOTAL
SEGMENTS QCT QTL QWI ITEMS (1) QSI QSI QUALCOMM
- --------------------------------- --------- --------- --------- ----------- --------- --------- ---------
REVENUES 557,240 242,479 113,882 (22,334) 891,267 30,341 921,608
CHANGE FROM PRIOR QUARTER (15%) (7%) (5%) N/M (12%) 16% (12%)
CHANGE FROM PRIOR YEAR 38% 22% 4% N/M 24% (39%) 20%
EARNINGS (LOSS) BEFORE TAXES 163,114 218,363 6,396 10,181 398,054 (27,563) 370,491
CHANGE FROM PRIOR QUARTER (27%) (8%) (13%) N/M (14%) 89% 72%
CHANGE FROM PRIOR YEAR 39% 25% 308% N/M 34% 90% 784%
TAX RATES 33% (172%) 48%
NET INCOME (LOSS) 266,697 (75,008) 191,689
CHANGE FROM PRIOR QUARTER (15%) 64% 86%
CHANGE FROM PRIOR YEAR 38% 46% 1492%
DILUTED NET EARNINGS (LOSS)
PER COMMON SHARE (3) 0.33 (0.09) 0.23
CHANGE FROM PRIOR QUARTER (13%) 65% 77%
CHANGE FROM PRIOR YEAR 38% 50% 1250%
SECOND QUARTER - FISCAL YEAR 2003
QUALCOMM
RECONCILING EXCLUDING TOTAL
SEGMENTS QCT QTL QWI ITEMS (1) QSI QSI QUALCOMM
- --------------------------------- --------- --------- --------- ----------- --------- --------- ---------
REVENUES 652,873 260,110 119,319 (15,524) 1,016,778 26,265 1,043,043
EARNINGS (LOSS) BEFORE TAXES 223,520 236,192 7,370 (6,431) 460,651 (245,775) 214,876
TAX RATES 32% 14% 52%
NET INCOME (LOSS) 313,858 (210,842) 103,016
DILUTED NET EARNINGS (LOSS)
PER COMMON SHARE (3) 0.38 (0.26) 0.13
THIRD QUARTER - FISCAL YEAR 2002
GOODWILL
QUALCOMM AMORTIZATION
RECONCILING EXCLUDING AND TOTAL
SEGMENTS QCT QTL QWI ITEMS (1) QSI QSI OTHER(2) QUALCOMM
- --------------------------------- --------- --------- --------- ----------- --------- --------- --------- ---------
REVENUES 404,253 198,853 109,581 8,631 721,318 49,456 143 770,917
EARNINGS (LOSS) BEFORE TAXES 117,524 174,450 (3,074) 8,906 297,806 (285,454) (66,496) (54,144)
TAX RATES 35% 51% (1%) 75%
NET INCOME (LOSS) 193,574 (139,872) (67,470) (13,768)
DILUTED NET EARNINGS (LOSS)
PER COMMON SHARE (3) 0.24 (0.18) (0.09) (0.02)
NINE MONTHS - FISCAL YEAR 2003
QUALCOMM
RECONCILING EXCLUDING TOTAL
SEGMENTS QCT QTL QWI ITEMS (1) QSI QSI QUALCOMM
- --------------------------------- --------- --------- --------- ----------- --------- --------- ---------
REVENUES 1,919,794 758,012 342,182 (43,979) 2,976,009 85,811 3,061,820
EARNINGS (LOSS) BEFORE TAXES 674,916 683,964 16,527 5,598 1,381,005 (406,389) 974,616
TAX RATES 33% 4% 45%
NET INCOME (LOSS) 925,273 (389,234) 536,039
DILUTED NET EARNINGS (LOSS)
PER COMMON SHARE (3) 1.13 (0.48) 0.66
NINE MONTHS - FISCAL YEAR 2002
GOODWILL
QUALCOMM AMORTIZATION
RECONCILING EXCLUDING AND TOTAL
SEGMENTS QCT QTL QWI ITEMS (1) QSI QSI OTHER(2) QUALCOMM
- --------------------------------- --------- --------- --------- ----------- --------- --------- --------- ---------
REVENUES 1,107,212 603,611 329,140 33,306 2,073,269 92,262 143 2,165,674
EARNINGS (LOSS) BEFORE TAXES 282,189 534,673 (8,271) 28,492 837,083 (409,241) (195,794) 232,048
TAX RATES 35% 56% 0% 27%
NET INCOME (LOSS) 544,104 (178,370) (196,339) 169,395
DILUTED NET EARNINGS (LOSS)
PER COMMON SHARE (3) 0.67 (0.22) (0.24) 0.21
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 6 of 18
(1) Reconciling items related to revenues consist primarily of other
non-reportable segment revenues less intersegment eliminations.
Reconciling items related to earnings before taxes consist primarily of
corporate expenses, charges that are not allocated to the segments for
management reporting purposes, unallocated net investment income,
non-reportable segment results, interest expense and the elimination of
intercompany profit.
(2) Starting in fiscal 2003, the Company no longer records goodwill
amortization, in accordance with Financial Accounting Standards No. 142.
In the third quarter of fiscal 2002, goodwill amortization and other
adjustments included $61.5 million of amortization of goodwill, $4.0
million of amortization of intangible assets and $2.3 million of payroll
expenses on stock option exercises, offset by $1.0 million of credits
related to the reduction of reserves established in connection with the
Globalstar business and $0.2 million of credits and $0.1 million of
revenues related to the sale of the terrestrial-based CDMA wireless
infrastructure business. In the first nine months of fiscal 2002, goodwill
amortization and other adjustments included $183.8 million of amortization
of goodwill, $10.1 million of amortization of intangible assets and $5.4
million of payroll expenses on stock option exercises, offset by $3.1
million of credits related to the reduction of reserves established in
connection with the Globalstar business and $0.3 million of credits and
$0.1 million of revenue related to the sale of the terrestrial-based CDMA
wireless infrastructure business. With the adoption of FAS 142 in 2003 and
given the immateriality of the other adjustments, the Company no longer
makes these adjustments to its results excluding QSI in fiscal 2003.
(3) The sum of the earnings per share amounts may not equal total earnings per
share due to rounding.
N/M - Not Meaningful
BUSINESS SEGMENT HIGHLIGHTS
QUALCOMM CDMA TECHNOLOGIES (QCT)
- Shipped approximately 23 million MSM(TM) phone chips, 97 percent of
which were 3G CDMA2000 1X/1xEV-DO, to customers worldwide during the
third fiscal quarter, compared to approximately 28 million shipped
in the second fiscal quarter and approximately 16 million units
shipped in the year ago quarter.
- Shipped CSM infrastructure chips for 3G CDMA2000 1X/1xEV-DO to
support more than 2.2 million equivalent voice channels, compared to
1.5 million in the second fiscal quarter and approximately 4 million
in the year ago quarter. Equivalent voice channels are provided
rather than actual chip shipments because our CSM infrastructure
chips currently support from eight to 32 voice channels per chip.
- Shipped samples of the MSM6500(TM) chipset and system software. The
MSM6500 chipset supports CDMA2000 1X/1xEV-DO and GSM/GPRS standards,
allowing roaming between third-generation (3G) and second-generation
(2G) networks. The MSM6500 solution will help accelerate the
adoption of feature-rich multimedia applications on wireless
consumer devices.
- Announced several chipset and system software products, including:
- MSM6025(TM) - a cost-effective solution to drive CDMA2000 1X
adoption in new markets worldwide.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 7 of 18
- MSM6275(TM) - a high-performance solution delivering High
Speed Downlink Packet Access (HSDPA), a next-generation
feature of the WCDMA (UMTS) standard, as well as roaming on
GSM and GPRS systems.
- CSM6700(TM) and MSM6700(TM) - solutions supporting integrated
voice and simultaneous high-speed packet data with support for
CDMA2000 through Revision D and 1xEV-DO.
- MSM7xxx family - a new generation of powerful dual-Central
Processing Unit (CPU) single chip solutions to address the
growing need for more cost-effective, high-performance
solutions that drive full-featured third-generation (3G)
multimedia handsets for consumers and high data rate devices
for enterprise customers.
QUALCOMM TECHNOLOGY LICENSING (QTL)
- Signed a total of 14 CDMA license agreements during the third fiscal
quarter, including ten new licenses and four amendments to existing
license agreements. These royalty-bearing license agreements enable
manufacturers to develop, make and sell products based on QUALCOMM's
extensive CDMA patent portfolio.
- Reported that licensees around the world are participating in the
growing 3G CDMA market:
- Thirty-five subscriber licensees reported sales of CDMA2000 1X
products and nine subscriber licensees reported sales of WCDMA
products through the third fiscal quarter.
- Fifteen infrastructure licensees reported sales of CDMA2000 1X
products and eight infrastructure licensees reported sales of
WCDMA products through the third fiscal quarter.
QUALCOMM WIRELESS & INTERNET GROUP (QWI)
QUALCOMM INTERNET SERVICES (QIS)
- Announced several operator developments, including U.S. Cellular's
commercial launch of BREW-based service across its CDMA2000 network;
KTF, a leading wireless operator in South Korea, renewed its
contract to offer its wireless application download service based on
the BREW platform; and China Unicom launched commercial BREW-enabled
services in Guangdong and Shanghai.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 8 of 18
- Announced two additional operators have signed agreements to launch
BREW-based wireless data services, BellSouth International in Latin
America and Midwest Wireless in the U.S. BellSouth International
plans to roll-out BREW-based services in nine BellSouth operating
companies in Latin America.
- Hosted the third annual BREW 2003 Developers Conference in San
Diego, April 28-30, 2003. A number of announcements and
demonstrations were made at the conference, including:
- Verizon Wireless announced that in just six months consumers
have downloaded 8.5 million Get It Nowsm games, ring tones,
entertainment applications and more. Verizon Wireless also
announced it has sold more than 3.2 million BREW-enabled
handsets to date and expects to sell more than eight million
of these handsets by the end of 2003. Verizon Wireless
reported average incremental revenue per active Get It Nowsm
user of more than $7.50 monthly, not including additional
airtime revenues.
- esmertec demonstrated the world's first implementation of MIDP
(Mobile Information Device Profile) 2.0 functionality with its
Mobile Foundation Java(TM) virtual machine (JVM) as an
extension to the BREW platform.
- Rocket Mobile demonstrated the industry's first Multimedia
Messaging Services (MMS) message exchange between CDMA and
GSM/GPRS networks with its RocketMMS(TM) client, and also
unveiled RocketMMS Extension, which enables BREW developers to
create applications that take advantage of MMS technologies.
- Demonstrated with QUALCOMM's QChat push-to-talk (PTT) technology an
initial call set-up performance of less than two seconds over
CDMA2000 infrastructure and handsets between dormant mobiles.
QUALCOMM's QChat solution uses voice over Internet protocol (VoIP)
technologies to enable ubiquitous, efficient and virtually
instantaneous PTT functionality on wireless devices based on
CDMA2000 and other CDMA 3G networks.
QUALCOMM WIRELESS BUSINESS SOLUTIONS(R) (QWBS)
- Shipped approximately 8,400 OmniTRACS(R) units and related products
in the third quarter, consistent with the second fiscal quarter.
This brings the cumulative total to nearly 479,000 units shipped
worldwide.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 9 of 18
- Introduced several enhancements to the FleetAdvisor(R) and
TrackingAdvisor(R) software for private fleet customers. These
enhancements enable improved productivity and customer service,
reduced operational costs, and improved operational efficiency.
- Commercially released GlobalTRACS(TM) equipment management system in
April 2003; announced an agreement with ACME Lift Company to deploy
GlobalTRACS on its fleet of large aerial work platforms.
QUALCOMM STRATEGIC INITIATIVES (QSI)
- Announced a commitment to invest up to $100 million, as part of our
$500 million total commitment to QUALCOMM Ventures, in early- to
mid-stage Chinese companies engaged in the development and
commercialization of CDMA-based products, applications and services.
CONFERENCE CALL
QUALCOMM's third quarter fiscal 2003 earnings conference call will be broadcast
live on July 23, 2003 beginning at 2:30 p.m. Pacific Daylight Time 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 July 23, 2003 beginning at
approximately 4:30 p.m. (PDT) through July 28, 2003 at 4:30 p.m. (PDT). To
listen to the replay, U.S. callers may dial (800) 633-8284 and international
callers may dial (402) 977-9140. U.S. and international callers should use
reservation number 21153017. 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.
QUALCOMM Incorporated (www.qualcomm.com) is a leader in developing and
delivering innovative digital wireless communications products and services
based on the Company's CDMA digital technology. Headquartered in San Diego,
Calif., QUALCOMM is included in the S&P 500
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 10 of 18
Index and is a 2003 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 financial information excluding the QUALCOMM Strategic
Initiatives (QSI) segment to facilitate evaluation by management, investors and
analysts of its ongoing core operating businesses, including QUALCOMM CDMA
Technologies (QCT), QUALCOMM Technology Licensing (QTL) and QUALCOMM Wireless &
Internet (QWI). QSI results relate to strategic investments for which the
Company has exit strategies of varying durations. Management believes that the
information excluding QSI presents a more representative measure of the
operating and liquidity performance of the Company because it excludes the
effect of fluctuations in value of investments that are unrelated to the
Company's operational performance. The financial information excluding QSI
should be considered in addition, not as a substitute for, or superior to,
financial measures calculated in accordance with GAAP. Reconciliations between
total QUALCOMM results and results excluding QSI and between total QUALCOMM cash
flow and cash, cash equivalents and marketable securities excluding the QSI
segment 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: changing
global economic conditions, particularly in the telecommunications and
Internet-related industries and the resulting uncertainty in forecasting future
results; timing and receipt of license fees and royalties; integrated circuit
inventory and order levels; the Company's ability to execute additional 3G
licenses; the scale-up, acceptance and operations of CDMA systems, including
CDMA2000 1xEV-DO and systems in new markets such as China and India; the ability
to sustain or improve operational efficiency and profitability; decreases in the
rate of growth in CDMA-based wireless data and Internet access or the CDMA
subscriber population; strategic investments, loans, acquisitions or
divestitures the Company has or may pursue; the value realized on the sale of
the Vesper Companies' business or assets; changes in the fair values of
marketable securities and derivative instruments held; the development,
deployment and
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 11 of 18
commercial acceptance of evolving CDMA technology standards; developments in
current or future litigation; customer receivables and performance guarantees;
component shortages; and international business activities, as well as the other
risks detailed from time-to-time in the Company's SEC reports.
###
QUALCOMM(R), QCT(R) QUALCOMM Wireless Business Solutions(R), OmniTRACS(R),
MSM(TM), MSM6500(TM), MSM6025(TM), MSM6275(TM), CSM6700(TM), MSM6700(TM),
FleetAdvisor(R), TrackingAdvisor(R), MPVc(R), GlobalTRACS(TM) and BREW(TM) are
trademarks and/or service marks of QUALCOMM Incorporated. All other trademarks
are the property of their respective owners.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 12 of 18
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
RESULTS EXCLUDING QSI TO TOTAL QUALCOMM RESULTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED JUNE 29, 2003
-----------------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
--------- --------- ---------
Revenues:
Equipment and services $ 652,233 $ 30,341 $ 682,574
Licensing and royalty fees 239,034 -- 239,034
--------- --------- ---------
891,267 30,341 921,608
--------- --------- ---------
Operating expenses:
Cost of equipment and services revenues 286,250 40,652 326,902
Research and development 134,436 1,254 135,690
Selling, general and administrative 109,294 8,192 117,486
Amortization of other acquisition-related
intangible assets 1,951 -- 1,951
Asset impairment charges -- 34,113 34,113
Other -- (30,356) (30,356)
--------- --------- ---------
Total operating expenses 531,931 53,855 585,786
--------- --------- ---------
Operating income (loss) 359,336 (23,514) 335,822
Interest expense (260) (9,503) (9,763)
Investment income, net 38,978(a) 5,454(d) 44,432
--------- --------- ---------
Income (loss) before income taxes 398,054 (27,563)(b) 370,491
Income tax expense (131,357)(c) (47,445) (178,802)(c)
Net income (loss) $ 266,697 $ (75,008) $ 191,689
========= ========= =========
Net earnings (loss) per common share:
Diluted $ 0.33(e) $ (0.09)(e) $ 0.23(e)
========= ========= =========
Shares used in per share calculations:
Diluted 815,856 815,856 815,856
========= ========= =========
(a) Includes $29 million in interest income related to cash, cash equivalents
and marketable debt securities, which are not part of the Company's
strategic investment portfolio.
(b) Includes $20 million loss, net of minority interest, of Vesper Holdings
from March 1, 2003 through May 31, 2003 due to the Company's practice of
consolidating foreign subsidiaries one month in arrears.
(c) The estimated fiscal year 2003 effective tax rate for operations excluding
QSI and total QUALCOMM are 33% and 45%, respectively. The change in the
estimated 2003 effective tax rate for total QUALCOMM from 43% used in the
second quarter of fiscal 2003 results in a 48% effective tax rate in the
third quarter of fiscal 2003.
(d) Includes $30 million interest income, $21 million other-than-temporary
losses on investments, $21 million equity losses in investees and $18
million realized gains on marketable securities.
(e) The sum of the earnings per share amounts may not equal total earnings per
share due to rounding.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 13 of 18
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
RESULTS EXCLUDING QSI TO TOTAL QUALCOMM RESULTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
NINE MONTHS ENDED JUNE 29, 2003
-----------------------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
----------- ----------- -----------
Revenues:
Equipment and services $ 2,243,708 $ 85,811 $ 2,329,519
Licensing and royalty fees 732,301 -- 732,301
----------- ----------- -----------
2,976,009 85,811 3,061,820
----------- ----------- -----------
Operating expenses:
Cost of equipment and services revenues 978,754 118,077 1,096,831
Research and development 374,440 5,530 379,970
Selling, general and administrative 333,050 68,159 401,209
Amortization of other acquisition-related
intangible assets 5,888 -- 5,888
Asset impairment charges -- 194,258 194,258
Other -- (30,356) (30,356)
----------- ----------- -----------
Total operating expenses 1,692,132 355,668 2,047,800
----------- ----------- -----------
Operating income (loss) 1,283,877 (269,857) 1,014,020
Interest expense (1,974) (18,549) (20,523)
Investment income (expense), net 99,102(a) (117,983)(d) (18,881)
----------- ----------- -----------
Income (loss) before income taxes 1,381,005 (406,389)(b) 974,616
Income tax (expense) benefit (455,732)(c) 17,155 (438,577)(c)
----------- ----------- -----------
Net income (loss) $ 925,273 $ (389,234) $ 536,039
=========== =========== ===========
Net earnings (loss) per common share:
Diluted $ 1.13(e) $ (0.48)(e) $ 0.66(e)
=========== =========== ===========
Shares used in per share calculations:
Diluted 816,563 816,563 816,563
=========== =========== ===========
(a) Includes $83 million in interest income related to cash, cash equivalents
and marketable debt securities, which are not part of the Company's
strategic investment portfolio.
(b) Includes $212 million loss, net of minority interest, of Vesper Holdings
from September 1, 2002 through May 31, 2003 due to the Company's practice
of consolidating foreign subsidiaries one month in arrears.
(c) The estimated fiscal year 2003 effective tax rate for operations excluding
QSI and total QUALCOMM are 33% and 45%, respectively.
(d) Includes $111 million other-than-temporary losses on investments, $110
million equity losses in investees, $45 million interest income, $37
million minority interest in loss of consolidated subsidiaries and $23
million realized gains on marketable securities.
(e) The sum of the earnings per share amounts may not equal total earnings per
share due to rounding.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 14 of 18
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING CASH FLOWS FROM CASH
CASH EQUIVALENTS AND MARKETABLE SECURITIES EXCLUDING
QSI TO TOTAL QUALCOMM CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED JUNE 29, 2003(C)
-----------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
--------- --------- ---------
Earnings before taxes, depreciation, amortization and other adjustments (1) $ 424,137 $ 26,714 $ 450,851
Working capital changes and taxes paid (2) (110,163) 4,411 (105,752)
--------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 313,974 31,125 345,099
Capital expenditures (44,176) (10,859) (55,035)
--------- --------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES 269,798 20,266 290,064
Net additional share capital 19,980 -- 19,980
Repurchases of common stock (42,047) -- (42,047)
Dividends paid (79,007) -- (79,007)
Net collections of finance receivables 55 282,734 282,789
Other investments -- (2,062) (2,062)
Other items (1,349) (9,228) (10,577)
Changes in fair value and other changes to marketable securities 17,766 32,823 50,589
Marketable securities pending settlement payment (receipt) 94,712 (4,830) 89,882
Transfer from QSI (3) 354,965 (354,965) --
Transfer to QSI (4) (39,837) 39,837 --
--------- --------- ---------
NET INCREASE IN CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (5) $ 595,036 $ 4,575 $ 599,611
========= ========= =========
(1) Reconciliation to GAAP:
Net income (loss) $ 266,697 $ (75,008) $ 191,689
Non-cash adjustments (a) 153,547 119,969 273,516
Net realized gains on marketable securities and other investments (9,892) (18,247) (28,139)
Plus: Taxes paid 13,785 13,785
--------- --------- ---------
Earnings before taxes, depreciation, amortization and other adjustments $ 424,137 $ 26,714 $ 450,851
========= ========= =========
(2) Reconciliation to GAAP:
(Decrease) increase in cash resulting from changes in working capital $ (96,378) $ 4,411 $ (91,967)
Minus: Taxes paid (13,785) (13,785)
--------- --------- ---------
Working capital changes and taxes paid $(110,163) $ 4,411 $(105,752)
========= ========= =========
(3) Cash from loan payments and sale of equity securities
(4) Funding for strategic debt and equity investments, operations of Vesper and
other QSI operating expenses
(5) Reconciliation to GAAP cash flow statement:
Net decrease in cash and cash equivalents (GAAP) $(185,846) $ (9,170) $(195,016)
Plus: Net purchase (proceeds) of marketable securities 668,404 (14,248) 654,156
Plus: Net increase in fair value and other changes to marketable securities 17,766 32,823 50,589
Plus: Net increase in marketable securities pending settlement payment (receipt) 94,712 (4,830) 89,882
--------- --------- ---------
Net increase in cash, cash equivalents and marketable securities $ 595,036 $ 4,575 $ 599,611
========= ========= =========
(a) See detail following the nine month cash flow schedule
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 15 of 18
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING CASH FLOWS FROM CASH,
CASH EQUIVALENTS AND MARKETABLE SECURITIES EXCLUDING
QSI TO TOTAL QUALCOMM CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
NINE MONTHS ENDED JUNE 29, 2003 (C)
--------------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
---------- ---------- ----------
Earnings before taxes, depreciation, amortization and other adjustments (1) $1,475,201 $ (16,830) $1,458,371
Working capital changes and taxes paid (2) (227,637) 23,692 (203,945)
---------- ---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,247,564 6,862 1,254,426
Capital expenditures (157,515) (28,491) (186,006)
---------- ---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES LESS CAPITAL EXPENDITURES 1,090,049 (21,629) 1,068,420
Net additional share capital 132,676 -- 132,676
Repurchases of common stock (158,488) -- (158,488)
Dividends paid (79,007) -- (79,007)
Net collections of finance receivables 6,845 654,956 661,801
Other investments -- (33,800) (33,800)
Other items (2,628) (31,391) (34,019)
Changes in fair value and other changes to marketable securities 42,123 46,151 88,274
Marketable securities pending settlement payment (receipt) 127,767 (9,542) 118,225
Transfer from QSI (3) 747,665 (747,665) --
Transfer to QSI (4) (149,330) 149,330 --
---------- ---------- ----------
NET INCREASE IN CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (5) $1,757,672 $ 6,410 $1,764,082
========== ========== ==========
(1) Reconciliation to GAAP:
Net income (loss) $ 925,273 $ (389,234) $ 536,039
Non-cash adjustments (b) 487,992 395,800 883,792
Net realized gains on marketable securities and other investments (16,011) (23,396) (39,407)
Plus: Taxes paid 77,947 77,947
---------- ---------- ----------
Earnings (loss) before taxes, depreciation, amortization and other adjustments $1,475,201 $ (16,830) $1,458,371
========== ========== ==========
(2) Reconciliation to GAAP:
(Decrease) increase in cash resulting from changes in working capital $ (149,690) $ 23,692 $ (125,998)
Minus: Taxes paid (77,947) -- (77,947)
---------- ---------- ----------
Working capital changes and taxes paid $ (227,637) $ 23,692 $ (203,945)
========== ========== ==========
(3) Cash from loan payments and sale of equity securities
(4) Funding for strategic debt and equity investments, operations of Vesper and
other QSI operating expenses
(5) Reconciliation to GAAP cash flow statement:
Net increase (decrease) in cash and cash equivalents (GAAP) $ 402,188 $ (14,067) $ 388,121
Plus: Net purchase (proceeds) of marketable securities 1,187,679 (16,132) 1,171,547
Plus: Net increase in fair value and other changes to marketable securities 42,123 46,151 88,274
Plus: Net increase in marketable securities pending settlement payment (receipt) 127,767 (9,542) 118,225
Less: Proceeds from trading securities included in working capital change (2,085) -- (2,085)
---------- ---------- ----------
Net increase in cash, cash equivalents and marketable securities $1,757,672 $ 6,410 $1,764,082
========== ========== ==========
(b) See detail on the following page.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 16 of 18
QUALCOMM INCORPORATED
SUPPLEMENTAL DETAIL TO THE
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED JUNE 29, 2003
----------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
--------- --------- ---------
(a) Non-cash adjustments are comprised of:
Depreciation and amortization $ 35,476 $ 7,567 $ 43,043
Asset impairment and related charges -- 34,113 34,113
Change in fair values of derivative investments -- 1,381 1,381
Other-than-temporary losses on marketable securities and other investments -- 21,105 21,105
Minority interest in loss of consolidated subsidiaries -- (242) (242)
Equity in losses of investees 45 20,993 21,038
Non-cash income tax expense 117,571 47,446 165,017
Other non-cash charges and credits 455 (12,394) (11,939)
--------- --------- ---------
Total non-cash adjustments $ 153,547 $ 119,969 273,516
========= ========= =========
NINE MONTHS ENDED JUNE 29, 2003
----------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
--------- --------- ---------
(b) Non-cash adjustments are comprised of:
Depreciation and amortization $ 101,216 $ 31,353 $ 132,569
Asset impairment and related charges -- 194,258 194,258
Change in fair values of derivative investments -- 1,261 1,261
Other-than-temporary losses on marketable securities and other investments 349 111,306 111,655
Minority interest in loss of consolidated subsidiaries -- (36,795) (36,795)
Equity in losses of investees 45 110,219 110,264
Non-cash income tax expense 377,785 (17,155) 360,630
Other non-cash charges and credits 8,597 1,353 9,950
--------- --------- ---------
Total non-cash adjustments $ 487,992 $ 395,800 883,792
========= ========= =========
(c) The Company's management uses this non-GAAP presentation to analyze
increases and decreases in certain of its liquid assets, comprised of
cash, cash equivalents and marketable securities. Management views certain
marketable debt securities as liquid assets available to fund operations,
which result from cash management strategies designed to increase yields.
However, these instruments do not meet the definition of cash equivalents
in accordance with Statement of Financial Standards No. 95, "Statement of
Cash Flows" and must be excluded from the GAAP statements of cash flows.
Since the GAAP statements of cash flows reconcile the Company's beginning
and ending cash and cash equivalents balances, the purchases and sales of
marketable securities are presented as inflows and outflows. For internal
analysis of the Company's cash position, management does not view these
transactions as inflows and outflows from the business, but as cash
management transactions. If required, such investments could be settled
relatively quickly as additional cash resources are needed. The Company
believes that this non-GAAP presentation is a helpful measure of the
Company's liquidity.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 17 of 18
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
ASSETS
QUALCOMM
EXCLUDING
QSI QSI (A) (B) QUALCOMM QUALCOMM
JUNE 29, JUNE 29, JUNE 29, SEPTEMBER 29,
2003 2003 2003 2002
----------- ----------- ----------- -----------
Current assets:
Cash and cash equivalents $ 1,785,824 $ 9,001 $ 1,794,825 $ 1,406,704
Marketable securities 2,524,102 41,091 2,565,193 1,411,178
Accounts receivable, net 577,016 43,064 620,080 536,950
Finance receivables, net 3,505 382 3,887 388,396
Inventories, net 111,890 11,107 122,997 88,094
Deferred tax assets (b) 608,528 -- 608,528 122
Other current assets 114,244 22,000 136,244 109,322
----------- ----------- ----------- -----------
Total current assets 5,725,109 126,645 5,851,754 3,940,766
Marketable securities 469,903 133,673 603,576 381,630
Finance receivables, net 4,187 180,083 184,270 442,934
Other investments 4,722 133,952 138,674 276,414
Property, plant and equipment, net 508,918 110,471 619,389 686,283
Goodwill, net 344,753 1,865 346,618 344,803
Deferred tax assets (b) 309,314 -- 309,314 7,493
Other assets 231,371 185,036 416,407 425,725
----------- ----------- ----------- -----------
Total assets $ 7,598,277 $ 871,725 $ 8,470,002 $ 6,506,048
=========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 108,258 $ 64,834 $ 173,092 $ 209,418
Payroll and other benefits related liabilities 117,284 8,265 125,549 126,005
Unearned revenue 171,367 6,758 178,125 183,482
Current portion of long-term debt -- 98,416 98,416 19,355
Other current liabilities 243,210 28,936 272,146 136,726
----------- ----------- ----------- -----------
Total current liabilities 640,119 207,209 847,328 674,986
Unearned revenue 258,147 135 258,282 259,995
Long-term debt -- 107,118 107,118 94,288
Other liabilities 48,552 3,127 51,679 40,283
----------- ----------- ----------- -----------
Total liabilities 946,818 317,589 1,264,407 1,069,552
----------- ----------- ----------- -----------
Minority interest in consolidated subsidiaries 50 -- 50 44,540
----------- ----------- ----------- -----------
Stockholders' equity:
Preferred stock, $0.0001 par value -- -- -- --
Common stock, $0.0001 par value 80 -- 80 79
Paid-in capital 6,184,743 -- 6,184,743 4,918,202
Retained earnings 1,061,656 -- 1,061,656 604,624
Accumulated other comprehensive loss (29,421) (11,513) (40,934) (130,949)
----------- ----------- ----------- -----------
Total stockholders' equity 7,217,058 (11,513) 7,205,545 5,391,956
----------- ----------- ----------- -----------
Total liabilities and stockholders' equity $ 8,163,926 $ 306,076 $ 8,470,002 $ 6,506,048
=========== =========== =========== ===========
(a) Includes the consolidated Vesper Holdings balance sheet at May 31, 2003.
The Company consolidates foreign subsidiaries one month in arrears.
(b) Deferred tax assets and liabilities are not allocated to the Company's
segments. A valuation allowance was provided on all net deferred tax
assets of investments that are consolidated by QSI, including Vesper,
because of uncertainty regarding their realization.
QUALCOMM Announces Third Quarter Fiscal 2003 Results Page 18 of 18
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
JUNE 29, JUNE 30, JUNE 29, JUNE 30,
2003 2002 2003 2002
----------- ----------- ----------- -----------
Revenues:
Equipment and services $ 682,574 $ 575,434 $ 2,329,519 $ 1,568,656
Licensing and royalty fees 239,034 195,483 732,301 597,018
----------- ----------- ----------- -----------
921,608 770,917 3,061,820 2,165,674
----------- ----------- ----------- -----------
Operating expenses:
Cost of equipment and services revenues 326,902 288,162 1,096,831 825,273
Research and development 135,690 118,086 379,970 341,709
Selling, general and administrative 117,486 152,072 401,209 376,797
Amortization of goodwill and other
acquisition-related intangible assets 1,951 65,024 5,888 192,437
Asset impairment charges 34,113 -- 194,258 --
Other (30,356) 8,955 (30,356) 8,955
----------- ----------- ----------- -----------
Total operating expenses 585,786 632,299 2,047,800 1,745,171
----------- ----------- ----------- -----------
Operating income 335,822 138,618 1,014,020 420,503
Interest expense (9,763) (8,639) (20,523) (17,357)
Investment income (expense), net 44,432 (184,123) (18,881) (171,098)
----------- ----------- ----------- -----------
Income (loss) before income taxes 370,491 (54,144) 974,616 232,048
Income tax (expense) benefit (178,802) 40,376 (438,577) (62,653)
----------- ----------- ----------- -----------
Net income (loss) $ 191,689 $ (13,768) $ 536,039 $ 169,395
=========== =========== =========== ===========
Net earnings (loss) per common share:
Basic $ 0.24 $ (0.02) $ 0.68 $ 0.22
=========== =========== =========== ===========
Diluted $ 0.23 $ (0.02) $ 0.66 $ 0.21
=========== =========== =========== ===========
Shares used in per share calculations:
Basic 790,511 773,127 787,606 768,663
=========== =========== =========== ===========
Diluted 815,856 773,127(a) 816,563 809,169
=========== =========== =========== ===========
Dividends declared per share $ 0.05 $ -- $ 0.10 $ --
=========== =========== =========== ===========
(a) The diluted share base excludes the potential dilutive effect of common
share equivalents related to outstanding stock options, calculated using
the treasury stock method, as these shares are anti-dilutive.