EXHIBIT 99.1
FOR IMMEDIATE RELEASE
QUALCOMM Contact:
Bill Davidson
Vice President, Investor Relations
1-(858) 658-4813 (ph) 1-(858) 651-9303 (fax)
e-mail: ir@qualcomm.com
QUALCOMM ANNOUNCES FOURTH QUARTER AND FISCAL 2004 RESULTS
GAAP FY2004 REVENUES $4.9 BILLION, EPS $1.03
PRO FORMA REVENUES $5.1 BILLION, EPS $1.09 EXCLUDING QSI SEGMENT
SAN DIEGO - November 3, 2004 - QUALCOMM Incorporated (NASDAQ: QCOM) today
announced its results for the fourth quarter and fiscal 2004 year ended
September 26, 2004.
INTRODUCTION
All of the share and per share amounts in this release reflect the two-for-one
stock split that was effected in the form of a stock dividend on August 13, 2004
to QUALCOMM stockholders of record on July 23, 2004.
Results presented in accordance with Generally Accepted Accounting Principles
(GAAP) reflect the Company's decision in the fourth quarter of fiscal 2004 to
cease accruing estimated earned royalties before the actual amounts were
reported by our licensees, as announced on October 28, 2004. Results that assume
the accrual of estimated earned royalties before they are reported by our
licensees (the "Prior Method of Estimating Royalties") are presented as
supplemental information to assist investors with evaluating financial
performance during this transition period.
RESULTS PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Background
For financial reporting purposes, the change resulting from the new royalty
estimation method is made prospectively and has the one-time effect of
significantly reducing royalty revenues in the fourth quarter of fiscal 2004.
Therefore, GAAP results for fiscal 2004 do not reflect a full year of the
economic performance of the Company's licensing business, as significant royalty
revenue that would have been recognized in the fourth quarter of fiscal 2004
will now be recognized in the first fiscal quarter of fiscal 2005 when the
actual royalty reports are received from licensees.
-more-
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
GAAP Fiscal 2004
Revenues were $4.9 billion in fiscal 2004, up 27 percent compared to fiscal
2003. Fiscal 2004 earnings were $1.7 billion and diluted earnings per share were
$1.03, up 108 percent and 102 percent, respectively, compared to fiscal 2003.
GAAP Fourth Quarter of Fiscal 2004
Revenues were $1.1 billion in the fourth quarter of fiscal 2004, up 28 percent
year-over-year and down 17 percent sequentially. Revenues for the fourth quarter
of fiscal 2004 grew $247 million compared to the fourth quarter of fiscal 2003,
including a $343 million increase in QUALCOMM CDMA Technologies (QCT) segment
revenues and a $91 million decrease in QUALCOMM Technology Licensing (QTL)
segment revenues, including the effect of the change in method of accruing
estimated earned royalties in the fourth quarter of fiscal 2004 partially offset
by increases in royalties reported by our licensees. The fourth quarter diluted
earnings per share were $0.23, up 28 percent year-over-year and down 21 percent
sequentially. The decrease in sequential revenue and diluted earnings per share
is primarily attributable to the change in the Company's method of accruing
estimated earned royalty revenues. These results include diluted earnings per
share for the QUALCOMM Strategic Initiatives (QSI) segment in fiscal 2004 and
the fourth quarter of fiscal 2004 of $0.02 and $0.03, respectively.
GAAP Fourth Quarter of Fiscal 2004 Operating Costs
Research and development (R&D) expenses were $208 million in the fourth quarter
of fiscal 2004, up 45 percent from the fourth quarter of fiscal 2003, largely
attributable to increases in costs related to integrated circuit products and
initiatives to support multimedia applications, high-speed wireless Internet
access and multimode, multiband, multinetwork products including CDMA2000(R)
1xEV-DO, WCDMA and High Speed Downlink Packet Access (HSDPA).
Selling, general and administrative (SG&A) expenses were $146 million in the
fourth quarter of fiscal 2004, up 24 percent from the fourth quarter of fiscal
2003, largely attributable to employee growth.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
GAAP Effective Tax Rates
Our GAAP fiscal 2004 effective tax rate for total QUALCOMM was approximately 25
percent compared to approximately 34 percent in fiscal 2003. The 2004 tax rate
is lower than the 2003 tax rate largely due to higher foreign earnings in fiscal
2004 which are taxed at a lower rate, tax benefits resulting from the Company's
forecast of its ability to use additional capital loss carryforwards, and the
reduction, as a percentage of total earnings, of QTL pretax earnings which are
taxed at a rate that is higher than our effective tax rate. The 10 percent
fourth quarter fiscal 2004 tax rate from continuing operations for total
QUALCOMM is lower than the annual effective tax rate due to the reduction in
earnings taxed at a higher rate that resulted from the change in method of
estimating QTL royalties as well as an increase in our forecast of our ability
to utilize capital loss carryforwards.
RESULTS UTILIZING THE PRIOR METHOD OF ESTIMATING ROYALTIES
EXCLUDING THE QSI SEGMENT ("PRO FORMA" RESULTS)
Background
The following results exclude the QSI segment and use the Prior Method of
Estimating Royalties for the fourth fiscal quarter and fiscal 2004. Results on
this basis will only be given for the fourth fiscal quarter and fiscal 2004 and
are provided to enable comparisons to our prior year results and our previous
guidance published on September 17, 2004. For ease of reference, results
utilizing the Prior Method and excluding QSI are referred to as "pro forma." Pro
forma revenues for the fourth quarter of fiscal 2004 include an estimate of $251
million in royalties that would have been recorded in the fourth quarter of
fiscal 2004 had we not made this change. This Prior Method, while no longer in
accordance with GAAP, was determined to be consistent with our past practices.
A summary of our September 17, 2004 guidance and a detailed reconciliation
between total QUALCOMM GAAP results and the pro forma results is included herein
and is presented on our Investor Relations web page at www.qualcomm.com.
Pro Forma Fiscal 2004
Pro forma revenues were $5.1 billion in fiscal 2004, up 33 percent
year-over-year, compared to our prior guidance of a 33-34 percent year-over-year
increase. Pro forma diluted earnings per share were $1.09 in fiscal 2004, as
compared to our prior guidance of $1.09-$1.10.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
Pro Forma Fiscal Fourth Quarter
Pro forma revenues were $1.4 billion in the fourth quarter of fiscal 2004, up 57
percent year-over-year, as compared to our prior guidance of 60-62 percent. Pro
forma diluted earnings per share were $0.29 in the fourth quarter of fiscal
2004, as compared to our prior guidance of $0.28-$0.30.
Pro Forma Effective Tax Rate
Our fiscal 2004 effective pro forma tax rate was approximately 29 percent
compared to approximately 33 percent in fiscal 2003. The pro forma 2004 tax rate
is lower than the 2003 tax rate largely due to higher foreign earnings in fiscal
2004 which are taxed at a lower rate. The annual effective tax rate declined
from the approximately 30 percent forecast in the third quarter to a pro forma
annual effective tax rate of approximately 29 percent resulting in a fourth
fiscal quarter pro forma tax rate of approximately 26 percent.
Fiscal 2004 Review and Commentary
MSM and Phone Shipments: QCT sold approximately 39 million Mobile Station
Modem(TM) (MSM(TM)) phone chips in the fourth quarter of fiscal 2004, compared
to 20 million in the fourth quarter of fiscal 2003. In the fourth quarter of
fiscal 2004, our licensees reported CDMA phone sales for the third quarter of
fiscal 2004 of approximately 41 million units at an average selling price of
$211, compared to 23 million units reported in the fourth quarter of fiscal 2003
at an average selling price of $193. For most of this year, there has been
insufficient channel inventory of our MSMs and CDMA phones as demand continued
to increase throughout the fiscal year. The Company now believes that the CDMA
channel has come back into better balance, due in part to the recent temporary
slowdown of the South Korean market. As a result, unit shipments in the fourth
fiscal quarter were lower than our estimate of 46 million units. The
Company now anticipates that 48-50 million CDMA phones will be shipped in the
December quarter.
"The CDMA market experienced dramatic growth during QUALCOMM's fiscal year
2004," said Dr. Irwin Mark Jacobs, chairman and CEO of QUALCOMM. "We met our
earnings per share and revenue targets on a pro forma basis delivering
year-over-year growth of 54% and 33%, respectively. The continuing growth in the
worldwide adoption of CDMA technology has significantly increased the cash flow
and earnings of QUALCOMM and we are pleased to share this success with our
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
stockholders through our dividend program. The performance of our business is
once again a direct result of the dedication of the employees at QUALCOMM, their
commitment to excellence and the effective partnerships we have achieved with
our customers, both manufacturers and operators."
"Clearly, the desire on the part of consumers and enterprises to utilize
applications that require more efficient and faster data transmission is driving
the deployment of CDMA2000 1xEV-DO and operator requests for earlier
availability of High Speed Downlink Packet Access (HSDPA) for WCDMA. To support
the growing worldwide demand for multimedia services, we announced an evolution
of our 1xEV-DO technology called "Platinum Multicast" and a new air interface
innovation called FLO(TM) (Forward Link Only). Both are designed to increase
network capacity and reduce the costs associated with delivering high-quality
video and audio to mobile handsets. On November 1, 2004, we announced plans to
deploy and operate a nationwide mobile wireless multimedia network in the U.S.
through a new subsidiary, MediaFLO USA Inc. This new subsidiary will provide a
comprehensive wireless multimedia service by delivering a wide selection of
program choices and very high-quality video and audio to U.S. consumers' mobile
phones at mass market prices. Although the exact timing has not yet been
decided, the Company intends a spin-off of our interest in MediaFLO USA to our
stockholders."
"QUALCOMM's performance this year was positively impacted by the continued
deployments of WCDMA networks around the world. Growth and demand for WCDMA
networks and services have strengthened recently with the availability of more
feature rich devices, attractive applications, and continually improving
coverage. Our strategy of integration and the ability to share powerful software
features among all of our chipsets has proven to be a competitive advantage in
the burgeoning WCDMA market. We remain focused on providing our customers a
strong competitive advantage in performance and cost over other solutions in the
market. Our leadership position in chipset development is enabling us to rapidly
address the emerging demand for HSDPA and capitalize on the high data rate
opportunities in the WCDMA market."
"Due to the execution and continued confidence in our business plan, the
QUALCOMM Board of Directors voted to increase the dividend twice during fiscal
2004 bringing the annual dividend to $0.28 per share of common stock after our
recent two-for-one stock split. With a strong free cash flow, QUALCOMM is
positioned for further increases to its dividend program. In fiscal 2005, we
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
plan to continue investing in areas that will further our technological
leadership and drive another strong growth year for 3G CDMA."
QUALCOMM Strategic Initiatives
The QUALCOMM Strategic Initiatives (QSI) segment includes our strategic
investments and related income and expenses. The fourth quarter fiscal 2004
results consisted primarily of $44 million in net gains on investments and $6
million in other income primarily from the transfer of the remaining portion of
our FCC Auction Discount Voucher to a wireless operator, partially offset by $17
million in equity losses and $11 million in other-than-temporary losses on
investments. Our total QUALCOMM GAAP results include diluted earnings per share
for the QSI segment in fiscal 2004 and the fourth fiscal quarter of $0.02 and
$0.03, respectively. QSI net cash generated for fiscal 2004 was $169 million.
Cash and Marketable Securities
QUALCOMM's cash, cash equivalents and both current and noncurrent marketable
securities totaled approximately $7.6 billion at the end of the fourth quarter
of fiscal 2004, compared to $5.4 billion on September 28, 2003. For the fourth
quarter of fiscal 2004, net cash provided by operations was $770 million
compared to $462 million in the third quarter of fiscal 2004. We paid $114
million in cash dividends, or $0.07 per share, in the fourth quarter of fiscal
2004. Detailed reconciliations between changes in total QUALCOMM GAAP cash flow
and cash, cash equivalents and marketable securities and total QUALCOMM
excluding the QSI segment are included in this news release.
BUSINESS OUTLOOK
Background - QSI Segment Includes MediaFLO
Beginning in the first quarter of fiscal 2005, the results of our newly
announced MediaFLO(TM) U.S. operator business will be included as part of the
QSI segment. Including the MediaFLO U.S. operator business in the QSI segment is
consistent with our historical treatment of strategic investments in operators,
and our intent to ultimately divest the business by spin-off of our interest to
stockholders. Previously, the results of the MediaFLO U.S. operator business
were presented as a non-reportable segment included in reconciling items.
Business outlook information presented below includes the expected results of
the MediaFLO U.S. operator in the QSI segment.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
Outlook and Comparable Period Information Will Be Presented Utilizing New Method
("New Method") of Estimating Royalties
Our business outlook and future results will be provided in accordance with the
New Method of estimating royalties based solely on reports received from
licensees. Because fiscal 2004 QUALCOMM GAAP results are based on the Prior
Method and reflect only partial economic performance of the Company's licensing
business in the fourth quarter, we will compare the fiscal 2005 outlook
(excluding QSI) to the fiscal 2004 results as if the New Method had been in
effect for the entire 2004 fiscal year. The historical financial information for
fiscal years 2003 through 2004 using the New Method is presented herein to
assist investors with evaluating financial performance on a comparable basis.
For fiscal 2001 through 2004 this information is presented on our Investor
Relations web page at www.qualcomm.com.
Forward-Looking Statements
The following statements are forward-looking and actual results may differ
materially. Please see Note Regarding Forward-Looking Statements in this 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. Due to their nature, certain income and expense
items such as realized investment gains or losses and asset impairments cannot
be accurately forecast. Accordingly, the Company excludes such forecasted 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 2005 Outlook
Unit Shipments: Based on the current business outlook, we estimate the CDMA
phone market will total approximately 218-228 million new unit shipments in
calendar 2005. Based on the 223 million unit midpoint of this estimate, we
anticipate shipments of approximately 168 million CDMA2000 units and
approximately 55 million WCDMA units. We anticipate average selling prices for
CDMA phones, CDMA2000 and WCDMA combined, to increase 5 percent in fiscal 2005
to approximately $215, compared to approximately $205 in fiscal 2004. Fiscal
year average selling prices will be calculated from phone shipments from the
September to the June quarters, consistent with our New Method for royalty
accounting.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
Fiscal 2005 Outlook Excluding QSI
Based on the current business outlook we anticipate fiscal 2005 revenues
excluding the QSI segment to be in the range of approximately $5.8-$6.3 billion,
an increase of 16-26 percent, and diluted earnings per share excluding the QSI
segment to be in the range of $1.15-$1.19, an increase of 8-12 percent for
fiscal 2005, compared to fiscal 2004 results excluding QSI of $1.06 utilizing
the New Method. Fiscal 2005 earnings per share include a decrease of
approximately $0.02 cents per share due to our three recently announced
acquisitions. Under their existing agreements with QUALCOMM, two entities are
entitled to share in a percentage of the royalty revenues for certain CDMA
products received by QUALCOMM from certain third parties. One of these sharing
arrangements expires in latter fiscal 2005 and the other in fiscal 2006. As a
result, we have estimated a modest improvement to fiscal 2005 revenue and
earnings. In fiscal 2006 we expect the termination of royalty sharing
arrangements to contribute approximately $330 to $360 million to our fiscal 2006
revenue and pretax earnings.
To enable and support the growth of our business, we anticipate a significant
increase in operating expenses. We also expect a higher tax rate for fiscal 2005
of approximately 30 percent which will reduce earnings per share.
GAAP Fiscal 2005 Outlook
Based on the current business outlook, we anticipate that total QUALCOMM GAAP
revenues will be in the range of approximately $5.8-$6.3 billion, an increase of
18-29 percent and total QUALCOMM GAAP diluted earnings per share to be in the
range of $1.12-$1.16 for fiscal 2005, an increase of 11-16 percent, including
an estimated $0.03 loss per share attributed to the QSI segment.
Q1 Fiscal 2005 Outlook
Unit Shipments: Based on the current business outlook, we estimate the CDMA
phone market will be approximately 41 million new unit shipments in the
September quarter and approximately 48-52 million for the December quarter.
Royalty revenue for the December quarter will be based on the September quarter
shipments reported to us on royalty reports received from our licensees in the
December quarter. We estimate an average selling price of $213 for the September
quarter shipments of 41 million units.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
Q1 Fiscal 2005 Outlook Excluding QSI
Based on the current business outlook we estimate first quarter fiscal 2005
revenues excluding the QSI segment to be in the range of approximately $1.3-$1.4
billion, an increase of 12-23 percent year-over-year and relatively flat
sequentially, in both cases assuming application of the New Method in the prior
periods. Under the New Method, royalty revenues in the first fiscal quarter will
reflect CDMA phone shipments that occurred in the quarter ended September 26,
2004. We estimate diluted earnings per share excluding the QSI segment to be in
the range of $0.24-$0.26, a decrease of 10-17 percent sequentially and an
increase of 4-13 percent year-over-year (again, assuming the utilization of the
New Method in the comparable periods). This estimate assumes shipments of
approximately 38-39 million MSM phone chips during the quarter, an increased tax
rate and inclusion of the three recently announced acquisitions.
GAAP Q1 Fiscal 2005 Outlook
Based on the current business outlook, we anticipate that total QUALCOMM GAAP
revenues in the first quarter of fiscal 2005 will be in the range of
approximately $1.3-$1.4 billion, an increase of 7-18 percent year-over-year and
15-26 percent sequentially. We anticipate that total QUALCOMM GAAP diluted
earnings per share will be approximately $0.23-$0.25 in the first fiscal
quarter, an increase of 0-9 percent sequentially and 10-19 percent
year-over-year, including an estimated $0.01 loss per share attributed to the
QSI segment, compared to a $0.04 loss per share in the year ago quarter.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
RESULTS OF BUSINESS SEGMENTS The following tables, which present segment
information, have been adjusted to reflect the SnapTrack reorganization (Note 1)
and discontinued operations (Note 3) (dollars in millions, except per share
data):
Fourth Quarter - Fiscal Year 2004
PRIOR
METHOD
PRO FORMA NEW METHOD
RECONCILING QUALCOMM QUALCOMM QUALCOMM
ITEMS EXCLUDING TOTAL EXCLUDING EXCLUDING
Segments QCT(1) QTL(6) QWI(1) (2) QSI QSI QUALCOMM QSI(7) QSI(8)
- -------- ------ ------- ------ ----------- --------- ------ --------- --------- --------------
Revenues 845 151 163 (41) 1,118 - 1,118 1,369 1,371
Change from prior year 68% (38%) 10% N/M 28% N/M 28% 57% 57%
Change from prior quarter 7% (65%) 9% N/M (17%) N/M (17%) 2% 2%
Earnings before taxes 271 111 16 13 411 20 431 662
Change from prior year 119% (48%) 100% N/M 17% N/M 24% 88%
Change from prior quarter 7% (72%) 300% N/M (39%) N/M (35%) (1%)
Net income 336 57 393 489 488
Change from prior year 42% 4% 35% 107% 107%
Change from prior quarter (30%) 1800% (19%) 1% 1%
Diluted earnings per common share (4) 0.20 0.03 0.23 0.29 0.29
Change from prior year 43% 0% 28% 107% 107%
Change from prior quarter (31%) N/M (21%) 0% 0%
Third Quarter - Fiscal Year 2004
QUALCOMM
RECONCILING EXCLUDING TOTAL
Segments QCT(1) QTL QWI(1) ITEMS (2) QSI QSI QUALCOMM
- -------- ------ ----- ------ ----------- --------- ------ ---------
Revenues 790 436 150 (35) 1,341 - 1,341
Earnings (loss) from continuing operations before taxes 254 398 4 16 672 (4) 668
Net income 483 3 486
Diluted earnings per common share (4)(5) 0.29 0.00 0.29
Fourth Quarter - Fiscal Year 2003
QUALCOMM
RECONCILING EXCLUDING TOTAL
Segments QCT(1)* QTL QWI(1)* ITEMS (2)* QSI QSI* QUALCOMM*
- -------- ------ ----- ------ ----------- --------- ------ ---------
Revenues 502 242 148 (21) 871 - 871
Earnings (loss) from continuing operations before taxes 124 213 8 7 352 (4) 348
Income from discontinued operations, net of tax (3) - 37 37
Net income 236 55 291
Diluted earnings per common share (4)(5) 0.14 0.03 0.18
Twelve Months - Fiscal Year 2004
PRIOR
METHOD
PRO FORMA NEW METHOD
RECONCILING QUALCOMM QUALCOMM QUALCOMM
ITEMS EXCLUDING TOTAL EXCLUDING EXCLUDING
Segments QCT(1) QTL(6) QWI(1) (2) QSI QSI QUALCOMM QSI(7) QSI(8)
- -------- ------- ------- ------ ----------- --------- ------ -------- --------- --------------
Revenues 3,094 1,331 596 (141) 4,880 - 4,880 5,131 5,031
Change from prior year 29% 33% 17% N/M 27% (100%) 27% 33% 31%
Earnings (loss) from continuing
operations before taxes 1,043 1,195 30 48 2,316 (3) 2,313 2,566
Change from prior year 31% 33% 11% N/M 34% 98% 48% 48%
Loss from discontinued operations,
net of tax (3) - (5) (5) -
Net income (loss) 1,680 40 1,720 1,833 1,772
Diluted earnings (loss) per common
share (4) 1.00 0.02 1.03 1.09 1.06
Change from prior year 41% N/M 102% 54% 49%
Twelve Months - Fiscal Year 2003
QUALCOMM
RECONCILING EXCLUDING TOTAL
Segments QCT(1)* QTL QWI(1)* ITEMS (2)* QSI QSI* QUALCOMM*
- -------- ------ ----- ------ ----------- --------- ------ ---------
Revenues 2,406 1,000 511 (71) 3,846 1 3,847
Earnings (loss) from continuing operations before taxes 797 897 27 12 1,733 (168) 1,565
Loss from discontinued operations, net of tax (3) - (202) (202)
Net income (loss) 1,161 (334) 827
Diluted earnings (loss) per common share (4)(5) 0.71 (0.20) 0.51
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
(1) During the second quarter of fiscal 2004, the Company reorganized its
wholly-owned subsidiary, SnapTrack, Inc. (SnapTrack), a developer of
wireless position location technology. The Company previously presented
all of the revenues and operating results of SnapTrack in the QCT segment.
As a result of the reorganization of SnapTrack, revenues and operating
results related to SnapTrack's server software business (software for
location-based services and applications) became part of the QIS division
in the QWI segment. Revenues and operating results related to SnapTrack's
client business (the gpsOne technology that is embedded within the
integrated circuit products) remain with the QCT segment. Prior period
segment information has been adjusted to conform to the new segment
presentation.
(2) 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.
(3) During fiscal 2004, the Company sold its consolidated subsidiaries, the
Vesper Operating Companies and TowerCo, and returned personal mobile
service (SMP) licenses to Anatel, the telecommunications regulatory agency
in Brazil. The results of operations of the Vesper Operating Companies and
TowerCo, including gains and losses realized on the sales transactions and
the SMP licenses, are presented as discontinued operations. The Company's
statements of operations and cash flows for all prior periods have been
adjusted to present the discontinued operations.
(4) The sum of the earnings per share amounts may not equal total earnings per
share due to rounding.
(5) We affected a two-for-one stock split in August 2004. All references to
number of shares and per share amounts reflect the stock split.
(6) QTL's results in the fourth quarter of fiscal 2004 reflect the Company's
decision to cease accruing royalties that had been earned but were
estimated by us before the actual amounts were reported by our licensees.
The new royalty estimation method is made prospectively and has the
one-time effect of significantly reducing royalty revenues in the fourth
quarter of fiscal 2004. Therefore, GAAP results for fiscal 2004 do not
reflect a full year of the economic performance of the Company's licensing
business, as significant royalty revenue that would have been recognized
in the fourth quarter of fiscal 2004 will now be recognized in the first
quarter of fiscal 2005 when the actual royalty reports are received from
licensees.
(7) Pro forma results assume the accrual of estimated earned royalties before
they are reported by our licensees and are presented to assist investors
with evaluation financial performance during this transition period.
(8) Revenues using the New Method are presented to illustrate the differences
between the previous estimation method used for royalties prior to the
fourth quarter of fiscal 2004 and the new "As Reported by Licensees"
method implementing starting in the fourth quarter of fiscal 2004.
* As adjusted as described in the notes above.
N/M - Not Meaningful
BUSINESS SEGMENT HIGHLIGHTS
QUALCOMM CDMA TECHNOLOGIES (QCT)
- Shipped approximately 39 million MSM phone chips to customers
worldwide during the fourth quarter of fiscal 2004, compared to
approximately 20 million units in the fourth quarter of fiscal 2003
and approximately 35 million units in the third quarter of fiscal
2004. This brings the total number of MSM phone chips shipped during
fiscal 2004 to approximately 137 million, compared to 99 million
chips shipped in fiscal 2003.
- Shipped CSM(TM) infrastructure chips for 3G CDMA2000 1X and 1xEV-DO
to support approximately 5.4 million equivalent voice channels,
compared to approximately 2.5 million in the fourth quarter of
fiscal 2003 and approximately 4.6 million in the third quarter of
fiscal 2004. Equivalent voice channels are provided rather than
actual chip shipments because our CSM infrastructure chips currently
support eight to 32 voice channels per chip.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
- Announced that QUALCOMM has licensed Microsoft(R) Windows Media(R)
technology and will integrate the Windows Media Audio and Video
codecs into QUALCOMM's Qtv(TM) video decoder solution. Consumers
will be able to play back and stream Windows Media Audio and Windows
Media Video content on wireless devices integrated with QUALCOMM's
Qtv solution. Support for this capability in the Qtv solution will
be available in the first quarter of calendar 2005, beginning with
QUALCOMM's MSM6250(TM), MSM6500(TM) and MSM6550(TM) WCDMA and
CDMA2000 1x EV-DO chipset solutions. QUALCOMM's integrated MSM
solutions will enable acceleration of Windows Media codecs to
provide improved decoding performance and lower power consumption,
resulting in an enhanced user experience This agreement leverages
the power of QUALCOMM's MSM chipsets with the flexibility of
Microsoft's Windows Media codecs to provide faster time-to-market
for multimedia-rich wireless handsets.
- Commercially launched the world's first CDMA2000 1X/GSM devices
based on QUALCOMM's MSM6300(TM) chipset solution, including handsets
manufactured by LGE, Motorola and Samsung.
- Increased market availability of QUALCOMM's radioOne(TM) Zero
Intermediate Frequency (ZIF) and powerOne(TM) power management
solutions through:
- sampling of the radioOne RFL6202(TM) and the RFR6202(TM) WCDMA
receiver solution for 800 MHz and 2100 MHz,
- support and commercial availability of radioOne RTR6250(TM)
chipset, a WCDMA transmitter and GSM/GPRS transceiver
solution,
- support and commercial availability of radioOne RFR6122(TM)
receiver and the RFT6122(TM) transmitter chips, the wireless
industry's first CDMA2000 1X devices developed with RF CMOS
(Complementary Metal Oxide Semiconductor) process technology,
and support and commercial availability powerOne PM6650(TM)
solution for 3G devices.
- Announced that QUALCOMM has signed a definitive agreement to acquire
Spike Technologies, Inc., a leading semiconductor design services
company, headquartered in Milpitas, California, with a design center
in Bangalore, India. The addition of Spike's engineering resources
strongly complements QUALCOMM's commitment to provide 3G CDMA
customers and partners with design, sales and technical support
around the world.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
Completion of the transaction is subject to regulatory approval and
certain other closing conditions.
QUALCOMM TECHNOLOGY LICENSING (QTL)
- Reported that licensees around the world are participating in the
growing 3G CDMA market:
- Forty-three subscriber licensees reported sales of CDMA2000 1X
products and 13 subscriber licensees reported sales of WCDMA
products during the third quarter of fiscal 2004.
- Twelve infrastructure licensees reported sales of CDMA2000 1X
products and 11 infrastructure licensees reported sales of
WCDMA products during the third quarter of fiscal 2004.
- WCDMA royalties reported by licensees were approximately 26
percent of total royalties reported by licensees in the fourth
quarter of fiscal 2004 for sales in the third quarter of
fiscal 2004.
QUALCOMM WIRELESS & INTERNET GROUP (QWI)
QUALCOMM INTERNET SERVICES (QIS)
- At the end of the fourth quarter of fiscal 2004, 37 wireless
operators were offering BREW services in 24 countries and cumulative
BREW-based application downloads exceeded 170 million worldwide.
- Announced Leap Wireless International and Cellular South launched
BREW-based services for their subscribers in the United States.
Grupo Iusacell completed the first launch of downloadable wireless
products and services based on QUALCOMM's BREW solution in Mexico.
- Announced a definitive agreement with VIBO Telecom Inc., a Taiwanese
wireless network operator, making it the first operator in Taiwan
that will offer downloadable wireless applications and services
based on the BREW solution. VIBO also announced its intent to deploy
QUALCOMM's QChat(R) push-to-chat solution, which enables one-to-one
and one-to-many communication between subscribers at the push of a
button.
- Announced the acquisition of Trigenix, a mobile user interface
company, based in the United Kingdom. The acquisition provides
QUALCOMM with Trigenix's User Interface (UI) development
technologies, products and tools, and extends QUALCOMM's commitment
to
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
the European wireless community. When combined with the BREW client
software, Trigenix's suite of technologies provides additional
substantial advantages to QUALCOMM's existing UI offerings that
enable flexible and customizable wireless device UIs for operators
and device manufacturers.
QUALCOMM WIRELESS BUSINESS SOLUTIONS(R) (QWBS)
- Began shipping T2(TM) Untethered TrailerTRACS(R) Asset Management
Solution for private fleets and for-hire carriers. The T2 Untethered
TrailerTRACS solution is an advanced, stand-alone wireless tracking
system that offers rapid-status visibility into trailer locations
and operational events and provides vehicle position reporting for
improved fleet utilization and security. Features include
sophisticated on-board hardware, advanced power management, complete
network services, cargo and door sensors and data integration
capabilities using state-of-the-art, multimode communications.
- Shipped approximately 13,900 satellite-based systems (OmniTRACS(R),
TruckMAIL(TM)) and nearly 4,900 terrestrial-based systems
(OmniExpress(R), GlobalTRACS(R), T2 Untethered TrailerTRACS and
LINQ) in the fourth quarter of fiscal 2004. This compares to
approximately 8,800 satellite-based systems and 1,300
terrestrial-based systems in the fourth quarter of 2003 and
approximately 10,200 satellite-based systems and over 2,200
terrestrial-based systems in the third quarter of fiscal 2004. This
brings the total number of satellite-based system shipments to over
43,400 and terrestrial-based system shipments to nearly 10,100
during fiscal 2004 and a cumulative total of approximately 520,000
satellite-based systems and over 22,000 terrestrial-based systems
shipped worldwide.
- Announced the commercial release of the GlobalTRACS Web 2.1 solution
for the construction equipment market. Building upon the established
success of the existing GlobalTRACS Web management application
system, the newest version provides added functionality by allowing
customers to track maintenance by machine. The system tracks a
machine's hours of operation, enabling customers to service their
equipment in a timely manner, thereby allowing companies to increase
equipment productivity as well as reducing overall maintenance and
administrative costs.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
CONFERENCE CALL
QUALCOMM's fourth quarter and fiscal 2004 earnings conference call will be
broadcast live on November 3, 2004 beginning at 2:30 p.m. Pacific Standard 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 November 3, 2004 beginning at
approximately 4:30 p.m. (PST) through November 8, 2004. 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 21209991.
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 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 the values of investments that are unrelated to the
Company's operational performance.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
The Company presents cash flow information excluding QSI and including
marketable securities. 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 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 Accounting 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.
The Company presents financial information using the Previous Method for the
fourth fiscal quarter and fiscal 2004 and financial results as though the New
Method had been in effect for prior periods to facilitate evaluation by
management, investors and analysts of the results for these periods on a
comparable basis to the Company's previous guidance and future periods. The
Company believes that this presentation is useful in evaluating performance as
compared to guidance on a consistent and comparable basis.
The non-GAAP financial information presented herein 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 using the Previous and New Methods and between total QUALCOMM cash flow
and cash, cash equivalents and marketable securities and total QUALCOMM
excluding the QSI segment are presented herein.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
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 development, deployment and commercial acceptance of CDMA based networks and
CDMA based technology, including CDMA2000 1X, 1xEVDO and WCDMA, both
domestically and internationally; our dependence on major customers and
licensees; fluctuations in the demand for CDMA based products, services or
applications; foreign currency fluctuations; strategic loans, investments and
transactions the Company has or may pursue; dependence on third party
manufacturers and suppliers; our ability to maintain and improve operational
efficiencies and profitability; developments in current and future litigation as
well as other risks detailed from time-to-time in the Company's SEC reports.
###
QUALCOMM(R), Mobile Station Modem(TM), MSM(TM), FLO (TM), MediaFLO (TM),
gpsOne(TM), CSM(TM), Qtv(TM) MSM6250(TM), MSM6500(TM), MSM6550(TM), MSM6300(TM),
radioOne(TM), powerOne(TM), RFL6202(TM), RFR6202(TM) , RTR6250(TM), RFR6122(TM),
RFT6122(TM), PM6650(TM), BREW(R), QChat(R), QUALCOMM Wireless Business
Solutions(R), TruckMAIL(TM), OmniTRACS(R), OmniExpress(R), GlobalTRACS(R),
T2(TM) and TrailerTRACS(R) are trademarks and/or service marks of QUALCOMM
Incorporated. CDMA2000(R) is a registered trademark of the Telecommunications
Industry Association. All other trademarks are the property of their respective
owners.
QUALCOMM Announces Forth Quarter and Fiscal 2004 Results
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 MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 26, 2004
--------------------------------------------
TOTAL
EXCLUDING QSI QSI QUALCOMM
------------- ---------- ----------
Revenues:
Equipment and services $ 954 $ - $ 954
------- ------- -------
Licensing and royalty fees 164 - 164
------- ------- -------
1,118 - 1,118
------- ------- -------
Operating expenses:
Cost of equipment and services revenues 410 - 410
Research and development 208 - 208
Selling, general and administrative 144 2 146
Amortization of other acquisition-related
intangible assets - - -
Other (2) (6) (8)
------- ------- -------
Total operating expenses 760 (4) 756
------- ------- -------
Operating income
358 4 362
Investment income, net
53 (a) 16 (b) 69
------- ------- -------
Income before income taxes 411 20 431
Income tax (expense) benefit (75) (c) 31 (44) (c)
------- ------- -------
Income from continuing operations 336 51 387
Income from discontinued operations, net of income taxes (d) - 6 6
------- ------- -------
Net income $ 336 $ 57 $ 393
======= ======= =======
Diluted earnings per common share
from continuing operations $ 0.20 $ 0.03 $ 0.23
Diluted earnings per common share from
discontinued operations - - -
------- ------- -------
Net earnings per common share:
Diluted $ 0.20 $ 0.03 $ 0.23
======= ======= =======
Shares used in per share calculations:
Diluted 1,692 1,692 1,692
======= ======= =======
(a) Includes $43 million in interest income related to cash, cash equivalents
and marketable securities, which are not part of the Company's strategic
investment portfolio.
(b) Includes $44 million in net gains on investments, partially offset by $17
million equity in losses of investees and $11 million in
other-than-temporary losses on investments.
(c) The fiscal year 2004 effective tax rates for continuing operations for
total QUALCOMM and QUALCOMM excluding QSI are approximately 25% and 27%,
respectively. The 10% fourth quarter fiscal 2004 tax rate from continuing
operations for total QUALCOMM is lower than the annual effective tax rate
due to the reduction in earnings taxed at a higher rate that resulted from
the change in method of estimating QTL royalties as well as an increase in
the Company's forecast of its ability to utilize its capital loss
carryforwards.
(d) The results of operations related to the Vesper Operating Companies,
TowerCo and the SMP licenses, including gains and losses realized on sales
transactions, are presented as discontinued operations.
QUALCOMM Announces Forth Quarter and Fiscal 2004 Results
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 MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
TWELVE MONTHS ENDED SEPTEMBER 26, 2004
--------------------------------------------------
TOTAL
EXCLUDING QSI QUALCOMM
--------- --------- ----------
Revenues:
Equipment and services $ 3,514 $ - $ 3,514
Licensing and royalty fees 1,366 - 1,366
------- ------ -------
4,880 - 4,880
------- ------ -------
Operating expenses:
Cost of equipment and services revenues 1,484 - 1,484
Research and development 720 - 720
Selling, general and administrative 553 15 568
Amortization of other acquisition-related
intangible assets 5 - 5
Other (4) (22) (26)
------- ------ -------
Total operating expenses 2,758 (7) 2,751
------- ------ -------
Operating income 2,122 7 2,129
Investment income (expense), net 194 (a) (10) (b) 184
------- ------ -------
Income (loss) from continuing operations before income taxes 2,316 (3) 2,313
Income tax (expense) benefit (636) (c) 48 (588) (c)
------- ------ -------
Income from continuing operations 1,680 45 1,725
Loss from discontinued operations, net of income taxes (d) - (5) (5)
------- ------ -------
Net income $ 1,680 $ 40 $ 1,720
======= ====== =======
Diluted earnings per common share
from continuing operations (e) $ 1.00 $ 0.03 $ 1.03
Diluted loss per common share from
discontinued operations (e) - (0.01) -
------- ------ -------
Diluted earnings per common share $ 1.00 $ 0.02 $ 1.03
======= ====== =======
Shares used in per share calculations:
Diluted 1,675 1,675 1,675
======= ====== =======
(a) Includes $161 million in interest income related to cash, cash equivalents
and marketable securities, which are not part of the Company's strategic
investment portfolio.
(b) Includes $71 million equity in losses of investees and $12 million in
other-than-temporary losses on marketable securities, partially offset by
$59 million in net gains on investments, and $14 million in interest
income.
(c) The fiscal year 2004 effective tax rates for continuing operations for
total QUALCOMM and QUALCOMM excluding QSI are approximately 25% and 27%,
respectively.
(d) The results of operations related to the Vesper Operating Companies,
TowerCo and the SMP licenses, including gains and losses realized on sales
transactions, are presented as discontinued operations.
(e) The sum of the earnings per share amounts may not equal total earnings per
share due to rounding.
QUALCOMM Announces Forth Quarter and Fiscal 2004 Results
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 MILLIONS)
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 26, 2004
-------------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
--------- ------ --------
Earnings before taxes, depreciation, amortization and other adjustments (1) $ 208 $ 5 $ 213
Working capital changes and net taxes paid (2) 560 (3) 557
NET CASH PROVIDED BY OPERATING ACTIVITIES 768 2 770
Capital expenditures (139) - (139)
FREE CASH FLOW (NET CASH PROVIDED BY OPERATING ACTIVITIES LESS
CAPITAL EXPENDITURES) 629 2 631
Net additional share capital 129 - 129
Dividends paid (114) - (114)
Net issuance of notes receivables - (2) (2)
Other investments - (4) (4)
Other items (4) 6 2
Changes in fair value and other changes to marketable securities 24 (11) 13
Marketable securities pending settlement receipts (19) (19) (38)
Net cash provided by discontinued operations - 7 7
Transfer from QSI (3) 22 (22) -
Transfer to QSI (4) (5) 5 -
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (5) $ 662 $ (38) $ 624
(1) Reconciliation to GAAP:
Net income $ 336 $ 51 $ 387
Non-cash adjustments (a) 4 (1) 3
Net realized gains on marketable securities and other investments (11) (45) (56)
Net taxes paid (121) - (121)
Earnings before taxes, depreciation, amortization and other adjustments $ 208 $ 5 $ 213
(2) Reconciliation to GAAP:
Increase in cash resulting from changes in working capital $ 439 $ (3) $ 436
Net taxes refunded 121 - 121
Working capital changes and net taxes paid $ 560 $ (3) $ 557
(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) $ (795) $ - $ (795)
Plus: Net purchase (proceeds) of marketable securities 1,452 (8) 1,444
Plus: Net increase (decrease) in fair value and other changes
to marketable securities 24 (11) 13
Plus: Net increase in marketable securities pending settlement receipt (19) (19) (38)
Net increase (decrease) in cash, cash equivalents and marketable securities $ 662 $ (38) $ 624
QUALCOMM Announces Forth Quarter and Fiscal 2004 Results
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 MILLIONS)
(UNAUDITED)
TWELVE MONTHS ENDED SEPTEMBER 26, 2004
--------------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
--------- ------ --------
Earnings before taxes, depreciation, amortization and other adjustments (1) $ 2,178 $ 26 $ 2,204
Working capital changes and net taxes paid (2) 274 3 277
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,452 29 2,481
Capital expenditures (332) - (332)
FREE CASH FLOW (NET CASH PROVIDED BY OPERATING ACTIVITIES LESS
CAPITAL EXPENDITURES) 2,120 29 2,149
Net additional share capital 330 - 330
Proceeds from put options 5 - 5
Dividends paid (308) - (308)
Net collections of finance receivables 2 193 195
Net collections (issuance) of notes receivables 37 (36) 1
Other investments (16) (54) (70)
Other items (6) 15 9
Changes in fair value and other changes to marketable securities (13) 25 12
Marketable securities pending settlement receipt (29) (18) (47)
Net cash used by discontinued operations - (13) (13)
Transfer from QSI (3) 305 (305) -
Transfer to QSI (4) (136) 136 -
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (5) $ 2,291 $ (28) $ 2,263
(1) Reconciliation to GAAP:
Net income from continuing operations $ 1,680 $ 45 $ 1,725
Non-cash adjustments (b) 657 37 694
Net realized gains on marketable securities and other investments (32) (56) (88)
Net taxes paid (127) - (127)
Earnings before taxes, depreciation, amortization and other adjustments $ 2,178 $ 26 $ 2,204
(2) Reconciliation to GAAP:
Increase (decrease) in cash resulting from changes in working capital $ 147 $ 3 $ 150
Net taxes refunded 127 - 127
Working capital changes and net taxes paid $ 274 $ 3 $ 277
(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) $ (823) $ (8) $ (831)
Plus: Net purchase (proceeds) of marketable securities 3,155 (26) 3,129
Plus: Net (decrease) increase in fair value and other changes to marketable securities (13) 25 12
Plus: Net increase in marketable securities pending settlement receipt (29) (18) (47)
Net increase (decrease) in cash, cash equivalents and marketable securities $ 2,290 $ (27) $ 2,263
(b) See the supplemental detail to the condensed consolidated statements of cash
flows and marketable securities.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
SUPPLEMENTAL DETAIL TO THE
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
(IN MILLIONS)
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 26, 2004
--------------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
--------- ---- --------
(a) Non-cash adjustments are comprised of:
Depreciation and amortization $ 42 $ 1 $ 43
Losses on derivative instruments - 1 1
Other-than-temporary losses on marketable
securities and other investments - 11 11
Equity in losses of investees - 18 18
Non-cash income tax benefit (47) (30) (77)
Other non-cash charges 9 (2) 7
---- ---- ----
Total non-cash adjustments $ 4 $ (1) $ 3
==== ==== ====
TWELVE MONTHS ENDED SEPTEMBER 26, 2004
--------------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
--------- ---- --------
(b) Non-cash adjustments are comprised of:
Depreciation and amortization $ 158 $ 5 $ 163
Gains on derivative instruments (5) (2) (7)
Other-than-temporary losses on marketable
securities and other investments - 12 12
Equity in losses of investees 1 71 72
Non-cash income tax expense (benefit) 467 (48) 419
Other non-cash charges (credits) 36 (1) 35
----- ---- -----
Total non-cash adjustments $ 657 $ 37 $ 694
===== ==== =====
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
QUALCOMM
EXCLUDING
QSI QSI (a) QUALCOMM QUALCOMM
SEPTEMBER 26, SEPTEMBER 26, SEPTEMBER 26, SEPTEMBER 28,
2004 2004 2004 2003
------------- ------------- ------------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,214 $ - $ 1,214 $ 2,045
Marketable securities 4,728 40 4,768 2,516
Accounts receivable, net 562 19 581 484
Inventories, net 154 - 154 110
Deferred tax assets (a) 409 - 409 612
Other current assets 92 9 101 182
-------- ---- ------- -------
Total current assets 7,159 68 7,227 5,949
Marketable securities 1,546 107 1,653 811
Property, plant and equipment, net 675 - 675 622
Goodwill, net 356 - 356 346
Deferred tax assets (a) 493 - 493 407
Other assets 191 225 416 687
-------- ---- ------- -------
Total assets $ 10,420 $400 $10,820 $ 8,822
======== ==== ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 284 $ 2 $ 286 $ 195
Payroll and other benefits related liabilities 194 - 194 141
Unearned revenue 172 - 172 174
Current portion of long-term debt - - - 103
Other current liabilities 239 3 242 195
-------- ---- ------- -------
Total current liabilities 889 5 894 808
Unearned revenue 170 - 170 237
Long-term debt - - - 123
Other liabilities 92 - 92 56
-------- ---- ------- -------
Total liabilities 1,151 5 1,156 1,224
-------- ---- ------- -------
Stockholders' equity:
Preferred stock, $0.0001 par value - - - -
Common stock, $0.0001 par value - - - -
Paid-in capital 6,940 - 6,940 6,325
Retained earnings 2,709 - 2,709 1,297
Accumulated other comprehensive (loss) income (41) 56 15 (24)
-------- ---- ------- -------
Total stockholders' equity 9,608 56 9,664 7,598
-------- ---- ------- -------
Total liabilities and stockholders' equity $ 10,759 $ 61 $10,820 $ 8,822
======== ==== ======= =======
(a) Deferred tax assets and liabilities are not allocated to the Company's
segments. Net deferred tax assets and liabilities, if any, of subsidiaries
that are consolidated by QSI are reflected as QSI assets and liabilities.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
QUALCOMM INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED TWELVE MONTHS ENDED
-------------------------- --------------------------
SEPTEMBER 26 SEPTEMBER 28 SEPTEMBER 26 SEPTEMBER 28
2004 2003 (a) 2004 2003 (a)
---- -------- ---- --------
Revenues:
Equipment and services $ 954 $ 618 $ 3,514 $ 2,862
Licensing and royalty fees 164 253 1,366 985
------- ------- ------- -------
1,118 871 4,880 3,847
------- ------- ------- -------
Operating expenses:
Cost of equipment and services revenues 410 289 1,484 1,268
Research and development 208 143 720 523
Selling, general and administrative 146 118 568 471
Amortization of acquisition-related intangible assets - 2 5 8
Asset impairment and related charges - - - 34
Other (8) - (26) (30)
------- ------- ------- -------
Total operating expenses 756 552 2,751 2,274
------- ------- ------- -------
Operating income 362 319 2,129 1,573
Investment income (expense), net 69 29 184 (8)
------- ------- ------- -------
Income from continuing operations before income taxes 431 348 2,313 1,565
Income tax expense (44) (93) (588) (536)
------- ------- ------- -------
Income from continuing operations 387 255 1,725 1,029
------- ------- ------- -------
Income (loss) from discontinued operations 6 36 (5) (202)
------- ------- ------- -------
Net income $ 393 $ 291 $ 1,720 $ 827
======= ======= ======= =======
Basic earnings per common share from continuing
operations (b) $ 0.24 $ 0.16 $ 1.07 $ 0.65
Basic earnings (loss) per common share from
discontinued operations (b) - 0.02 (0.01) (0.13)
------- ------- ------- -------
Basic earnings per common share (b) $ 0.24 $ 0.18 $ 1.06 $ 0.52
======= ======= ======= =======
Diluted earnings per common share from continuing
operations (b) $ 0.23 $ 0.16 $ 1.03 $ 0.63
Diluted earnings (loss) per common share from
discontinued operations (b) - $ 0.03 - (0.12)
------- ------- ------- -------
Diluted earnings per common share (b) $ 0.23 $ 0.18 $ 1.03 $ 0.51
======= ======= ======= =======
Shares used in per share calculations:
Basic (b) 1,630 1,591 1,616 1,579
======= ======= ======= =======
Diluted (b) 1,692 1,643 1,675 1,636
======= ======= ======= =======
Dividends per share paid (b) $ 0.070 $ 0.035 $ 0.190 $ 0.085
======= ======= ======= =======
Dividends per share announced (b) $ 0.070 $ 0.035 $ 0.190 $ 0.085
======= ======= ======= =======
(a) As adjusted to present results related to Vesper, TowerCo and SMP licenses
as discontinued operations.
(b) We affected a two-for-one stock split in August 2004. All references to
number of shares and per share amounts reflect the stock split.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
QUALCOMM INCORPORATED
A COMPARISON OF THE "PRIOR METHOD OF ESTIMATING ROYALTIES" AND
THE "NEW METHOD OF ESTIMATING ROYALTIES"
($ IN MILLIONS)
Q403 FY03 Q104 Q204 Q304 Q404 FY04
---- ---- ---- ---- ---- ---- ----
Estimate of estimated licensees for prior period $ 135 $ 150 $ 151 $ 205 $ 237 $ 253 $ 151
Royalties reported by estimated licensees for prior period 154 167 208 262 264 255 208
------ ------- ------- ------ ------- ------- -------
Prior period variance included in reporting period 19 17 57 57 27 2 57
Other royalties reported in reporting period 37 670 45 51 109 99 1,084
Estimate for estimated licensees for current period 151 151 205 237 253 - -
------ ------- ------- ------ ------- ------- -------
Total QTL royalty revenues from external licensees 207 838 307 345 389 101 1,141
Intercompany revenue 20 103 32 30 33 36 132
License revenue 15 59 15 15 15 14 59
------ ------- ------- ------ ------- ------- -------
Total QTL revenue using the prior method $ 242 $ 1,000 $ 353 $ 390 $ 436
Total QTL revenue including prospective change to
new method in Q4 04 $ 151 $ 1,331
Total royalties reported by external licensees (1) $ 191 $ 837 $ 253 $ 313 $ 373 $ 354 $ 1,292
Intercompany revenue 20 103 32 30 33 36 132
License revenue 15 59 15 15 15 14 59
------ ------- ------- ------ ------- ------- -------
Total QTL Revenue using new method $ 226 $ 999 $ 300 $ 358 $ 420 $ 404 $ 1,483
Difference between the estimation methods $ 16 $ 1 $ 54 $ 32 $ 16 $ (253) $ (151)
------ ------- ------- ------ ------- ------- -------
Total QCOM revenues as reported under GAAP (2) $ 871 $ 3,847 $ 1,207 $1,216 $ 1,341 $ 1,118 $ 4,880
Less: Difference between the estimation methods 16 1 54 32 16 (253) (151)
Less: QSI Revenue (2) - 1 - - - - -
------ ------- ------- ------ ------- ------- -------
Total QCOM revenues using new method $ 854 $ 3,845 $ 1,153 $1,184 $ 1,325 $ 1,371 $ 5,031
TOTAL QCOM net income as reported under GAAP $ 291 $ 827 $ 352 $ 488 $ 486 $ 393 $ 1,720
Less: Net income attributed to difference between
the estimation methods(3) 10 1 33 20 10 (154) (92)
Less: QSI Net income (loss) 55 (334) (66) 46 4 57 40
------ ------- ------- ------ ------- ------- -------
QCOM net income using new method $ 226 $ 1,160 $ 386 $ 422 $ 473 $ 490 $ 1,772
QCOM diluted EPS as reported under GAAP $ 0.18 $ 0.51 $ 0.21 $ 0.29 $ 0.29 $ 0.23 $ 1.03
EPS ATTRIBUTED TO DIFFERENCE BETWEEN
THE ESTIMATION METHODS $ 0.01 $ 0.00 $ 0.02 $ 0.01 $ 0.01 $ (0.09) $ (0.06)
QSI Net income (loss) $ 0.03 $ (0.20) $ (0.04) $ 0.03 $ 0.00 $ 0.03 $ 0.02
QCOM diluted EPS excluding QSI using new method $ 0.14 $ 0.71 $ 0.23 $ 0.25 $ 0.28 $ 0.29 $ 1.06
Shares previously used for diluted EPS 821 818 827 836 841 n/a n/a
Adjusted for stock split 1,643 1,636 1,654 1,672 1,682 1,692 1,675
All EPS amounts have been adjusted to reflect the 2:1 stock split that was
effected during the fourth quarter of fiscal 2004.
QTL revenues as reported under GAAP and using the New Method are presented to
illustrate the difference between the Prior Method used for royalties prior to
the fourth quarter of fiscal 2004 and the New Method implemented starting in the
fourth quarter of fiscal 2004. A similar table is provided on our web site for
fiscal 2001 and 2002 and quarterly for fiscal 2003.
(1) Represents royalty revenue that would have been reported during the period
if the New Method had been adopted retroactively. Does not represent
royalty revenue that will be recognized under GAAP due to the effect of
the accounting change on these periods.
(2) During fiscal 2004, the Company sold its consolidated subsidiaries, the
Vesper Operating Companies and TowerCo, and returned personal mobile
service (SMP) licenses to Anatel, the telecommunications regulatory agency
in Brazil. The results of operations of the Vesper Operating Companies and
TowerCo, including gains and losses realized on the sales transactions and
the SMP license, have been restated as discontinued operations. The
Company's revenues for all prior periods have been adjusted to present the
discontinued operations.
(3) QTL's rounded effective tax rate is 40% in fiscal 2003 and 2004.
Sums may not equal totals due to rounding.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
QUALCOMM INCORPORATED
PRO FORMA RESULTS USING THE "PRIOR METHOD OF ESTIMATING ROYALTIES"
($ IN MILLIONS, EXCEPT PER SHARE DATA)
Q404 FY04
---- ----
Total GAAP revenues $ 1,118 $ 4,880
Plus: QTL royalty revenue estimate that would have been recorded 251 251
------- -------
Pro forma revenues 1,369 5,131
Less: QSI revenues - -
------- -------
Pro forma revenues excluding QSI $ 1,369 $ 5,131
======= =======
Total GAAP income from continuing operations before income taxes $ 431 $ 2,313
Plus: QTL royalty revenue estimate that would have been recorded 251 251
------- -------
Pro forma income from continuing operations before income taxes 682 2,564
Less: QSI income from continuing operations before income taxes 20 (3)
------- -------
Pro forma income from continuing operations before income taxes excluding QSI $ 662 2,566
======= =======
Total GAAP income tax expense $ 44 $ 588
Plus: Income tax expense on QTL royalty revenue estimate 98 98
------- -------
Pro forma income tax expense 142 685
Less: QSI income tax benefit (31) (48)
------- -------
Pro forma income tax expense excluding QSI $ 173 $ 733
======= =======
Total GAAP net income $ 393 $ 1,720
Plus: QTL royalty revenue estimate, net of tax, that would have been recorded 153 153
------- -------
Pro forma net income 546 1,873
Less: QSI net income 57 40
------- -------
Pro forma net income excluding QSI $ 489 $ 1,833
======= =======
Total GAAP diluted earnings per share $ 0.23 $ 1.03
Plus: Incremental pro forma diluted earnings per share from QTL revenue 0.09 0.09
------- -------
Pro forma diluted earnings per share 0.32 1.12
Less: QSI diluted earnings per share 0.03 0.02
------- -------
Pro forma diluted earnings per share excluding QSI 0.29 1.09
======= =======
Number of shares used in the diluted earnings per share calculations 1,692 1,675
Sums may not equal totals due to rounding.
Pro forma results using the estimation method used for royalties prior to the
fourth quarter of fiscal 2004 (the Prior Method of estimating royalties) are
provided to illustrate the effect of the change in estimation method related to
QTL royalty revenues to enable comparisons of fourth quarter results to previous
guidance.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
QUALCOMM INCORPORATED
QUARTERLY GUIDANCE PROVIDED ON SEPTEMBER 17, 2004
QUARTERLY GUIDANCE (1) - As of September 17, 2004
Q4 FY 04
(September 2004)
Guidance
------------------------------
QUALCOMM Excluding QSI
Revenues 4-5% sequential increase
60-62% year-over-year increase
EPS $0.28-$0.30
Total QUALCOMM
Revenues 4-5% sequential increase
60-62% year-over-year increase
EPS $0.28-$0.30
QSI
Revenues
EPS $0.00
FISCAL YEAR GUIDANCE (1) - As of September 17, 2004
FY 04
Guidance
------------------------------
QUALCOMM Excluding QSI
Revenues 33-34% sequential increase
EPS $1.09-$1.10
Total QUALCOMM
Revenues 33-34% sequential increase
EPS $1.08-$1.09
QSI
Revenues
EPS ($0.01)
(1) Due to their nature, certain income and expense items such as realized
investment gains or losses, 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 such income or expense items.
QUALCOMM Announces Fourth Quarter and Fiscal 2004 Results
QUALCOMM INCORPORATED
PRIOR PERIOD SUPPLEMENTAL SCHEDULE
THIS SCHEDULE IS PROVIDED SOLELY FOR THE PURPOSES OF RECONCILING NON-GAAP
FINANCIAL MEASURES RELATED TO PRIOR PERIODS
(IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
NINE MONTHS ENDED JUNE 27, 2004
-----------------------------------------
EXCLUDING TOTAL
QSI QSI QUALCOMM
--------- ------- --------
Revenues 3,763 - 3,763
------- ------- -------
Income (loss) from continuing operations before income taxes 1,904 (23) 1,881
Income tax (expense) benefit (560)(b) 17 (543)(b)
------- ------- -------
Income (loss) from continuing operations 1,344 (6) 1,338
Loss from discontinued operations, net of income taxes (a) - (11) (11)
------- ------- -------
Net income (loss) $ 1,344 $ (17) $ 1,327
======= ======= =======
Diluted earnings (loss) per common share
from continuing operations (d) (e) $ 0.81 $ 0.00 $ 0.80
======= ======= =======
Diluted loss per common share from
discontinued operations (d) (e) $ 0.00 $ (0.01) $ 0.00
======= ======= =======
Diluted earnings (loss) per common share (d) (e) $ 0.81 $ (0.01) $ 0.80
======= ======= =======
Shares used in per share calculations:
Diluted (e) 1,669 1,669 1,669
======= ======= =======
THREE MONTHS ENDED DECEMBER 28, 2003
----------------------------------------
Revenues 1,207 - 1,207
------- ------- -------
Income (loss) from continuing operations before income taxes 607 (4) 603
Income tax (expense) benefit (188)(c) (5) (193)(c)
------- ------- -------
Income from continuing operations 419 (9) 410
Income from discontinued operations, net of income taxes (a) - (58) (58)
------- ------- -------
Net income $ 419 $ (67) $ 352
======= ======= =======
Diluted earnings per common share
from continuing operations (d) (e) $ 0.25 0.00 $ 0.25
======= ======= =======
Diluted earnings per common share from
discontinued operations (d) (e) $ 0.00 $ (0.04) $ (0.04)
======= ======= =======
Diluted earnings loss per common share (d) (e) $ 0.25 $ (0.04) $ 0.21
======= ======= =======
Shares used in per share calculations:
Diluted (e) 1,654 1,654 1,654
======= ======= =======
TWELVE MONTHS ENDED SEPTEMBER 28, 2003
----------------------------------------
Revenues 3,846 1 3,847
------- ------- -------
Income (loss) from continuing operations before income taxes 1,733 (168) 1,565
Income tax (expense) benefit (572)(c) 36 (536)(c)
------- ------- -------
Income (loss) from continuing operations 1,161 (132) 1,029
Loss from discontinued operations, net of income taxes (a) - (202) (202)
------- ------- -------
Net income (loss) $ 1,161 $ (334) $ 827
======= ======= =======
Diluted earnings (loss) per common share
from continuing operations (d) (e) $ 0.71 $ (0.08) $ 0.63
======= ======= =======
Diluted loss per common share from
discontinued operations (d) (e) $ 0.00 $ (0.12) $ (0.12)
======= ======= =======
Diluted earnings loss per common share (d) (e) $ 0.71 $ (0.20) $ 0.51
======= ======= =======
Shares used in per share calculations:
Diluted (e) 1,636 1,636 1,636
======= ======= =======
(a) The results of operations related to the Vesper Operating Companies,
TowerCo and the SMP licenses, including gains and losses realized on sales
transactions, are presented as discontinued operations.
(b) The third quarter of fiscal 2004 estimated annual effective tax rates for
continuing operations for total QUALCOMM and QUALCOMM excluding QSI were
approximately 29% and 30%, respectively.
(c) The fiscal year 2003 effective tax rates for continuing operations for
total QUALCOMM and QUALCOMM excluding QSI were approximately 34% and 33%,
respectively.
(d) The sum of the earnings per share amounts may not equal total earnings per
share due to rounding.
(e) We effected a two-for-one stock split in August 2004. All references to
number of shares and per share amounts reflect these stock splits.
Revenues and earnings excluding the QSI segment, including for forward
looking periods, are calculated as total QUALCOMM revenues and earnings
less revenues and earnings attributed to the QSI segment. No other
adjustments are made.