Qualcomm Announces Record First Quarter Fiscal 2012
Results
Revenues $4.7 Billion
GAAP EPS $0.81, Non-GAAP EPS $0.97
-- Record First Quarter Results, Raising Fiscal 2012 Guidance
--
PR Newswire -- February 1, 2012
SAN DIEGO, Feb. 1, 2012 /PRNewswire-FirstCall/ -- Qualcomm
Incorporated (Nasdaq:
QCOM), a leading developer and innovator of advanced wireless
technologies,
products and services, today announced record results for the first
quarter of
fiscal 2012 ended December 25, 2011.
"I am pleased to report another record quarter with revenues,
earnings and MSM
shipments reaching all-time highs, driven by our industry-leading
chipset
portfolio and the continued strong demand for smartphones around
the world,"
said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. "We are
raising our
revenue and earnings guidance as our broad licensing partnerships
and extensive
chipset roadmap, led by our integrated Snapdragon processors,
position us well
for strong growth in fiscal 2012. We continue to invest in
innovative wireless
technologies, products and services, and we are excited about the
opportunities
ahead as 3G and 4G continue to expand across new device types and
geographies."
First Quarter Results (GAAP)
-- Revenues: (1) $4.68 billion, up 40 percent year-over-year
(y-o-y) and 14
percent sequentially.
-- Operating income: (1) $1.55 billion, up 24 percent y-o-y and 25
percent
sequentially.
-- Net income: (2) $1.40 billion, up 20 percent y-o-y and 33
percent
sequentially.
-- Diluted earnings per share: (2) $0.81, up 14 percent y-o-y and
31
percent sequentially.
-- Effective tax rate: (1) 19 percent for the quarter.
-- Operating cash flow: $1.78 billion, 38 percent of
revenues.
-- Return of capital to stockholders: $461 million, including $362
million,
or $0.215 per share, of cash dividends paid, and $99 million
to
repurchase 2.0 million shares of our common stock.
(1) The results of FLO TV are presented as discontinued operations,
and prior
period amounts have been adjusted accordingly. Revenues, operating
expenses,
operating income, earnings before tax (EBT) and effective tax rates
throughout
this news release are from continuing operations (i.e., before
discontinued
operations and the adjustment for noncontrolling interests), unless
otherwise
stated.
(2) Net income and diluted earnings per share throughout this news
release are
attributable to Qualcomm (i.e., after discontinued operations and
adjustment for
noncontrolling interests), unless otherwise stated.
Non-GAAP First Quarter Results
Non-GAAP results exclude the Qualcomm Strategic Initiatives (QSI)
segment,
certain share-based compensation, certain acquisition-related items
starting
with acquisitions completed in the third quarter of fiscal 2011 and
certain tax
items.
-- Revenues: $4.68 billion, up 40 percent y-o-y and 14
percent
sequentially.
-- Operating income: $1.87 billion, up 32 percent y-o-y and 15
percent
sequentially.
-- Net income: $1.67 billion, up 24 percent y-o-y and 22
percent
sequentially.
-- Diluted earnings per share: $0.97, up 18 percent y-o-y and 21
percent
sequentially. Excludes $0.01 loss per share attributable to the
QSI
segment, $0.11 loss per share attributable to certain
share-based
compensation and $0.03 loss per share attributable to certain
acquisition-related items (the sum of Non-GAAP earnings per share
and
items excluded do not equal GAAP earnings per share due to
rounding).
-- Effective tax rate: 19 percent for the quarter.
-- Free cash flow (defined as net cash from operating activities
less
capital expenditures): $1.49 billion, 32 percent of revenues.
Detailed reconciliations between results reported in accordance
with generally
accepted accounting principles (GAAP) and Non-GAAP results are
included at the
end of this news release.
The following should be noted with regards to the above results
and
year-over-year comparisons: first quarter fiscal 2012 results
included the
results of Qualcomm Atheros, Inc., which was acquired on May 24,
2011.
Additionally, on December 27, 2011, after the close of our first
fiscal quarter,
we completed the sale of substantially all of our 700 MHz spectrum
for $1.9
billion. As a result, we will recognize a gain in discontinued
operations of
$1.2 billion in the second quarter of fiscal 2012 related to the
close of this
transaction.
First Quarter Key Business Metrics
-- MSM(TM) shipments: 156 million units, up 32 percent y-o-y and 23
percent
sequentially.
-- September quarter total reported device sales: approximately
$41.4
billion, up 22 percent y-o-y and 6 percent sequentially.
o September quarter estimated 3G/4G device shipments: approximately
191
to 195 million units, at an estimated average selling price
of
approximately $212 to $218 per unit.
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled $22.0
billion at
the end of the first quarter of fiscal 2012, compared to $20.9
billion at the
end of the fourth quarter of fiscal 2011 and $19.1 billion a year
ago. As of
December 25, 2011, $948 million remained authorized for repurchases
under our
stock repurchase program, net of put options outstanding. On
January 10, 2012,
we announced a cash dividend of $0.215 per share payable on March
23, 2012 to
stockholders of record as of March 2, 2012.
Research and Development
($ in millions) Non-GAAP Share-Based QSI GAAP
-------- Compensation --- ----
First quarter fiscal
2012 $746 $126 $1 $873
As a % of revenues 16% 19%
First quarter fiscal
2011* $560 $85 $4 $649
As a % of revenues 17% 19%
Year-over-year change
($) 33% 48% N/M 35%
*As adjusted for discontinued operations.
N/M - Not Meaningful
Non-GAAP R&D expenses increased 33 percent y-o-y primarily due
to an increase in
investments in the development of integrated circuit products
(including
connectivity products), next-generation technologies and other
initiatives to
support the acceleration of advanced wireless products and
services.
Selling, General and Administrative
Share-
($ in millions) Non-GAAP Based Acquisition QSI GAAP
-------- ------ ----------- --- ----
Compensation Related
------------ -------
Items
-----
First quarter fiscal
2012 $381 $101 $9 $12 $503
As a % of revenues 8% 11%
First quarter fiscal
2011* $343 $70 $- $(4) $409
As a % of revenues 10% 12%
Year-over-year change
($) 11% 44% N/M N/M 23%
*As adjusted for discontinued operations.
N/M - Not Meaningful
Non-GAAP selling, general and administrative (SG&A) expenses
increased 11
percent y-o-y primarily due to increases in employee-related and
marketing
costs.
Effective Income Tax Rates
Our fiscal 2012 effective income tax rates are estimated to be
approximately 18
percent for GAAP and approximately 18 to 19 percent for Non-GAAP.
The first
quarter effective income tax rates for GAAP and Non-GAAP were both
19 percent.
Qualcomm Strategic Initiatives
The QSI segment makes strategic investments, many of which are in
early-stage
companies, and holds wireless spectrum. QSI also includes the
discontinued
operations of our FLO TV business. GAAP results for the first
quarter of fiscal
2012 included a $0.01 loss per share for the QSI segment.
Business Outlook
The following statements are forward looking, and actual results
may differ
materially. The "Note Regarding Forward-Looking Statements" in this
news release
provides a description of certain risks that we face, and our
annual and
quarterly reports on file with the Securities and Exchange
Commission (SEC)
provide a more complete description of risks.
Our outlook does not include provisions for future asset
impairments or for
pending legal matters, other than future legal amounts that are
probable and
estimable. Further, due to their nature, certain income and expense
items, such
as realized investment and certain derivative gains or losses,
cannot be
accurately forecast. Accordingly, we only include such items in our
business
outlook to the extent they are reasonably certain; however, actual
results may
vary materially from the business outlook.
The following table summarizes GAAP and Non-GAAP guidance based on
the current
business outlook. The Non-GAAP business outlook presented below is
consistent
with the presentation of Non-GAAP results included elsewhere
herein.
Qualcomm's Business Outlook Summary
-----------------------------------
SECOND FISCAL QUARTER
---------------------
Q2 FY11 Current Guidance
Q2 FY12 Estimates
Results (1) (2)
----------- ------------------
Revenues $3.87B $4.6B - $5.0B
Year-over-year change increase 19% - 29%
Non-GAAP Diluted earnings per share (EPS) $0.86 $0.91 - $0.97
Year-over-year change increase 6% - 13%
Diluted EPS attributable to QSI ($0.18) $0.43
Diluted EPS attributable to share-based
compensation ($0.09) ($0.11)
Diluted EPS attributable to acquisition-related
items $0.00 ($0.03)
Diluted EPS attributable to tax items $0.00 n/a
GAAP Diluted EPS $0.59 $1.20 - $1.26
increase 103% -
Year-over-year change 114%
Metrics
MSM shipments approx. 118M approx. 146M - 154M
Year-over-year change increase 24% - 31%
Total reported device sales (3) $40.0B* $47.5B - $51.5B*
Year-over-year change increase 19% - 29%
*Est. sales in December quarter, reported in
March quarter
FISCAL YEAR
-----------
FY 2011 Prior Guidance Current Guidance
FY 2012 FY 2012 Estimates
Results Estimates (2)
------- ------- ------------------
Revenues $14.96B $18.0B - $19.0B $18.7B - $19.7B
increase 20% -
Year-over-year change 27% increase 25% - 32%
Non-GAAP Diluted EPS $3.20 $3.42 - $3.62 $3.55 - $3.75
increase 7% -
Year-over-year change 13% increase 11% - 17%
Diluted EPS attributable to QSI ($0.23) ($0.04) $0.41
Diluted EPS attributable to share-based
compensation ($0.37) ($0.46) ($0.47)
Diluted EPS attributable to acquisition-related
items ($0.12) ($0.12) ($0.13)
Diluted EPS attributable to tax items $0.04 n/a n/a
GAAP Diluted EPS $2.52 $2.80 - $3.00 $3.36 - $3.56
increase 11% -
Year-over-year change 19% increase 33% - 41%
Metrics
Est. fiscal year* 3G/4G device average selling approx $203 - approx
$197 -
price range (3) $209 $209 approx $204 - $216
*Shipments in Sept. to June quarters, reported
in Dec. to Sept. quarters
CALENDAR YEAR Device Estimates (3)
----------------------------------
Prior Guidance Current Guidance Prior Guidance Current
Guidance
-------------- ---------------- --------------
----------------
Calendar 2011 Calendar 2011 Calendar 2012 Calendar 2012
------------- ------------- ------------- -------------
Estimates Estimates Estimates Estimates
--------- --------- --------- ---------
Est. 3G/4G device shipments
approx. 170M - approx. 170M -
March quarter 174M 174M not provided not provided
approx. 187M - approx. 187M -
June quarter 191M 191M not provided not provided
approx. 191M -
September quarter not provided 195M not provided not provided
December quarter not provided not provided not provided not
provided
---------------- ------------ ------------ ------------
------------
Est. Calendar year range (approx.) 755M - 795M 770M - 795M 865M -
935M 875M - 945M
---------------------------------- ----------- -----------
----------- -----------
Est. Calendar year midpoint (approx.) (4) 775M 783M 900M 910M
----------------------------------------- ---- ---- ---- ----
(1) As adjusted to reflect the reclassification of revenues related
to FLO TV to
discontinued operations.
(2) Current guidance for Q2 FY12 and FY 2012 for QSI and GAAP
includes $0.44 EPS
related to a $1.2 billion gain associated with completing the sale
of
substantially all of our 700 MHz spectrum, which will be recognized
in
discontinued operations. This gain will be excluded from Non-GAAP
results.
(3) Total reported device sales is the sum of all reported sales in
U.S. dollars
(as reported to us by our licensees) of all licensed CDMA-based,
OFDMA-based and
multimode CDMA/OFDMA subscriber devices (including handsets,
modules, modem
cards and other subscriber devices) by our licensees during a
particular period
(collectively "3G/4G devices"). The reported quarterly estimated
ranges of ASPs
and unit shipments are determined based on the information as
reported to us by
our licensees during the relevant period and our own estimates of
the selling
prices and unit shipments for licensees that do not provide such
information.
Not all licensees report sales, selling prices and/or unit
shipments the same
way (e.g., some licensees report selling prices net of permitted
deductions,
such as transportation, insurance and packing costs, while other
licensees
report selling prices and then identify the amount of permitted
deductions in
their reports), and the way in which licensees report such
information may
change from time to time. Total reported device sales, estimated
unit shipments
and estimated ASPs for a particular period may include prior period
activity
that was not reported by the licensee until such particular
period.
(4) The midpoints of the estimated calendar year ranges are
identified for
comparison purposes only and do not indicate a higher degree of
confidence in
the midpoints.
Sums may not equal totals due to rounding.
Results of Business Segments
The following table has been adjusted to reflect discontinued
operations (Note
4) (in millions, except per share data):
Acquisition-
Non-GAAP Non- Related
Reconciling GAAP Items (2) Tax
SEGMENTS QCT QTL QWI Items (1) (2) QSI* (2) (3) Items GAAP*
-------- --- --- --- ----------- ---- -------- Share-Based
------------- ----- -----
Compensation*
(2)
--------------
Q1 - FISCAL 2012
----------------
Revenues $3,085 $1,440 $152 $4 $4,681 $- $- $- $- $4,681
Change from prior
year 46% 36% (12%) N/M 40% 40%
Change from prior
quarter 19% 6% (7%) N/M 14% 14%
Operating
income
(loss) $1,871 ($13) ($247) ($60) $- $1,551
Change from
prior year 32% N/A (46%) N/A 24%
Change from
prior
quarter 15% (44%) 2% 52% 25%
EBT $739 $1,267 $1 $55 $2,062 ($34) ($247) ($60) $- $1,721
Change from prior
year 15% 42% N/M N/M 24% (62%) (46%) N/A 17%
Change from prior
quarter 30% 6% 120% N/M 19% 0% 2% 52% 30%
EBT as a % of
revenues 24% 88% N/M N/M 44% 37%
Discontinued
operations,
net of tax
(4) $- ($5) $- $- $- ($5)
Net income
(loss) $1,672 ($22) ($194) ($55) $- $1,401
Change from
prior year 24% 75% (67%) N/A N/M 20%
Change from
prior
quarter 22% 0% 9% 54% N/M 33%
Diluted EPS $0.97 ($0.01) ($0.11) ($0.03) $- $0.81
Change from
prior year 18% 80% (57%) N/A N/M 14%
Change from
prior
quarter 21% 0% 8% 57% N/M 31%
Diluted
shares used 1,721 1,721 1,721 1,721 1,721 1,721
Q4 - FISCAL 2011
----------------
Revenues $2,587 $1,361 $163 $6 $4,117 $- $- $- $- $4,117
Operating
income
(loss) 1,624 (9) (252) (125) - 1,238
EBT 569 1,193 (5) (20) 1,737 (34) (252) (125) - 1,326
Discontinued
operations,
net of tax
(4) - (5) (1) - - (6)
Net income
(loss) 1,372 (22) (214) (120) 40 1,056
Diluted EPS $0.80 ($0.01) ($0.12) ($0.07) $0.02 $0.62
Diluted
shares used 1,716 1,716 1,716 1,716 1,716 1,716
Q2 - FISCAL 2011
----------------
Revenues $1,962 $1,746 $157 $5 $3,870 $- $- $- $- $3,870
Operating
income
(loss) 1,652 (17) (199) (6) - 1,430
EBT 417 1,575 (135) 13 1,870 (46) (199) (6) - 1,619
Discontinued
operations,
net of tax
(4) - (267) (2) - - (269)
Net income
(loss) 1,450 (296) (146) (6) (3) 999
Diluted EPS $0.86 ($0.18) ($0.09) $0.00 $0.00 $0.59
Diluted
shares used 1,689 1,689 1,689 1,689 1,689 1,689
Q1 - FISCAL 2011
----------------
Revenues $2,116 $1,057 $172 $3 $3,348 $- $- $- $- $3,348
Operating
income
(loss) 1,416 - (169) - - 1,247
EBT 640 892 - 128 1,660 (21) (169) - - 1,470
Discontinued
operations,
net of tax
(4) - (80) (2) - - (82)
Net income
(loss) 1,345 (87) (116) - 28 1,170
Diluted EPS $0.82 ($0.05) ($0.07) $- $0.02 $0.71
Diluted
shares used 1,648 1,648 1,648 1,648 1,648 1,648
12 MONTHS - FISCAL 2011
-----------------------
Revenues $8,859 $5,422 $656 $20 $14,957 $- $- $- $- $14,957
Operating
income
(loss) 6,084 (37) (813) (208) - 5,026
EBT 2,056 4,753 (152) 183 6,840 (132) (813) (208) - 5,687
Discontinued
operations,
net of tax
(4) - (308) (5) - - (313)
Net income
(loss) 5,407 (385) (624) (200) 62 4,260
Diluted EPS $3.20 ($0.23) ($0.37) ($0.12) $0.04 $2.52
Diluted
shares used 1,691 1,691 1,691 1,691 1,691 1,691
------------ ----- ----- ----- ----- ----- -----
(1) Non-GAAP reconciling items related to revenues consist
primarily of other
nonreportable segment revenues less intersegment eliminations.
Non-GAAP
reconciling items related to earnings before taxes consist
primarily of certain
investment income or losses, interest expense, research and
development
expenses, sales and marketing expenses and other operating expenses
that are not
allocated to the segments for management reporting purposes,
nonreportable
segment results and the elimination of intersegment profit.
(2) At fiscal year end, the sum of the quarterly tax provisions
(benefits) for
each column equals the annual tax provision (benefit) for each
column computed
in accordance with GAAP. In interim quarters, the sum of these
provisions
(benefits) may not equal the total GAAP tax provision, and starting
in fiscal
2012, this difference is allocated to tax provisions (benefits)
among the
columns. In interim quarters of prior years, it was included in QSI
because
variability in QSI results was considered the primary driver of the
difference.
(3) Starting with acquisitions completed in the third quarter of
fiscal 2011,
Non-GAAP results exclude certain items related to acquisitions.
During the first
quarter of fiscal 2012, acquisition related items consisted of
amortization of
certain intangible assets.
(4) During fiscal 2011, we shut down the FLO TV business and
network. The
results of FLO TV are presented as discontinued operations, and
prior period
amounts have been adjusted accordingly.
* As adjusted for discontinued operations.
N/M - Not Meaningful
N/A - Not Applicable
Sums may not equal totals due to rounding.
Conference Call
Qualcomm's first quarter of fiscal 2012 earnings conference call
will be
broadcast live on February 1, 2012, beginning at 1:45 p.m. Pacific
Time (PT) on
the Investor Relations section of the Company's web site at:
www.qualcomm.com.
This 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 Investor Relations section
of the
Company's web site at www.qualcomm.com immediately prior to
commencement of the
call. A taped audio replay will be available via telephone on
February 1, 2012,
beginning at approximately 5:30 p.m. PT through March 1, 2012 at
9:00 p.m. PT.
To listen to the replay, U.S. callers may dial (855) 859-2056 and
international
callers may dial (404) 537-3406. U.S. and international callers
should use
reservation number 41343500. An audio replay of the conference call
will be
available on the Investor Relations section of the Company's web
site at
www.qualcomm.com following the live call.
Editor's Note: To view the web slides that supplement the
conference call,
please go to: http://investor.qualcomm.com/results.cfm
Qualcomm Incorporated (Nasdaq: QCOM) is a world leader in 3G and
next-generation
mobile technologies. For more than 25 years, Qualcomm ideas and
inventions have
driven the evolution of digital communications, linking people
everywhere more
closely to information, entertainment and each other. For more
information,
visit www.qualcomm.com.
Note Regarding Use of Non-GAAP Financial Measures
The Non-GAAP financial information presented herein should be
considered in
addition to, not as a substitute for, or superior to, financial
measures
calculated in accordance with GAAP. In addition, "Non-GAAP" is not
a term
defined by GAAP, and as a result, the Company's measure of Non-GAAP
results
might be different than similarly titled measures used by other
companies.
Reconciliations between GAAP results and Non-GAAP results are
presented herein.
The Company presents Non-GAAP financial information that is used by
management
(i) to evaluate, assess and benchmark the Company's operating
results on a
consistent and comparable basis; (ii) to measure the performance
and efficiency
of the Company's ongoing core operating businesses, including the
Qualcomm CDMA
Technologies, Qualcomm Technology Licensing and Qualcomm Wireless
& Internet
segments; and (iii) to compare the performance and efficiency of
these segments
against each other and against competitors outside the Company.
Non-GAAP
measurements of the following financial data are used by the
Company's
management: revenues, R&D expenses, SG&A expenses, total
operating expenses,
operating income (loss), net investment income (loss), income
(loss) before
income taxes, effective tax rate, net income (loss), diluted
earnings (loss) per
share, operating cash flow and free cash flow. Management is able
to assess what
it believes is a more meaningful and comparable set of financial
performance
measures for the Company and its business segments by using
Non-GAAP
information. As a result, management compensation decisions and the
review of
executive compensation by the Compensation Committee of the Board
of Directors
focus primarily on Non-GAAP financial measures applicable to the
Company and its
business segments.
Non-GAAP information used by management excludes the QSI segment,
certain
share-based compensation, certain tax items and certain
acquisition-related
items. The QSI segment is excluded because the Company expects to
exit its
strategic investments at various times, and the effects of
fluctuations in the
value of such investments and realized gains or losses are viewed
by management
as unrelated to the Company's operational performance. Share-based
compensation,
other than amounts related to share-based awards granted under a
bonus program
that may result in the issuance of unrestricted shares of the
Company's common
stock, is excluded because management views such share-based
compensation as
unrelated to the Company's operational performance. Further,
share-based
compensation is affected by factors that are subject to change,
including the
Company's stock price, stock market volatility, expected option
life, risk-free
interest rates and expected dividend payouts in future years.
Certain tax items
that were recorded in reported earnings in each fiscal year
presented, but that
were unrelated to the fiscal year in which they were recorded, are
excluded in
order to provide a clearer understanding of the Company's ongoing
Non-GAAP tax
rate and after tax earnings. However, the Company excludes any
benefit resulting
from the retroactive extensions of the federal R&D tax credit
from Non-GAAP
results because the Company does not include the potential
extension of the
credit in its business outlook due to uncertainty as to whether and
when the
federal R&D tax credit will be retroactively extended. In
addition to its
historical practice of excluding acquired in-process research and
development
expenses from Non-GAAP results, the Company began excluding
amortization of
certain intangible assets, recognition of the step-up of
inventories to fair
value and the related tax effects of these items starting with
acquisitions
completed in the third quarter of fiscal 2011, as well as any tax
effects of
restructuring the ownership of such acquired assets. These
certain
acquisition-related items are excluded and no longer allocated to
the Company's
segments because management has concluded that such expenses should
not be
considered when assessing segment performance as they are unrelated
to the
operating activities of the Company's ongoing core businesses. In
addition,
these charges are significantly impacted by the size and timing of
acquisitions,
potentially obscuring period to period comparisons of the Company's
operating
businesses.
The Company presents free cash flow, defined as net cash provided
by operating
activities less capital expenditures, to facilitate an
understanding of the
amount of cash flow generated that is available to grow its
business and to
create long-term stockholder value. The Company believes that this
presentation
is useful in evaluating its operating performance and financial
strength. In
addition, management uses this measure to evaluate the Company's
performance, to
value the Company and to compare its operating performance with
other companies
in the industry.
Note Regarding Forward-Looking Statements
In addition to the historical information contained herein, this
news release
contains forward-looking statements that are inherently subject to
risks and
uncertainties, including but not limited to statements regarding
the Company's
business outlook; growth expectations; and estimates and guidance
related to
financial performance, effective income tax rates, MSM shipments,
device
shipments, device sales and device average selling prices.
Forward-looking
statements are generally identified by words such as "expects,"
"anticipates,"
"intends," "plans," "believes," "seeks," "estimates," "guidance"
and similar
expressions. Actual results may differ materially from those
referred to in the
forward-looking statements due to a number of important factors,
including but
not limited to, risks associated with the commercial deployment of,
and demand
for, our technologies in communications products and services; the
uncertainty
of global economic conditions and their potential impacts on demand
for our
products, services or applications and on the value of our
marketable
securities; competition; our dependence on a small number of
customers and
licensees; attacks on our licensing business model, including
results of current
and future litigation and arbitration proceedings, as well as
actions of
governmental or quasi-governmental bodies, and the costs we incur
in connection
therewith, including potentially damaged relationships with
customers and
operators who may be impacted by the results of these proceedings;
our
dependence on third-party suppliers; the commercial success of our
QMT
division's IMOD display technology; foreign currency fluctuations;
strategic
investments and transactions we have or may pursue, including our
investment in
the BWA Spectrum in India, which is currently subject to legal
proceedings; and
failures and defects or errors in our products and services or in
the products
of our customers. These and other risks are set forth in the
Company's Annual
Report on Form 10-K for the fiscal year ended September 25, 2011
and Quarterly
Report on Form 10-Q for the fiscal quarter ended December 25, 2011
filed with
the SEC. Our reports filed with the SEC are available on our
website at
www.qualcomm.com. We undertake no obligation to update, or continue
to provide
information with respect to, any forward-looking statement or risk
factor,
whether as a result of new information, future events or
otherwise.
Qualcomm, MSM and Snapdragon are registered trademarks of Qualcomm
Incorporated,
registered in the United States and other countries. CDMA2000 is a
registered
trademark of the Telecommunications Industry Association (TIA USA).
All other
trademarks are the property of their respective owners.
Qualcomm Incorporated
Supplemental Information for the Three
Months Ended December 25, 2011
(Unaudited)
Acquisition-
Share-
Non-GAAP Based Related GAAP
Results QSI Compensation Items (a) Results
------- --- ------------ --------- -------
($
in
millions
except
per
share
data)
Cost
of
equipment
and
services
revenues $1,683 $- $20 $51 $1,754
R&D 746 1 126 - 873
SG&A 381 12 101 9 503
Operating
income
(loss) 1,871 (13) (247) (60) 1,551
Investment
income
(loss),
net $191 (b) $(21) (c) $- $- $170
Tax
rate 19% 32% 21% 8% 19%
Net
income
(loss) $1,672 $(22) $(194) $(55) $1,401
Diluted
earnings
(loss)
per
share
(EPS) $0.97 $(0.01) $(0.11) $(0.03) $0.81
Operating
cash
flow $1,850 $(48) $(23) $- $1,779
Operating
cash
flow
as
%
of
revenues 40% N/A N/A N/A 38%
Free
cash
flow
(d) $1,491 $(48) $(23) $- $1,420
Free
cash
flow
as
a
%
of
revenues 32% N/A N/A N/A 30%
(a) Beginning in the third quarter of fiscal 2011, Non-GAAP
results
exclude certain items related to acquisitions. During the
first
quarter of fiscal 2012, acquisition related items consisted
of
amortization of certain intangible assets.
(b) Included $126 million in interest and dividend income related
to
cash, cash equivalents and marketable securities, which were
not
part of our strategic investments, $44 million in gains on
derivatives (primarily due to gains from put options sold as part
of
our stock repurchase program) and $37 million in net realized
gains
on investments, partially offset by $14 million in
other-than-
temporary losses on investments and $2 million in interest
expense.
(c) Included $25 million in interest expense, $6 million in
other-
than-temporary losses on investments and $2 million in equity
losses of investees, partially offset by $7 million net
realized
gains on investments, $4 million in interest and dividend
income
related to cash, cash equivalents and marketable securities and
$1
million in gains on derivatives.
(d) Free cash flow is calculated as net cash provided by
operating
activities less capital expenditures. Reconciliation of these
amounts is included in the "Reconciliation of Non-GAAP Free
Cash
Flows to Net Cash Provided by Operating Activities (GAAP) and
Other
Supplemental Disclosures" for the three months ended December
25,
2011, included herein.
N/A - Not Applicable
Sums may not equal totals due to rounding.
Qualcomm Incorporated
Reconciliation of Non-GAAP Free Cash Flows to
Net Cash Provided by Operating Activities (GAAP)
and Other Supplemental Disclosures
(In millions)
(Unaudited)
Three Months Ended December 25, 2011
------------------------------------
Share-Based
Non-GAAP QSI Compensation GAAP
-------- --- ------------ ----
Net cash
provided
(used)
by
operating
activities $1,850 $(48) (a) $(23) $1,779
Less:
capital
expenditures (359) - - (359)
---- --- --- ----
Free cash
flow $1,491 $(48) $(23) $1,420
====== ==== ==== ======
Revenues $4,681 $- $- $4,681
Free cash
flow as
a % of
revenues 32% N/A N/A 30%
Other
supplemental
cash
disclosures:
Cash
transfers
from QSI
(b) $11 $(11) $- $-
Cash
transfers
to QSI
(c) (66) 66 - -
--- --- --- ---
Net cash
transfers $(55) $55 $- $-
==== === === ===
Three Months Ended December 26, 2010
------------------------------------
Share-Based
Non-GAAP QSI Compensation GAAP
-------- --- ------------ ----
Net cash
provided
(used)
by
operating
activities $227 (d) $(134) (a) $(45) $48 (d)
Less:
capital
expenditures (100) (2) - (102)
---- --- --- ----
Free cash
flow $127 $(136) $(45) $(54)
==== ===== ==== ====
(a) Incremental tax benefits from stock options exercised during
the
period.
(b) Primarily cash from sale of equity securities and disposal
of
property, plant and equipment.
(c) Primarily funding for strategic debt and equity investments
and
QSI operating expenses.
(d) GAAP and Non-GAAP operating cash flow for the first quarter
of
fiscal 2011 included a $1.5 billion income tax payment.
N/A - Not Applicable
Qualcomm Incorporated
Reconciliation of Non-GAAP Tax Rates to GAAP Tax Rate (a)
(in millions)
(Unaudited)
Three Months Ended December 25, 2011
------------------------------------
Acquisition-
Share-
Non-GAAP Based Related GAAP
Results QSI Compensation Items Results
------- --- ------------ ----- -------
Income
(loss)
from
continuing
operations
before
income
taxes $2,062 $(34) $(247) $(60) $1,721
Income
tax
(expense)
benefit (390) 11 53 5 (321)
---- --- --- --- ----
Income
(loss)
from
continuing
operations $1,672 $(23) $(194) $(55) $1,400
====== ==== ===== ==== ======
Tax
rate 19% 32% 21% 8% 19%
(a) At fiscal year end, the sum of the quarterly tax
provisions
(benefits) for each column equals the annual tax provision
(benefit)
for each column computed in accordance with GAAP. In interim
quarters, the sum of these provisions (benefits) may not equal
the
total GAAP tax provision, and this difference is allocated to
tax
provisions (benefits) among the columns.
Sums may not equal totals due to rounding.
Qualcomm Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
ASSETS
December September
25, 25,
2011 2011
---- ----
Current assets:
Cash and cash equivalents $4,964 $5,462
Marketable securities 6,576 6,190
Accounts receivable, net 1,035 993
Inventories 714 765
Deferred tax assets 509 537
Other current assets 236 346
--- ---
Total current assets 14,034 14,293
Marketable securities 10,438 9,261
Deferred tax assets 1,626 1,703
Assets held for sale 746 746
Property, plant and equipment, net 2,607 2,414
Goodwill 3,624 3,432
Other intangible assets, net 3,093 3,099
Other assets 1,438 1,474
----- -----
Total assets $37,606 $36,422
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $974 $969
Payroll and other benefits related liabilities 542 644
Unearned revenues 543 610
Loans payable 928 994
Income taxes payable 40 18
Other current liabilities 1,967 2,054
----- -----
Total current liabilities 4,994 5,289
Unearned revenues 3,535 3,541
Other liabilities 580 620
--- ---
Total liabilities 9,109 9,450
----- -----
Stockholders' equity:
Qualcomm stockholders' equity:
Preferred stock, $0.0001 par value; 8 shares
authorized; none outstanding - -
Common stock, $0.0001 par value; 6,000 shares
authorized; 1,687
and 1,681 shares issued and outstanding,
respectively - -
Paid-in capital 10,749 10,394
Retained earnings 17,237 16,204
Accumulated other comprehensive income 495 353
--- ---
Total Qualcomm stockholders' equity 28,481 26,951
Noncontrolling interests 16 21
--- ---
Total stockholders' equity 28,497 26,972
------ ------
Total liabilities and stockholders' equity $37,606 $36,422
======= =======
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended
------------------
December December
25, 26,
2011 2010*
---- -----
Revenues:
Equipment and services $3,167 $2,213
Licensing 1,514 1,135
----- -----
Total revenues 4,681 3,348
----- -----
Operating expenses:
Cost of equipment and services
revenues 1,754 1,043
Research and development 873 649
Selling, general and administrative 503 409
Total operating expenses 3,130 2,101
----- -----
Operating income 1,551 1,247
Investment income, net 170 223
--- ---
Income from continuing operations
before income taxes 1,721 1,470
Income tax expense (321) (218)
---- ----
Income from continuing operations 1,400 1,252
Discontinued operations, net of
income taxes (5) (82)
--- ---
Net Income 1,395 1,170
Net loss attributable to
noncontrolling interests 6 -
--- ---
Net income attributable to Qualcomm $1,401 $1,170
====== ======
Basic earnings (loss) per share
attributable to Qualcomm:
Continuing operations $0.83 $0.77
Discontinued operations - (0.05)
--- -----
Net income $0.83 $0.72
===== =====
Diluted earnings (loss) per share
attributable to Qualcomm:
Continuing operations $0.81 $0.76
Discontinued operations - (0.05)
--- -----
Net income $0.81 $0.71
===== =====
Shares used in per share
calculations:
Basic 1,684 1,623
===== =====
Diluted 1,721 1,648
===== =====
Dividends per share announced $0.215 $0.19
====== =====
*As adjusted for discontinued operations
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
------------------
December 25, December 26,
2011 2010
---- ----
Operating Activities:
Net income $1,395 $1,170
Adjustments to reconcile net income to net cash provided by
operating
activities:
Depreciation and amortization 208 201
Revenues related to non-monetary exchanges (31) (31)
Income tax provision in excess of (less than) income tax payments
118 (1,474)
Non-cash portion of share-based compensation expense 247 174
Incremental tax benefit from stock options exercised (23)
(45)
Net realized gains on marketable securities and other investments
(44) (127)
Gains on derivative instruments (45) (1)
Net impairment losses on marketable securities and other
investments 20 11
Other items, net 6 (1)
Changes in assets and liabilities, net of effects of
acquisitions:
Accounts receivable, net (38) 76
Inventories 50 (45)
Other assets (24) (23)
Trade accounts payable 26 (234)
Payroll, benefits and other liabilities (43) 21
Unearned revenues (43) 376
--- ---
Net cash provided by operating activities 1,779 48
----- ---
Investing Activities:
Capital expenditures (359) (102)
Purchases of available-for-sale securities (2,027) (2,309)
Proceeds from sale of available-for-sale securities 1,603
3,024
Purchase of trading securities (1,137) -
Proceeds from sale of trading securities 148 -
Acquisitions and other investments, net of cash acquired (300)
(66)
Other items, net 4 7
--- ---
Net cash (used) provided by investing activities (2,068) 554
------ ---
Financing Activities:
Borrowing under loans payable - 1,083
Repayment of loans payable - (1,083)
Proceeds from issuance of common stock 228 791
Incremental tax benefit from stock options exercised 23 45
Repurchase and retirement of common stock (99) -
Dividends paid (362) (309)
Change in obligation under securities lending 20 38
Other items, net (1) (4)
--- ---
Net cash (used) provided by financing activities (191) 561
---- ---
Effect of exchange rate changes on cash (18) 1
--- ---
Net (decrease) increase in cash and cash equivalents (498)
1,164
Cash and cash equivalents at beginning of period 5,462 3,547
----- -----
Cash and cash equivalents at end of period $4,964 $4,711
====== ======
Qualcomm Contact:
Warren Kneeshaw
Phone: 1-858-658-4813
e-mail: [email protected]
SOURCEï¹›Qualcomm Incorporated