Qualcomm Announces Third Quarter Fiscal 2011 Results
SAN DIEGO, July 20, 2011 /PRNewswire/ --
Revenues $3.6 Billion
GAAP EPS $0.61, Non-GAAP EPS $0.73
-- Raises Fiscal 2011 Revenue and Non-GAAP Earnings Guidance --
Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for the third quarter of fiscal 2011 ended June 26, 2011.
"Qualcomm delivered strong year-over-year results again this quarter as our business performed well across all key guidance metrics. In addition, we successfully completed the acquisition of Atheros, positioning us to further expand our opportunities going forward," said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. "Looking forward, we continue to see healthy growth in CDMA-based device shipments of approximately 18 percent in calendar year 2011, and we are pleased to be raising our revenue and Non-GAAP earnings guidance for the fiscal year, driven primarily by strong global smartphone adoption and the addition of Atheros."
Third Quarter Results (GAAP)
- Revenues: (1) $3.62 billion, up 34 percent year-over-year (y-o-y) and down 6 percent sequentially.
- Operating income: (1) $1.11 billion, up 25 percent y-o-y and down 22 percent sequentially.
- Net income: (2) $1.04 billion, up 35 percent y-o-y and 4 percent sequentially.
- Diluted earnings per share: (2) $0.61, up 30 percent y-o-y and 3 percent sequentially.
- Effective tax rate: (1) 23 percent for the quarter.
- Operating cash flow: $1.26 billion, up 33 percent y-o-y; 35 percent of revenues.
- Return of capital to stockholders: $360 million, or $0.215 per share, of cash dividends paid.
(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 rate 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 Third Quarter Results
Non-GAAP results exclude the Qualcomm Strategic Initiatives (QSI) segment, certain share-based compensation, certain tax items that are not related to the current year and certain acquisition-related items. Starting with acquisitions completed in the third quarter of fiscal 2011, we changed our methodology for reporting Non-GAAP results to exclude the recognition of the step-up of inventories to fair value and amortization of certain intangible assets, in addition to our historical practice of excluding acquired in-process research and development (R&D) expense. Third quarter of fiscal 2011 Non-GAAP results excluded $45 million related to the step-up of inventories to fair value and $32 million in amortization of intangible assets that resulted from the acquisition of Atheros Communications, Inc. (Atheros).
- Revenues: $3.62 billion, up 34 percent y-o-y and down 6 percent sequentially.
- Operating income: $1.39 billion, up 41 percent y-o-y and down 16 percent sequentially.
- Net income: $1.24 billion, up 32 percent y-o-y and down 14 percent sequentially.
- Diluted earnings per share: $0.73, up 28 percent y-o-y and down 15 percent sequentially. The current quarter excludes $0.01 earnings per share attributable to the QSI segment, $0.09 loss per share attributable to certain share-based compensation and $0.04 loss per share attributable to acquisition-related items.
- Effective tax rate: 21 percent for the quarter.
- Free cash flow: $1.16 billion, up 22 percent y-o-y; 32 percent of revenues (defined as net cash from operating activities less capital expenditures).
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.
In the comparisons summarized above for the third quarter of fiscal 2011, the following should be noted: results for the second quarter of fiscal 2011 included $401 million in revenues related to prior quarters as a result of agreements entered into with two licensees to settle disputes and $120 million in impairment charges related to our Firethorn division, including $114 million in goodwill impairment.
Third Quarter Key Business Metrics
- CDMA-based Mobile Station Modem™ (MSM™) shipments: 120 million units, up 17 percent y-o-y and 2 percent sequentially.
- March quarter total reported device sales: approximately $36.4 billion, up 44 percent y-o-y and down 9 percent sequentially.
- March quarter estimated CDMA-based device shipments: approximately 170 to 174 million units, at an estimated average selling price of approximately $209 to $215 per unit.
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled $20.2 billion at the end of the third quarter of fiscal 2011, compared to $22.1 billion at the end of the second quarter of fiscal 2011 and $17.6 billion a year ago. Upon the close of the Atheros acquisition on May 24, 2011, we paid $3.1 billion in cash, net of the cash acquired. On July 13, 2011, we announced a cash dividend of $0.215 per share payable on September 23, 2011 to stockholders of record as of August 26, 2011.
Research and Development
Share-
Based
($ in millions) Non-GAAP Compensation QSI GAAP
-------- ------------ --- ----
Third quarter fiscal
2011 $661 $95 $1 $757
As a % of revenues 18% 21%
Third quarter fiscal
2010(*) $546 $72 $5 $623
As a % of revenues 20% 23%
Year-over-year
change ($) 21% 32% N/M 22%
*As adjusted for discontinued operations
N/M - Not Meaningful
Non-GAAP R&D expenses increased 21 percent y-o-y primarily due to an increase in costs related to the development of integrated circuit products, next generation technologies and other initiatives to support the acceleration of advanced wireless products and services.
Selling, General and Administrative
Acquisition-
Share-Based Related
($ in millions) Non-GAAP Compensation Items QSI GAAP
-------- ------------ ----------- --- ----
Third quarter
fiscal 2011 $365 $84 $18 $8 $475
As a % of revenues 10% 13%
Third quarter
fiscal 2010(*) $321 $63 $- $(52) $332
As a % of revenues 12% 12%
Year-over-year
change ($) 14% 33% N/M N/M 43%
*As adjusted for discontinued operations
Non-GAAP selling, general and administrative (SG&A) expenses increased 14 percent y-o-y primarily due to an increase in employee-related costs. QSI SG&A expenses for the third quarter of fiscal 2010 included a $62 million gain on the sale of our Australia spectrum license.
Effective Income Tax Rate
Our fiscal 2011 effective income tax rates are estimated to be 20 percent for GAAP and 21 percent for Non-GAAP. Our fiscal 2011 estimated GAAP tax rate increased from our prior estimate of 17 percent primarily as a result of the reclassification of tax benefits to discontinued operations and lower foreign earnings related to the step-up of acquired Atheros assets to fair value. The third quarter GAAP tax rate of 23 percent was a result of this increase in the estimated annual effective tax rate.
During the fourth quarter of fiscal 2011, we reached agreement with the California Franchise Tax Board on a component of our fiscal 2006 through 2010 tax returns. As a result of this agreement, we expect to record a $44 million tax benefit that will be excluded from our fourth quarter fiscal 2011 Non-GAAP results. This estimated benefit, which is included in our guidance, will reduce our fiscal 2011 estimated GAAP tax rate from 20 percent to 19 percent.
Qualcomm Strategic Initiatives
The QSI segment makes strategic investments in early-stage and other companies and in wireless spectrum, such as the Broadband Wireless Access spectrum won in the India auction. QSI also includes the discontinued operations of our FLO TV subsidiary. GAAP results for the third quarter of fiscal 2011 included $0.01 earnings per share for the QSI segment. During the third quarter of fiscal 2011, in connection with the presentation of the FLO TV business as discontinued operations and the requirement to compute the tax effect of discontinued operations on a discrete basis, we recorded a tax benefit of $43 million for tax benefits related to losses incurred in the first and second quarter of fiscal 2011 that were previously included in the calculation of the estimated annual effective tax rate.
Business Outlook
The following statements are forward looking and actual results may differ materially. The "Note Regarding Forward-Looking Statements" at the end of this news release provides a description of certain risks that we face, and our annual and quarterly reports on file with the Securities and Exchange Commission (SEC) provide a more complete description of risks.
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 gains or losses, or gains and losses on certain derivative instruments, 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
FOURTH FISCAL QUARTER
Q4 FY10 Current Guidance
Results Q4 FY11 Estimates
Revenues $2.95B $3.86B - $4.16B
Year-over-year change increase 31% -41%
Non-GAAP Diluted earnings
per share (EPS) $0.68 $0.75 - $0.80
Year-over-year change increase 10% -18%
Diluted EPS attributable to QSI ($0.05) $0.00
Diluted EPS attributable
to share-based compensation ($0.07) ($0.10)
Diluted EPS attributable
to acquisition-related items $0.00 ($0.07)
Diluted EPS attributable
to certain tax items (1) ($0.02) $0.02
GAAP Diluted EPS $0.53 $0.60 - $0.65
Year-over-year change increase 13% -23%
Metrics
MSM shipments approx. 111M approx. 120M -125M
Year-over-year change increase 8% -13%
Total reported device sales (2) $28.3B* $38.0B - $41.0B*
Year-over-year change increase 34% -45%
*Est. sales in June quarter, reported in September quarter
FISCAL YEAR
FY 2010 Prior Guidance Current Guidance
Results (3) FY 2011 Estimates FY 2011 Estimates
Revenues $10.98B $14.1B - $14.7B $14.7B - $15.0B
Year-over-year
change increase 28% -34% increase 34% -37%
Non-GAAP Diluted EPS $2.46 $3.05 - $3.13 $3.15 - $3.20
Year-over-year change increase 24% -27% increase 28% -30%
Diluted EPS
attributable
to QSI ($0.13) ($0.22) ($0.22)
Diluted EPS
attributable to
share-based
compensation ($0.27) ($0.33) ($0.35)
Diluted EPS
attributable to
acquisition-related
items $0.00 $0.00 ($0.12)
Diluted EPS
attributable to
certain tax
items (1) ($0.10) $0.01 $0.04
GAAP Diluted EPS $1.96 $2.51 - $2.59 $2.50 - $2.55
Year-over-year
change increase 28% -32% increase 28% -30%
Metrics
Est. fiscal year*
CDMA-based device
average selling
price
range (2) approx $183 -$189 approx $199 -$209 approx $204 -$210
*Shipments in Sept. to June quarters, reported in Dec. to Sept.
quarters
CALENDAR YEAR Device Estimates (2)
Calendar 2010 Prior Guidance Current Guidance
Estimates Calendar 2011 Calendar 2011
Estimates Estimates
Est. CDMA-based
device shipments
March quarter approx. 134M -138M not provided approx. 170M -174M
June quarter approx. 153M -157M not provided not provided
September
quarter approx. 165M -169M not provided not provided
December
quarter approx. 195M -200M not provided not provided
Est. Calendar
year range
(approx.) 646M - 663M 750M - 800M 750M - 800M
Midpoint Midpoint Midpoint
Est. total
CDMA-based units approx. 655M approx. 775M approx. 775M
Est. CDMA units approx. 238M approx. 250M approx. 245M
Est. WCDMA units approx. 417M approx. 525M approx. 530M
(1) During the fourth quarter of fiscal 2011, we reached agreement with
the California Franchise Tax Board on a component of our fiscal 2006
through 2010 tax returns. As a result of this agreement, we expect
to record a $44 million tax benefit that will be excluded from our
fourth quarter fiscal 2011 Non-GAAP results.
(2) 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 subscriber devices (including handsets, modules, modem cards
and other subscriber devices) by our licensees during a particular
period. 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 is reported
with the activity for the particular period.
(3) As adjusted to reflect the reclassification of revenues related to
FLO TV to discontinued operations.
Sums may not equal totals due to rounding.
Results of Business Segments
The following tables have been adjusted to reflect discontinued
operations (Note 5) (in millions, except per share data):
Non-GAAP
Reconciling
SEGMENTS QCT QTL QWI Items (1)
-------- --- --- --- -----------
Q3 - FISCAL 2011
----------------
Revenues $2,194 $1,257 $164 $8
Change from prior year 30% 48% 1% N/M
Change from prior
quarter 12% (28%) 4% N/M
Operating income
(loss)
Change from prior year
Change from prior
quarter
EBT $430 $1,092 ($13) $65
Change from prior year 6% 62% N/M N/M
Change from prior
quarter 3% (31%) N/M N/M
EBT as a % of revenues 20% 87% N/M N/M
Discontinued
operations, net of
tax (5)
Net income (loss)
Change from prior year
Change from prior
quarter
Diluted EPS
Change from prior year
Change from prior
quarter
Diluted shares used
Q2 - FISCAL 2011
----------------
Revenues $1,962 $1,746 $157 $5
Operating income
(loss)
EBT 417 1,575 (135) 13
Discontinued
operations, net of
tax (5)
Net income (loss)
Diluted EPS
Diluted shares used
Q1 - FISCAL 2011
----------------
Revenues $2,116 $1,057 $172 $3
Operating income
(loss)
EBT 640 892 - 128
Discontinued
operations, net of
tax (5)
Net income (loss)
Diluted EPS
Diluted shares used
Q4 - FISCAL 2010
----------------
Revenues $1,860 $921 $171 $-
Operating income
(loss)
EBT 519 754 (2) 90
Discontinued
operations, net of
tax (5)
Net income (loss)
Diluted EPS
Diluted shares used
Q3 - FISCAL 2010
----------------
Revenues $1,691 $847 $162 $-
Operating income
(loss)
EBT 404 673 6 78
Discontinued
operations, net of
tax (5)
Net income (loss)
Diluted EPS
Diluted shares used
Tax
Items
SEGMENTS Non-GAAP Share-Based (2)
-------- -------- Compensation* ------
-------------
Q3 - FISCAL 2011
----------------
Revenues $3,623 $- $-
Change from prior year 34%
Change from prior
quarter (6%)
Operating income
(loss) $1,393 ($193) -
Change from prior year 41% (33%)
Change from prior
quarter (16%) 3%
EBT $1,574 ($193) -
Change from prior year 36% (33%)
Change from prior
quarter (16%) 3%
EBT as a % of revenues 43% N/M
Discontinued
operations, net of
tax (5) $- $- $-
Net income (loss) 1,240 (147) (4)
Change from prior year 32% (32%) N/M
Change from prior
quarter (14%) (1%) N/M
Diluted EPS $0.73 ($0.09) $-
Change from prior year 28% (29%) N/M
Change from prior
quarter (15%) - N/M
Diluted shares used 1,709 1,709 1,709
Q2 - FISCAL 2011
----------------
Revenues $3,870 $- $-
Operating income
(loss) 1,652 (199) -
EBT 1,870 (199) -
Discontinued
operations, net of
tax (5) - (2) -
Net income (loss) 1,450 (146) (3)
Diluted EPS $0.86 ($0.09) $-
Diluted shares used 1,689 1,689 1,689
Q1 - FISCAL 2011
----------------
Revenues $3,348 $- $-
Operating income
(loss) 1,416 (169) -
EBT 1,660 (169) -
Discontinued
operations, net of
tax (5) - (2) -
Net income (loss) 1,345 (116) 28
Diluted EPS $0.82 ($0.07) $0.02
Diluted shares used 1,648 1,648 1,648
Q4 - FISCAL 2010
----------------
Revenues $2,952 $- $-
Operating income
(loss) 1,130 (157) -
EBT 1,361 (157) -
Discontinued
operations, net of
tax (5) - (3) -
Net income (loss) 1,105 (120) (40)
Diluted EPS $0.68 ($0.07) ($0.02)
Diluted shares used 1,621 1,621 1,621
Q3 - FISCAL 2010
----------------
Revenues $2,700 $- $-
Operating income
(loss) 991 (145) -
EBT 1,161 (145) -
Discontinued
operations, net of
tax (5) - (3) -
Net income (loss) 936 (111) (54)
Diluted EPS $0.57 ($0.07) ($0.03)
Diluted shares used 1,642 1,642 1,642
Acquisition-
Related
SEGMENTS Items (3) QSI (4)* GAAP
-------- ------------ -------- ----
Q3 - FISCAL 2011
----------------
Revenues $- $- $3,623
Change from prior year 34%
Change from prior
quarter (6%)
Operating income
(loss) ($77) ($10) $1,113
Change from prior year N/A N/M 25%
Change from prior
quarter N/M 41% (22%)
EBT ($77) ($30) $1,274
Change from prior year N/A N/M 18%
Change from prior
quarter N/M 35% (21%)
EBT as a % of revenues N/M N/M 35%
Discontinued
operations, net of
tax (5) $- $44 $44
Net income (loss) (73) 19 1,035
Change from prior year N/A N/M 35%
Change from prior
quarter N/M N/M 4%
Diluted EPS ($0.04) $0.01 $0.61
Change from prior year N/A N/M 30%
Change from prior
quarter N/M N/M 3%
Diluted shares used 1,709 1,709 1,709
Q2 - FISCAL 2011
----------------
Revenues $- $- $3,870
Operating income
(loss) (6) (17) 1,430
EBT (6) (46) 1,619
Discontinued
operations, net of
tax (5) - (267) (269)
Net income (loss) (6) (296) 999
Diluted EPS $- ($0.18) $0.59
Diluted shares used 1,689 1,689 1,689
Q1 - FISCAL 2011
----------------
Revenues $- $- $3,348
Operating income
(loss) - - 1,247
EBT - (21) 1,470
Discontinued
operations, net of
tax (5) - (80) (82)
Net income (loss) - (87) 1,170
Diluted EPS $- ($0.05) $0.71
Diluted shares used 1,648 1,648 1,648
Q4 - FISCAL 2010
----------------
Revenues $- $- $2,952
Operating income
(loss) - (15) 958
EBT - (32) 1,172
Discontinued
operations, net of
tax (5) - (70) (73)
Net income (loss) - (80) 865
Diluted EPS $- ($0.05) $0.53
Diluted shares used 1,621 1,621 1,621
Q3 - FISCAL 2010
----------------
Revenues $- $- $2,700
Operating income
(loss) - 47 893
EBT - 60 1,076
Discontinued
operations, net of
tax (5) - (62) (65)
Net income (loss) - (4) 767
Diluted EPS $- $- $0.47
Diluted shares used 1,642 1,642 1,642
Non-GAAP
Reconciling
SEGMENTS QCT QTL QWI Items (1)
-------- --- --- --- -----------
Q2 - FISCAL 2010
----------------
Revenues $1,537 $974 $152 ($2)
Operating income (loss)
EBT 344 821 (1) 94
Discontinued operations,
net of tax (5)
Net income (loss)
Diluted EPS
Diluted shares used
Q1 - FISCAL 2010
----------------
Revenues $1,608 $917 $142 $1
Operating income (loss)
EBT 425 772 9 104
Discontinued operations,
net of tax (5)
Net income (loss)
Diluted EPS
Diluted shares used
9 MONTHS - FISCAL 2011
----------------------
Revenues $6,272 $4,061 $493 $14
Change from prior year 30% 48% 8% N/M
Operating income (loss)
Change from prior year
EBT $1,487 $3,559 ($147) $205
Change from prior year 27% 57% N/M N/M
Discontinued operations,
net of tax (5)
Net income (loss)
Change from prior year
Diluted EPS
Change from prior year
Diluted shares used
9 MONTHS - FISCAL 2010
----------------------
Revenues $4,835 $2,738 $456 $1
Operating income (loss)
EBT 1,173 2,266 14 274
Discontinued operations,
net of tax (5)
Net income (loss)
Diluted EPS
Diluted shares used
12 MONTHS - FISCAL 2010
-----------------------
Revenues $6,695 $3,659 $628 $-
Operating income (loss)
EBT 1,693 3,020 12 361
Discontinued operations,
net of tax (5)
Net income (loss)
Diluted EPS
Diluted shares used
Share- Tax Items
SEGMENTS Non-GAAP Based (2)
-------- -------- Compensation* ----------
-------------
Q2 - FISCAL 2010
----------------
Revenues $2,661 $- $-
Operating income (loss) 1,065 (150) -
EBT 1,258 (150) -
Discontinued operations,
net of tax (5) - (3) -
Net income (loss) 989 (98) (33)
Diluted EPS $0.59 ($0.06) ($0.02)
Diluted shares used 1,678 1,678 1,678
Q1 - FISCAL 2010
----------------
Revenues $2,668 $- $-
Operating income (loss) 1,134 (147) -
EBT 1,310 (147) -
Discontinued operations,
net of tax (5) - (3) -
Net income (loss) 1,041 (114) (32)
Diluted EPS $0.62 ($0.07) ($0.02)
Diluted shares used 1,691 1,691 1,691
9 MONTHS - FISCAL 2011
----------------------
Revenues $10,840 $- $-
Change from prior year 35%
Operating income (loss) $4,461 ($561) -
Change from prior year 40% (27%)
EBT $5,104 ($561) -
Change from prior year 37% (27%)
Discontinued operations,
net of tax (5) $- ($4) -
Net income (loss) 4,036 (410) 21
Change from prior year 36% (27%) N/M
Diluted EPS $2.40 ($0.24) $0.01
Change from prior year 35% (26%) N/M
Diluted shares used 1,682 1,682 1,682
9 MONTHS - FISCAL 2010
----------------------
Revenues $8,030 $- $-
Operating income (loss) 3,189 (441) -
EBT 3,727 (441) -
Discontinued operations,
net of tax (5) - (8) -
Net income (loss) 2,967 (322) (119)
Diluted EPS $1.78 ($0.19) ($0.07)
Diluted shares used 1,670 1,670 1,670
12 MONTHS - FISCAL 2010
-----------------------
Revenues $10,982 $- $-
Operating income (loss) 4,316 (597) -
EBT 5,086 (597) -
Discontinued operations,
net of tax (5) - (11) -
Net income (loss) 4,071 (442) (159)
Diluted EPS $2.46 ($0.27) ($0.10)
Diluted shares used 1,658 1,658 1,658
Acquisition-
Related QSI
SEGMENTS Items (3) (4)* GAAP
-------- ------------ ---- ----
Q2 - FISCAL 2010
----------------
Revenues $- $- $2,661
Operating income (loss) (3) (16) 896
EBT (3) (16) 1,089
Discontinued operations,
net of tax (5) - (75) (78)
Net income (loss) (3) (81) 774
Diluted EPS $- ($0.05) $0.46
Diluted shares used 1,678 1,678 1,678
Q1 - FISCAL 2010
----------------
Revenues $- $- $2,668
Operating income (loss) - (7) 980
EBT - (7) 1,156
Discontinued operations,
net of tax (5) - (54) (57)
Net income (loss) - (54) 841
Diluted EPS $- ($0.03) $0.50
Diluted shares used 1,691 1,691 1,691
9 MONTHS - FISCAL 2011
----------------------
Revenues $- $- $10,840
Change from prior year 35%
Operating income (loss) ($83) ($28) $3,789
Change from prior year N/M N/M 37%
EBT ($83) ($97) $4,363
Change from prior year N/M N/M 31%
Discontinued operations,
net of tax (5) - ($303) ($307)
Net income (loss) (79) (364) 3,204
Change from prior year N/M N/M 35%
Diluted EPS ($0.05) ($0.22) $1.90
Change from prior year N/M N/M 33%
Diluted shares used 1,682 1,682 1,682
9 MONTHS - FISCAL 2010
----------------------
Revenues $- $- $8,030
Operating income (loss) (3) 25 2,770
EBT (3) 39 3,322
Discontinued operations,
net of tax (5) - (192) (200)
Net income (loss) (3) (141) 2,382
Diluted EPS $- ($0.08) $1.43
Diluted shares used 1,670 1,670 1,670
12 MONTHS - FISCAL 2010
-----------------------
Revenues $- $- $10,982
Operating income (loss) (3) 11 3,727
EBT (3) 7 4,493
Discontinued operations,
net of tax (5) - (262) (273)
Net income (loss) (3) (220) 3,247
Diluted EPS $- ($0.13) $1.96
Diluted shares used 1,658 1,658 1,658
(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) During the first quarter of fiscal 2011, we recorded a tax benefit
of $32 million related to fiscal 2010 due to the retroactive
reenactment of the federal R&D tax credit. Also, during the
first, second and third quarter of fiscal 2011, we recorded $3
million, $3 million and $4 million, respectively, in state tax
expense because deferred revenue related to the license agreement
signed in the first quarter of fiscal 2010 with Samsung is
taxable in fiscal 2011 but the resulting deferred tax asset will
reverse in future years when our state tax rate will be lower.
Our first, second and third quarter fiscal 2011 Non-GAAP results
exclude these items.
(3) Beginning in the third quarter of fiscal 2011, Non-GAAP results
exclude certain items related to acquisitions. During the third
quarter of fiscal 2011, Non-GAAP results excluded $45 million
related to the step-up of inventories to fair value and $32
million in amortization of intangible assets that resulted from
the acquisition of Atheros.
(4) At fiscal year-end, the sum of the quarterly tax provisions for
each column, including QSI, equals the annual tax provisions for
each column computed in accordance with GAAP. In interim
quarters, the tax provision for the QSI operating segment is
computed by subtracting the Non-GAAP tax provision, the tax
items column and the tax provision related to share-based
compensation from the GAAP tax provision.
(5) 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 third quarter fiscal 2011 earnings conference call will be broadcast live on July 20, 2011, beginning at 1:45 p.m. Pacific Time (PT) on the Company's web site at: http://www.qualcomm.com. This conference call may contain forward-looking financial information and 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 http://www.qualcomm.com immediately prior to commencement of the call. A taped audio replay will be available via telephone on July 20, 2011, beginning at approximately 5:00 p.m. PT through August 20, 2011 at 9:00 p.m. PT. To listen to the replay, U.S. callers may dial (800) 642-1687 and international callers may dial +1-706-645-9291. U.S. and international callers should use reservation number 78821001. An audio replay of the conference call will be available on the Company's web site at http://www.qualcomm.com following the live call.
Editor's Note: To view the web slides that accompany this earnings release and conference call, please go to the Qualcomm Investor Relations website at: http://investor.qualcomm.com/results.cfm
Qualcomm Incorporated (Nasdaq: QCOM) is a world leader in 3G and next-generation mobile technologies. For more than 25 years, Qualcomm ideas and inventions have driven the evolution of wireless communications, connecting people more closely to information, entertainment and each other. Today, Qualcomm technologies are powering the convergence of mobile communications and consumer electronics, making wireless devices and services more personal, affordable and accessible to people everywhere. For more information, please visit http://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 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 related to stock options is affected by factors that are subject to change, including the Company's stock price, stock market volatility, expected option life, risk-free interest rates and expected dividend payouts in future years. Certain tax items that were recorded in reported earnings in each fiscal year presented, but 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. In fiscal 2011, the Company began excluding the benefit of 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 recognition of the step-up of inventories to fair value and amortization of certain intangible assets starting with acquisitions completed in the third quarter of fiscal 2011. 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. We believe this practice also conforms to the approach taken by many other leading technology companies.
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 subject to risks and uncertainties. Actual results may differ substantially from those referred to herein due to a number of factors, including but not limited to risks associated with: the rate of deployment and adoption of, and demand for, our technologies in communications, products and services; the uncertainty of global economic conditions and its potential impact on demand for our products, services or applications and the value of our marketable securities; competition; our dependence on major 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 manufacturers and suppliers; foreign currency fluctuations; strategic investments and transactions we have or may pursue; defects or errors in our products and services; the development and commercial success of our QMT division's mirasol® display technology; as well as the other risks detailed from time-to-time in our SEC reports, including the report on Form 10-K for the year ended September 26, 2010 and the most recent Form 10-Q. 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 is a registered trademark of Qualcomm Incorporated. Mobile Station Modem, MSM, and FLO TV are trademarks of Qualcomm Incorporated. mirasol is a registered trademark of Qualcomm MEMS Technologies, Inc. CDMA2000 is a registered trademark of the Telecommunications Industry Association (TIA USA). All other trademarks are the property of their respective owners.
Qualcomm Contact:
Warren Kneeshaw
Phone: 1-858-658-4813
e-mail: ir@qualcomm.com
Qualcomm Incorporated
Supplemental Information for the Three Months Ended June 26, 2011
(Unaudited) Non-GAAP Share-Based Tax
Results Compensation Items
------- ------------ -----
($ in millions except per
share data)
Cost of Sales $1,204 $14 $-
R&D 661 95 -
SG&A 365 84 -
Operating income (loss) 1,393 (193) -
Investment income (loss),
net 181 (b) - -
Tax rate 21% 24% N/A
Net income (loss) $1,240 $(147) $(4) (d)
Diluted earnings (loss) per
share (EPS) $0.73 $(0.09) $-
Operating cash flow $1,379 $(35) $-
Operating cash flow as % of
revenues 38% N/A N/A
Free cash flow (e) $1,160 $(35) $-
Free cash flow as a % of
revenues 32% N/A N/A
Acquisition-
Related GAAP
Items (a) QSI Results
--------- --- -------
($ in millions except per
share data)
Cost of Sales $59 $1 $1,278
R&D - 1 757
SG&A 18 8 475
Operating income (loss) (77) (10) 1,113
Investment income (loss),
net - (20) (c) 161
Tax rate N/M N/M 23%
Net income (loss) $(73) $19 $1,035
Diluted earnings (loss) per
share (EPS) $(0.04) $0.01 $0.61
Operating cash flow $- $(80) $1,264
Operating cash flow as % of
revenues N/A N/A 35%
Free cash flow (e) $- $(80) $1,045
Free cash flow as a % of
revenues N/A N/A 29%
(a) Beginning in the third quarter of fiscal 2011, Non-GAAP
results exclude certain items related to acquisitions.
During the third quarter of fiscal 2011, Non-GAAP
results excluded $45 million related to the step-up of
inventories to fair value and $32 million in
amortization of intangible assets that resulted from the
acquisition of Atheros.
(b) Included $117 million in interest and dividend income
related to cash, cash equivalents and marketable
securities, which were not part of the Company's
strategic investments, and $72 million in net realized
gains on investments, partially offset by $5 million in
other-than-temporary losses on investments and $3
million in interest expense.
(c) Included $25 million in interest expense and $5 million
in other-than-temporary losses on investments,
partially offset by $10 million in interest and dividend
income related to cash, cash equivalents and marketable
securities.
(d) Included $4 million in state tax expense because deferred
revenue related to the license agreement signed in the
first quarter of fiscal 2010 with Samsung is taxable in
fiscal 2011 but the resulting deferred tax asset will
reverse in future years when our state tax rate will be
lower.
(e) Free cash flow is calculated as net cash provided by
operating activities less capital expenditures.
Reconciliation of these amounts is included in the
"Reconciliation of Non-GAAP Free Cash Flows to Net Cash
Provided by Operating Activities (GAAP) and Other
Supplemental Disclosures" for the three months ended
June 26, 2011, included herein.
N/M - Not Meaningful
N/A - Not Applicable
Sums may not equal totals due to rounding.
Qualcomm Incorporated
Supplemental Information for the Nine Months Ended June 26, 2011
(Unaudited) Non-GAAP Share-Based Tax
Results Compensation (a) Items
------- ------------ -----
($ in millions except per
share data)
Cost of Sales $3,272 $44 $-
R&D 1,855 277 -
SG&A 1,138 240 -
Operating income (loss) 4,461 (c) (561) -
Investment income (loss), net 643 (d) - -
Tax rate 21% 28% N/A
Net income (loss) $4,036 $(410) $21 (f)
Diluted earnings (loss) per
share (EPS) $2.40 $(0.24) $0.01
Operating cash flow $3,532 $(167) $-
Operating cash flow as % of
revenues 33% N/A N/A
Free cash flow (g) $3,138 $(167) $-
Free cash flow as a % of
revenues 29% N/A N/A
Acquisition-
Related GAAP
Items (b) QSI (a) Results
--------- ------- -------
($ in millions except per
share data)
Cost of Sales $59 $5 $3,380
R&D 6 6 2,144
SG&A 18 17 1,413
Operating income (loss) (83) (28) 3,789
Investment income (loss), net - (69) (e) 574
Tax rate N/M N/M 20%
Net income (loss) $(79) $(364) $3,204
Diluted earnings (loss) per
share (EPS) $(0.05) $(0.22) $1.90
Operating cash flow $- $(285) $3,080
Operating cash flow as % of
revenues N/A N/A 28%
Free cash flow (g) $- $(291) $2,680
Free cash flow as a % of
revenues N/A N/A 25% (a) During fiscal 2011, the Company 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.
(b) Beginning in the third quarter of fiscal 2011, Non-GAAP
results exclude certain items related to acquisitions.
During the third quarter of fiscal 2011, Non-GAAP results
excluded $45 million related to the step-up of
inventories to fair value and $32 million in amortization
of intangible assets that resulted from the acquisition of
Atheros. In addition, during the first nine months of
fiscal 2011, Non-GAAP results excluded $6 million in
acquired in-process research and development expense.
(c) During the first nine months of fiscal 2011, we recorded
impairment charges of $120 million related to our
Firethorn division, including $114 million in goodwill
impairment.
(d) Included $369 million in interest and dividend income
related to cash, cash equivalents and marketable
securities, which were not part of our strategic
investments, and $302 million in net realized gains on
investments, partially offset by $16 million in other-
than-temporary losses on investments and $11 million in
interest expense.
(e) Included $72 million in interest expense, $10 million in
other-than-temporary losses on investments and $5
million in equity in losses of investees, partially offset
by $15 million in interest and dividend income related to
cash, cash equivalents and marketable securities and $1
million in net realized gains on investments.
(f) Included a tax benefit of $32 million related to fiscal
2010 due to the retroactive reenactment of the federal R&D
tax credit and $10 million in state tax expense because
deferred revenue related to the license agreement signed
in the first quarter of fiscal 2010 with Samsung is
taxable in fiscal 2011 but the resulting deferred tax
asset will reverse in future years when our state tax rate
will be lower.
(g) 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 nine months ended June
26, 2011, included herein.
N/M - Not Meaningful
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 June 26, 2011
-------------------------------- Share-Based
Non-GAAP Compensation QSI GAAP
-------- ------------ --- ----
Net cash
provided
(used) by
operating
activities $1,379 $(35) (a) $(80) $1,264
Less: capital
expenditures (219) - - (219)
---- --- --- ----
Free cash flow $1,160 $(35) $(80) $1,045
====== ==== ==== ======
Revenues $3,623 $- $- $3,623
Free cash flow
as a % of
revenues 32% N/A N/M 29%
Other
supplemental
cash
disclosures:
Cash transfers
from QSI $(4) $- $4 $-
Cash transfers
to QSI (b) (89) - 89 -
--- --- --- ---
Net cash
transfers $(93) $- $93 $-
==== === === ===
Nine Months Ended June 26, 2011
------------------------------- Share-Based
Non-GAAP Compensation QSI GAAP
-------- ------------ --- ----
Net cash
provided
(used) by
operating
activities $3,532 $(167) (a) $(285) $3,080
Less: capital
expenditures (394) - (6) (400)
---- --- --- ----
Free cash flow $3,138 $(167) $(291) $2,680
====== ===== ===== ======
Revenues $10,840 $- $- $10,840
Free cash flow
as a % of
revenues 29% N/A N/M 25%
Other
supplemental
cash
disclosures:
Cash transfers
from QSI (c) $67 $- $(67) $-
Cash transfers
to QSI (b) (330) - 330 -
---- --- --- ---
Net cash
transfers $(263) $- $263 $-
===== === ==== ===
Three Months Ended June 27, 2010
--------------------------------
Share-Based
Non-GAAP Compensation QSI GAAP
-------- ------------ --- ----
Net cash
provided
(used) by
operating
activities $1,051 $(3) (a) $(97) $951
Less: capital
expenditures (97) - (20) (117)
--- --- --- ----
Free cash flow $954 $(3) $(117) $834
==== === ===== ====
Nine Months Ended June 27, 2010
------------------------------- Share-Based
Non-GAAP Compensation QSI GAAP
-------- ------------ --- ----
Net cash
provided
(used) by
operating
activities $3,297 $(34) (a) $(280) $2,983
Less: capital
expenditures (249) - (64) (313)
---- --- --- ----
Free cash flow $3,048 $(34) $(344) $2,670
====== ==== ===== ======
(a) Incremental tax benefits from stock options exercised during
the period.
(b) Primarily funding for strategic debt and equity investments
and QSI operating expenses.
(c) Cash primarily from the issuance of subsidiary shares to
noncontrolling interests.
N/M - Not Meaningful
N/A - Not Applicable
Qualcomm Incorporated
Reconciliation of Non-GAAP Tax Rate to GAAP Tax Rate
(in millions)
(Unaudited)
Three Months Ended June 26, 2011
--------------------------------
Non-GAAP Share-Based Tax Items
Results Compensation (a)
------- ------------ ------
Income (loss) from continuing
operations before income
taxes $1,574 $(193) $-
Income tax (expense) benefit (334) 46 (4)
---- --- ---
Income from continuing
operations $1,240 $(147) $(4)
====== ===== ===
Tax rate 21% 24% N/A
Acquisition-
Related GAAP
Items QSI (b) Results
----- ------- -------
Income (loss) from continuing
operations before income
taxes $(77) $(30) $1,274
Income tax (expense) benefit 4 (1) (289)
--- --- ----
Income from continuing
operations $(73) $(31) $985
==== ==== ====
Tax rate N/M N/M 23%
Nine Months Ended June 26, 2011
-------------------------------
Non-GAAP Share-Based Tax Items
Results Compensation (a)
------- ------------ ------
Income (loss) from continuing
operations before income
taxes $5,104 $(561) $-
Income tax (expense) benefit (1,068) 155 21
------ --- ---
Income from continuing
operations $4,036 $(406) $21
====== ===== ===
Tax rate 21% 28% N/A
Acquisition-
Related GAAP
Items QSI (b) Results
----- ------- -------
Income (loss) from continuing
operations before income
taxes $(83) $(97) $4,363
Income tax (expense) benefit 4 26 (862)
--- --- ----
Income from continuing
operations $(79) $(71) $3,501
==== ==== ======
Tax rate N/M N/M 20%
(a) During the first quarter of fiscal 2011, we recorded a tax benefit
of $32 million related to fiscal 2010 due to the retroactive
reenactment of the federal R&D tax credit. Also, during the first,
second and third quarter of fiscal 2011, we recorded $3 million,
$3 million and $4 million, respectively, in state tax expense
because deferred revenue related to the license agreement signed
in the first quarter of fiscal 2010 with Samsung is taxable in
fiscal 2011 but the resulting deferred tax asset will reverse in
future years when our state tax rate will be lower.
(b) At fiscal year-end, the sum of the quarterly tax provisions for
each column, including QSI, equals the annual tax provisions for
each column computed in accordance with GAAP. In interim
quarters, the tax provision for the QSI operating segment is
computed by subtracting the Non-GAAP tax provision, the tax items
column and the tax provision related to share-based compensation
from the GAAP tax provision.
N/M - Not Meaningful
Sums may not equal totals due to rounding
Qualcomm Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
ASSETS
June September
26, 26,
2011 2010
---- ----
Current assets:
Cash and cash equivalents $5,746 $3,547
Marketable securities 4,982 6,732
Accounts receivable, net 832 730
Inventories 753 528
Deferred tax assets 310 321
Other current assets 210 275
--- ---
Total current assets 12,833 12,133
Marketable securities 9,493 8,123
Deferred tax assets 1,884 1,922
Assets held for sale 746 -
Property, plant and equipment, net 2,267 2,373
Goodwill 3,195 1,488
Other intangible assets, net 3,098 3,022
Other assets 1,584 1,511
----- -----
Total assets $35,100 $30,572
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $761 $764
Payroll and other benefits related
liabilities 568 467
Unearned revenues 541 623
Loans payable 1,092 1,086
Income taxes payable 84 1,443
Other current liabilities 1,418 1,085
----- -----
Total current liabilities 4,464 5,468
Unearned revenues 3,630 3,485
Other liabilities 705 761
Total liabilities 8,799 9,714
----- -----
Stockholders' equity:
Qualcomm Incorporated (Qualcomm) Stockholders'
equity:
Preferred stock, $0.0001 par value; issuable in
series;
8 shares authorized; none outstanding
at June 26, 2011 and September 26,
2010 - -
Common stock, $0.0001 par value; 6,000 shares
authorized;
1,677 and 1,612 shares issued and
outstanding at June 26, 2011 and
September 26, 2010, respectively - -
Paid-in capital 10,011 6,856
Retained earnings 15,516 13,305
Accumulated other comprehensive income 744 697
--- ---
Total Qualcomm stockholders' equity 26,271 20,858
Noncontrolling interests 30 -
--- ---
Total stockholders' equity 26,301 20,858
Total liabilities and stockholders
equity $35,100 $30,572
======= =======
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
June 26, June 27, June 26, June 27,
2011 2010* 2011 2010*
---- ----- ---- -----
Revenues:
Equipment and services $2,297 $1,766 $6,550 $5,021
Licensing and royalty fees 1,326 934 4,290 3,009
----- --- ----- -----
Total revenues 3,623 2,700 10,840 8,030
----- ----- ------ -----
Operating expenses:
Cost of equipment and
services revenues 1,278 852 3,380 2,375
Research and development 757 623 2,144 1,822
Selling, general and
administrative 475 332 1,413 1,063
Goodwill impairment - - 114 -
--- --- --- ---
Total operating expenses 2,510 1,807 7,051 5,260
----- ----- ----- -----
Operating income 1,113 893 3,789 2,770
Investment income, net 161 183 574 552
--- --- --- ---
Income from continuing
operations before income
taxes 1,274 1,076 4,363 3,322
Income tax expense (289) (244) (862) (740)
---- ---- ---- ----
Income from continuing
operations 985 832 3,501 2,582
Discontinued operations, net
of income taxes 44 (65) (307) (200)
--- --- ---- ----
Net Income 1,029 767 3,194 2,382
Net loss attributable to
noncontrolling interests 6 - 10 -
--- --- --- ---
Net income attributable to
Qualcomm $1,035 $767 $3,204 $2,382
====== ==== ====== ======
Basic earnings (loss) per
share attributable to
Qualcomm:
Continuing operations $0.59 $0.51 $2.13 $1.56
Discontinued operations 0.03 (0.04) (0.19) (0.12)
---- ----- ----- -----
Net income $0.62 $0.47 $1.94 $1.44
===== ===== ===== =====
Diluted earnings (loss) per
share attributable to
Qualcomm:
Continuing operations $0.58 $0.51 $2.09 $1.55
Discontinued operations 0.03 (0.04) (0.19) (0.12)
---- ----- ----- -----
Net income $0.61 $0.47 $1.90 $1.43
===== ===== ===== =====
Shares used in per share
calculations:
Basic 1,673 1,629 1,650 1,654
===== ===== ===== =====
Diluted 1,709 1,642 1,682 1,670
===== ===== ===== =====
Dividends per share
announced $0.215 $0.190 $0.595 $0.530
====== ====== ====== ======
*As adjusted for discontinued operations
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
June 26, June 27, June 26, June 27,
2011 2010 2011 2010
---- ---- ---- ----
Operating Activities:
Net income $1,029 $767 $3,194 $2,382
Adjustments to reconcile
net income to net cash
provided by
operating activities:
Depreciation and
amortization 185 166 820 495
Goodwill impairment - - 114 -
Revenues related to non-
monetary exchanges (31) (31) (93) (99)
Income tax provision in
excess of (less than)
income tax payments 116 86 (1,218) 80
Non-cash portion of
share-based
compensation expense 193 149 568 453
Incremental tax benefit
from stock options
exercised (35) (3) (167) (34)
Net realized gains on
marketable securities
and other investments (73) (92) (304) (274)
Net impairment losses on
marketable securities
and other investments 10 29 26 102
Other items, net 5 (66) 23 (70)
Changes in assets and
liabilities, net of
effects of acquisitions:
Accounts receivable, net (2) (126) 21 (91)
Inventories 38 (45) (43) 7
Other assets (17) (1) (36) (71)
Trade accounts payable (46) 104 (191) 23
Payroll, benefits and
other liabilities (59) 78 210 (161)
Unearned revenues (49) (64) 156 241
--- --- --- ---
Net cash provided by
operating activities 1,264 951 3,080 2,983
----- --- ----- -----
Investing Activities:
Capital expenditures (219) (117) (400) (313)
Advanced payment on
spectrum - (1,064) - (1,064)
Purchases of available-
for-sale securities (2,426) (2,569) (8,271) (7,049)
Proceeds from sale of
available-for-sale
securities 3,888 3,113 9,355 7,354
Atheros acquisition, net
of cash acquired (3,130) - (3,130) -
Other acquisitions and
investments, net of cash
acquired (6) (17) (95) (45)
Other items, net (45) 85 (22) 121
--- --- --- ---
Net cash used by
investing activities (1,938) (569) (2,563) (996)
------ ---- ------ ----
Financing Activities:
Borrowing under loans
payable - 1,064 1,260 1,064
Repayment of loans
payable - - (1,260) -
Proceeds from issuance of
common stock 368 35 2,392 519
Proceeds from issuance of
subsidiary shares to
noncontrolling interests - - 62 -
Incremental tax benefit
from stock options
exercised 35 3 167 34
Repurchase and retirement
of common stock - (1,178) - (2,893)
Dividends paid (360) (309) (985) (872)
Other items, net 10 (1) 36 (2)
--- --- --- ---
Net cash provided (used)
by financing activities 53 (386) 1,672 (2,150)
--- ---- ----- ------
Effect of exchange rate
changes on cash - (8) 10 (13)
--- --- --- ---
Net (decrease) increase
in cash and cash
equivalents (621) (12) 2,199 (176)
Cash and cash equivalents
at beginning of period 6,367 2,553 3,547 2,717
----- ----- ----- -----
Cash and cash equivalents
at end of period $5,746 $2,541 $5,746 $2,541
====== ====== ====== ======
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