Qualcomm Announces Third Quarter Fiscal 2013 Results Revenues $6.2 billion

GAAP EPS $0.90, Non-GAAP EPS $1.03

- Record Quarterly Revenues; Raising Fiscal 2013 EPS Guidance -

SAN DIEGO, July 24, 2013 /PRNewswire-FirstCall/ -- 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 2013 ended June 30, 2013.

"We delivered another strong quarter as our Qualcomm Snapdragon solutions were prominent in a broad set of flagship smartphones, and 3G/4G device average selling prices were stronger than expected. We also focused on return of capital to stockholders and increased our stock repurchases and dividends paid during the quarter," said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. "This quarter, we continued our technology leadership, with our Snapdragon 800 processor powering the world's first LTE-Advanced smartphone. We see expanding opportunities for growth of 3G/4G devices around the globe, driven by the strong pace of innovation in the industry."

Third Quarter Results (GAAP)*

  • Revenues: 1 $6.24 billion, up 35 percent year-over-year (y-o-y) and 2 percent sequentially.
  • Operating income: 1 $1.68 billion, up 21 percent y-o-y and down 11 percent sequentially.
  • Net income: 2 $1.58 billion, up 31 percent y-o-y and down 15 percent sequentially.
  • Diluted earnings per share: 2 $0.90, up 30 percent y-o-y and down 15 percent sequentially.
  • Effective tax rate: 1 17 percent for the quarter.
  • Operating cash flow: $2.08 billion, up 125 percent y-o-y; 33 percent of revenues.
  • Return of capital to stockholders: $1.64 billion, including $1.04 billion through repurchases of 16.7 million shares of common stock and $604 million, or $0.35 per share, of cash dividends paid.

1 Throughout this news release, fiscal 2012 results for FLO TV are presented as discontinued operations. Revenues, operating expenses, operating income, earnings before tax (EBT) and effective tax rates are from continuing operations (i.e., before adjustments for noncontrolling interests and, for fiscal 2012, discontinued operations), unless otherwise stated.

2 Throughout this news release, net income and diluted earnings per share are attributable to Qualcomm (i.e., after adjustments for noncontrolling interests and discontinued operations), unless otherwise stated.

Non-GAAP Third Quarter Results*

Non-GAAP results exclude the QSI (Qualcomm Strategic Initiatives) segment and certain share-based compensation, acquisition-related items and tax items.

  • Revenues: $6.24 billion, up 35 percent y-o-y and 2 percent sequentially.
  • Operating income: $2.04 billion, up 18 percent y-o-y and down 9 percent sequentially.
  • Net income: $1.82 billion, up 23 percent y-o-y and down 12 percent sequentially.
  • Diluted earnings per share: $1.03, up 21 percent y-o-y and down 12 percent sequentially.
  • Effective tax rate: 18 percent for the quarter.
  • Free cash flow (defined as net cash from operating activities less capital expenditures): $1.85 billion, up 181 percent y-o-y; 30 percent of revenues.

Detailed reconciliations between results reported in accordance with generally accepted accounting principles (GAAP) and Non-GAAP results are included within this news release.

*The following should be considered in regards to the year-over-year and sequential comparisons: Third quarter fiscal 2013 GAAP and Non-GAAP results included a $158 million loss, or $0.06 per share, that resulted from an impairment charge on certain long-lived assets related to our QMT division.

Third Quarter Key Business Metrics

  • MSMchip shipments: 172 million units, up 22 percent y-o-y and down 1 percent sequentially.
  • March quarter total reported device sales: approximately $56.5 billion, up 18 percent y-o-y and down 8 percent sequentially.
    • March quarter estimated 3G/4G device shipments: approximately 244 to 248 million units, at an estimated average selling price of approximately $227 to $233 per unit.

Cash and Marketable Securities

Our cash, cash equivalents and marketable securities totaled $30.4 billion at the end of the third quarter of fiscal 2013, compared to $26.5 billion a year ago and $30.5 billion at the end of the second quarter of fiscal 2013. On July 17, 2013, we announced a cash dividend of $0.35 per share payable on September 25, 2013 to stockholders of record as of September 4, 2013. During the third quarter of fiscal 2013, we repurchased and retired 16.7 million shares of common stock for $1.04 billion. Since June 30, 2013, we repurchased and retired an additional 8.4 million shares of common stock for $512 million.

Research and Development

($ in millions)

Non-GAAP


 

QSI


 

Share-Based Compensation


 

Acquisition-Related
Items


 

GAAP

Third quarter fiscal 2013

$

1,130


 

 

$

1


 

 

$

166


 

 

$

1


 

 

$

1,298


 

As % of revenues

18%


 

 

 

 

 

 

 

 

21%


 

Third quarter fiscal 2012

$

832


 

 

$

1


 

 

$

141


 

 

$


 

 

$

974


 

As % of revenues

18%


 

 

 

 

 

 

 

 

21%


 

Year-over-year change ($)

36%


 

 

N/M


 

 

18%


 

 

N/M


 

 

33%


 

N/M - Not Meaningful

Non-GAAP research and development (R&D) expenses increased 36 percent y-o-y primarily due to an increase in costs to develop CDMA-based 3G, OFDMA-based 4G LTE and other technologies for integrated circuit and related software products and to expand our intellectual property portfolio.

Selling, General and Administrative

($ in millions)

Non-GAAP


 

QSI


 

Share-Based
Compensation


 

Acquisition-Related
Items


 

GAAP

Third quarter fiscal 2013

$

505


 

 

$

6


 

 

$

96


 

 

$

6


 

 

$

613


 

As % of revenues

8%


 

 

 

 

 

 

 

 

10%


 

Third quarter fiscal 2012

$

423


 

 

$

10


 

 

$

104


 

 

$

7


 

 

$

544


 

As % of revenues

9%


 

 

 

 

 

 

 

 

12%


 

Year-over-year change ($)

19%


 

 

N/M


 

 

(8%)


 

 

N/M


 

 

13%


 

N/M - Not Meaningful

Non-GAAP selling, general and administrative (SG&A) expenses increased 19 percent y-o-y primarily due to increases in employee-related expenses, selling and marketing expenses and professional fees, partially offset by a decrease in costs related to litigation and other legal matters.

Effective Income Tax Rates

Our fiscal 2013 annual effective income tax rates are estimated to be approximately 16 percent for GAAP and approximately 17 to 18 percent for Non-GAAP, consistent with our prior estimates. The third quarter effective income tax rates were 17 percent for GAAP and 18 percent for Non-GAAP.

QSI Segment

QSI makes strategic investments, many of which are in early-stage companies, and holds wireless spectrum. GAAP results for the third quarter of fiscal 2013 included $0.02 earnings per share for QSI. In the third quarter of fiscal 2013, QSI deconsolidated the subsidiaries that hold the BWA spectrum in India.

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


 

 

 

 

 

 

 

 

 

FOURTH FISCAL QUARTER


 

 

Q4 FY12

Results

Current Guidance

Q4 FY13 Estimates


 

Revenues


 

$4.87B

$5.9B - $6.6B


 

Year-over-year change


 

increase 21% - 35%


 

Non-GAAP Diluted earnings per share (EPS)

 

$0.89

$1.02 - $1.10


 

Year-over-year change


 

increase 15% - 24%


 

Diluted EPS attributable to QSI


 

$0.01

$0.00


 

Diluted EPS attributable to share-based compensation


 

($0.13)

 

($0.13)


 

Diluted EPS attributable to acquisition-related items


 

($0.04)

 

($0.03)


 

Diluted EPS attributable to tax items

$0.01

N/A


 

GAAP Diluted EPS


 

$0.73

$0.86 - $0.94


 

Year-over-year change


 

increase 18% - 29%


 

Metrics


 

 

 

MSM chip shipments

141M

171M - 181M


 

Year-over-year change


 

increase 21% - 28%


 

Total reported device sales (1)

approx. $46.5B*

approx. $55.0B - $60.0B*


 

Year-over-year change


 

increase 18% - 29%


 

*Est. sales in June quarter, reported in September quarter


 

 

 

 

 

 

 

 

 

 

 

 

 

 

FISCAL YEAR


 

 

FY 2012

Results (2)

Prior Guidance

FY 2013 Estimates (3)

Current Guidance

FY 2013 Estimates (3)


 

Revenues


 

$19.12B

$24.0B - $25.0B

$24.3B - $25.0B


 

Year-over-year change


 

increase 26% - 31%

increase 27% - 31%


 

Non-GAAP Diluted earnings per share (EPS)


 

$3.71

$4.40 - $4.55

$4.48 - $4.56


 

Year-over-year change


 

increase 19% - 23%

increase 21% - 23%


 

Diluted EPS attributable to QSI


 

$0.40

 

$0.01

 

$0.04


 

Diluted EPS attributable to share-based compensation


 

($0.47)

 

($0.51)

 

($0.50)


 

Diluted EPS attributable to acquisition-related items


 

($0.14)

 

($0.16)

 

($0.16)


 

Diluted EPS attributable to tax items


 

$0.01

 

$0.04

 

$0.04


 

GAAP Diluted EPS


 

$3.51

$3.78 - $3.93

$3.90 - $3.98


 

Year-over-year change


 

increase 8% - 12%

increase 11% - 13%


 

Metrics


 

 

 

 

Est. fiscal year* CDMA-based device average selling price range (1)

approx. $216 - $222

approx. $216 - $224

approx. $223 - $229


 

*Shipments in Sept. to June quarters, reported in Dec. to Sept. quarters


 

 

 

 

 

 

 

 

 

CALENDAR YEAR Device Estimates (1)


 

 

Calendar 2012

Estimates

Prior Guidance

Calendar 2013

Estimates

Current Guidance

Calendar 2013

Estimates


 

Est. 3G/4G device shipments


 

 

 

 

March quarter

approx. 206M - 211M

not provided

approx. 244M - 248M


 

June quarter

approx. 210M - 214M

not provided

not provided


 

September quarter

approx. 233M - 237M

not provided

not provided


 

December quarter

approx. 279M - 283M

not provided

not provided


 

Est. calendar year range (approx.)

928M - 945M

1,015M - 1,085M

1,015M - 1,085M


 

Est. calendar year midpoint (approx.) (4)

937M

1,050M

1,050M


 

 

 

(1)

 

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 CDMA/OFDMA multimode 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 average selling prices (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.

(2)

FY 2012 results for QSI and GAAP included $0.44 EPS related to a $1.2 billion gain associated with the sale of substantially all of our 700 MHz spectrum, which was recognized in discontinued operations and was excluded from Non-GAAP results.

(3)

FY 2013 guidance for tax items includes $0.04 EPS related to a tax benefit that resulted from the retroactive reinstatement of the federal R&D tax credit related to fiscal 2012, which was excluded from Non-GAAP results.

(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.

N/A - Not Applicable
Sums may not equal totals due to rounding.

Results of Business Segments

The following table reconciles our Non-GAAP results to our GAAP results (in millions, except per share data):


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENTS                   

QCT

QTL

QWI

Non-GAAP Reconciling Items (1)

Non-
GAAP (2)

QSI (2)

Share-Based Compensation (2)

Acquisition-Related Items (2)

Tax
Items

GAAP

Q3 - FISCAL 2013


 

Revenues

$4,222

$1,867

$158

($4)

$6,243

 

$—

 

$—

 

$—

 

$—

$6,243

Change from prior year

47%

17%

(1%)

N/M

35%


 

 

 

 

35%

Change from prior quarter

8%

(9%)

2%

N/M

2%


 

 

 

 

2%

Operating income (loss)

$2,035

($7)

($280)

($71)

 

$—

$1,677

Change from prior year


 

 

 

 

18%

36%

(6%)

(16%)


 

21%

Change from prior quarter


 

 

 

 

(9%)

(40%)

(4%)

14%


 

(11%)

EBT

$738

$1,633

($16)

($145)

$2,210

$51

($280)

($71)

 

$—

$1,910

Change from prior year

56%

16%

N/M

N/M

15%

N/M

(6%)

(16%)


 

21%

Change from prior quarter

8%

(9%)

N/M

N/M

(10%)

55%

(4%)

14%


 

(11%)

EBT as % of revenues

17%

87%

N/M

N/M

35%


 

 

 

 

31%

Net income (loss)

$1,823

$43

($222)

($64)

 

$—

$1,580

Change from prior year


 

 

 

 

23%

N/M

(6%)

(10%)

N/A

31%

Change from prior quarter


 

 

 

 

(12%)

19%

(1%)

20%

N/M

(15%)

Diluted EPS

$1.03

$0.02

($0.13)

($0.04)

 

$—

$0.90

Change from prior year


 

 

 

 

21%

N/M

(8%)

(33%)

N/A

30%

Change from prior quarter


 

 

 

 

(12%)

—%

(8%)

20%

N/M

(15%)

Diluted shares used

1,765

1,765

1,765

1,765

1,765

1,765

Q2 - FISCAL 2013

Revenues

$3,916

$2,057

$155

($4)

$6,124

 

$—

 

$—

 

$—

 

$—

$6,124

Operating income (loss)

2,233

(5)

(268)

(83)

1,877

EBT

$681

$1,803

 

$—

($30)

2,454

33

(268)

(83)

2,136

Net income (loss)

2,066

36

(220)

(80)

64

1,866

Diluted EPS

$1.17

$0.02

($0.12)

($0.05)

$0.04

$1.06

Diluted shares used

1,763

1,763

1,763

1,763

1,763

1,763

Q3 - FISCAL 2012


 

Revenues

$2,869

$1,593

$160

$4

$4,626

 

$—

 

$—

 

$—

 

$—

$4,626

Operating income (loss)

1,718

(11)

(264)

(61)

1,382

EBT

$472

$1,407

($6)

$49

1,922

(16)

(264)

(61)

1,581

Discontinued operations, net of tax

(3)

(3)

Net income (loss)

1,486

(11)

(210)

(58)

1,207

Diluted EPS

$0.85

($0.01)

($0.12)

($0.03)

 

$—

$0.69

Diluted shares used

1,758

1,758

1,758

1,758

1,758

1,758

Q4 - FISCAL 2012


 

Revenues

$3,129

$1,572

$161

$9

$4,871

 

$—

 

$—

 

$—

 

$—

$4,871

Operating income (loss)

1,612

(4)

(284)

(89)

1,235

EBT

$486

$1,370

($1)

$65

1,920

(21)

(284)

(89)

1,526

Discontinued operations, net of tax

23

23

Net income (loss)

1,547

14

(222)

(78)

10

1,271

Diluted EPS

$0.89

$0.01

($0.13)

($0.04)

$0.01

$0.73

Diluted shares used

1,745

1,745

1,745

1,745

1,745

1,745


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SEGMENTS                   

QCT

QTL

QWI

Non-GAAP Reconciling Items (1)

Non-
GAAP (2)

QSI (2)

Share-Based Compensation (2)

Acquisition-Related Items (2)

Tax Items

GAAP

9 MONTHS - FISCAL 2013


 

Revenues

$12,258

$5,680

$459

($12)

$18,385

 

$—

 

$—

 

$—

 

$—

$18,385

Change from prior year

36%

19%

(3%)

N/M

29%


 

 

 

 

29%

Operating income (loss)

$6,716

($20)

($829)

($225)

 

$—

$5,642

Change from prior year


 

 

 

 

22%

82%

(10%)

(26%)


 

27%

EBT

$2,487

$4,968

($20)

($75)

$7,360

$66

($829)

($225)

 

$—

$6,372

Change from prior year

37%

18%

(33%)

N/M

20%

N/M

(10%)

(26%)


 

27%

EBT as % of revenues

20%

87%

N/M

N/M

40%


 

 

 

 

35%

Net income (loss)

$6,094

$67

($661)

($212)

$64

$5,352

Change from prior year


 

 

 

 

24%

(90%)

(12%)

(28%)

N/M

11%

Diluted EPS

$3.46

$0.04

($0.38)

($0.12)

$0.04

$3.04

Change from prior year


 

 

 

 

22%

(90%)

(12%)

(33%)

N/M

9%

Diluted shares used

1,760

1,760

1,760

1,760

1,760

1,760

9 MONTHS - FISCAL 2012


 

Revenues

$9,012

$4,755

$471

$13

$14,251

 

$—

 

$—

 

$—

 

$—

$14,251

Operating income (loss)

5,489

(112)

(751)

(178)

4,448

EBT

$1,810

$4,215

($15)

$105

6,115

(149)

(751)

(178)

5,037

Discontinued operations, net of tax

754

(1)

753

Net income (loss)

4,917

675

(589)

(165)

4,838

Diluted EPS

$2.83

$0.39

($0.34)

($0.09)

 

$—

$2.78

Diluted shares used

1,740

1,740

1,740

1,740

1,740

1,740

12 MONTHS - FISCAL 2012


 

Revenues

$12,141

$6,327

$633

$20

$19,121

 

$—

 

$—

 

$—

 

$—

$19,121

Operating income (loss)

7,100

(116)

(1,035)

(267)

5,682

EBT

$2,296

$5,585

($15)

$168

8,034

(170)

(1,035)

(267)

6,562

Discontinued operations, net of tax

777

(1)

776

Net income (loss)

6,463

690

(811)

(243)

10

6,109

Diluted EPS

$3.71

$0.40

($0.47)

($0.14)

$0.01

$3.51

Diluted shares used

1,741

1,741

1,741

1,741

1,741

1,741


 

 

(1)

Non-GAAP reconciling items related to revenues consisted primarily of nonreportable segment revenues less intersegment eliminations. Non-GAAP reconciling items related to earnings before taxes consist primarily of certain costs of equipment and services revenues, research and development expenses, sales and marketing expenses, other operating expenses and certain investment income or losses and interest expense 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 provision (benefit) 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.

N/M - Not Meaningful
N/A - Not Applicable
Sums may not equal totals due to rounding.

Conference Call

Qualcomm's third quarter fiscal 2013 earnings conference call will be broadcast live on July 24, 2013, beginning at 1:45 p.m. Pacific Time (PT) at http://investor.qualcomm.com/events.cfm. This conference call will include a discussion of "Non-GAAP financial measures" as 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 other financial and statistical information to be discussed on the conference call, will be posted at www.qualcomm.com/investor immediately prior to commencement of the call. An audio replay will be available at http://investor.qualcomm.com/events.cfm and via telephone following the live call for 30 days thereafter. To listen to the replay via telephone, U.S. callers may dial (855) 859-2056, and international callers may dial (404) 537-3406. Callers should use reservation number 15022636.

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 and Non-GAAP results are presented herein.

The Company uses Non-GAAP financial information (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 QCT (Qualcomm CDMA Technologies), QTL (Qualcomm Technology Licensing) and QWI (Qualcomm Wireless & Internet) segments; and (iii) to compare the performance and efficiency of these segments against each other and against competitors. Non-GAAP measurements of the following financial data are used by the Company: revenues, cost of revenues, R&D expenses, SG&A expenses, other 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. The Company 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. The Company presents Non-GAAP financial information to provide greater transparency to investors with respect to its use of such information in financial and operational decision-making.

Non-GAAP information used by management excludes QSI and certain share-based compensation, acquisition-related items and tax items.

  • QSI 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 expense primarily relates to restricted stock units and stock options. Certain share-based compensation is excluded because management views such expenses as unrelated to the operating activities of the Company's ongoing core businesses. Further, the fair values of share-based awards are affected by factors that are variable on each grant date, which may include the Company's stock price, stock market volatility, expected award life, risk-free interest rates and expected dividend payouts in future years.
  • Acquisition-related items relate to amortization and impairment 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 from restructuring the ownership of such acquired assets. Additionally, starting with acquisitions completed in the fourth quarter of fiscal 2012, the Company began excluding expenses related to the termination of contracts that limit the use of the acquired intellectual property. These acquisition-related items are excluded and are not allocated to the Company's segments because management views such expenses as unrelated to the operating activities of the Company's ongoing core businesses. In addition, these charges are impacted by the size and timing of acquisitions, potentially obscuring period to period comparisons of the Company's operating businesses.
  • Certain tax items that were recorded 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.

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. In addition, management uses this measure to evaluate the Company's performance and to compare its operating performance with other companies in the industry.

About Qualcomm

Qualcomm Incorporated (Nasdaq: QCOM) is a world leader in 3G, 4G and next-generation wireless technologies. Qualcomm Incorporated includes Qualcomm's licensing business, QTL, and the vast majority of its patent portfolio. Qualcomm Technologies, Inc., a wholly-owned subsidiary of Qualcomm Incorporated, operates, along with its subsidiaries, substantially all of Qualcomm's engineering, research and development functions, and substantially all of its products and services businesses, including its semiconductor business, QCT. 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 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 expanding opportunities for growth of 3G/4G devices around the globe driven by the strong pace of innovation in the industry; our business outlook; and our estimates and guidance related to revenues, GAAP and Non-GAAP diluted earnings per share, effective income tax rates, MSM chip shipments, total reported device sales, 3G/4G device average selling price ranges and 3G/4G device shipments, ranges and midpoints. 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 our technologies and our customers' and licensees' sales of equipment, products and services based on these technologies; competition; our dependence on a small number of customers and licensees; attacks on our licensing business model, including current and future legal proceedings and actions of governmental or quasi-governmental bodies; our dependence on third-party suppliers, including the potential impact of supply constraints; the enforcement and protection of our intellectual property rights; claims by third parties that we infringe their intellectual property; global economic conditions that impact the communications industry and the potential impact on demand for our products and our customers' and licensees' products; our stock price and earnings volatility; strategic transactions and investments; the commercial success of our QMT division's display technology; foreign currency fluctuations; and failures, defects or errors in our products and services or in the products of our customers and licensees. These and other risks are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2012 and Quarterly Report on Form 10-Q for the third quarter ended June 30, 2013 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, Snapdragon and MSM are trademarks of Qualcomm Incorporated, registered in the United States and other countries. 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 30, 2013

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Results

QSI

Share-Based
Compensation

Acquisition-
Related Items (a)

GAAP

Results

($ in millions, except per share data)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of equipment and services revenues


 

$

2,415


 

 

$


 

 

$

18


 

 

$

64


 

 

$

2,497


 

 

R&D


 

1,130


 

 

1


 

 

166


 

 

1


 

 

1,298


 

 

SG&A


 

505


 

 

6


 

 

96


 

 

6


 

 

613


 

 

Other operating expenses


 

158

(b)


 


 

 


 

 


 

 

158


 

 

Operating income (loss)


 

2,035


 

 

(7)


 

 

(280)


 

 

(71)


 

 

1,677


 

 

Investment income, net


 

$

175

(c)


 

$

58

(d)


 

$


 

 

$


 

 

$

233


 

 

Tax rate


 

18%


 

 

20%


 

 

21%


 

 

10%


 

 

17%


 

 

Net income (loss)


 

$

1,823


 

 

$

43


 

 

$

(222)


 

 

$

(64)


 

 

$

1,580


 

 

Diluted earnings (loss) per share (EPS)


 

$

1.03


 

 

$

0.02


 

 

$

(0.13)


 

 

$

(0.04)


 

 

$

0.90


 

 

Operating cash flow


 

$

2,157


 

 

$

(5)


 

 

$

(75)


 

 

$


 

 

$

2,077


 

 

Operating cash flow as % of revenues


 

35%


 

 

N/A


 

 

N/A


 

 

N/A


 

 

33%


 

 

Free cash flow (e)


 

$

1,850


 

 

$

(12)


 

 

$

(75)


 

 

$


 

 

$

1,763


 

 

Free cash flow as % of revenues


 

30%


 

 

N/A


 

 

N/A


 

 

N/A


 

 

28%


 

 

 

(a)

Included amortization and impairment of certain intangible assets and the recognition of the step-up of inventories to fair value.

(b)

Included a $158 million loss, or $0.06 per share, that resulted from an impairment charge on certain long-lived assets related to our QMT division.

(c)

Included $179 million in interest and dividend income, $15 million in net realized gains on investments and $5 million in net gains on derivatives, partially offset by $22 million in other-than-temporary losses on investments, $1 million in losses on deconsolidation of subsidiaries and $1 million in interest expense.

(d)

Included $45 million in net realized gains on investments, $22 million in gains on deconsolidation of subsidiaries and $3 million in interest and dividend income, partially offset by $6 million in interest expense, $5 million in other-than-temporary losses on investments and $1 million in equity in net losses of investees.

(e)

Free cash flow is defined 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 30, 2013 included herein.

N/A - Not Applicable
Sums may not equal totals due to rounding.


 

 

Qualcomm Incorporated

Supplemental Information for the Nine Months Ended June 30, 2013

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Results

QSI

Share-Based Compensation

Acquisition-
Related Items (a)

Tax Items (b)

GAAP

Results

($ in millions, except per share data)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of equipment and services revenues


 

$

6,848


 

 

$


 

 

$

55


 

 

$

203


 

 

$


 

 

$

7,106


 

 

R&D


 

3,135


 

 

3


 

 

478


 

 

2


 

 


 

 

3,618


 

 

SG&A


 

1,528


 

 

17


 

 

296


 

 

20


 

 


 

 

1,861


 

 

Other operating expenses


 

158

(c)


 


 

 


 

 


 

 

 

 

 

158


 

 

Operating income (loss)


 

6,716


 

 

(20)


 

 

(829)


 

 

(225)


 

 


 

 

5,642


 

 

Investment income, net


 

$

644

(d)


 

$

86

(e)


 

$


 

 

$


 

 

$


 

 

$

730


 

 

Tax rate


 

17%


 

 

9%


 

 

20%


 

 

6%


 

 

N/A


 

 

16%


 

 

Net income (loss)


 

$

6,094


 

 

$

67


 

 

$

(661)


 

 

$

(212)


 

 

$

64


 

 

$

5,352


 

 

Diluted earnings (loss) per share (EPS)


 

$

3.46


 

 

$

0.04


 

 

$

(0.38)


 

 

$

(0.12)


 

 

$

0.04


 

 

$

3.04


 

 

Operating cash flow


 

$

6,469


 

 

$

(23)


 

 

$

(178)


 

 

$


 

 

$


 

 

$

6,268


 

 

Operating cash flow as % of revenues


 

35%


 

 

N/A


 

 

N/A


 

 

N/A


 

 

N/A


 

 

34%


 

 

Free cash flow (f)


 

$

5,696


 

 

$

(58)


 

 

$

(178)


 

 

$


 

 

$


 

 

$

5,460


 

 

Free cash flow as % of revenues


 

31%


 

 

N/A


 

 

N/A


 

 

N/A


 

 

N/A


 

 

30%


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

Included amortization and impairment of certain intangible assets, expense associated with the termination of a contract and the recognition of the step-up of inventories to fair value.

(b)

Included a $64 million tax benefit as a result of the retroactive reinstatement of the federal R&D tax credit related to fiscal 2012.

(c)

Included a $158 million loss, or $0.06 per share, that resulted from an impairment charge on certain long-lived assets related to our QMT division.

(d)

Included $521 million in interest and dividend income, $147 million in net realized gains on investments and $17 million in net gains on derivatives, partially offset by $36 million in other-than-temporary losses on investments, $4 million in interest expense and $1 million in losses on deconsolidation of subsidiaries.

(e)

Included $92 million in net realized gains on investments, $22 million in gains on deconsolidation of subsidiaries and $8 million in interest and dividend income, partially offset by $18 million in interest expense, $13 million in other-than-temporary losses on investments and $5 million in equity in net losses of investees.

(f)

Free cash flow is defined 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 30, 2013 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 June 30, 2013


 

Non-GAAP


 

QSI


 

Share-Based
Compensation


 

GAAP

Net cash provided (used) by operating activities

$

2,157


 

$

(5)


 

$

(75)

(a)

$

2,077

Less: capital expenditures

(307)


 

(7)


 


 

(314)

Free cash flow

$

1,850


 

$

(12)


 

$

(75)


 

$

1,763


 

 

 

 

 

 

 

 

Revenues

$

6,243


 

$


 

$


 

$

6,243

Free cash flow as % of revenues

30%


 

N/A


 

N/A


 

28%


 

 

 

 

 

 

 

 

 

Nine Months Ended June 30, 2013


 

Non-GAAP


 

QSI


 

Share-Based
Compensation


 

GAAP

Net cash provided (used) by operating activities

$

6,469


 

$

(23)


 

$

(178)

(a)

$

6,268

Less: capital expenditures

(773)


 

(35)


 


 

(808)

Free cash flow

$

5,696


 

$

(58)


 

$

(178)


 

$

5,460


 

 

 

 

 

 

 

 

Revenues

$

18,385


 

$


 

$


 

$

18,385

Free cash flow as % of revenues

31%


 

N/A


 

N/A


 

30%


 

 

 

 

 

 

 

 

 

Three Months Ended June 24, 2012


 

Non-GAAP


 

QSI


 

Share-Based
Compensation


 

GAAP

Net cash provided (used) by operating activities

$

972


 

$

(21)


 

$

(29)

(a)

$

922

Less: capital expenditures

(314)


 

(85)


 


 

(399)

Free cash flow

$

658


 

$

(106)


 

$

(29)


 

$

523


 

 

 

 

 

 

 

 

 

Nine Months Ended June 24, 2012


 

Non-GAAP


 

QSI


 

Share-Based
Compensation


 

GAAP

Net cash provided (used) by operating activities

$

4,906


 

$

(190)


 

$

(127)

(a)

$

4,589

Less: capital expenditures

(949)


 

(85)


 


 

(1,034)

Free cash flow

$

3,957


 

$

(275)


 

$

(127)


 

$

3,555


 

 

(a)

Incremental tax benefits from share-based compensation during the period.

N/A - Not Applicable


 

 

Qualcomm Incorporated

Reconciliation of Non-GAAP Tax Rates to GAAP Tax Rates (a)

(In millions)

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2013


 

Non-GAAP Results


 

QSI


 

Share-Based Compensation


 

Acquisition-
Related Items


 

Tax Items


 

GAAP Results

Income (loss) from continuing operations before income taxes

$

2,210


 

$

51


 

$

(280)


 

$

(71)


 

$


 

$

1,910

Income tax (expense) benefit

(387)


 

(10)


 

58


 

7


 


 

(332)

Income (loss) from continuing operations

$

1,823


 

$

41


 

$

(222)


 

$

(64)


 

$


 

$

1,578


 

 

 

 

 

 

 

 

 

 

 

 

Tax rate

18%


 

20%


 

21%


 

10%


 

N/A


 

17%


 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended June 30, 2013


 

Non-GAAP Results


 

QSI


 

Share-Based Compensation


 

Acquisition-
Related Items


 

Tax Items (b)


 

GAAP Results

Income (loss) from continuing operations before income taxes

$

7,360


 

$

66


 

$

(829)


 

$

(225)


 

$


 

$

6,372

Income tax (expense) benefit

(1,267)


 

(6)


 

168


 

13


 

64


 

(1,028)

Income (loss) from continuing operations

$

6,093


 

$

60


 

$

(661)


 

$

(212)


 

$

64


 

$

5,344


 

 

 

 

 

 

 

 

 

 

 

 

Tax rate

17%


 

9%


 

20%


 

6%


 

N/A


 

16%


 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

At fiscal year end, the sum of the quarterly tax provision (benefit) 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.

(b)

During the second quarter of fiscal 2013, we recorded a tax benefit of $64 million related to fiscal 2012 due to the retroactive reinstatement of the federal R&D tax credit.

Sums may not equal totals due to rounding.


 

 

Qualcomm Incorporated

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)

(Unaudited)


 

 

 

 

 

 

 

 

 

June 30,

2013


 

September 30,
2012

ASSETS

Current assets:


 

 

 

Cash and cash equivalents

$

2,533


 

$

3,807

Marketable securities

8,928


 

8,567

Accounts receivable, net

1,949


 

1,459

Inventories

1,727


 

1,030

Deferred tax assets

329


 

309

Other current assets

506


 

473

Total current assets

15,972


 

15,645

Marketable securities

18,941


 

14,463

Deferred tax assets

1,446


 

1,412

Assets held for sale


 

1,109

Property, plant and equipment, net

2,974


 

2,851

Goodwill

3,995


 

3,917

Other intangible assets, net

2,690


 

2,938

Other assets

791


 

677

Total assets

$

46,809


 

$

43,012


 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:


 

 

 

Trade accounts payable

$

1,850


 

$

1,298

Payroll and other benefits related liabilities

713


 

664

Unearned revenues

482


 

545

Liabilities held for sale


 

1,072

Other current liabilities

1,983


 

1,723

Total current liabilities

5,028


 

5,302

Unearned revenues

3,679


 

3,739

Other liabilities

519


 

426

Total liabilities

9,226


 

9,467


 

 

 

 

Stockholders' equity:


 

 

 

Qualcomm stockholders' equity:


 

 

 

Preferred stock, $0.0001 par value; issuable in series; 8 shares authorized; none outstanding


 

Common stock, $0.0001 par value; 6,000 shares authorized; 1,722 and 1,706 shares issued and outstanding, respectively


 

Paid-in capital

12,316


 

11,956

Retained earnings

24,564


 

20,701

Accumulated other comprehensive income

698


 

866

Total Qualcomm stockholders' equity

37,578


 

33,523

Noncontrolling interests

5


 

22

Total stockholders' equity

37,583


 

33,545

Total liabilities and stockholders' equity

$

46,809


 

$

43,012


 

 

Qualcomm Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended


 

Nine Months Ended


 

June 30,

2013


 

June 24,

2012


 

June 30,

2013


 

June 24,

2012

Revenues:


 

 

 

 

 

 

 

Equipment and services

$

4,286


 

$

2,948


 

$

12,474


 

$

9,253

Licensing

1,957


 

1,678


 

5,911


 

4,998

Total revenues

6,243


 

4,626


 

18,385


 

14,251


 

 

 

 

 

 

 

 

Operating expenses:


 

 

 

 

 

 

 

Cost of equipment and services revenues

2,497


 

1,719


 

7,106


 

5,255

Research and development

1,298


 

974


 

3,618


 

2,801

Selling, general and administrative

613


 

544


 

1,861


 

1,643

Other

158


 

7


 

158


 

104

Total operating expenses

4,566


 

3,244


 

12,743


 

9,803


 

 

 

 

 

 

 

 

Operating income

1,677


 

1,382


 

5,642


 

4,448


 

 

 

 

 

 

 

 

Investment income, net

233


 

199


 

730


 

589

Income from continuing operations before income taxes

1,910


 

1,581


 

6,372


 

5,037

Income tax expense

(332)


 

(375)


 

(1,028)


 

(993)

Income from continuing operations

1,578


 

1,206


 

5,344


 

4,044

Discontinued operations, net of income taxes


 

(3)


 


 

753

Net income

1,578


 

1,203


 

5,344


 

4,797

Net loss attributable to noncontrolling interests

2


 

4


 

8


 

41

Net income attributable to Qualcomm

$

1,580


 

$

1,207


 

$

5,352


 

$

4,838


 

 

 

 

 

 

 

 

Basic earnings per share attributable to Qualcomm:


 

 

 

 

 

 

 

Continuing operations

$

0.91


 

$

0.70


 

$

3.11


 

$

2.40

Discontinued operations


 


 


 

0.45

Net income

$

0.91


 

$

0.70


 

$

3.11


 

$

2.85

Diluted earnings per share attributable to Qualcomm:


 

 

 

 

 

 

 

Continuing operations

$

0.90


 

$

0.69


 

$

3.04


 

$

2.35

Discontinued operations


 


 


 

0.43

Net income

$

0.90


 

$

0.69


 

$

3.04


 

$

2.78

Shares used in per share calculations:


 

 

 

 

 

 

 

Basic

1,727


 

1,715


 

1,720


 

1,699

Diluted

1,765


 

1,758


 

1,760


 

1,740


 

 

 

 

 

 

 

 

Dividends per share announced

$

0.35


 

$

0.25


 

$

0.85


 

$

0.68


 

 

Qualcomm Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended


 

Nine Months Ended


 

June 30,

2013


 

June 24,

2012


 

June 30,

2013


 

June 24,

2012

Operating Activities:


 

 

 

 

 

 

 

Net income

$

1,578


 

$

1,203


 

$

5,344


 

$

4,797

Adjustments to reconcile net income to net cash provided by operating activities:


 

 

 

 

 

Depreciation and amortization

255


 

221


 

744


 

640

Gain on sale of wireless spectrum


 


 


 

(1,179)

Revenues related to non-monetary exchanges

(31)


 

(31)


 

(93)


 

(92)

Income tax provision in excess of (less than) income tax payments

59


 

(261)


 

220


 

239

Non-cash portion of share-based compensation expense

281


 

264


 

831


 

752

Incremental tax benefits from share-based compensation

(75)


 

(29)


 

(178)


 

(127)

Net realized gains on marketable securities and other investments

(60)


 

(70)


 

(239)


 

(214)

Other items, net

195


 

38


 

274


 

26

Changes in assets and liabilities, net of effects of acquisitions:


 

 

 

 

 

 

 

Accounts receivable, net

(21)


 

(54)


 

(445)


 

(249)

Inventories

(245)


 

(32)


 

(699)


 

(53)

Other assets

90


 

(21)


 

(111)


 

(31)

Trade accounts payable

221


 

(90)


 

598


 

197

Payroll, benefits and other liabilities

(151)


 

(151)


 

52


 

(412)

Unearned revenues

(19)


 

(65)


 

(30)


 

295

Net cash provided by operating activities

2,077


 

922


 

6,268


 

4,589

Investing Activities:


 

 

 

 

 

 

 

Capital expenditures

(314)


 

(399)


 

(808)


 

(1,034)

Purchases of available-for-sale securities

(4,663)


 

(4,768)


 

(12,112)


 

(11,804)

Proceeds from sales of available-for-sale securities

2,805


 

2,231


 

7,337


 

5,774

Purchases of trading securities

(862)


 

(641)


 

(2,658)


 

(2,280)

Proceeds from sales of trading securities

767


 

646


 

2,365


 

1,297

Proceeds from sale of wireless spectrum


 


 


 

1,925

Acquisitions and other investments, net of cash acquired

(47)


 

(348)


 

(179)


 

(677)

Other items, net

(2)


 

(23)


 

68


 

(76)

Net cash used by investing activities

(2,316)


 

(3,302)


 

(5,987)


 

(6,875)

Financing Activities:


 

 

 

 

 

 

 

Borrowing under loans and debentures

534


 

478


 

534


 

710

Repayment of loans and debentures

(492)


 

(440)


 

(492)


 

(591)

Proceeds from issuance of common stock

217


 

223


 

964


 

1,358

Incremental tax benefits from share-based compensation

75


 

29


 

178


 

127

Repurchases and retirements of common stock

(1,039)


 

(373)


 

(1,289)


 

(472)

Dividends paid

(604)


 

(429)


 

(1,463)


 

(1,158)

Change in obligation under securities lending

27


 

242


 

27


 

203

Other items, net

10


 

83


 

8


 

83

Net cash (used) provided by financing activities

(1,272)


 

(187)


 

(1,533)


 

260

Changes in cash and cash equivalents held for sale

(46)


 


 

(15)


 

Effect of exchange rate changes on cash

(3)


 

(19)


 

(7)


 

(24)

Net decrease in cash and cash equivalents

(1,560)


 

(2,586)


 

(1,274)


 

(2,050)

Cash and cash equivalents at beginning of year

4,093


 

5,998


 

3,807


 

5,462

Cash and cash equivalents at end of year

$

2,533


 

$

3,412


 

$

2,533


 

$

3,412

SOURCE Qualcomm Incorporated



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http://www.qualcomm.com

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