2014

Qualcomm Announces Second Quarter Fiscal 2013 Results Revenues $6.1 Billion

GAAP EPS $1.06, Non-GAAP EPS $1.17

— Record Quarterly Revenues; Raising Fiscal 2013 Guidance —

SAN DIEGO, April 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 second quarter of fiscal 2013 ended March 31, 2013.

"We delivered another strong quarter as the worldwide adoption of smartphones continues," said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm.  "Looking forward, we are seeing strong traction with our new Qualcomm Snapdragon 600 and 800 processors, and we continue to expect healthy growth in 3G and 3G/4G multimode devices around the world.  We are pleased to be raising our calendar 2013 3G/4G device shipment estimates and our revenue and earnings guidance for fiscal 2013."

Second Quarter Results (GAAP)

  • Revenues: 1 $6.12 billion, up 24 percent year-over-year (y-o-y) and 2 percent sequentially.
  • Operating income: 1 $1.88 billion, up 24 percent y-o-y and down 10 percent sequentially.
  • Net income: 2 $1.87 billion, down 16 percent y-o-y* and 2 percent sequentially.
  • Diluted earnings per share: 2 $1.06, down 17 percent y-o-y* and 3 percent sequentially. 
  • Effective tax rate: 1 13 percent for the quarter.
  • Operating cash flow:  $2.22 billion, up 17 percent y-o-y; 36 percent of revenues.
  • Return of capital to stockholders:  $431 million, or $0.25 per share, of cash dividends paid.

* The second quarter of fiscal 2012 GAAP results included $761 million, net of income taxes, or $0.44 per share, for discontinued operations as a result of a $1.2 billion pre-tax gain associated with the sale of substantially all of our 700 MHz spectrum.

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 Second Quarter Results

Non-GAAP results exclude the QSI segment and certain share-based compensation, acquisition-related items and tax items. 

  • Revenues:  $6.12 billion, up 24 percent y-o-y and 2 percent sequentially.
  • Operating income:  $2.23 billion, up 18 percent y-o-y and down 9 percent sequentially.
  • Net income:  $2.07 billion, up 17 percent y-o-y and down 6 percent sequentially.
  • Diluted earnings per share:  $1.17, up 16 percent y-o-y and down 7 percent sequentially. 
  • Effective tax rate:  16 percent for the quarter. 
  • Free cash flow (defined as net cash from operating activities less capital expenditures):  $1.99 billion, up 10 percent y-o-y; 33 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.  

Second Quarter Key Business Metrics

  • MSMchip shipments:  173 million units, up 14 percent y-o-y and down 5 percent sequentially.
  • December quarter total reported device sales:  approximately $61.1 billion, up 18 percent y-o-y and 15 percent sequentially.
    • December quarter estimated 3G/4G device shipments:  approximately 279 to 283 million units, at an estimated average selling price of approximately $214 to $220 per unit.   

Cash and Marketable Securities

Our cash, cash equivalents and marketable securities totaled $30.5 billion at the end of the second quarter of fiscal 2013, compared to $26.6 billion a year ago and $28.4 billion at the end of the first quarter of fiscal 2013.  On April 9, 2013, we announced a cash dividend of $0.35 per share payable on June 26, 2013 to stockholders of record as of June 5, 2013, which represents a 40 percent increase over our prior quarterly dividend.

Research and Development

($ in millions)

Non-GAAP


QSI


Share-Based

Compensation


Acquisition-Related Items


GAAP











Second quarter fiscal 2013

$    1,056


$    1


$           156


$            1


$  1,214

As % of revenues

17%








20%

Second quarter fiscal 2012

$       824


$    4


$           126


$             -


$     954

As % of revenues

17%








19%

Year-over-year change ($)

28%


 N/M 


24%


N/M


27%











N/M - Not Meaningful







Non-GAAP research and development (R&D) expenses increased 28 percent y-o-y primarily due to an increase in costs related to the development of 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











Second quarter fiscal 2013

$       556


$    4


$            95


$           6


$ 661

As % of revenues

9%








11%

Second quarter fiscal 2012

$       488


$    4


$            97


$           6


$ 595

As % of revenues

10%








12%

Year-over-year change ($)

14%


 N/M 


(2%)


 N/M 


11%











N/M - Not Meaningful







Non-GAAP selling, general and administrative (SG&A) expenses increased 14 percent y-o-y primarily due to increases in employee-related expenses, patent-related expenses and selling and marketing expenses.    

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.  The second quarter effective income tax rates were 13 percent for GAAP and 16 percent for Non-GAAP, which are lower than the estimated annual effective tax rates primarily as a result of the retroactive reinstatement of the federal R&D tax credit during the second quarter.  The federal R&D tax credit benefit that related to fiscal 2012 of $0.04 per share was excluded from Non-GAAP results.   

QSI Segment

QSI makes strategic investments, many of which are in early-stage companies, and holds wireless spectrum.  GAAP results for the second quarter of fiscal 2013 included $0.02 earnings per share for QSI.

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



THIRD FISCAL QUARTER



Q3 FY12
Results

Current Guidance
Q3 FY13 Estimates





Revenues



$4.63B

$5.8B - $6.3B



  Year-over-year change


increase 25% - 36%



Non-GAAP Diluted earnings per share (EPS)

$0.85

$0.97 - $1.05



  Year-over-year change


increase 14% - 24%



         Diluted EPS attributable to QSI

($0.01)

$0.00



         Diluted EPS attributable to share-based compensation

($0.12)

($0.13)



         Diluted EPS attributable to acquisition-related items

($0.03)

($0.04)



GAAP Diluted EPS

$0.69

$0.80 - $0.88



  Year-over-year change


increase 16% - 28%










Metrics





MSM chip shipments

141M 

163M - 173M 



  Year-over-year change


increase 16% - 23%



Total reported device sales (1)

 approx. $47.8B*

  approx. $51.0B - $56.0B*



  Year-over-year change


increase 7% - 17%



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


















FISCAL YEAR





FY 2012
Results (2)

Prior Guidance
FY 2013 Estimates (3)

Current Guidance
FY 2013 Estimates (3)







Revenues


$19.12B 

$23.4B - $24.4B

$24.0B - $25.0B



  Year-over-year change


increase 22% - 28%

increase 26% - 31%



Non-GAAP Diluted EPS

$3.71

$4.25 - $4.45

$4.40 - $4.55



  Year-over-year change


increase 15% - 20%

increase 19% - 23%



         Diluted EPS attributable to QSI

$0.40

($0.02)

$0.01



         Diluted EPS attributable to share-based compensation

($0.47)

($0.51)

($0.51)



         Diluted EPS attributable to acquisition-related items

($0.14)

($0.15)

($0.16)



         Diluted EPS attributable to tax items

$0.01

$0.04

$0.04



GAAP Diluted EPS

$3.51

$3.61 - $3.81

$3.78 - $3.93



  Year-over-year change


increase 3% - 9%

increase 8% - 12%









Metrics






Est. fiscal year* 3G/4G device average selling price range (1)

approx. $216 - $222

approx. $214 - $226

approx. $216 - $224



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












CALENDAR YEAR Device Estimates (1)




Prior Guidance
Calendar 2012
Estimates

Current
Calendar 2012
Estimates

Prior Guidance
Calendar 2013
Estimates

Current Guidance
Calendar 2013
Estimates



Est. 3G/4G device shipments







March quarter

approx. 206M - 211M

approx. 206M - 211M

not provided

not provided



June quarter

approx. 210M - 214M

approx. 210M - 214M

not provided

not provided



September quarter

approx. 233M - 237M

approx. 233M - 237M

not provided

not provided



December quarter

not provided

approx. 279M - 283M

not provided

not provided



Est. calendar year range (approx.)

915M - 940M

928M - 945M

1,000M - 1,070M

1,015M - 1,085M



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

928M

937M

1,035M

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.




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

Q2 - FISCAL 2013








Revenues 

$3,916

$2,057

$155

($4)

$6,124

$  -

$  -

$  -

$  -

$6,124

  Change from prior year

28%

19%

(3%)

N/M

24%





24%

  Change from prior quarter 

(5%)

17%

6%

20%

2%





2%

Operating income (loss)





$2,233

($5)

($268)

($83)

$  -

$1,877

  Change from prior year





18%

94%

(12%)

(46%)


24%

  Change from prior quarter 





(9%)

38%

5%

(19%)


(10%)

EBT

$681

$1,803

$  -

($30)

$2,454

$33

($268)

($83)

$  -

$2,136

  Change from prior year

14%

17%

N/M

N/M

15%

N/M

(12%)

(46%)


23%

  Change from prior quarter 

(36%)

18%

N/M

N/M

(9%)

N/M

5%

(19%)


(8%)

EBT as % of revenues

17%

88%

N/M

N/M

40%





35%

Net income (loss) 





$2,066

$36

($220)

($80)

$ 64

$1,866

  Change from prior year





17%

(95%)

(20%)

(54%)

N/A

(16%)

  Change from prior quarter 





(6%)

N/M

0%

(19%)

N/A

(2%)

Diluted EPS





$1.17

$0.02

($0.12)

($0.05)

$0.04

$1.06

  Change from prior year





16%

(95%)

(9%)

(67%)

N/A

(17%)

  Change from prior quarter 





(7%)

N/M

0%

(25%)

N/A

(3%)

Diluted shares used





1,763

1,763

1,763

1,763

1,763

1,763

Q1 - FISCAL 2013








Revenues 

$4,120

$1,757

$146

($5)

$6,018

$  -

$  -

$  -

$  -

$6,018

Operating income (loss)





2,447

(8)

(281)

(70)

-

2,088

EBT

$1,068

$1,532

($3)

$98

2,695

(17)

(281)

(70)

-

2,327

Net income (loss)





2,204

(12)

(219)

(67)

-

1,906

Diluted EPS





$1.26

($0.01)

($0.12)

($0.04)

$  -

$1.09

Diluted shares used





1,751

1,751

1,751

1,751

1,751

1,751

Q2 - FISCAL 2012








Revenues 

$3,059

$1,723

$159

$2

$4,943

$  -

$  -

$  -

$  -

$4,943

Operating income (loss)





1,900

(89)

(240)

(57)

-

1,514

EBT

$599

$1,540

($10)

$1

2,130

(99)

(240)

(57)

-

1,734

Discontinued operations, net of tax




-

761

-

-

-

761

Net income (loss)





1,759

707

(184)

(52)

-

2,230

Diluted EPS





$1.01

$0.41

($0.11)

($0.03)

$  -

$1.28

Diluted shares used





1,743

1,743

1,743

1,743

1,743

1,743

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

 

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

6 MONTHS - FISCAL 2013









Revenues 

$8,036

$3,813

$301

($7)

$12,143

$  -

$  -

$  -

$  -

$12,143

  Change from prior year

31%

21%

(3%)

N/M

26%





26%

Operating income (loss)





$4,681

($12)

($549)

($154)

$  -

$3,966

  Change from prior year





24%

88%

(13%)

(32%)


29%

EBT

$1,749

$3,335

($4)

$70

$5,150

$16

($549)

($154)

$  -

$4,463

  Change from prior year

31%

19%

(56%)

27%

23%

N/M

(13%)

(32%)


29%

EBT as a % of revenues

22%

87%

N/M

N/M

42%





37%

Net income (loss) 





$4,270

$24

($439)

($147)

$ 64

$3,772

  Change from prior year





24%

(97%)

(16%)

(36%)

N/A

4%

Diluted EPS





$2.43

$0.01

($0.25)

($0.08)

$0.04

$2.15

  Change from prior year





23%

(98%)

(14%)

(33%)

N/A

2%

Diluted shares used





1,757

1,757

1,757

1,757

1,757

1,757

6 MONTHS - FISCAL 2012








Revenues 

$6,143

$3,162

$311

$9

$9,625

$  -

$  -

$  -

$  -

$9,625

Operating income (loss)





3,772

(102)

(487)

(117)

-

3,066

EBT

$1,338

$2,808

($9)

$55

4,192

(133)

(487)

(117)

-

3,455

Discontinued operations, net of tax




-

756

-

-

-

756

Net income (loss)





3,431

686

(378)

(108)

-

3,631

Diluted EPS





$1.98

$0.40

($0.22)

($0.06)

$  -

$2.10

Diluted shares used





1,732

1,732

1,732

1,732

1,732

1,732

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 consist 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 second quarter fiscal 2013 earnings conference call will be broadcast live on April 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 material 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 and 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 29888090.

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, QTL and QWI 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 charges 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 strong traction we are seeing with our new Qualcomm Snapdragon 600 and 800 processors; our expectations regarding healthy growth in 3G and 3G/4G multimode devices around the world; 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 second quarter ended March 31, 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 March 31, 2013

(Unaudited)





















Acquisition-

Tax-




Non-GAAP



Share-Based

Related

Related

GAAP



Results

QSI

Compensation

Items (a)

Items (b)

Results

 ($ in millions, except per share data)


























Cost of equipment and services revenues

$     2,279


$          -


$               17


$          76


$           -


$     2,372















R&D 

1,056


1


156


1


-


1,214















SG&A

556


4


95


6


-


661















Operating income (loss)

2,233


(5)


(268)


(83)


-


1,877















Investment income, net

$        221

(c)

$       38

(d)

$                 -


$             -


$           -


$        259















Tax rate

16%


0%


18%


4%


N/A


13%















Net income (loss)

$     2,066


$       36


$           (220)


$         (80)


$         64


$     1,866















Diluted earnings (loss) per share (EPS)

$       1.17


$    0.02


$          (0.12)


$      (0.05)


$      0.04


$       1.06















Operating cash flow

$     2,266


$       (8)


$             (42)


$             -


$           -


$     2,216


Operating cash flow as % of revenues

37%


N/A


N/A


N/A


N/A


36%















Free cash flow(e)

$     1,993


$     (24)


$             (42)


$             -


$           -


$     1,927


Free cash flow as % of revenues

33%


N/A


N/A


N/A


N/A


31%














(a)

Included amortization and impairment charges of certain intangible assets 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 $177 million in interest and dividend income, $41 million in net realized gains on investments and $14 million in gains on derivatives, partially offset by $10 million in other-than-temporary losses on investments and $1 million in interest expense. 



(d)

Included $43 million in net realized gains on investments and $4 million in interest and dividend income, partially offset by $6 million in interest expense, $2 million in other-than-temporary losses on investments and $1 million in equity in 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 March 31, 2013 included herein.



N/A – Not Applicable

Sums may not equal totals due to rounding.



Qualcomm Incorporated                                                                                                                                                                                                                              

Supplemental Information for the Six Months Ended March 31, 2013

(Unaudited)





















Acquisition-

Tax-




Non-GAAP



Share-Based

Related

Related

GAAP



Results

QSI

Compensation

Items (a)

Items (b)

Results

 ($ in millions, except per share data)


























Cost of equipment and services revenues

$     4,432


$          -


$               37


$        140


$             -


$     4,609















R&D 

2,006


1


312


1


-


2,320















SG&A

1,024


11


200


13


-


1,248















Operating income (loss)

4,681


(12)


(549)


(154)


-


3,966















Investment income, net

$        469

(c)

$       28

(d)

$                 -


$             -


$             -


$        497















Tax rate

17%


-19%


20%


5%


N/A


16%















Net income (loss)

$     4,270


$       24


$           (439)


$       (147)


$          64


$     3,772















Diluted earnings (loss) per share (EPS)

$       2.43


$    0.01


$          (0.25)


$      (0.08)


$       0.04


$       2.15















Operating cash flow

$     4,312


$     (18)


$           (103)


$             -


$             -


$     4,191


Operating cash flow as % of revenues

36%


N/A


N/A


N/A


N/A


35%















Free cash flow(e)

$     3,846


$     (46)


$           (103)


$             -


$             -


$     3,697


Free cash flow as % of revenues

32%


N/A


N/A


N/A


N/A


30%














(a)

Included amortization and impairment charges of certain intangible assets, expense associated with the termination of a contract of an acquiree 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 $342 million in interest and dividend income, $132 million in net realized gains on investments and $12 million in gains on derivatives, partially offset by $14 million in other-than-temporary losses on investments and $3 million in interest expense.



(d)

Included $47 million in net realized gains on investments and $5 million in interest and dividend income, partially offset by $12 million in interest expense, $8 million in other-than-temporary losses on investments and $4 million in equity in 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 six months ended March 31, 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 March 31, 2013



Non-GAAP


QSI


Share-Based
Compensation


GAAP

Net cash provided (used) by operating activities


$       2,266


$          (8)


$                  (42)

 (a) 

$       2,216

Less:  capital expenditures


(273)


(16)


-


(289)

Free cash flow


$       1,993


$        (24)


$                  (42)


$       1,927










Revenues


$       6,124


$          -


$                    -


$       6,124

Free cash flow as % of revenues


33%


 N/A 


 N/A 


31%










Other supplemental cash disclosures:









   Cash transfers from QSI (b)


$            51


$        (51)


$                    -


$            -

   Cash transfers to QSI (c)


(54)


54


-


-

   Net cash transfers


$             (3)


$           3


$                    -


$            -





















Six Months Ended March 31, 2013



Non-GAAP


QSI


Share-Based
Compensation


GAAP

Net cash provided (used) by operating activities


$       4,312


$        (18)


$                (103)

 (a) 

$       4,191

Less:  capital expenditures


(466)


(28)


-


(494)

Free cash flow


$       3,846


$        (46)


$                (103)


$       3,697










Revenues


$     12,143


$          -


$                    -


$     12,143

Free cash flow as % of revenues


32%


 N/A 


 N/A 


30%










Other supplemental cash disclosures:









   Cash transfers from QSI (b)


$            58


$        (58)


$                    -


$            -

   Cash transfers to QSI (c)


(157)


157


-


-

   Net cash transfers


$           (99)


$         99


$                    -


$            -






























Three Months Ended March 25, 2012



Non-GAAP


QSI


Share-Based
Compensation


GAAP

Net cash provided (used) by operating activities


$       2,084


$      (121)


$                  (75)

 (a) 

$       1,888

Less:  capital expenditures


(276)


-


-


(276)

Free cash flow


$       1,808


$      (121)


$                  (75)


$       1,612





















Six Months Ended March 25, 2012



Non-GAAP


QSI


Share-Based
Compensation


GAAP

Net cash provided (used) by operating activities


$       3,934


$      (169)


$                  (98)

 (a) 

$       3,667

Less:  capital expenditures


(635)


-


-


(635)

Free cash flow


$       3,299


$      (169)


$                  (98)


$       3,032

(a)

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



(b)

Primarily cash from sale of equity securities and other investments.



(c)

Primarily funding for strategic debt and equity investments, other investing activities and QSI operating and capital expenditures.



N/A - Not Applicable



Qualcomm Incorporated                                                                                                                                                                                                                              

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

(in millions)

(Unaudited)














Three Months Ended March 31, 2013


Non-GAAP
Results


QSI


 Share-Based
Compensation


Acquisition-
Related
Items


Tax-Related
Items (b)


GAAP
Results













Income (loss) from continuing operations before income taxes

$      2,454


$           33


$         (268)


$        (83)


$            -


$     2,136

Income tax (expense) benefit

(388)


-


48


3


64


(273)

Income (loss) from continuing operations 

$      2,066


$           33


$         (220)


$        (80)


$         64


$     1,863













Tax rate

16%


0%


18%


4%


N/A


13%



Six Months Ended March 31, 2013


 

Non-GAAP
Results


QSI


 

Share-Based
Compensation


 

Acquisition-
Related
Items


Tax-Related
Items (b)


GAAP
Results













Income (loss) from continuing operations before income taxes

$      5,150


$           16


$         (549)


$      (154)


$            -


$     4,463

Income tax (expense) benefit

(881)


3


110


7


64


(697)

Income (loss) from continuing operations 

$      4,269


$           19


$         (439)


$      (147)


$         64


$     3,766













Tax rate

17%


-19%


20%


5%


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.



N/A - Not Applicable

Sums may not equal totals due to rounding.



Qualcomm Incorporated

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)

(Unaudited)


ASSETS



March 31,


September 30,



2013


2012

Current assets:





  Cash and cash equivalents


$          4,093


$          3,807

  Marketable securities


9,400


8,567

  Accounts receivable, net


1,889


1,459

  Inventories


1,484


1,030

  Deferred tax assets


318


309

  Other current assets 


582


473

          Total current assets


17,766


15,645

Marketable securities


17,046


14,463

Deferred tax assets


1,229


1,412

Assets held for sale


1,070


1,109

Property, plant and equipment, net


2,971


2,851

Goodwill


3,975


3,917

Other intangible assets, net


2,735


2,938

Other assets


807


677

          Total assets


$        47,599


$        43,012






LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:





  Trade accounts payable


$          1,628


$          1,298

  Payroll and other benefits related liabilities


679


664

  Unearned revenues


514


545

  Liabilities held for sale


538


1,072

  Other current liabilities


1,904


1,723

         Total current liabilities


5,263


5,302

Unearned revenues


3,697


3,739

Liabilities held for sale


531


-

Other liabilities


480


426

         Total liabilities


9,971


9,467











Stockholders' equity:





Qualcomm stockholders' equity:





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


-


-

  Common stock, $0.0001 par value; 6,000 shares authorized; 1,726





    and 1,706 shares issued and outstanding, respectively


-


-

  Paid-in capital


12,991


11,956

  Retained earnings


23,599


20,701

  Accumulated other comprehensive income


1,021


866

         Total Qualcomm stockholders' equity


37,611


33,523

Noncontrolling interests


17


22

         Total stockholders' equity


37,628


33,545

            Total liabilities and stockholders' equity


$        47,599


$        43,012


Qualcomm Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)



Three Months Ended



Six Months Ended


March 31,


March 25,



March 31,


March 25,


2013


2012



2013


2012










Revenues:









  Equipment and services

$     3,990


$     3,137



$     8,189


$     6,305

  Licensing

2,134


1,806



3,954


3,320

  Total revenues

6,124


4,943



12,143


9,625










Operating expenses:









  Cost of equipment and services revenues

2,372


1,783



4,609


3,537

  Research and development

1,214


954



2,320


1,827

  Selling, general and administrative

661


595



1,248


1,098

  Other

-


97



-


97

      Total operating expenses

4,247


3,429



8,177


6,559










Operating income 

1,877


1,514



3,966


3,066










Investment income, net

259


220



497


389

  Income from continuing operations before income taxes

2,136


1,734



4,463


3,455

Income tax expense 

(273)


(296)



(697)


(617)

  Income from continuing operations

1,863


1,438



3,766


2,838

Discontinued operations, net of income taxes

-


761



-


756

  Net income

1,863


2,199



3,766


3,594

Net loss attributable to noncontrolling interests

3


31



6


37

  Net income attributable to Qualcomm

$     1,866


$     2,230



$     3,772


$     3,631










Basic earnings per share attributable to Qualcomm:









  Continuing operations

$       1.08


$       0.86



$       2.20


$       1.70

  Discontinued operations

-


0.45



-


0.45

  Net income

$       1.08


$       1.31



$       2.20


$       2.15

Diluted earnings per share attributable to Qualcomm:









  Continuing operations

$       1.06


$       0.84



$       2.15


$       1.66

  Discontinued operations

-


0.44



-


0.44

  Net income

$       1.06


$       1.28



$       2.15


$       2.10

Shares used in per share calculations:









  Basic

1,722


1,698



1,716


1,691

  Diluted

1,763


1,743



1,757


1,732










Dividends per share announced

$     0.250


$     0.215



$     0.500


$     0.430


Qualcomm Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)













Three Months Ended


Six Months Ended



March 31,
2013


March 25,
2012



March 31,
2013


March 25,
2012

Operating Activities:










Net income


$    1,863


$    2,199



$    3,766


$    3,594

Adjustments to reconcile net income to net cash provided by










       operating activities:










   Depreciation and amortization


248


211



489


419

   Gain on sale of wireless spectrum


-


(1,179)



-


(1,179)

   Revenues related to non-monetary exchanges


(31)


(30)



(62)


(61)

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


(34)


382



161


500

   Non-cash portion of share-based compensation expense


267


241



550


488

   Incremental tax benefit from share-based compensation


(42)


(75)



(103)


(98)

   Net realized gains on marketable securities and other investments


(84)


(101)



(179)


(144)

   Gains on derivative instruments


(14)


(28)



(12)


(74)

   Other items, net


55


36



91


62

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










   Accounts receivable, net


(239)


(157)



(424)


(195)

   Inventories


(207)


(71)



(454)


(21)

   Other assets


(150)


14



(201)


(10)

   Trade accounts payable


1


261



377


287

   Payroll, benefits and other liabilities


590


(218)



203


(261)

   Unearned revenues


(7)


403



(11)


360

  Net cash provided by operating activities


2,216


1,888



4,191


3,667

Investing Activities:










   Capital expenditures


(289)


(276)



(494)


(635)

   Purchases of available-for-sale securities


(4,160)


(5,009)



(7,449)


(7,036)

   Proceeds from sale of available-for-sale securities


2,306


1,940



4,532


3,543

   Purchases of trading securities


(826)


(502)



(1,796)


(1,639)

   Proceeds from sale of trading securities


574


503



1,598


651

   Proceeds from sale of spectrum


-


1,925



-


1,925

   Acquisitions and other investments, net of cash acquired


(93)


(29)



(132)


(329)

   Other items, net


44


(57)



70


(53)

  Net cash used by investing activities


(2,444)


(1,505)



(3,671)


(3,573)

Financing Activities:










   Borrowing under loans and debentures


-


232



-


232

   Repayment of loans payable


-


(151)



-


(151)

   Proceeds from issuance of common stock


407


907



747


1,135

   Incremental tax benefit from share-based compensation


42


75



103


98

   Repurchases and retirements of common stock


-


-



(250)


(99)

   Dividends paid


(431)


(366)



(859)


(729)

   Other items, net


(4)


(59)



(2)


(39)

  Net cash provided (used) by financing activities


14


638



(261)


447

  Changes in cash and cash equivalents held for sale


18


-



31


-

  Effect of exchange rate changes on cash and cash equivalents


(4)


13



(4)


(5)

Net (decrease) increase in cash and cash equivalents


(200)


1,034



286


536

Cash and cash equivalents at beginning of period


4,293


4,964



3,807


5,462

Cash and cash equivalents at end of period


$    4,093


$    5,998



$    4,093


$    5,998

SOURCE Qualcomm Incorporated



RELATED LINKS
http://www.qualcomm.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.