-- Revenues $6.6 billion
-- GAAP EPS $1.09, Non-GAAP EPS $1.26
- Record Quarterly Revenues -
SAN DIEGO/PRNewswire/ -- Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for the first quarter of fiscal 2014 ended December 29, 2013.
"We are pleased with the start to our fiscal year, with record results in quarterly revenues, device sales reported by licensees and MSM chip shipments," said Dr. Paul E. Jacobs, Chairman and CEO of Qualcomm. "Looking forward, we expect our performance to reflect the continued strong global growth of smartphones, our chipset leadership position and our competitive strengths in 3G/4G technologies and products."
First Quarter Results (GAAP)*
-- Revenues: (1) $6.62 billion, up 10 percent year-over-year
(y-o-y) and 2 percent sequentially.
-- Operating income: (1) $1.49 billion, down 28 percent y-o-y
and 6 percent sequentially.
-- Net income: (2) $1.88 billion, down 2 percent y-o-y and up
25 percent sequentially.
-- Diluted earnings per share: (2) $1.09, even y-o-y and up
27 percent sequentially.
-- Effective tax rate: (1) 18 percent.
-- Operating cash flow: $2.78 billion, up 41 percent y-o-y;
42 percent of revenues.
-- Return of capital to stockholders: $1.59 billion,
including $1.00 billion through repurchases of 14.2 million
shares of common stock and $590 million, or $0.35 per share,
of cash dividends paid.
(1) The gain on the sale of Omnitracs recorded in the first quarter of fiscal 2014 is presented as discontinued operations. Throughout this news release, 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 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 First Quarter Results*
Non-GAAP results exclude the QSI (Qualcomm Strategic Initiatives) segment and certain share-based compensation, acquisition-related items and tax items.
-- Revenues: $6.62 billion, up 10 percent y-o-y and 2 percent
sequentially.
-- Operating income: $1.85 billion, down 24 percent y-o-y and
5 percent sequentially.
-- Net income: $2.16 billion, down 2 percent y-o-y and up 19
percent sequentially.
-- Diluted earnings per share: $1.26, even y-o-y and up 20
percent sequentially.
-- Effective tax rate: 18 percent.
Detailed reconciliations between results reported in accordance with 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:
-- The first quarter of fiscal 2014 results included:
-- $665 million gain ($430 million after tax), or $0.25
per share, in discontinued operations associated with
the sale of substantially all of the operations of our
Omnitracs division; and
-- $444 million charge ($346 million after tax), or $0.20
per share, that resulted from an impairment charge on
certain property, plant and equipment related to our
QMT division.
-- The fourth quarter of fiscal 2013 results included:
-- $173 million charge (before and after tax), or $0.10
per share, related to the verdict in our litigation
with ParkerVision.
First Quarter Key Business Metrics
-- MSMTM chip shipments: 213 million units, up 17 percent
y-o-y and 12 percent sequentially.
-- September quarter total reported device sales:
approximately $61.6 billion, up 16 percent y-o-y and 2
percent sequentially.
-- September quarter estimated 3G/4G device shipments:
approximately 276 to 280 million units, at an
estimated average selling price of approximately
$219 to $225 per unit.
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled $31.6 billion at the end of the first quarter of fiscal 2014, compared to $28.4 billion a year ago and $29.4 billion at the end of the fourth quarter of fiscal 2013. On January 22, 2014, we announced a cash dividend of $0.35 per share payable on March 26, 2014 to stockholders of record as of the close of business on March 5, 2014.
Research and Development
Share- Acquisition-
($ in Non- Based Related
millions) GAAP QSI Compensation Items GAAP
---- --- ------------ ------------ ----
First
quarter
fiscal
2014 $1,152 $2 $173 $1 $1,328
As % of
revenues 17% 20%
First
quarter
fiscal
2013 $949 $1 $156 $- $1,106
As % of
revenues 16% 18%
Year-
over-
year
change
($) 21% N/M 11% N/M 20%
N/M - Not Meaningful
Non-GAAP research and development (R&D) expenses increased 21 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 Non- Share-Based Acquisition-
millions) GAAP QSI Compensation Related Items GAAP
First quarter
fiscal 2014 $517 $3 $96 $7 $623
As % of
revenues 8% 9%
First quarter
fiscal 2013 $468 $7 $105 $7 $587
As % of
revenues 8% 10%
Year-over-
year change
($) 10% N/M (9%) N/M 6%
N/M - Not Meaningful
Non-GAAP selling, general and administrative (SG&A) expenses increased 10 percent y-o-y primarily due to increases in employee-related expenses and selling and marketing expenses, partially offset by a decrease in costs related to litigation and other legal matters.
Effective Income Tax Rates
Our fiscal 2014 annual effective income tax rates are estimated to be approximately 18 percent for GAAP and approximately 17 to 19 percent for Non-GAAP, both of which include an estimate of the United States federal R&D tax credit expected to be generated through December 31, 2013, the date on which the credit expired. The first quarter of fiscal 2014 effective income tax rates were 18 percent for both GAAP and Non-GAAP.
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.
Our outlook for fiscal 2014 diluted earnings per share includes an estimate of the benefit related to approximately $3 billion in stock repurchases that we plan to complete over the remainder of fiscal 2014 under our current stock repurchase program.
The following table summarizes GAAP and Non-GAAP guidance based on the current business outlook. The Non-GAAP business outlook presented below is consistent with the presentation of Non-GAAP results included elsewhere herein.
Qualcomm's Business Outlook Summary
SECOND FISCAL QUARTER
---------------------
Q2 FY13 Current Guidance
------- Q2 FY14 Estimates
Results
-------
Revenues $6.12B $6.1B - $6.7B
Year-over-year change even - increase 9%
Non-GAAP diluted earnings
per share (EPS) $1.17 $1.15 - $1.25
Year-over-year change decrease 2% -
increase 7%
Diluted EPS attributable to QSI $0.02 $0.00
Diluted EPS attributable to
share-based compensation ($0.12) ($0.12)
Diluted EPS attributable to
acquisition-related items ($0.05) ($0.04)
Diluted EPS attributable to
tax items $0.04 N/A
GAAP diluted EPS $1.06 $0.99 - $1.09
Year-over-year change decrease 7% -
increase 3%
-------------
Metrics
MSM chip shipments 173M 180M - 195M
Year-over-year change increase 4% - 13%
Total reported device sales (1) approx. approx. $66.5B -
$61.1B* $72.5B*
Year-over-year change increase 9% - 19%
*Est. sales in December quarter, reported in March
quarter
--------------------------------------------------
FISCAL YEAR
-----------
FY 2013 Prior Guidance
FY 2014 Estimates
------- (2)
Results
-------
Revenues $24.87B $26.0B - $27.5B
increase 5% -
Year-over-year change 11%
Non-GAAP diluted EPS $4.51 $4.95 - $5.15
increase 10% -
Year-over-year change 14%
Diluted EPS attributable to
QSI $0.02 ($0.03)
Diluted EPS attributable to
share-based compensation ($0.51) ($0.51)
Diluted EPS attributable to
acquisition-related items ($0.16) ($0.16)
Diluted EPS attributable to
tax items $0.04 N/A
GAAP diluted EPS $3.91 $4.25 - $4.45
increase 9% -
Year-over-year change 14%
--------------------- --------------
Metrics
Est. fiscal year* 3G/4G-
based device average approx. $223 - approx. $216 -
selling price range (1) $229 $230
*Shipments in Sept. to June
quarters, reported in Dec.
to Sept. quarters
---------------------------
- Cont'd -
Current
Guidance
--------
FY 2014
Estimates (2)
--------------
Revenues $26.0B - $27.5B
increase 5%
Year-over-year change -11%
Non-GAAP diluted EPS $5.00 - $5.20
increase
Year-over-year change 11% -15%
Diluted EPS attributable to
QSI $0.00
Diluted EPS attributable to
share-based compensation ($0.51)
Diluted EPS attributable to
acquisition-related items ($0.16)
Diluted EPS attributable to
tax items N/A
GAAP diluted EPS $4.33 - $4.53
increase
Year-over-year change 11% -16%
--------------------- ---------
Metrics
Est. fiscal year* 3G/4G- approx.
based device average $216 -
selling price range (1) $230
*Shipments in Sept. to June
quarters, reported in Dec.
to Sept. quarters
---------------------------
CALENDAR YEAR Device Estimates (1)
Prior Guidance Current Prior Current
Calendar 2013 Guidance Guidance Guidance
--------------- -------- --------- --------
Calendar Calendar Calendar
Estimates 2013 2014 2014
--------- --------- --------- ---------
Estimates Estimates Estimates
--------- -------- ---------
Est. 3G/4G device shipments
approx. 244M - approx. 244M not not
March quarter 248M -248M provided provided
approx. 260M - approx. 260M not not
June quarter 264M -264M provided provided
approx. 276M not not
September quarter not provided -280M provided provided
not not
December quarter not provided not provided provided provided
----------------- --------
Est. calendar
year range 1,080M - 1,220M - 1,220M -
(approx.) 1,075M - 1,125M 1,120M 1,300M 1,300M
------------------ --------- ---------
Est. calendar year
midpoint (approx.)
(3) 1,100M 1,100M 1,260M 1,260M
------------------- ------ ------ ------ ------
(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) Our prior and current outlook for FY 2014 diluted earnings per
share includes an estimate of the benefit related to stock
repurchases that we plan to complete during the fiscal year.
FY 2014 guidance also reflects an annual effective tax rate that
includes an estimate of the United States federal R&D tax credit
expected to be generated through December 31, 2013, the date on
which the credit expired.
(3) 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 Non-GAAP
-------- --- --- Reconciling
Items (1)
(2)
----------
Q1 -FISCAL
2014
----------
Revenues $4,616 $1,900 $106
Change from 12% 8% (25%)
prior year
Change from
prior
quarter 4% 1% (29%)
Operating
income
(loss)
Change from
prior year
Change from
prior
quarter
EBT $906 $1,670 ($473)
Change from
prior year (15%) 9% N/M
Change from
prior
quarter 29% 3% N/M
EBT as % of
revenues 20% 88% N/M
Discontinued
operations,
net of tax
(4)
Net income
(loss)
Change from
prior year
Change from
prior
quarter
Diluted EPS
Change from
prior year
Change from
prior
quarter
Diluted
shares used
Q4 -FISCAL
2013
----------
Revenues $4,457 $1,874 $149
Operating
income
(loss)
EBT $702 $1,622 ($151)
Net income
(loss)
Diluted EPS
Diluted
shares used
Q1 -FISCAL
2013
----------
Revenues $4,120 $1,757 $141
Operating
income
(loss)
EBT $1,068 $1,532 $95
Net income
(loss)
Diluted EPS
Diluted
shares used
Q2 -FISCAL
2013
----------
Revenues $3,916 $2,057 $151
Operating
income
(loss)
EBT $681 $1,803 ($30)
Net income
(loss)
Diluted EPS
Diluted
shares used
12 MONTHS -
FISCAL 2013
------------
Revenues $16,715 $7,554 $597
Operating
income
(loss)
EBT $3,189 $6,590 ($245)
Net income
(loss)
Diluted EPS
Diluted
shares used
------------
- Cont'd -
SEGMENTS Non-GAAP QSI (3) Share-
-------- (3) ------- Based
Compensation
--- (3)
-------------
Q1 -FISCAL
2014
----------
Revenues $6,622 $- $-
Change from 10%
prior year
Change from
prior
quarter 2%
Operating
income
(loss) $1,848 ($5) ($281)
Change from
prior year (24%) 38% -%
Change from
prior
quarter (5%) 55% (3%)
EBT $2,103 $4 ($281)
Change from
prior year (22%) N/M -%
Change from
prior
quarter (3%) N/M (3%)
EBT as % of
revenues 32%
Discontinued
operations,
net of tax
(4) $430 $- $-
Net income
(loss) $2,163 $4 ($226)
Change from
prior year (2%) N/M (3%)
Change from
prior
quarter 19% N/M -%
Diluted EPS $1.26 $0.00 ($0.13)
Change from
prior year -% N/M (8%)
Change from
prior
quarter 20% N/M -%
Diluted
shares used 1,722 1,722 1,722
Q4 -FISCAL
2013
----------
Revenues $6,480 $- $-
Operating
income
(loss) 1,940 (11) (274)
EBT 2,173 (11) (274)
Net income
(loss) 1,818 (24) (226)
Diluted EPS $1.05 ($0.01) ($0.13)
Diluted
shares used 1,738 1,738 1,738
Q1 -FISCAL
2013
----------
Revenues $6,018 $- $-
Operating
income
(loss) 2,447 (8) (281)
EBT 2,695 (17) (281)
Net income
(loss) 2,204 (12) (219)
Diluted EPS $1.26 ($0.01) ($0.12)
Diluted
shares used 1,751 1,751 1,751
Q2 -FISCAL
2013
----------
Revenues $6,124 $- $-
Operating
income
(loss) 2,233 (5) (268)
EBT 2,454 33 (268)
Net income
(loss) 2,066 36 (220)
Diluted EPS $1.17 $0.02 ($0.12)
Diluted
shares used 1,763 1,763 1,763
12 MONTHS -
FISCAL 2013
------------
Revenues $24,866 $- $-
Operating
income
(loss) 8,657 (31) (1,103)
EBT 9,534 56 (1,103)
Net income
(loss) 7,911 43 (886)
Diluted EPS $4.51 $0.02 ($0.51)
Diluted
shares used 1,754 1,754 1,754
------------ ----- ----- -----
- Cont'd -
SEGMENTS Acquisition- Tax GAAP
-------- Related Items ----
Items (3) -----
---------
Q1 -FISCAL
2014
----------
Revenues $- $- $6,622
Change from 10%
prior year
Change from
prior
quarter 2%
Operating
income
(loss) ($69) $- $1,493
Change from
prior year 1% (28%)
Change from
prior
quarter (3%) (6%)
EBT ($69) $- $1,757
Change from
prior year 1% (24%)
Change from
prior
quarter (3%) (4%)
EBT as % of
revenues 27%
Discontinued
operations,
net of tax
(4) $- $- $430
Net income
(loss) ($66) $- $1,875
Change from
prior year 1% N/A (2%)
Change from
prior
quarter 1% N/A 25%
Diluted EPS ($0.04) $- $1.09
Change from
prior year -% N/A -%
Change from
prior
quarter -% N/A 27%
Diluted
shares used 1,722 1,722 1,722
Q4 -FISCAL
2013
----------
Revenues $- $- $6,480
Operating
income
(loss) (67) - 1,588
EBT (67) - 1,821
Net income
(loss) (67) - 1,501
Diluted EPS ($0.04) $- $0.86
Diluted
shares used 1,738 1,738 1,738
Q1 -FISCAL
2013
----------
Revenues $- $- $6,018
Operating
income
(loss) (70) - 2,088
EBT (70) - 2,327
Net income
(loss) (67) - 1,906
Diluted EPS ($0.04) $- $1.09
Diluted
shares used 1,751 1,751 1,751
Q2 -FISCAL
2013
----------
Revenues $- $- $6,124
Operating
income
(loss) (83) - 1,877
EBT (83) - 2,136
Net income
(loss) (80) 64 1,866
Diluted EPS ($0.05) $0.04 $1.06
Diluted
shares used 1,763 1,763 1,763
12 MONTHS -
FISCAL 2013
------------
Revenues $- $- $24,866
Operating
income
(loss) (293) - 7,230
EBT (293) - 8,194
Net income
(loss) (279) 64 6,853
Diluted EPS ($0.16) $0.04 $3.91
Diluted
shares used 1,754 1,754 1,754
------------ ----- ----- -----
(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 consisted 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) During the first quarter of fiscal 2014, as a result of
the reassessment of management reporting, the Qualcomm
Wireless & Internet (QWI) segment was eliminated.
Revenues and operating results for the divisions that
comprised the QWI segment are included in Non-GAAP
reconciling items. Prior period information has been
adjusted to conform to the current presentation.
(3) 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.
(4) During the first quarter of fiscal 2014, a gain of
$665 million was recorded associated with the sale of
substantially all of the operations of our Omnitracs
division.
N/M - Not Meaningful
N/A - Not Applicable
Sums may not equal totals due to rounding.
Conference Call
Qualcomm's first quarter fiscal 2014 earnings conference call will be broadcast live on January 29, 2014, 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.cfmand 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 31476192.
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) and QTL (Qualcomm Technology Licensing) 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 equipment and services revenues, R&D expenses, SG&A expenses, operating income, net investment income, income or earnings before income taxes, effective tax rate, net income, diluted earnings 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. 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 include 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, the Company excludes
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 are 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.
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 our expectations for our performance to reflect continued strong global growth of smartphones, our chipset leadership position and our competitive strengths in 3G/4G technologies and products; stock repurchases that we plan to complete over the remainder of fiscal 2014 under our current stock repurchase program; our business outlook; and our estimates and guidance related to revenues, GAAP and Non-GAAP diluted earnings per share, 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 "estimates," "guidance," "expects," "anticipates," "intends," "plans," "believes," "seeks" 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 CDMA, OFDMA and other communications technologies, continuing growth in our customers' and licensees' sales of products and services based on these technologies and our ability to continue to drive customer demand for our products and services based on these technologies; competition; our dependence on a small number of customers and licensees; the continued and future success of our licensing programs; attacks on our licensing business model, including current and future legal proceedings or actions of governmental or quasi-governmental bodies or standards or industry organizations; the enforcement and protection of our intellectual property rights; the commercial success of our new technologies, products and services; claims by third parties that we infringe their intellectual property; our dependence on a limited number of third-party suppliers; our stock price and earnings volatility; government regulations and policies; acquisitions, strategic transactions and investments; global economic conditions that impact the mobile communications industry; foreign currency fluctuations; and failures in our products or services or in the products of our customers, including those resulting from security vulnerabilities, defects or errors. These and other risks are set forth in the Company's Annual Report on Form 10-K for the fiscal year ended September 29, 2013and Quarterly Report on Form 10-Q for the first quarter ended December 29, 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 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
Vice President, Investor Relations
Phone: 1-858-658-4813
e-mail: ir@qualcomm.com
Supplemental Information
(Unaudited)
Three Months Ended December 29, 2013
Non-GAAP QSI
Results ---
-------
($ in millions, except per
share data)
Cost of equipment and services
revenues $2,633 $-
R&D 1,152 2
SG&A 517 3
Other expenses 472 (a) -
Operating income (loss) 1,848 (5)
Investment income, net $255 (b) $9 (c)
Tax rate 18% 25%
Net income (loss) $2,163 $4
Diluted EPS $1.26 $0.00
----------- ----- -----
- Cont'd -
Share- Acquisition- GAAP
Based Related Results
Compensation Items -------
------------ -----
($ in millions, except per
share data)
Cost of equipment and services
revenues $12 $61 $2,706
R&D 173 1 1,328
SG&A 96 7 623
Other expenses - - 472
Operating income (loss) (281) (69) 1,493
Investment income, net $- $- $264
Tax rate 20% 4% 18%
Net income (loss) $(226) $(66) $1,875
Diluted EPS $(0.13) $(0.04) $1.09
----------- ------ ------ -----
(a) Included a $444 million loss, or $0.20 per share, that resulted from
an impairment charge on certain property, plant and equipment related
to our QMT division, a $16 million goodwill impairment charge
related to our QRS division and a $12 million charge related to the
ParkerVision verdict.
(b) Included $156 million in interest and dividend income, $126 million
in net realized gains on investments and $6 million in net gains on
derivatives, partially offset by $30 million in other-than-temporary
losses on investments and $3 million in interest expense.
(c) Included $19 million in net realized gains on investments, partially
offset by $7 million in other-than-temporary losses on investments,
$2 million in net losses on derivatives and $1 million in equity in
losses of investees.
Sums may not equal totals due to rounding.
Reconciliation of Non-GAAP Tax Rates to GAAP Tax Rates (a)
($ in millions)
(Unaudited)
Three Months Ended December 29, 2013
------------------------------------
Non-
GAAP QSI Share-Based Acquisition- GAAP
Related
Results --- Compensation Items Results
------- ------------ -------- -------
Income (loss) from
continuing operations
before income taxes $2,103 $4 $(281) $(69) $1,757
Income tax (expense)
benefit (370) (1) 55 3 (313)
Income (loss) from
continuing operations $1,733 $3 $(226) $(66) $1,444
====== === ===== ==== ======
Tax rate 18% 25% 20% 4% 18%
(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.
Qualcomm Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
September
December 29, 29,
2013 2013
---- ---
ASSETS
Current assets:
Cash and cash equivalents $8,292 $6,142
Marketable securities 8,988 8,824
Accounts receivable, net 1,327 2,142
Inventories 1,064 1,302
Deferred tax assets 404 573
Other current assets 510 572
--- ---
Total current assets 20,585 19,555
Marketable securities 14,330 14,440
Deferred tax assets 1,346 1,059
Property, plant and equipment, net 2,562 2,995
Goodwill 4,212 3,976
Other intangible assets, net 2,490 2,553
Other assets 757 938
--- ---
Total assets $46,282 $45,516
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $1,375 $1,554
Payroll and other benefits related liabilities 706 839
Unearned revenues 470 501
Other current liabilities 2,762 2,319
----- -----
Total current liabilities 5,313 5,213
Unearned revenues 3,566 3,666
Other liabilities 376 550
--- ---
Total liabilities 9,255 9,429
----- -----
Stockholders' equity:
Qualcomm stockholders' equity:
Preferred stock, $0.0001 par value; 8 shares
authorized; none outstanding - -
Common stock, $0.0001 par value; 6,000 shares
authorized; 1,687 and 1,685 shares issued and
outstanding, respectively - -
Paid-in capital 9,506 9,874
Retained earnings 26,737 25,461
Accumulated other comprehensive income 784 753
--- ---
Total Qualcomm stockholders' equity 37,027 36,088
Noncontrolling interests - (1)
--- ---
Total stockholders' equity 37,027 36,087
------ ------
Total liabilities and stockholders' equity $46,282 $45,516
======= =======
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended
------------------
December December
29, 30,
--------- ---------
2013 2012
---- ----
Revenues:
Equipment and services $4,653 $4,199
Licensing 1,969 1,819
----- -----
Total revenues 6,622 6,018
----- -----
Costs and expenses:
Cost of equipment and services
revenues 2,706 2,237
Research and development 1,328 1,106
Selling, general and administrative 623 587
Other 472 -
--- ---
Total costs and expenses 5,129 3,930
----- -----
Operating income 1,493 2,088
Investment income, net 264 239
--- ---
Income from continuing operations
before income taxes 1,757 2,327
Income tax expense (313) (424)
---- ----
Income from continuing operations 1,444 1,903
Discontinued operations, net of
income taxes 430 -
--- ---
Net income 1,874 1,903
Net loss attributable to
noncontrolling interests 1 3
--- ---
Net income attributable to Qualcomm $1,875 $1,906
====== ======
Basic earnings per share attributable to
Qualcomm:
Continuing operations $0.86 $1.12
Discontinued operations 0.25 -
---- ---
Net income $1.11 $1.12
===== =====
Diluted earnings per share attributable to
Qualcomm:
Continuing operations $0.84 $1.09
Discontinued operations 0.25 -
---- ---
Net income $1.09 $1.09
===== =====
Shares used in per share calculations:
Basic 1,688 1,709
===== =====
Diluted 1,722 1,751
===== =====
Dividends per share announced $0.35 $0.25
===== =====
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
------------------
December December
29, 30,
--------- ---------
2013 2012
---- ----
Operating Activities:
Net income $1,874 $1,903
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization expense 272 241
Gain on sale of discontinued operations (665) -
Goodwill and long-lived asset impairment
charges 460 5
Revenues related to non-monetary exchanges (31) (31)
Income tax provision in excess of income tax
payments 258 195
Non-cash portion of share-based compensation
expense 282 283
Incremental tax benefits from share-based
compensation (99) (61)
Net realized gains on marketable securities
and other investments (145) (96)
Net impairment losses on marketable
securities and other investments 37 10
Other items, net 33 24
Changes in assets and liabilities:
Accounts receivable, net 788 (185)
Inventories 237 (247)
Other assets 69 (51)
Trade accounts payable (148) 376
Payroll, benefits and other liabilities (342) (387)
Unearned revenues (99) (4)
--- ---
Net cash provided by operating activities 2,781 1,975
----- -----
Investing Activities:
Capital expenditures (210) (205)
Purchases of available-for-sale securities (2,055) (3,289)
Proceeds from sales and maturities of available-
for-sale securities 2,168 2,226
Purchases of trading securities (785) (970)
Proceeds from sales and maturities of trading
securities 773 1,024
Proceeds from sale of discontinued operations,
net of cash sold 788 -
Acquisitions and other investments, net of
cash acquired (315) (39)
Other items, net 81 26
--- ---
Net cash provided (used) by investing
activities 445 (1,227)
--- ------
Financing Activities:
Proceeds from issuance of common stock 441 340
Incremental tax benefits from share-based
compensation 99 61
Repurchases and retirements of common stock (1,002) (250)
Dividends paid (590) (428)
Other items, net (21) 2
--- ---
Net cash used by financing activities (1,073) (275)
------
Changes in cash and cash equivalents held
for sale (4) 13
--- ---
Effect of exchange rate changes on cash and cash
equivalents 1 -
--- ---
Net increase in cash and cash equivalents 2,150 486
Cash and cash equivalents at beginning of
period 6,142 3,807
----- -----
Cash and cash equivalents at end of period $8,292 $4,293
====== ======
SOURCE Qualcomm Incorporated