QUALCOMM, INC. SAN DIEGO, Jan. 28, 2015 /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 2015 ended December 28, 2014.
"We delivered a strong quarter, achieving record quarterly revenues and Non-GAAP operating income, and we also are very pleased to have resolved our previously disclosed dispute with a licensee in China," said Steve Mollenkopf, CEO of Qualcomm Incorporated. "Looking ahead, we have lowered our revenue outlook for our semiconductor business for the second half of the fiscal year and lowered our EPS expectations. These changes reflect our revised expectations related to OEM mix, sales to a large customer and heightened competition in China."
First Quarter Results (GAAP)*
Q1 Fiscal Q1 Fiscal Year-Over- Q4 Fiscal Sequential
2015 2014 Year 2014 Change
Change
Revenues (1) $7.1B $6.6B +7% $6.7B +6%
Operating
income (1) $2.1B $1.5B +38% $2.0B +4%
Net income
(2) $2.0B $1.9B +5% $1.9B +4%
Diluted
earnings
per share
(2) $1.17 $1.09 +7% $1.11 +5%
Operating
cash flow $2.4B $2.8B (15%) $1.6B +46%
1 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*
Q1 Fiscal Q1 Fiscal Year-Over- Q4 Fiscal Sequential
2015 2014 Year 2014 Change
Change
Revenues $7.1B $6.6B +7% $6.7B +6%
Operating
income $2.5B $1.8B +37% $2.3B +9%
Net income $2.3B $2.2B +5% $2.1B +6%
Diluted
earnings
per share $1.34 $1.26 +6% $1.26 +6%
Non-GAAP results exclude the QSI (Qualcomm Strategic Initiatives) segment and certain share-based compensation, acquisition-related items, tax items and other items. Beginning in the first quarter of fiscal 2015, we changed our methodology for reporting Non-GAAP results to exclude third-party acquisition and integration services costs and certain other items, which may include major restructuring and restructuring-related costs, goodwill and long-lived asset impairment charges and litigation settlements and/or damages. Detailed reconciliations between GAAP and Non-GAAP results are included within this news release.
* The following should be considered in regards to the year-over-year comparisons:
-- The first quarter of fiscal 2014 results included:
-- $665 million gain, 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, or $0.20 per share, that resulted from an
impairment on long-lived assets related to our QMT (Qualcomm MEMS
Technologies) division.
First Quarter Key Business Metrics
Q1 Fiscal Q1 Fiscal Year-Over-Year Q4 Fiscal Sequential
Change (1) Change (1)
2015 2014 2014
---- ---- ----
MSM(TM) chip
shipments 270M 213M +27% 236M +14%
Total reported
device sales (2) $56.4B $61.6B (8%) $57.4B (2%)
Est. reported 3G/
4G device
shipments
(approx.) (2) 284M - 288M 276M - 280M +3% 256M - 260M +11%
Est. reported 3G/
4G average
selling price
(approx.) (2) $194 - $200 $219 - $225 (11%) $220 - $226 (12%)
(1)
The midpoints of the estimated
ranges are identified for
comparison purposes only and
do not indicate a higher
degree of confidence in the
midpoints.
(2) The first quarter of fiscal
2014 and 2015 are based on
sales by our licensees in the
September quarter as reported
to us in the December
quarter, and the fourth
quarter of fiscal 2014 is
based on sales by our
licensees in the June quarter
as reported to us in the
September quarter.
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled $31.6 billion at the end of the first quarter of fiscal 2015, compared to $31.6 billion a year ago and $32.0 billion at the end of the fourth quarter of fiscal 2014.
Return of Capital to Stockholders
During the first quarter of fiscal 2015, we returned $2.4 billion to stockholders, including $1.7 billion through repurchases of 22.9 million shares of common stock and $697 million, or $0.42 per share, of cash dividends paid. On January 14, 2015, we announced a cash dividend of $0.42 per share payable on March 25, 2015 to stockholders of record as of the close of business on March 4, 2015. Since December 28, 2014, we repurchased and retired 6.8 million shares of common stock for $502 million.
Effective Income Tax Rates
Our fiscal 2015 annual effective income tax rates are estimated to be approximately 17 percent for GAAP and approximately 18 percent for Non-GAAP, both of which include the United States federal research and development (R&D) tax credit generated through December 31, 2014, the date on which the credit expired. The first quarter of fiscal 2015 effective income tax rates were 14 percent for GAAP and 18 percent for Non-GAAP. As a result of the retroactive reinstatement of the federal R&D tax credit during the first quarter of fiscal 2015, a tax benefit related to fiscal 2014 of $0.06 per share was excluded from Non-GAAP results.
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 most recent 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 financial outlook to the extent they are reasonably certain; however, actual results may differ materially from the outlook.
We have lowered our outlook for the second half of fiscal 2015 in our semiconductor business, QCT, largely driven by the effects of:
-- A shift in share among OEMs at the premium tier, which has reduced our
near-term opportunity for sales of our integrated Snapdragon(TM)
processors and has skewed our product mix towards more modem chipsets in
this tier;
-- Expectations that our Snapdragon 810 processor will not be in the
upcoming design cycle of a large customer's flagship device; and
-- Heightened competition in China.
China continues to present significant opportunities for us, particularly with the rollout of 3G/4G LTE multimode, but also presents significant challenges, as our business practices continue to be the subject of an investigation by the China National Development and Reform Commission (NDRC). Please refer to our Quarterly Report on Form 10-Q for the first quarter ended December 28, 2014 filed with the SEC for our most recent disclosures regarding the NDRC investigation.
Our current outlook for our licensing business, QTL, reflects the following:
-- We resolved the previously disclosed dispute with a licensee in China in
the first quarter of fiscal 2015. However, we continue to believe that
certain licensees in China are not fully complying with their
contractual obligations to report their sales of licensed products to us
(which includes certain licensees underreporting a portion of their
3G/4G device sales) and that unlicensed companies may seek to delay
execution of new licenses while the NDRC investigation is ongoing. We
are taking steps to address these issues, although the outcome and
timing of any resolutions are uncertain.
-- We expect global 3G/4G device shipments to be approximately 1.35 billion
for calendar year 2014. However, due to the issues described above, we
do not believe that all of the global 3G/4G device shipments for
calendar year 2014 will be reported to us within the time periods
required by our license agreements. Accordingly, we currently estimate
approximately 1.135 billion to 1.175 billion calendar year 2014 3G/4G
device shipments will actually be reported to us through the first
calendar quarter of 2015.
-- We expect global 3G/4G device shipments to be approximately 1.5 billion
to 1.6 billion for calendar year 2015. At this time, we are not
providing a forecast for calendar year 2015 reported 3G/4G device
shipments.
-- In the following table, we do provide guidance for estimated second
fiscal quarter and fiscal 2015 3G/4G total reported device sales. That
guidance includes an estimate of some prior period activity (i.e.,
devices shipped in prior periods) that may be reported to us.
Our outlook for fiscal 2015 includes an estimate of the benefit related to stock repurchases that we plan to complete over the remainder of fiscal 2015 under our current stock repurchase program.
We have not included any estimates related to the proposed acquisition of CSR plc in our fiscal 2015 outlook. The acquisition is expected to close by the end of the summer of 2015. We expect the acquisition to be accretive to Non-GAAP earnings per share in fiscal 2016, the first full year of combined operations.
The following table summarizes GAAP and Non-GAAP guidance based on the current outlook. The Non-GAAP outlook presented below is consistent with the presentation of Non-GAAP results included elsewhere herein.
Qualcomm's Business Outlook Summary
SECOND FISCAL QUARTER
Q2 FY14 Current Guidance
Results Q2 FY15 Estimates
------- -----------------
Revenues $6.4B $6.5B - $7.1B
Year-over-year change increase 2% -
12%
Non-GAAP diluted earnings
per share (EPS) $1.31 $1.28 - $1.40
Year-over-year change decrease 2% -
increase 7%
Diluted EPS attributable to
QSI ($0.01) ($0.01)
Diluted EPS attributable to
share-based compensation ($0.11) ($0.13)
Diluted EPS attributable to
other items ($0.05) ($0.06)
GAAP diluted EPS $1.14 $1.08 - $1.20
Year-over-year change decrease 5% -
increase 5%
Metrics
MSM chip shipments 188M 220M - 240M
Year-over-year change increase 17% -
28%
Total reported device sales* approx. approx. $69.5B
(1) $66.5B -$75.5B (3)
Year-over-year change increase 5% -
14%
*Est. sales in December
quarter, reported in March
quarter
---------------------------
FISCAL YEAR
-----------
FY 2014 Prior Guidance Current
Guidance
FY 2015
Estimates (2)
Results FY 2015
Estimates (2)
Revenues $26.5B $26.8B - $28.8B $26.0B - $28.0B
Year-over-year change increase 1% - decrease 2%
9% -increase
6%
Non-GAAP diluted EPS $5.27 $5.05 - $5.35 $4.75 - $5.05
Year-over-year change decrease 4% - decrease 4%
increase 2% -10%
Diluted EPS attributable to QSI $0.01 ($0.01) ($0.02)
Diluted EPS attributable to share-based
compensation ($0.50) ($0.55) ($0.54)
Diluted EPS attributable to other items ($0.13) ($0.16) ($0.15)
GAAP diluted EPS $4.65 $4.33 - $4.63 $4.04 - $4.34
Year-over-year change decrease 7% - decrease 7%
even -13%
Metrics
Total reported device sales* (1) approx. $243.6B approx. approx.
$240.0B - $245.0B -
$270.0B (3) $270.0B
(3)
Year-over-year change decrease 1% - increase 1%
increase 11% -11%
*Est. sales in Sept. to June quarters,
reported in Dec. to Sept. quarters
---------------------------------------
CALENDAR YEAR Reported 3G/4G Device Estimates (1)
Prior Guidance Current Guidance
Calendar 2014 Calendar 2014
Estimates Estimates
---------
Est.
reported
3G/4G
device
shipments
March
quarter approx. 250M - 254M approx. 250M - 254M
June quarter approx. 256M - 260M approx. 256M - 260M
September
quarter not provided approx. 284M - 288M
December
quarter not provided not provided
------------
Est.
calendar
year range
(approx.) 1,040M - 1,130M (4) 1,135M - 1,175M (4)
----------- ------------------ ------------------
(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 sales net of
permitted deductions, including
transportation, insurance, packing
costs and other items, while other
licensees report sales 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. In addition, certain
licensees may not report (in the
quarter in which they are
contractually obligated to report)
their sales of certain types of
subscriber units, which (as a
result of audits, legal actions or
for other reasons) may be reported
in a subsequent quarter.
Accordingly, 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 guidance for
fiscal 2015 includes an estimate of
the benefit related to stock
repurchases that we plan to
complete over the remainder of
fiscal 2015 under our current stock
repurchase program.
(3) Our guidance range for the second
quarter of fiscal 2015 and fiscal
2015 total reported device sales
reflects estimated 3G/4G total
reported device sales that we
currently expect to be reported to
us, which includes an estimate of
some prior period activity (i.e.,
devices shipped in prior periods)
that may be reported to us.
(4) We expect global 3G/4G device
shipments to be approximately 1.35
billion for calendar year 2014.
However, we do not believe that all
of the global 3G/4G device
shipments for calendar year 2014
will be reported to us within the
time periods required by our
license agreements. Accordingly, we
currently estimate approximately
1.135 billion to 1.175 billion
calendar year 2014 3G/4G device
shipments will actually be reported
to us through the first calendar
quarter of 2015.
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 Non-GAAP QSI Share-Based Other Items
Reconciling Compensation (b) (c) GAAP
Items (a)
--- --------
Q1 - FISCAL 2015
------------------------------------------------------------------------------------------
Revenues $5,242 $1,816 $41 $7,099 $- $- $- $7,099
Change from prior year 14% (4%) (61%) 7% 7%
Change from prior quarter 8% 1% (15%) 6% 6%
Cost of equipment and services revenues $2,968 $- $12 $67 $3,047
Research and development 1,173 1 174 4 1,352
Selling, general and administrative 427 6 87 47 567
Other expenses - - - 69 69
Operating income (loss) $2,531 ($7) ($273) ($187) $2,064
Change from prior year 37% (40%) 3% N/M 38%
Change from prior quarter 9% N/M (8%) N/M 4%
Investment income, net $228 (d) $6 (e) $- $- $234
EBT $1,146 $1,579 $34 $2,759 ($1) ($273) ($187) $2,298
Change from prior year 26% (5%) N/M 31% N/M 3% N/M 31%
Change from prior quarter 10% 3% N/M 8% N/M (8%) N/M 2%
EBT as % of revenues 22% 87% 83% 39% 32%
Net income (loss) $2,263 $- ($229) ($62) $1,972
Change from prior year 5% N/M (1%) 6% 5%
Change from prior quarter 6% N/M (15%) 21% 4%
Diluted EPS $1.34 $0.00 ($0.14) ($0.04) $1.17
Change from prior year 6% -% (8%) -% 7%
Change from prior quarter 6% N/M (17%) 20% 5%
Diluted shares used 1,686 1,686 1,686 1,686 1,686
-----
Q4 - FISCAL 2014
----------------
Revenues $4,849 $1,795 $48 $6,692 $- $- $- $6,692
Operating income (loss) 2,323 (3) (252) (76) 1,992
EBT $1,045 $1,536 ($30) 2,551 29 (252) (76) 2,252
Net income (loss) 2,143 28 (199) (78) 1,894
Diluted EPS $1.26 $0.02 ($0.12) ($0.05) $1.11
Diluted shares used 1,701 1,701 1,701 1,701 1,701
-----
Q1 - FISCAL 2014
----------------
Revenues $4,616 $1,900 $106 $6,622 $- $- $- $6,622
Operating income (loss) 1,848 (5) (281) (69) 1,493
EBT $906 $1,670 ($473) 2,103 4 (281) (69) 1,757
Discontinued operations, net of tax 430 - - - 430
Net income (loss) 2,163 4 (226) (66) 1,875
Diluted EPS $1.26 $0.00 ($0.13) ($0.04) $1.09
Diluted shares used 1,722 1,722 1,722 1,722 1,722
-----
Q2 - FISCAL 2014
----------------
Revenues $4,243 $2,071 $53 $6,367 $- $- $- $6,367
Operating income (loss) 2,337 (6) (251) (90) 1,990
EBT $740 $1,834 $78 2,652 (39) (251) (90) 2,272
Net income (loss) 2,255 (17) (198) (81) 1,959
Diluted EPS $1.31 ($0.01) ($0.11) ($0.05) $1.14
Diluted shares used 1,719 1,719 1,719 1,719 1,719
-----
12 MONTHS - FISCAL 2014
-----------------------
Revenues $18,665 $7,569 $253 $26,487 $- $- $- $26,487
Operating income (loss) 8,933 (18) (1,059) (306) 7,550
EBT $3,807 $6,590 ($247) 10,150 (7) (1,059) (306) 8,778
Discontinued operations, net of tax 430 - - - 430
Net income (loss) 9,032 15 (856) (224) 7,967
Diluted EPS $5.27 $0.01 ($0.50) ($0.13) $4.65
Diluted shares used 1,714 1,714 1,714 1,714 1,714
------------------- ----- ----- ----- ----- -----
(a) 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
research and development expenses,
selling, general and
administrative expenses, other
expenses or income and certain
investment income that are not
allocated to the segments for
management reporting purposes;
nonreportable segment results; and
the elimination of intersegment
profit.
(b) Beginning in the first quarter of
fiscal 2015, we changed our
methodology for reporting Non-
GAAP results to exclude third-
party acquisition and integration
services costs and certain other
items, which may include major
restructuring and restructuring-
related costs, goodwill and long-
lived asset impairment charges and
litigation settlements and/or
damages. In the first quarter of
fiscal 2015, other items excluded
from Non-GAAP EBT included $83
million of acquisition-related
items, $69 million due to the
impairment of goodwill related to
our business that provides push-
to-talk enablement services to
wireless operators and $35 million
of severance costs related to a
restructuring.
(c) The tax benefit in the "Other
Items" column included a $101
million tax benefit related to
fiscal 2014 as a result of the
retroactive reinstatement of the
federal R&D tax credit, a $21
million tax benefit for the tax
effect of other items in EBT, a $4
million tax benefit related to
fiscal 2014 as a result of the
retroactive reinstatement of other
tax laws and a $2 million tax
benefit to reconcile the tax
provisions for each column to the
total GAAP tax provision for the
quarter, partially offset by a $3
million tax expense for the tax
effect of acquisition-related
items. At fiscal year end, 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
included in the tax provision
(benefit) in the "Other Items"
column. In interim quarters of
prior year, this difference was
allocated to the tax provisions
(benefits) among the columns. See
the "Reconciliation of Non-GAAP
Tax Rates to GAAP Tax Rates"
below.
(d) Included $156 million in net
realized gains on investments,
$133 million in interest and
dividend income and $1 million in
other net investment income,
partially offset by $62 million in
other-than-temporary losses on
investments.
(e) Included $10 million in net
realized gains on investments,
partially offset by $4 million in
other net investment expense.
N/M - Not Meaningful
Sums may not equal totals due to rounding.
Reconciliation of Non-GAAP Tax Rates to GAAP Tax Rates
(Unaudited)
Three Months Ended December 28, 2014
------------------------------------
($ in millions) Non-GAAP Results QSI Share-Based
Compensation Other Items GAAP Results
--------------- ---------------- --- ------------ ----------- ------------
Income (loss) from
continuing operations
before income taxes $2,759 $(1) $(273) $(187) $2,298
Income tax (expense)
benefit (496) - 44 125 (327)
---- --- --- --- ----
Income (loss) from
continuing operations $2,263 $(1) $(229) $(62) $1,971
Tax rate 18% -% 16% 67% 14%
-------- --- --- --- --- ---
Conference Call
Qualcomm's first quarter fiscal 2015 earnings conference call will be broadcast live on January 28, 2015, 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 55501467.
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 used by the Company include revenues, cost of equipment and services revenues, R&D expenses, SG&A expenses, other expenses, operating income, net investment income, income or earnings before income taxes, effective tax rate, net income and diluted earnings per share. 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, tax items and other items.
-- QSI is excluded because the Company expects to exit its strategic
investments in the foreseeable future, 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. Non-cash share-based compensation is excluded because management
views such expenses as unrelated to the operating activities of the
Company's ongoing core businesses.
-- Certain other items are excluded because management views such expenses
as unrelated to the operating activities of the Company's ongoing core
business, including:
-- Acquisition-related items include amortization of certain intangible
assets, recognition of the step-up of inventories to fair value and
the related tax effects of these items starting with acquisitions
completed in the third quarter of fiscal 2011, as well as any tax
effects 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. Starting in the first quarter of fiscal 2015,
the Company excludes third-party acquisition and integration
services costs. Prior year amounts have not been reclassified to
conform to the current presentation.
-- Starting in the first quarter of fiscal 2015, the Company excludes
certain other items that management views as unrelated to the
Company's ongoing business, such as major restructuring and
restructuring-related costs, goodwill and long-lived asset
impairments and litigation settlements and/or damages. Prior year
amounts have not been reclassified to conform to the current
presentation.
-- Certain tax items that are unrelated to the fiscal year in which
they are recorded are excluded in order to provide a clearer
understanding of the Company's ongoing Non-GAAP tax rate and after
tax earnings. Also, the provision (benefit) to reconcile the tax
provisions (benefits) for each column to the total GAAP tax
provision for the quarter is excluded. At fiscal year end, 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
included in the tax provision (benefit) in the "Other Items" column.
In interim quarters of prior fiscal years, this difference was
allocated to the tax provisions (benefits) among the columns.
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 lowered outlook for our semiconductor business for the second half of the fiscal year and our lowered EPS expectations, largely driven by the effects of a shift in share among OEMs at the premium tier, expectations that our Snapdragon 810 processor will not be in the upcoming design cycle of a large customer's flagship device and heightened competition in China; stock repurchases that we plan to complete during fiscal 2015 under our stock repurchase program and estimates of the benefits thereof; opportunities for and challenges to our business in China, including the NDRC investigation and 3G/4G device sales that we believe may not be reported to us or are currently unlicensed; our proposed acquisition of CSR plc, including the expected timing and financial impact of, and our ability to complete the acquisition; 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, global 3G/4G device shipments and reported 3G/4G device shipments. 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 commercial network deployments, expansions and upgrades of CDMA, OFDMA and other communications technologies, our customers' and licensees' sales of products and services based on these technologies and our ability to drive our customers' demand for our products and services; competition in an environment of rapid technological change; 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; government regulations and policies, or adverse rulings in enforcement or other proceedings; the commercial success of our new technologies, products and services; claims by third parties that we infringe their intellectual property; acquisitions (including the possibility that the CSR acquisition may not be completed timely, if at all), strategic transactions and investments; our dependence on a limited number of third-party suppliers; our stock price and earnings volatility; our ability to attract and retain qualified employees; global economic conditions that impact the mobile communications industry; foreign currency fluctuations and failures in our products or services or in the products or services of our customers or licensees, 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 28, 2014 and Quarterly Report on Form 10-Q for the first quarter ended December 28, 2014 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
Vice President, Investor Relations
Phone: 1-858-658-4813
e-mail: ir@qualcomm.com
Qualcomm Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
December 28, September 28,
2014 2014
---- ----
ASSETS
Current assets:
Cash and cash equivalents $6,325 $7,907
Marketable securities 11,463 9,658
Accounts receivable, net 2,239 2,412
Inventories 1,761 1,458
Deferred tax assets 445 577
Other current assets 528 401
--- ---
Total current assets 22,761 22,413
Marketable securities 13,815 14,457
Deferred tax assets 1,329 1,174
Property, plant and equipment,
net 2,531 2,487
Goodwill 4,413 4,488
Other intangible assets, net 2,497 2,580
Other assets 1,101 975
----- ---
Total assets $48,447 $48,574
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $2,482 $2,183
Payroll and other benefits
related liabilities 786 802
Unearned revenues 885 785
Other current liabilities 2,252 2,243
----- -----
Total current liabilities 6,405 6,013
Unearned revenues 2,763 2,967
Other liabilities 460 428
--- ---
Total liabilities 9,628 9,408
----- -----
Stockholders' equity:
Qualcomm stockholders' equity:
Preferred stock, $0.0001 par
value; 8 shares authorized; none
outstanding - -
Common stock and paid-in
capital, $0.0001 par value;
6,000 shares authorized; 1,654
and 1,669 shares issued and
outstanding, respectively 6,334 7,736
Retained earnings 32,061 30,799
Accumulated other comprehensive
income 428 634
--- ---
Total Qualcomm stockholders'
equity 38,823 39,169
Noncontrolling interests (4) (3)
--- ---
Total stockholders' equity 38,819 39,166
------ ------
Total liabilities and
stockholders' equity $48,447 $48,574
======= =======
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended
------------------
December 28, December 29,
2014 2013
---- ----
Revenues:
Equipment and
services $5,216 $4,653
Licensing 1,883 1,969
----- -----
Total
revenues 7,099 6,622
----- -----
Costs and expenses:
Cost of
equipment
and services
revenues 3,047 2,706
Research and
development 1,352 1,328
Selling,
general and
administrative 567 623
Other 69 472
--- ---
Total costs
and expenses 5,035 5,129
----- -----
Operating
income 2,064 1,493
Investment
income, net 234 264
--- ---
Income from
continuing
operations
before
income taxes 2,298 1,757
Income tax
expense (327) (313)
---- ----
Income from
continuing
operations 1,971 1,444
Discontinued
operations,
net of
income taxes - 430
--- ---
Net income 1,971 1,874
Net loss
attributable
to
noncontrolling
interests 1 1
--- ---
Net income
attributable
to Qualcomm $1,972 $1,875
====== ======
Basic earnings per share
attributable to Qualcomm:
Continuing
operations $1.19 $0.86
Discontinued
operations - 0.25
--- ----
Net income $1.19 $1.11
===== =====
Diluted earnings per share
attributable to Qualcomm:
Continuing
operations $1.17 $0.84
Discontinued
operations - 0.25
--- ----
Net income $1.17 $1.09
===== =====
Shares used in per share
calculations:
Basic 1,661 1,688
===== =====
Diluted 1,686 1,722
===== =====
Dividends per
share
announced $0.42 $0.35
===== =====
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
------------------
December 28, December 29,
2014 2013
---- ----
Operating Activities:
Net income $1,971 $1,874
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation
and
amortization
expense 287 272
Gain on
sale of
discontinued
operations - (665)
Long-lived
asset and
goodwill
impairment
charges 75 460
Income tax
provision
(less
than) in
excess of
income tax
payments (7) 258
Non-cash
portion of
share-
based
compensation
expense 273 282
Incremental
tax
benefits
from share-
based
compensation (48) (99)
Net
realized
gains on
marketable
securities
and other
investments (166) (145)
Impairment
losses on
marketable
securities
and other
investments 65 37
Other
items, net (31) 2
Changes in assets and
liabilities:
Accounts
receivable,
net 173 788
Inventories (303) 237
Other
assets (140) 69
Trade
accounts
payable 268 (148)
Payroll,
benefits
and other
liabilities 20 (342)
Unearned
revenues (73) (99)
--- ---
Net cash
provided
by
operating
activities 2,364 2,781
----- -----
Investing Activities:
Capital
expenditures (253) (210)
Purchases
of
available-
for-sale
securities (5,966) (2,055)
Proceeds
from sales
and
maturities
of
available-
for-sale
securities 4,578 2,168
Purchases
of trading
securities (302) (785)
Proceeds
from sales
and
maturities
of trading
securities 296 773
Proceeds
from sale
of
discontinued
operations,
net of
cash sold - 788
Acquisitions
and other
investments,
net of
cash
acquired (98) (315)
Other
items, net 9 81
--- ---
Net cash
(used)
provided
by
investing
activities (1,736) 445
------ ---
Financing Activities:
Proceeds
from
issuance
of common
stock 116 441
Incremental
tax
benefits
from share-
based
compensation 48 99
Repurchases
and
retirements
of common
stock (1,664) (1,002)
Dividends
paid (697) (590)
Other
items, net (6) (21)
--- ---
Net cash
used by
financing
activities (2,203) (1,073)
------
Changes in
cash and
cash
equivalents
held for
sale - (4)
--- ---
Effect of
exchange
rate
changes on
cash and
cash
equivalents (7) 1
--- ---
Net
(decrease)
increase
in cash
and cash
equivalents (1,582) 2,150
Cash and
cash
equivalents
at
beginning
of period 7,907 6,142
----- -----
Cash and
cash
equivalents
at end of
period $6,325 $8,292
====== ======
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SOURCE Qualcomm Incorporated
