Qualcomm Announces Fourth Quarter and Fiscal 2012 Results

($ in millions)

Non-GAAP

QSI

Share-Based

Compensation

GAAP

Fourth quarter fiscal 2012

$      961

$     1

$       152

$  1,114

As % of revenues

20%

23%

Fourth quarter fiscal 2011

$      731

$     1

$       119

$     851

As % of revenues

18%

21%

Year-over-year change ($)

31%

 N/M 

28%

31%

N/M - Not Meaningful

($ in millions)

Non-GAAP

QSI

Share-Based
Compensation

Acquisition-Related
Items

GAAP

Fourth quarter fiscal 2012

$     545

$      3

$       112

$      21

$     681

As % of revenues

11%

14%

Fourth quarter fiscal 2011

$     371

$      8

$       110

$      42

$     531

As % of revenues

9%

13%

Year-over-year change ($)

47%

 N/M 

2%

 N/M 

28%

N/M - Not Meaningful

Qualcomm's Business Outlook Summary

FIRST FISCAL QUARTER

Q1 FY12

Current Guidance

Results

Q1 FY13 Estimates

Revenues

$4.68B

$5.6B - $6.1B

  Year-over-year change

increase 20% - 30%

Non-GAAP Diluted earnings per share (EPS)

$0.97

$1.08 - $1.16

  Year-over-year change

increase 11% - 20%

         Diluted EPS attributable to QSI

($0.01)

($0.01)

         Diluted EPS attributable to share-based compensation

($0.11)

($0.13)

         Diluted EPS attributable to acquisition-related items

($0.03)

($0.04)

         Diluted EPS attributable to tax items 

N/A

N/A

GAAP Diluted EPS

$0.81

$0.90 - $0.98

  Year-over-year change

increase 11% - 21%

Metrics

MSM chip shipments

156M 

168M - 178M 

  Year-over-year change

increase 8% - 14%

Total reported device sales (1)

 approx. $41.4B*

  approx. $46.0B - $51.0B*

  Year-over-year change

increase 11% - 23%

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

FISCAL YEAR

FY 2012

Current Guidance

Results (2)

FY 2013 Estimates

Revenues

$19.12B 

$23.0B - $24.0B

  Year-over-year change

increase 20% - 26%

Non-GAAP Operating Income

$7.10B

$8.1B - $8.6B

  Year-over-year change

increase 14% - 21%

         Operating loss attributable to QSI

($0.12B)

($0.05B)

         Operating loss attributable to share-based compensation

($1.04B)

($1.15B)

         Operating loss attributable to acquisition-related items

($0.27B)

($0.30B)

GAAP Operating Income

$5.68B

$6.6B - $7.1B

  Year-over-year change

increase 16% - 25%

Non-GAAP Diluted EPS

$3.71

$4.12 - $4.32

  Year-over-year change

increase 11% - 16%

         Diluted EPS attributable to QSI

$0.40

($0.04)

         Diluted EPS attributable to share-based compensation

($0.47)

($0.53)

         Diluted EPS attributable to acquisition-related items

($0.14)

($0.15)

         Diluted EPS attributable to tax items 

$0.01

N/A

GAAP Diluted EPS

$3.51

$3.40 - $3.60

  Year-over-year change

decrease 3% - increase 3%

Metrics

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

approx. $216 - $222

approx. $214 - $226

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

CALENDAR YEAR Device Estimates (1)

Prior Guidance
Calendar 2012
Estimates

Current Guidance
Calendar 2012
Estimates

Current Guidance
Calendar 2013
Estimates

Est. 3G/4G device shipments

March quarter

approx. 206M - 211M

approx. 206M - 211M

not provided

June quarter

not provided

approx. 210M - 214M

not provided

September quarter

not provided

not provided

not provided

December quarter

not provided

not provided

not provided

Est. calendar year range (approx.)

875M - 935M

880M - 930M

1,000M - 1,070M

Est. calendar year midpoint (approx.) (3)

905M

905M

1,035M

(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 multimode CDMA/OFDMA 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)

Fiscal 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)

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.

SEGMENTS

QCT

QTL

QWI 

Non-GAAP Reconciling Items (1)

Non-GAAP (2)

QSI (2)

Share-Based
Compensation (2)

Acquisition- Related Items (2) (3)

Tax Items (4)

GAAP

Q4 - FISCAL 2012

Revenues 

$3,129

$1,572

$161

$9

$4,871

$  -

$  -

$  -

$  -

$4,871

  Change from prior year

21%

16%

(1%)

50%

18%

18%

  Change from prior quarter 

9%

(1%)

1%

N/M

5%

5%

Operating income (loss)

$1,612

($4)

($284)

($89)

$  -

$1,235

  Change from prior year

(1%)

56%

(13%)

29%

0%

  Change from prior quarter 

(6%)

64%

(8%)

(46%)

(11%)

EBT

$486

$1,370

($1)

$65

$1,920

($21)

($284)

($89)

$  -

$1,526

  Change from prior year

(15%)

15%

80%

N/M

11%

38%

(13%)

29%

15%

  Change from prior quarter 

3%

(3%)

83%

33%

0%

(31%)

(8%)

(46%)

(3%)

EBT as % of revenues

16%

87%

N/M

N/M

39%

31%

Discontinued operations, net of tax (5)

$  -

$23

$  -

$  -

$  -

$23

Net income (loss) 

$1,547

$14

($222)

($78)

$ 10

$1,271

  Change from prior year

13%

N/M

(4%)

35%

(75%)

20%

  Change from prior quarter 

4%

N/M

(6%)

(34%)

N/A

5%

Diluted EPS

$0.89

$0.01

($0.13)

($0.04)

$0.01

$0.73

  Change from prior year

11%

N/M

(8%)

43%

(50%)

18%

  Change from prior quarter 

5%

N/M

(8%)

(33%)

N/A

6%

Diluted shares used

1,745

1,745

1,745

1,745

1,745

1,745

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 (5)

-

(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

Q1 - FISCAL 2012

Revenues 

$3,085

$1,440

$152

$4

$4,681

$  -

$  -

$  -

$  -

$4,681

Operating income (loss)

1,871

(13)

(247)

(60)

-

1,551

EBT

$739

$1,267

$1

$55

2,062

(34)

(247)

(60)

-

1,721

Discontinued operations, net of tax (5)

-

(5)

-

-

-

(5)

Net income (loss)

1,672

(22)

(194)

(55)

-

1,401

Diluted EPS

$0.97

($0.01)

($0.11)

($0.03)

$  -

$0.81

Diluted shares used

1,721

1,721

1,721

1,721

1,721

1,721

Q4 - FISCAL 2011

Revenues 

$2,587

$1,361

$163

$6

$4,117

$  -

$  -

$  -

$  -

$4,117

Operating income (loss)

1,624

(9)

(252)

(125)

-

1,238

EBT

$569

$1,193

($5)

($20)

1,737

(34)

(252)

(125)

-

1,326

Discontinued operations, net of tax (5)

-

(5)

(1)

-

-

(6)

Net income (loss)

1,372

(22)

(214)

(120)

40

1,056

Diluted EPS

$0.80

($0.01)

($0.12)

($0.07)

$0.02

$0.62

Diluted shares used

1,716

1,716

1,716

1,716

1,716

1,716

12 MONTHS - FISCAL 2012

Revenues 

$12,141

$6,327

$633

$20

$19,121

$  -

$  -

$  -

$  -

$19,121

  Change from prior year

37%

17%

(4%)

0%

28%

28%

Operating income (loss)

$7,100

($116)

($1,035)

($267)

$  -

$5,682

  Change from prior year

17%

N/M

(27%)

(28%)

13%

EBT

$2,296

$5,585

($15)

$168

$8,034

($170)

($1,035)

($267)

$  -

$6,562

  Change from prior year

12%

18%

90%

(8%)

17%

(29%)

(27%)

(28%)

15%

EBT as a % of revenues

19%

88%

N/M

N/M

42%

34%

Discontinued operations, net of tax (5)

$  -

$777

($1)

$  -

$  -

$776

Net income (loss) 

$6,463

$690

($811)

($243)

$ 10

$6,109

  Change from prior year

20%

N/M

(30%)

(22%)

(84%)

43%

Diluted EPS

$3.71

$0.40

($0.47)

($0.14)

$0.01

$3.51

  Change from prior year

16%

N/M

(27%)

(17%)

(75%)

39%

Diluted shares used

1,741

1,741

1,741

1,741

1,741

1,741

12 MONTHS - FISCAL 2011

Revenues 

$8,859

$5,422

$656

$20

$14,957

$  -

$  -

$  -

$  -

$14,957

Operating income (loss)

6,084

(37)

(813)

(208)

-

5,026

EBT

$2,056

$4,753

($152)

$183

6,840

(132)

(813)

(208)

-

5,687

Discontinued operations, net of tax (5)

-

(308)

(5)

-

-

(313)

Net income (loss)

5,407

(385)

(624)

(200)

62

4,260

Diluted EPS

$3.20

($0.23)

($0.37)

($0.12)

$0.04

$2.52

Diluted shares used

1,691

1,691

1,691

1,691

1,691

1,691

(1)

Non-GAAP reconciling items related to revenues consist primarily of other nonreportable segment revenues less intersegment eliminations.  Non-GAAP reconciling items related to earnings before taxes consist primarily of certain 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 starting in fiscal 2012, this difference is allocated to tax provisions (benefits) among the columns.  In interim quarters of prior years, it was included in QSI because variability in QSI results was considered the primary driver of the difference.

(3)

In addition to our historical practice of excluding acquired in-process research and development expenses, starting with acquisitions completed in the third quarter of fiscal 2011, Non-GAAP results also exclude other items related to acquisitions.  During fiscal 2012, acquisition-related items consisted of amortization 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.

(4)

During the fourth quarter of fiscal 2012, we recorded a tax benefit of $10 million related to the completion of the audit of our fiscal 2005 through fiscal 2008 state tax returns.  Our quarterly and fiscal 2012 Non-GAAP results exclude this item. 

(5)

During fiscal 2011, we shut down the FLO TV business and network.  The results of FLO TV are presented as discontinued operations.

N/M – Not Meaningful

N/A – Not Applicable

Sums may not equal totals due to rounding.

Qualcomm Incorporated

Supplemental Information for the Three Months Ended September 30, 2012

(Unaudited)

Acquisition-

Tax-

Non-GAAP

Share-Based

Related

Related

GAAP

Results

QSI

Compensation

Items (a)

Items

Results

 ($ in millions, except per share data)

Cost of equipment and services revenues

$   1,753

$        -

$           20

$       68

$          -

$   1,841

R&D 

961

1

152

-

-

1,114

SG&A

545

3

112

21

-

681

Operating income (loss)

1,612

(4)

(284)

(89)

-

1,235

Investment income (loss), net

$      308

^(b)

$   (17)

^(c)

$             -

$          -

$          -

$      291

Tax rate

19%

19%

22%

12%

N/M

19%

Net income (loss)

$   1,547

$     14

$       (222)

$      (78)

$       10

^(d)

$   1,271

Diluted earnings (loss) per share (EPS)

$     0.89

$  0.01

$      (0.13)

$   (0.04)

$    0.01

$     0.73

Operating cash flow

$   1,476

$    (26)

$         (41)

$          -

$          -

$   1,409

Operating cash flow as % of revenues

30%

N/A

N/A

N/A

N/A

29%

Free cash flow^(e)

$   1,242

$    (42)

$         (41)

$          -

$          -

$   1,159

Free cash flow as % of revenues

25%

N/A

N/A

N/A

N/A

24%

(a)  

Consisted of amortization 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 $177 million in interest and dividend income related to cash, cash equivalents and marketable securities, which were not part of our strategic investments and $143 million in net realized gains on investments, partially offset by $5 million in other-than-temporary losses on investments, $4 million in losses on derivatives and $3 million in interest expense.

(c)    

Included $14 million in other-than-temporary losses on investments, $13 million in interest expense and $3 million in equity in losses of investees, partially offset by $12 million in net realized gains on investments and $1 million in interest and dividend income related to cash, cash equivalents and marketable securities.

(d)   

Included a tax benefit of $10 million related to the completion of the audit of our fiscal 2005 through fiscal 2008 state tax returns.

(e)    

Free cash flow is calculated as net cash provided by operating activities less capital expenditures.  Reconciliation of these amounts is included in the "Reconciliation of Non-GAAP Free Cash Flows to Net Cash Provided by Operating Activities (GAAP) and Other Supplemental Disclosures" for the three months ended September 30, 2012 included herein.

N/A – Not Applicable

Sums may not equal totals due to rounding.

Qualcomm Incorporated

Supplemental Information for the Twelve Months Ended September 30, 2012

(Unaudited)

Acquisition-

Tax-

Non-GAAP

Share-Based

Related

Related

GAAP

Results

QSI

Compensation

Items (a)

Items

Results

 ($ in millions, except per share data)

Cost of equipment and services revenues

$   6,796

$          -

$           75

$     225

$          -

$   7,096

R&D 

3,363

6

546

-

-

3,915

SG&A

1,839

29

414

42

-

2,324

Other operating expenses

23

81

^(b)

-

-

-

104

Operating income (loss)

7,100

(116)

(1,035)

(267)

-

5,682

Investment income (loss), net

$      934

^(c)

$     (54)

^(d)

$             -

$          -

$          -

$      880

Tax rate

20%

19%

22%

9%

N/M

19%

Net income (loss)

$   6,463

$     690

$       (811)

$    (243)

$       10

^(e)

$   6,109

Diluted earnings (loss) per share (EPS)

$     3.71

$    0.40

$      (0.47)

$   (0.14)

$    0.01

$     3.51

Operating cash flow

$   6,382

$   (216)

$       (168)

$          -

$          -

$   5,998

Operating cash flow as % of revenues

33%

N/A

N/A

N/A

N/A

31%

Free cash flow^(f)

$   5,199

$   (317)

$       (168)

$          -

$          -

$   4,714

Free cash flow as % of revenues

27%

N/A

N/A

N/A

N/A

25%

(a)   

Consisted of amortization 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)    

QSI results for fiscal 2012 included $81 million in other operating expenses associated with a payment made to the Indian government in connection with the issuance of the BWA spectrum license.

(c)   

Included $590 million in interest and dividend income related to cash, cash equivalents and marketable securities, which were not part of our strategic investments, $327 million in net realized gains on investments, $76 million in gains on derivatives (primarily due to gains from put options sold as part of our stock repurchase program) and $1 million in equity earnings of investees, partially offset by $49 million in other-than-temporary losses on investments and $11 million in interest expense.

(d)    

Included $79 million in interest expense, $34 million in other-than-temporary losses on investments and $10 million of equity in losses of investees, partially offset by $42 million in net realized gains on investments, $19 million in interest and dividend income related to cash, cash equivalents and marketable securities and $8 million in gains on derivatives.

(e)     

Included a tax benefit of $10 million related to the completion of the audit of our fiscal 2005 through fiscal 2008 state tax returns.

(f)   

Free cash flow is calculated as net cash provided by operating activities less capital expenditures.  Reconciliation of these amounts is included in the "Reconciliation of Non-GAAP Free Cash Flows to Net Cash Provided by Operating Activities (GAAP) and Other Supplemental Disclosures" for the twelve months ended September 30, 2012, 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 September 30, 2012

Non-GAAP

QSI

Share-Based

Compensation

GAAP

Net cash provided (used) by operating activities

$ 1,476

$ (26)

$ (41)

(a)

$ 1,409

Less: capital expenditures

(234)

(16)

-

(250)

Free cash flow

$ 1,242

$ (42)

$ (41)

$ 1,159

Revenues

$ 4,871

$ -

$ -

$ 4,871

Free cash flow as % of revenues

25%

N/A

N/A

24%

Other supplemental cash disclosures:

   Cash transfers from QSI (b)

$ 183

$ (183)

$ -

$ -

   Cash transfers to QSI (c)

(123)

123

-

-

    Net cash transfers

$ 60

$ (60)

$ -

$ -

Twelve Months Ended September 30, 2012

Non-GAAP

QSI

Share-Based

Compensation

GAAP

Net cash provided (used) by operating activities

$ 6,382

$ (216)

$ (168)

(a)

$ 5,998

Less: capital expenditures

(1,183)

(101)

-

(1,284)

Free cash flow

$ 5,199

$ (317)

$ (168)

$ 4,714

Revenues

$ 19,121

$ -

$ -

$ 19,121

Free cash flow as % of revenues

27%

N/A

N/A

25%

Other supplemental cash disclosures:

   Cash transfers from QSI (d)

$ 2,281

$ (2,281)

$ -

$ -

   Cash transfers to QSI (c)

(478)

478

-

-

     Net cash transfers

$ 1,803

$ (1,803)

$ -

$ -

Three Months Ended September 25, 2011

Non-GAAP

QSI

Share-Based

Compensation

GAAP

Net cash provided (used) by operating activities

$ 1,886

$ (50)

$ (16)

(a)

$ 1,820

Less: capital expenditures

(194)

-

-

(194)

Free cash flow

$ 1,692

$ (50)

$ (16)

$ 1,626

Twelve Months Ended September 25, 2011

Non-GAAP

QSI

Share-Based

Compensation

GAAP

Net cash provided (used) by operating activities

$ 5,418

$ (335)

$ (183)

(a)

$ 4,900

Less: capital expenditures

(588)

(5)

-

(593)

Free cash flow

$ 4,830

$ (340)

$ (183)

$ 4,307

(a)

Incremental tax benefits from stock options exercised during the period.

(b)

Primarily due to release of restricted cash and 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.

(d)

Primarily cash from sale of wireless spectrum, issuance of subsidiary shares to noncontrolling interest, borrowings under loans and debentures and sale of equity securities and other investments.

N/A - Not Applicable

Qualcomm Incorporated

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

(in millions)

(Unaudited)

Three Months Ended September 30, 2012

Non-GAAP

Results

QSI

Share-Based

Compensation

Acquisition-

Related

Items

Tax-

Related

Items

GAAP

Results

Income (loss) from continuing operations before income taxes

$ 1,920

$ (21)

$ (284)

$ (89)

$ -

$ 1,526

Income tax (expense) benefit

(373)

4

62

11

10

(286)

   Income (loss) from continuing operations

$ 1,547

$ (17)

$ (222)

$ (78)

$ 10

$ 1,240

Tax rate

19%

19%

22%

12%

N/M

19%

Twelve Months Ended September 30, 2012

Non-GAAP

Results

QSI

Share-Based

Compensation

Acquisition-

Related

Items

Tax-

Related

Items

GAAP

Results

Income (loss) from continuing operations before income taxes

$ 8,034

$ (170)

$ (1,035)

$ (267)

$ -

$ 6,562

Income tax (expense) benefit

(1,571)

33

225

24

10

(1,279)

   Income (loss) from continuing operations

$ 6,463

$ (137)

$ (810)

$ (243)

$ 10

$ 5,283

Tax rate

20%

19%

22%

9%

N/M

19%

(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.  

Sums may not equal totals due to rounding.

Qualcomm Incorporated

CONSOLIDATED BALANCE SHEETS

(In millions, except per share data)

(Unaudited)

ASSETS

September 30,

September 25,

2012

2011

Current assets:

  Cash and cash equivalents

$          3,807

$          5,462

  Marketable securities

8,567

6,190

  Accounts receivable, net

1,459

993

  Inventories

1,030

765

  Deferred tax assets

309

537

  Other current assets 

473

346

          Total current assets

15,645

14,293

Marketable securities

14,463

9,261

Deferred tax assets

1,412

1,703

Assets held for sale

1,109

746

Property, plant and equipment, net

2,851

2,414

Goodwill

3,917

3,432

Other intangible assets, net

2,938

3,099

Other assets

677

1,474

          Total assets

$        43,012

$        36,422

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Trade accounts payable

$          1,298

$             969

  Payroll and other benefits related liabilities

664

644

  Unearned revenues

545

610

  Loans and debentures

-

994

  Liabilities held for sale

1,072

-

  Other current liabilities

1,723

2,072

         Total current liabilities

5,302

5,289

Unearned revenues

3,739

3,541

Other liabilities

426

620

         Total liabilities

9,467

9,450

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; 1,706

    and 1,681 shares issued and outstanding, respectively

-

-

  Paid-in capital

11,956

10,394

  Retained earnings

20,701

16,204