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Qualcomm Announces First Quarter Fiscal 2013 Results

Tools

FOR IMMEDIATE RELEASE

Qualcomm Contact:

Warren Kneeshaw

Phone: 1-858-658-4813

e-mail:

 

ir@qualcomm.com

Qualcomm Announces First Quarter Fiscal 2013 Results

Revenues $6.0 Billion

GAAP EPS $1.09, Non-GAAP EPS $1.26

Record Quarterly Revenues and Non-GAAP EPS; Raising Fiscal 2013 Guidance

SAN DIEGO

— January 30, 2013 — 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 2013 ended December 30, 2012.

"

We are pleased to report record quarterly revenues, Non-GAAP EPS and MSM chip

shipments, driven by the growing global demand for smartphones and our industry-leading

portfolio of 3G/LTE chipsets," said Dr. Paul E. Jacobs, chairman and CEO of

Qualcomm.

"Our broad licensing partnerships and extensive chipset roadmap, including our

recently announced best-in-class Qualcomm Snapdragon 800 and 600 processors, position us

well for strong growth, and we are pleased to be raising our revenue and earnings guidance for

fiscal 2013."

First Quarter Results (GAAP)

Revenues: 1 $6.02 billion, up 29 percent year-over-year (y-o-y) and 24 percent

sequentially.

Operating income: 1 $2.09 billion, up 35 percent y-o-y and 69 percent sequentially.

Net income: 2 $1.91 billion, up 36 percent y-o-y and 50 percent sequentially.

Diluted earnings per share: 2 $1.09, up 35 percent y-o-y and 49 percent sequentially.

Effective tax rate: 1 18 percent for the quarter.

Operating cash flow: $1.98 billion, up 11 percent y-o-y; 33 percent of revenues.

1

 

Throughout this news release, fiscal 2012 results for FLO TV are presented as discontinued operations. Revenues, operating

expenses, operating income, earnings before tax (EBT) and effective tax rates are from continuing operations (i.e., before

adjustments for noncontrolling interests and, for fiscal 2012, discontinued operations), unless otherwise stated.

2

 

Throughout this news release, net income and diluted earnings per share are attributable to Qualcomm (i.e., after adjustments

for noncontrolling interests and discontinued operations), unless otherwise stated.

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 2 of 16

Return of capital to stockholders: $678 million, including $428 million, or $0.25 per

share, of cash dividends paid, and $250 million through repurchases of 4.3 million

shares of common stock.

Non-GAAP First Quarter Results

Non-GAAP results exclude the QSI segment, certain share-based compensation, certain

acquisition-related items and certain tax items.

Revenues: $6.02 billion, up 29 percent y-o-y and 24 percent sequentially.

Operating income: $2.45 billion, up 31 percent y-o-y and 52 percent sequentially.

Net income: $2.20 billion, up 32 percent y-o-y and 42 percent sequentially.

Diluted earnings per share: $1.26, up 30 percent y-o-y and 42 percent sequentially.

Excludes $0.01 loss per share attributable to QSI, $0.12 loss per share attributable to

certain share-based compensation and $0.04 loss per share attributable to certain

acquisition-related items.

Effective tax rate: 18 percent for the quarter.

Free cash flow (defined as net cash from operating activities less capital expenditures):

$1.85 billion, up 24 percent y-o-y; 31 percent of revenues.

Detailed reconciliations between results reported in accordance with generally accepted

accounting principles (GAAP) and Non-GAAP results are included within this news release.

First Quarter Key Business Metrics

MSMTM chip shipments: 182 million units, up 17 percent y-o-y and 29 percent

sequentially.

September quarter total reported device sales: approximately $53.3 billion, up 29

percent y-o-y and 15 percent sequentially.

o

September quarter estimated 3G/4G device shipments: approximately 233 to

237 million units, at an estimated average selling price of approximately $224

to $230 per unit.

Cash and Marketable Securities

Our cash, cash equivalents and marketable securities totaled $28.4 billion at the end of the first

quarter of fiscal 2013, compared to $22.0 billion a year ago and $26.8 billion at the end of the

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 3 of 16

fourth quarter of fiscal 2012. On January 15, 2013, we announced a cash dividend of $0.25 per

share payable on March 27, 2013 to stockholders of record as of March 8, 2013.

Research and Development

($ in millions)

 

Non-GAAP QSI

Share-Based

Compensation GAAP

First quarter fiscal 2013 $ 949 $ 1 $ 156 $ 1,106

As % of revenues 16% 18%

First quarter fiscal 2012 $ 746 $ 1 $ 126 $ 873

As % of revenues 16% 19%

Year-over-year change ($) 27% N/M 24% 27%

N/M - Not Meaningful

Non-GAAP research and development (R&D) expenses increased 27 percent y-o-y primarily

due to an increase in costs related to the development of CDMA-based 3G, OFDMA-based 4G

LTE and other technologies for integrated circuit and related software products and to expand

our intellectual property portfolio.

Selling, General and Administrative

($ in millions)

 

Non-GAAP QSI

Share-Based

Compensation

Acquisition-

Related Items GAAP

First quarter fiscal 2013 $ 468 $ 7 $ 105 $ 7 $ 587

As % of revenues 8% 10%

First quarter fiscal 2012 $ 381 $ 12 $ 101 $ 9 $ 503

As % of revenues 8% 11%

Year-over-year change ($) 23% N/M 4% N/M 17%

N/M - Not Meaningful

Non-GAAP selling, general and administrative (SG&A) expenses increased 23 percent y-o-y

primarily due to increases in employee-related expenses and costs relating to legal matters.

Effective Income Tax Rates

In the first quarter of fiscal 2013, the effective income tax rates for GAAP and Non-GAAP

were both 18 percent. Starting in the second quarter of fiscal 2013, our fiscal 2013 annual

effective income tax rates are estimated to be approximately 16 percent for GAAP and

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 4 of 16

approximately 17 to 18 percent for Non-GAAP, which include the recent retroactive extension

of the federal R&D tax credit. The R&D tax credit benefit related to fiscal 2012 that will be

recorded in the second quarter of fiscal 2013 will be excluded from Non-GAAP results.

QSI Segment

QSI makes strategic investments, many of which are in early-stage companies, and holds

wireless spectrum. GAAP results for the first quarter of fiscal 2013 included $0.01 loss per

share for QSI.

Business Outlook

The following statements are forward looking, and actual results may differ materially. The

"Note Regarding Forward

-Looking Statements" in this news release provides a description of

certain risks that we face, and our annual and quarterly reports on file with the Securities and

Exchange Commission (SEC) provide a more complete description of risks.

Our outlook does not include provisions for future asset impairments or for pending legal

matters, other than future legal amounts that are probable and estimable. Further, due to their

nature, certain income and expense items, such as realized investment and certain derivative

gains or losses, cannot be accurately forecast. Accordingly, we only include such items in our

business outlook to the extent they are reasonably certain; however, actual results may vary

materially from the business outlook.

The following table summarizes GAAP and Non-GAAP guidance based on the current

business outlook. The Non-GAAP business outlook presented below is consistent with the

presentation of Non-GAAP results included elsewhere herein.

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 5 of 16

SECOND FISCAL QUARTER

Q2 FY12 Current Guidance

Results (1) Q2 FY13 Estimates

Revenues $4.94B $5.8B - $6.3B

Year-over-year change increase 17% - 27%

Non-GAAP Diluted earnings per share (EPS) $1.01 $1.10 - $1.18

Year-over-year change increase 9% - 17%

Diluted EPS attributable to QSI $0.41 $0.00

Diluted EPS attributable to share-based compensation ($0.11) ($0.12)

Diluted EPS attributable to acquisition-related items ($0.03) ($0.04)

Diluted EPS attributable to tax items (2) N/A $0.04

GAAP Diluted EPS $1.28 $0.98 - $1.06

Year-over-year change decrease 17% - 23%

Metrics

MSM chip shipments 152M 163M - 173M

Year-over-year change increase 7% - 14%

Total reported device sales (3) approx. $51.7B* approx. $57.5B - $62.5B*

Year-over-year change increase 11% - 21%

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

FISCAL YEAR

FY 2012 Prior Guidance Current Guidance

Results (1) FY 2013 Estimates FY 2013 Estimates

Revenues $19.12B $23.0B - $24.0B $23.4B - $24.4B

Year-over-year change increase 20% - 26% increase 22% - 28%

Non-GAAP Diluted EPS $3.71 $4.12 - $4.32 $4.25 - $4.45

Year-over-year change increase 11% - 16% increase 15% - 20%

Diluted EPS attributable to QSI $0.40 ($0.04) ($0.02)

Diluted EPS attributable to share-based compensation ($0.47) ($0.53) ($0.51)

Diluted EPS attributable to acquisition-related items ($0.14) ($0.15) ($0.15)

Diluted EPS attributable to tax items (2) $0.01 N/A $0.04

GAAP Diluted EPS $3.51 $3.40 - $3.60 $3.61 - $3.81

Year-over-year change decrease 3% - increase 3% increase 3% - 9%

Metrics

Est. fiscal year* 3G/4G device average selling price range (3) approx. $216 - $222 approx. $214 - $226 approx. $214 - $226

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

CALENDAR YEAR Device Estimates (3)

Prior Guidance

Calendar 2012

Estimates

Current Guidance

Calendar 2012

Estimates

Prior Guidance

Calendar 2013

Estimates

Current Guidance

Calendar 2013

Estimates

Est. 3G/4G device shipments

March quarter approx. 206M - 211M approx. 206M - 211M not provided not provided

June quarter approx. 210M - 214M approx. 210M - 214M not provided not provided

September quarter not provided approx. 233M - 237M not provided not provided

December quarter not provided not provided not provided not provided

Est. calendar year range (approx.) 880M - 930M 915M - 940M 1,000M - 1,070M 1,000M - 1,070M

Est. calendar year midpoint (approx.) (4) 905M 928M 1,035M 1,035M

Qualcomm's Business Outlook Summary

(1) Q2 FY12 and FY 2012 results for QSI and GAAP included $0.44 EPS related to a $1.2 billion gain associated with the sale of substantially all

of our 700 MHz spectrum, which was recognized in discontinued operations and was excluded from Non-GAAP results.

(2) In the second quarter of fiscal 2013, we expect to record a tax benefit as a result of the retroactive extension of the federal R&D tax credit

related to fiscal 2012 of approximately $0.04 per share, which will be excluded from Non-GAAP results.

(3) 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.

(4) The midpoints of the estimated calendar year ranges are identified for comparison purposes only and do not indicate a higher degree of

confidence in the midpoints.

N/A

 

– Not Applicable

Sums may not equal totals due to rounding.

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 6 of 16

Results of Business Segments

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

SEGMENTS QCT QTL QWI

Non-GAAP

Reconciling

Items (1)

Non-GAAP

(2) QSI (2)

Share-Based

Compensation (2)

Acquisition-

Related Items

(2) Tax Items GAAP

Q1 - FISCAL 2013

Revenues $4,120 $1,757 $146 ($5) $6,018 $ - $ - $ - $ - $6,018

Change from prior year 34% 22% (4%) N/M 29% 29%

Change from prior quarter 32% 12% (9%) N/M 24% 24%

Operating income (loss) $2,447 ($8) ($281) ($70) $ - $2,088

Change from prior year 31% 38% (14%) (17%) 35%

Change from prior quarter 52% (100%) 1% 21% 69%

EBT $1,068 $1,532 ($3) $98 $2,695 ($17) ($281) ($70) $ - $2,327

Change from prior year 45% 21% N/M 78% 31% 50% (14%) (17%) 35%

Change from prior quarter 120% 12% N/M 51% 40% 19% 1% 21% 52%

EBT as % of revenues 26% 87% N/M N/M 45% 39%

Net income (loss) $2,204 ($12) ($219) ($67) $ - $1,906

Change from prior year 32% 45% (13%) (22%) N/A 36%

Change from prior quarter 42% N/M 1% 14% N/M 50%

Diluted EPS $1.26 ($0.01) ($0.12) ($0.04) $ - $1.09

Change from prior year 30% 0% (9%) (33%) N/A 35%

Change from prior quarter 42% N/M 8% 0% N/M 49%

Diluted shares used 1,751 1,751 1,751 1,751 1,751 1,751

Q4 - FISCAL 2012

Revenues $3,129 $1,572 $161 $9 $4,871 $ - $ - $ - $ - $4,871

Operating income (loss) 1,612 (4) (284) (89) - 1,235

EBT $486 $1,370 ($1) $65 1,920 (21) (284) (89) - 1,526

Discontinued operations, net of tax

 

- 23 - - - 23

Net income (loss) 1,547 14 (222) (78) 10 1,271

Diluted EPS $0.89 $0.01 ($0.13) ($0.04) $0.01 $0.73

Diluted shares used 1,745 1,745 1,745 1,745 1,745 1,745

Q2 - FISCAL 2012

Revenues $3,059 $1,723 $159 $2 $4,943 $ - $ - $ - $ - $4,943

Operating income (loss) 1,900 (89) (240) (57) - 1,514

EBT $599 $1,540 ($10) $1 2,130 (99) (240) (57) - 1,734

Discontinued operations, net of tax

 

- 761 - - - 761

Net income (loss) 1,759 707 (184) (52) - 2,230

Diluted EPS $1.01 $0.41 ($0.11) ($0.03) $ - $1.28

Diluted shares used 1,743 1,743 1,743 1,743 1,743 1,743

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)

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

12 MONTHS - FISCAL 2012

Revenues $12,141 $6,327 $633 $20 $19,121 $ - $ - $ - $ - $19,121

Operating income (loss) 7,100 (116) (1,035) (267) - 5,682

EBT $2,296 $5,585 ($15) $168 8,034 (170) (1,035) (267) - 6,562

Discontinued operations, net of tax

 

- 777 (1) - - 776

Net income (loss) 6,463 690 (811) (243) 10 6,109

Diluted EPS $3.71 $0.40 ($0.47) ($0.14) $0.01 $3.51

Diluted shares used 1,741 1,741 1,741 1,741 1 ,741 1,741

(1) Non-GAAP reconciling items related to revenues consist primarily of 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 this difference is allocated to tax provisions (benefits) among the columns.

N/M

 

– Not Meaningful

N/A

 

– Not Applicable

Sums may not equal totals due to rounding.

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 7 of 16

Conference Call

Qualcomm

's first quarter fiscal 2013 earnings conference call will be broadcast live on January

30, 2013, beginning at 1:45 p.m. Pacific Time (PT) at

http://investor.qualcomm.com/events.cfm

 

. This conference call will include a discussion of

"

Non-GAAP financial measures" as defined in Regulation G. The most directly comparable

GAAP financial measures and GAAP reconciliation information, as well as the other material

financial and statistical information to be discussed on the conference call, will be posted at

www.qualcomm.com/investor

 

immediately prior to commencement of the call. An audio

replay will be available at

http://investor.qualcomm.com/events.cfm and via telephone for 30

days shortly following the live call. 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 85067601.

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 c

onsistent and comparable basis; (ii) to measure the

performance and efficiency of the Company's ongoing core operating businesses, including the

QCT, QTL and QWI segments; and (iii) to compare the performance and efficiency of these

segments against each other and against competitors outside the Company. Non-GAAP

measurements of the following financial data are used by the Company: revenues, cost of

revenues, R&D expenses, SG&A expenses, other operating expenses, operating income (loss),

net investment income (loss), income (loss) before income taxes, effective tax rate, net income

(loss), diluted earnings (loss) per share, operating cash flow and free cash flow. The Company

is able to assess what it believes is a more meaningful and comparable set of financial

performance measures for the Company and its business segments by using Non-GAAP

information. As a result, management compensation decisions and the review of executive

compensation by the Compensation Committee of the Board of Directors focus primarily on

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 8 of 16

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 decisionmaking.

Non-GAAP information used by management excludes QSI, certain share-based

compensation, certain acquisition-related items and certain tax items.

QSI is excluded because the Company expects to exit its strategic investments at various

times, and the effects of fluctuations in the value of such investments and realized gains or

losses

are viewed by management as unrelated to the Company's operational performance.

Share-based compensation expense primarily relates to restricted stock units and stock

options. Certain share-based compensation is excluded because management views such

expenses as unrelated to the operating activities of th

e Company's ongoing core business.

Further, the fair values of share-based awards are affected by factors that are variable on

each grant date, which may include

the Company's stock price, stock market volatility,

expected award life, risk-free interest rates and expected dividend payouts in future years.

Acquisition-related items relate to amortization and impairment charges of certain

intangible assets, recognition of the step-up of inventories to fair value and the related tax

effects of these items starting with acquisitions completed in the third quarter of fiscal

2011, as well as any tax effects from restructuring the ownership of such acquired assets.

Additionally, starting with acquisitions completed in the fourth quarter of fiscal 2012, the

Company began excluding expenses related to the termination of contract(s) that limit the

use of the acquired intellectual property. These certain 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

business. In addition, these charges are impacted by the size and timing of acquisitions,

potentially obscuring period to period comparisons of the Company's operating businesses.

Certain tax items that were recorded in each fiscal year presented, but that were unrelated

to the fiscal year in which they were recorded, are excluded in order to provide a clearer

understanding of the Company's ongoing Non

-GAAP tax rate and after tax earnings.

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 9 of 16

The Company presents free cash flow, defined as net cash provided by operating activities less

capital expenditures, to facilitate an understanding of the amount of cash flow generated that is

available to grow its business and to create long-term stockholder value. The Company

believes that this presentation is useful in evaluating its operating performance and financial

strength.

In addition, management uses this measure to evaluate the Company's performance

and to compare its operating performance with other companies in the industry.

About Qualcomm

Qualcomm Incorporated (Nasdaq: QCOM) is a world leader in 3G, 4G and next-generation

wireless technologies.

Qualcomm Incorporated includes Qualcomm's licensing business,

QTL, and the vast majority of its patent portfolio. Qualcomm Technologies, Inc., a whollyowned

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 forwardlooking

statements that are inherently subject to risks and uncertainties, including but not

limited to statements regarding

the Company's broad licensing partnerships and extensive

chipset roadmap positioning it for strong growth;

the Company's business outlook; estimates

and guidance related to revenues, GAAP and Non-GAAP diluted earnings per share,

effective income tax rates, MSM chip shipments, total reported device sales, 3G/4G device

average selling price ranges and 3G/4G device shipment ranges and midpoints; and the

treatment of the tax credit benefit resulting from the retroactive extension of the federal R&D

tax credit. Forward-

looking statements are generally identified by words such as "expects,"

"anticipates," "intends," "plans," "believes," "seeks," "estimates," "guidance" and similar

expressions. Actual results may differ materially from those referred to in the forwardlooking

statements due to a number of important factors, including but not limited to risks

associated with the commercial deployment of our technologies

and our customers' and

licensees' sales of equipment, products and

services based on these technologies;

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 10 of 16

competition; our dependence on a small number of customers and licensees; attacks on our

licensing business model, including current and future legal proceedings and actions of

governmental or quasi-governmental bodies; our dependence on third-party suppliers,

including the potential impact of supply constraints; the enforcement and protection of our

intellectual property rights; claims by third parties that we infringe their intellectual property;

global economic conditions that impact the communications industry and the potential

impact on demand for our products

and our customers' and licensees' products; our stock

price and earnings volatility; strategic transactions and investments; the commercial success

of our QMT

division's display technology; foreign currency fluctuations; and failures,

defects or errors in our products and services or in the products of our customers and

licensees

. These and other risks are set forth in the Company's Annual Report on Form 10-K

for the fiscal year ended September 30, 2012 and Quarterly Report on Form 10-Q for the

fiscal quarter ended December 30, 2012 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 Announces First Quarter of Fiscal 2013 Results Page 11 of 16

GAAP

Results

($ in millions, except per share data)

Cost of equipment and services revenues $ 2,154 $ - $ 20 $ 63 $ 2,237

R&D 949 1 156 - 1,106

SG&A 468 7 105 7 587

Operating income (loss) 2,447 (8) (281) (70) 2,088

Investment income (loss), net $ 248

 

(b) $ (9) (c) $ - $ - $ 239

Tax rate 18% 12% 22% 4% 18%

Net income (loss) $ 2,204 $ (12) $ (219) $ (67) $ 1,906

Diluted earnings (loss) per share (EPS) $ 1.26 $ (0.01) $ (0.12) $ (0.04) $ 1.09

Operating cash flow $ 2,046 $ (10) $ (61) $ - $ 1,975

Operating cash flow as % of revenues 34% N/A N/A N/A 33%

Free cash flow

 

(d)

$ 1,853 $ (22) $ (61) $ - $ 1,770

Free cash flow as % of revenues 31% N/A N/A N/A 29%

Related

Items (a)

Qualcomm Incorporated

Results

Non-GAAP Share-Based

Compensation

Supplemental Information for the Three Months Ended December 30, 2012

(Unaudited)

QSI

Acquisition-

(a) Included amortization and impairment charges of certain intangible assets, expense associated with the termination of a contract of an

acquiree and the recognition of the step-up of inventories to fair value.

(b) Included $164 million in interest and dividend income and $91 million in net realized gains on investments, partially offset by $4 million

in other-than-temporary losses on investments, $2 million in interest expense and $1 million in losses on derivatives.

(c) Included $6 million in other-than-temporary losses on investments, $6 million in interest expense and $3 million in equity in losses of

investees, partially offset by $5 million in net realized gains on investments and $1 million in interest and dividend income.

(d) 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 December 30, 2012 included herein.

N/A

 

– Not Applicable

Sums may not equal totals due to rounding.

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 12 of 16

Share-Based

Non-GAAP QSI Compensation GAAP

Net cash provided (used) by operating activities

 

 

$ 2,046 $ (10) $ (61) (a) $ 1,975

Less: capital expenditures (193) (12) - (205)

Free cash flow

 

 

$ 1,853 $ (22) $ (61) $ 1,770

Revenues $ 6,018 $ - $ - $ 6,018

Free cash flow as % of revenues 31%

 

N/A N/A 29%

Other supplemental cash disclosures:

Cash transfers from QSI (b) $ 7 $ (7) $ - $ -

Cash transfers to QSI (c) (103) 103 - -

Net cash transfers $ (96) $ 96 $ - $ -

Share-Based

Non-GAAP QSI Compensation GAAP

Net cash provided (used) by operating activities

 

 

$ 1,850 $ (48) $ (23) (a) $ 1,779

Less: capital expenditures (359) - - (359)

Free cash flow

 

 

$ 1,491 $ (48) $ (23) $ 1,420

Qualcomm Incorporated

Reconciliation of Non-GAAP Free Cash Flows to

Net Cash Provided by Operating Activities (GAAP)

(In millions)

and Other Supplemental Disclosures

Three Months Ended December 30, 2012

(Unaudited)

Three Months Ended December 25, 2011

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

(b) Primarily cash from sale of equity securities and other investments.

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

N/A - Not Applicable

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 13 of 16

Acquisition-

Non-GAAP Share-Based Related GAAP

Results QSI Compensation Items Results

Income (loss) from continuing operations

before income taxes $ 2,695 $ (17) $ (281) $ (70) $ 2,327

Income tax (expense) benefit (491) 2 62 3 (424)

Income (loss) from continuing operations $ 2,204 $ (15) $ (219) $ (67) $ 1,903

Tax rate 18% 12% 22% 4% 18%

Three Months Ended December 30, 2012

Qualcomm Incorporated

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

(in millions)

(Unaudited)

(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 Announces First Quarter of Fiscal 2013 Results Page 14 of 16

December 30, September 30,

2012 2012

Current assets:

Cash and cash equivalents $ 4,293 $ 3,807

Marketable securities 8,982 8,567

Accounts receivable, net 1,647 1,459

Inventories 1,277 1,030

Deferred tax assets 309 309

Other current assets 595 473

Total current assets 17,103 15,645

Marketable securities 15,096 14,463

Deferred tax assets 1,327 1,412

Assets held for sale 1,037 1,109

Property, plant and equipment, net 2,874 2,851

Goodwill 3,929 3,917

Other intangible assets, net 2,826 2,938

Other assets 649 677

Total assets $ 44,841 $ 43,012

Current liabilities:

Trade accounts payable $ 1,657 $ 1,298

Payroll and other benefits related liabilities 618 664

Unearned revenues 733 545

Liabilities held for sale 524 1,072

Other current liabilities 1,473 1,723

Total current liabilities 5,005 5,302

Unearned revenues 3,516 3,739

Liabilities held for sale 526 -

Other liabilities 440 426

Total liabilities 9,487 9,467

Stockholders' equity:

Qualcomm stockholders' equity:

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

Common stock, $0.0001 par value; 6,000 shares authorized; 1,716

and 1,706 shares issued and outstanding, respectively - -

Paid-in capital 12,282 11,956

Retained earnings 22,172 20,701

Accumulated other comprehensive income 880 866

Total Qualcomm stockholders' equity

 

35,334 33,523

Noncontrolling interests 20 22

Total stockholders' equity

 

35,354 33,545

Total liabilities and stockholders' equity

 

$ 44,841 $ 43,012

Qualcomm Incorporated

(Unaudited)

ASSETS

LIABILITIES AND STOCKHOLDERS' EQUITY

(In millions, except per share data)

CONDENSED CONSOLIDATED BALANCE SHEETS

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 15 of 16

December 30, December 25,

2012 2011

Revenues:

Equipment and services $ 4,199 $ 3,167

Licensing 1,819 1,514

Total revenues 6,018 4,681

Operating expenses:

Cost of equipment and services revenues 2,237 1,754

Research and development 1,106 873

Selling, general and administrative 587 503

Total operating expenses 3,930 3,130

Operating income 2,088 1,551

Investment income, net 239 170

Income from continuing operations before income taxes 2,327 1,721

Income tax expense (424) (321)

Income from continuing operations 1,903 1,400

Discontinued operations, net of income taxes - (5)

Net income 1,903 1,395

3 6

Net income attributable to Qualcomm $ 1,906 $ 1,401

Basic earnings per share attributable to Qualcomm:

Continuing operations $ 1.12 $ 0.83

Discontinued operations - -

Net income $ 1.12 $ 0.83

Diluted earnings per share attributable to Qualcomm:

Continuing operations $ 1.09 $ 0.81

Discontinued operations - -

Net income $ 1.09 $ 0.81

Shares used in per share calculations:

Basic 1,709 1,684

Diluted 1,751 1,721

Dividends per share announced $ 0.250 $ 0.215

Net loss attributable to noncontrolling interests

Three Months Ended

Qualcomm Incorporated

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

(Unaudited)

Qualcomm Announces First Quarter of Fiscal 2013 Results Page 16 of 16

December 30,

2012

December 25,

2011

Operating Activities:

Net income $ 1 ,903 $ 1,395

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization 2 41 208

Revenues related to non-monetary exchanges (31) (31)

Income tax provision in excess of income tax payments 1 95 118

Non-cash portion of share-based compensation expense 2 83 247

Incremental tax benefit from share-based compensation (61) (23)

Net realized gains on marketable securities and other investments (96) (44)

Losses (gains) on derivative instruments 1 (45)

Net impairment losses on marketable securities and other investments 1 0 20

Other items, net 2 8 6

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

Accounts receivable, net (185) (38)

Inventories (247) 50

Other assets (51) (24)

Trade accounts payable 3 76 26

Payroll, benefits and other liabilities (387) (43)

Unearned revenues (4) (43)

Net cash provided by operating activities 1 ,975 1,779

Investing Activities:

Capital expenditures (205) (359)

Purchases of available-for-sale securities (3,289) (2,027)

Proceeds from sale of available-for-sale securities 2 ,226 1,603

Purchases of trading securities (970) (1,137)

Proceeds from sale of trading securities 1 ,024 148

Acquisitions and other investments, net of cash acquired (39) (300)

Other items, net 2 6 4

Net cash used by investing activities (1,227) (2,068)

Financing Activities:

Proceeds from issuance of common stock 3 40 228

Incremental tax benefit from share-based compensation 6 1 23

Repurchases and retirements of common stock (250) (99)

Dividends paid (428) (362)

Change in obligation under securities lending 3 20

Other items, net (1) (1)

Net cash used by financing activities (275) (191)

Changes in cash and cash equivalents held for sale 1 3 -

Effect of exchange rate changes on cash and cash equivalents - (18)

Net increase (decrease) in cash and cash equivalents

 

 

4 86 (498)

Cash and cash equivalents at beginning of period

 

 

3 ,807 5,462

Cash and cash equivalents at end of period

 

 

$ 4 ,293 $ 4,964