(PR NEWSWIRE) QUALCOMM Announces Fourth Quarter and Fiscal 2002 =1
Q4 GAAP Revenues $874 Million, EPS $0.23 - FY2002 $3.0 Billion, EPS $0.44
Q4 Pro Forma Revenues $840 Million, EPS $0.31 - FY2002 $2.9 Billion, EPS $0.98
QUALCOMM's fourth quarter fiscal 2002 earnings conference call will be
broadcast live on November 7, 2002 beginning at 2:30 p.m. Pacific
Standard Time on the Company's web site at: www.qualcomm.com . This
conference call may contain forward-looking financial information. The
taped audio replay will be available for five business days. To listen
to the replay, U.S. callers may dial (800) 633-8284 and international
callers may dial (402) 977-9140. Both U.S. and international callers
should use reservation number 20898587.
SAN DIEGO, Nov. 7 /PRNewswire-FirstCall/ --
QUALCOMM Incorporated (Nasdaq: QCOM) today announced its fourth quarter and
fiscal 2002 results ended September 29, 2002. GAAP reported revenues were
$874 million (34 percent increase) in the fourth quarter of fiscal 2002
compared to $651 million in the year ago quarter. GAAP reported earnings were
$190 million or $0.23 per share in the fourth quarter compared to a loss of
$75 million or $0.10 loss per share in the year ago quarter. GAAP reported
revenues were $3.0 billion (13 percent increase) in fiscal 2002 compared to
$2.7 billion in fiscal 2001. GAAP reported earnings were $360 million or
$0.44 per share in fiscal 2002 compared to a loss of $578 million or
$0.76 loss per share in fiscal 2001.
Pro forma revenues were $840 million (29 percent increase) in the fourth
quarter of fiscal 2002 compared to $651 million in the year ago quarter. Pro
forma earnings were $250 million or $0.31 per share (63 percent increase) in
the fourth quarter of fiscal 2002 compared to $155 million or $0.19 per share
in the year ago quarter.(1) Pro forma revenues were $2.9 billion (9 percent
increase) in fiscal 2002 compared to $2.7 billion in fiscal 2001. Pro forma
earnings were $794 million or $0.98 per share (11 percent increase) in fiscal
2002 compared to $710 million or $0.88 per share in fiscal 2001 (see PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS table). The increase in
revenues in the fourth quarter and fiscal 2002 compared to the year ago
quarter and fiscal 2001 was primarily related to increasing demand for CDMA
products across all major regions of CDMA deployment.
(1) Pro forma earnings exclude charges related to the values of
marketable equity securities and derivatives, amortization of
goodwill and other acquisition-related intangible assets,
consolidated losses of the Vesper Companies in Brazil and other gains
and losses related to strategic investments. Pro forma results
include the Company's core operating businesses, QUALCOMM CDMA
Technologies (QCT), QUALCOMM Technology Licensing (QTL) and QUALCOMM
Wireless & Internet (QWI). Reported earnings are presented in
accordance with Generally Accepted Accounting Principles (GAAP) and
include the QUALCOMM Strategic Initiatives (QSI) segment and other
items excluded from pro forma.
"QUALCOMM's highly focused business strategy enabled us to strengthen our
position this year despite the challenges facing the global economy and the
telecom sector," said Dr. Irwin Mark Jacobs, chairman and CEO of QUALCOMM.
"Among the reasons for our success are the economic benefits and competitive
differentiation that CDMA2000 1X and 1xEV-DO are providing to 20 wireless
operators in 11 countries today, with many more to come. We extended our lead
by continuing to deliver on-schedule a broad family of highly integrated and
feature-rich CDMA chipsets, and we achieved record MSM shipments this fiscal
year. These next generation chipsets enable new devices with advanced
features, such as digital cameras, position location and streaming video. We
introduced our family of radioOne(TM) direct conversion chips to support
multiple technologies in the same chip and significantly reduce bill of
materials costs for our customers."
"We continue to execute on our strategy for increasing global acceptance
of our technology and these efforts bore fruit with the commercial launch of
the first CDMA network in China; the first two commercial deployments of our
high-speed CDMA2000 1xEV-DO networks in South Korea and, most recently, here
in the U.S. with Monet Mobile; and the successful introduction of our BREW
applications development platform in South Korea, Japan and the U.S. With a
strong product and technology portfolio and a solid balance sheet, we believe
that QUALCOMM is well positioned to continue its revenue and earnings growth
in the future," Dr. Jacobs said.
Pro forma gross margin for the fourth quarter of fiscal 2002 was
69 percent compared to 64 percent in the year ago quarter and 67 percent in
the third quarter of fiscal 2002. The increase in pro forma gross margin from
the year ago quarter resulted from improved gross margins in the QUALCOMM CDMA
Technologies (QCT) business segment, primarily resulting from a change in
product mix within our Mobile Station Modem (MSM(TM)) family of phone chips
and an increase in royalty revenues in the QUALCOMM Technology Licensing (QTL)
business segment.
Pro forma R&D expenses were $107 million (6 percent decrease) in the
fourth quarter of fiscal 2002 compared to $114 million in the year ago
quarter. The decrease in R&D expenses compared to the year ago quarter was
primarily due to the completion of a co-development agreement and a reduction
of development efforts related to the Globalstar business, partially offset by
increased support efforts for the QUALCOMM Wireless Business Solutions (QWBS)
business.
Pro forma selling, general and administrative expenses were $102 million
(12 percent increase) in the fourth quarter of fiscal 2002 compared to
$92 million in the year ago quarter. The increase in SG&A expense compared to
the year ago quarter was primarily due to the expansion of our international
QCT customer base and international business development activities,
particularly in China, as well as increased expenses for our marketing and
support efforts related to the BREW(TM) (Binary Runtime Environment for
Wireless(TM)) application development platform.
Pro forma investment income was $16 million (40 percent decrease) for the
fourth quarter of fiscal 2002 compared to $26 million in the year ago quarter.
Pro forma investment income is primarily comprised of interest income on
corporate cash and marketable debt securities and other-than-temporary losses
on debt securities. The decrease in investment income as compared to the year
ago quarter was a result of lower interest rates and an increase in
other-than-temporary losses on debt securities.
The Company's pro forma annual effective income tax rate for fiscal
2002 was 35 percent, compared to 34 percent for fiscal 2001.
QUALCOMM Strategic Initiatives (Excluded from Pro Forma Results)
The QUALCOMM Strategic Initiatives (QSI) segment includes our strategic
investments and related income and expenses from non-core businesses including
the Vesper Companies. QSI revenues were $34 million in the fourth quarter of
fiscal 2002, primarily related to the consolidation of the Vesper Companies.
QSI losses before taxes for the fourth quarter of fiscal 2002 were
$98 million. Our share of the losses from Vesper operations in the fourth
quarter of fiscal 2002 was $42 million, an increase of $7 million from the
third quarter of fiscal 2002.
This increase was attributable to an unfavorable foreign exchange rate, as
well as the agreement reached with Brazilian regulators regarding limitations
on Vesper's mobility license. Our share of equity losses for expanded Inquam
operations in Europe was $17 million in the fourth quarter of fiscal 2002
compared to $13 million in the third quarter of fiscal 2002. Other-than-
temporary losses on investments were $38 million during the fourth quarter of
fiscal 2002 to reflect the change in estimated market values of certain
investments. Of the $38 million total, $13 million was related to Leap
Wireless, leaving a nominal $1 million remaining investment in Leap Wireless.
The cash invested and unfunded commitments balance for the QSI segment is
updated quarterly (see www.qualcomm.com on the Investor Relations page under
"Segment Reporting").
Business Outlook
The following statements are forward-looking and actual results may differ
materially. Please see a description of certain risk factors in this press
release and QUALCOMM's quarterly reports on file with the Securities and
Exchange Commission (SEC) for a more complete description of risks. We will
disseminate our current business outlook in conjunction with the quarterly
earnings release and conference call.
Outlook information is presented on a pro forma basis and excludes the QSI
segment.
First Quarter Fiscal 2003
-- Based on the current business outlook, we expect first fiscal quarter
pro forma revenues to increase by approximately 15-22 percent compared
to the fourth quarter of fiscal 2002. We expect first fiscal quarter
pro forma earnings per share to be approximately $0.35-$0.38. This
estimate assumes shipments of approximately 25-27 million MSM phone
chips during the quarter, including approximately 21-22 million
CDMA2000 1X MSM phone chips. We expect approximately 85 million CDMA
phones to be sold in calendar 2002.
Fiscal 2003
-- Based on the current business outlook, we expect pro forma revenue
growth for fiscal 2003 to be approximately 19-23 percent and pro forma
earnings per share to be approximately $1.15-$1.20. This estimate is
based on the sale of 100-105 million CDMA phones in calendar 2003 with
approximately 10 percent decrease in average selling prices of CDMA
phones, upon which royalties are calculated.
Cash Flow
QUALCOMM's cash, cash equivalents and marketable securities, excluding the
QSI Segment, totaled approximately $3.0 billion at the end of the fourth
quarter of fiscal 2002. The following table presents selected cash flow
information for the fourth quarter and fiscal 2002, which includes cash
equivalents and marketable securities, but excludes the QSI Segment (in
millions):
Selected Cash Flow Information
______________________________
Fourth Quarter Twelve Months
Fiscal 2002 Fiscal 2002
_________________________________
Earnings before taxes, depreciation,
amortization and asset impairments $425 $1,329
Working capital changes and taxes paid 78 (44)
Additional share capital 11 114
_________________________________
Net cash inflows 514 1,399
Capital expenditures and acquisitions (38) (152)
_________________________________
Net cash provided 476 1,247
Change in fair value of marketable
securities 1 (28)
Net transfers to QSI (51) (602)
Net increase in cash, cash equivalents _________________________________
and marketable securities of
QUALCOMM, excluding QSI $426 $617
=================================
Results of Business Segments
The following tables present pro forma segment information (in thousands):
Fourth Quarter - Fiscal Year 2002
Other/
Reconciling Pro
Segments QCT QTL QWI Items (1) Forma
Revenues 483,617 243,481 109,542 3,031 839,671
Change from prior quarter 20% 22% (0%) N/M 16%
Change from prior year 44% 29% (2%) N/M 29%
Earnings before taxes 158,334 221,500 (1,196) 5,395 384,033
% of revenues 33% 91% (1%) N/M 46%
Change from prior quarter 35% 27% 61% N/M 29%
Change from prior year 140% 29% (127%) N/M 64%
Third Quarter - Fiscal Year 2002
Other/
Reconciling Pro
Segments QCT QTL QWI Items (1) Forma
Revenues 404,253 198,853 109,581 8,631 721,318
Earnings before taxes 117,524 174,450 (3,074) 8,906 297,806
% of revenues 29% 88% (3%) N/M 41%
Fourth Quarter - Fiscal Year 2001
Other/
Reconciling Pro
Segments QCT QTL QWI Items (1) Forma
Revenues 336,881 189,340 112,240 12,370 650,831
Earnings before taxes 65,917 172,102 4,403 (7,981) 234,441
% of revenues 20% 91% 4% N/M 36%
Twelve Months - Fiscal Year 2002
Other/
Reconciling Pro
Segments QCT QTL QWI Items (1) Forma
Revenues 1,590,829 847,092 438,682 36,337 2,912,940
Change from prior year 17% 8% 3% N/M 9%
Earnings before taxes 440,523 756,173 (9,467) 33,887 1,221,116
% of revenues 28% 89% (2%) N/M 42%
Change from prior year 44% 7% (128%) N/M 14%
Twelve Months - Fiscal Year 2001
Other/
Reconciling Pro
Segments QCT QTL QWI Items (1) Forma
Revenues 1,364,687 781,939 426,066 107,094 2,679,786
Earnings before taxes 305,546 705,794 33,484 30,796 1,075,620
% of revenues 22% 90% 8% N/M 40%
(1) Other/Reconciling Items related to revenues consist primarily of
other non-reportable segment revenues less intersegment eliminations.
Reconciling items related to earnings before taxes consist primarily
of charges that are not allocated to the segments for management
reporting purposes, unallocated net investment income, non-reportable
segment results, interest expense and the elimination of intercompany
profit.
N/M - Not Meaningful
Business Segment Highlights
QUALCOMM Technology Licensing (QTL)
-- Signed a total of ten CDMA license agreements during the fourth
quarter of fiscal 2002, including seven new licenses and three
extensions to existing license agreements.
-- Modified the existing royalty-bearing license agreement with Siemens
to include infrastructure for all CDMA standards and subscriber
equipment for certain 3G standards including WCDMA (UMTS). Under the
agreement, Siemens will pay the same subscriber royalty rate,
irrespective of the standard implemented. The agreement also grants
QUALCOMM a royalty-free right under Siemens' patents to market and
sell components, including multimode chipsets.
-- Signed a total of 35 CDMA license agreements during fiscal 2002,
including 24 new licenses and 11 extensions to existing licensees
bringing the total number of companies licensed for CDMA to more than
115. Of the approximately 115 companies, approximately 55 are
currently licensed for WCDMA.
QUALCOMM CDMA Technologies (QCT)
-- Shipped approximately 20 million MSM phone chips to customers
worldwide during the fourth quarter of fiscal 2002 compared to
approximately 13 million units in the year ago quarter and 16 million
in the third quarter of fiscal 2002. This brings the total number of
MSM phone chips shipped during fiscal 2002 to approximately
65 million.
-- Shipped approximately 15 million CDMA2000 1X MSM phone chips during
the fourth quarter of fiscal 2002 for a total of approximately 40
million in fiscal 2002.
-- Shipped CSM infrastructure chips to support more than 2.5 million
equivalent voice channels compared to approximately 4 million
equivalent voice channels in both the year ago quarter and the third
quarter of fiscal 2002.
-- Began on-time sampling of the MSM6100(TM) chipset and system
software, a highly integrated CDMA2000 1X multimedia solution with
gpsOne position location and radioOne direct conversion technologies.
The MSM6100 enables lower system costs for manufacturers developing
handsets with advanced multimedia applications.
-- Began on-time sampling of the MSM6300(TM) single-modem chip 3G
solution for multimode, multiband CDMA2000/GSM/GPRS, the first true
world-phone chipset enabling global roaming across wireless networks.
-- Announced accelerated sampling delivery of the dual-mode MSM6200(TM)
chipset and system software. The MSM6200 was selected by Samsung
Electronics Co., Ltd, Sanyo Electronics Co., Ltd and Novatel Wireless
for development of WCDMA (UMTS) and GSM/GPRS devices.
QUALCOMM Wireless & Internet Group (QWI)
QUALCOMM Internet Services (QIS)
-- Announced a definitive agreement with China Unicom for the commercial
deployment of wireless data application services using QUALCOMM's
BREW solution.
-- Continued BREW deployments as carriers throughout the world join
Verizon Wireless and soon ALLTEL in the United States, KTF in South
Korea and KDDI in Japan in commercializing BREW-based services.
U.S. Cellular has launched a BREW trial in the U.S. and China Unicom
announced its plans to launch BREW-based services in China. To date,
16 carriers have indicated support for the BREW solution.
Twenty-four models of BREW-enabled handsets are already available to
consumers worldwide, and 30 device manufacturers have indicated their
support for BREW.
-- Signed OEM agreement with Motorola enabling Motorola to provide
BREW-enabled handsets to Verizon Wireless for its BREW-based 'Get It
Now' service.
-- Signed OEM agreement with Toshiba enabling Toshiba to provide
BREW-enabled handsets to BREW carriers around the world.
-- Announced the licensing of our QChat voice-over-Internet protocol
(VoIP) push-to-talk technology for 3G CDMA networks to Nextel, the
world's leading provider of push-to-talk services, which it markets
under the Direct Connect brand.
QUALCOMM Wireless Business Solutions (QWBS)
-- Shipped approximately 15,000 OmniTRACS units and related products in
the fourth quarter of fiscal 2002, compared to approximately 13,000
units during the year ago quarter and 12,000 units during the third
quarter of fiscal 2002. This brings the total number of OmniTRACS
and related product shipments during fiscal 2002 to nearly 46,000
units and a cumulative total of over 450,000 units shipped worldwide.
The increase in unit shipments can be mainly attributed to additional
sales in the private fleet transportation market.
-- Announced that Frito-Lay, the leading multinational snack chip
company, has signed a contract with QUALCOMM to install over
1,100 OmniTRACS and OmniExpress mobile communications system units
and 4,400 TrailerTRACS asset management system units in 2002.
-- Demonstrated support of local and national homeland security efforts
through advanced security features of its OmniTRACS satellite-based
mobile communications and tracking system including:
-- On-board and wireless panic buttons,
-- Driver I.D. authentication and tamper detection alerts,
-- Remote disabling of the truck in the event of a security breach
due to on-board tamper detection or invalid driver log-in, and
-- Geofencing for alerting the trucking company when the vehicle
enters restricted areas or leaves its designated route
-- Served as Technical Integrator on a winning team awarded $2.5 million
from the U.S. Department of Transportation for Hazardous Materials
Transportation Safety and Security Operational Test including vehicle
tracking and disabling, cargo seals, driver
authentication/biometrics, and other safety security features.
QUALCOMM Strategic Initiatives (QSI)
-- Announced the closing of the transaction in which Telefonica Moviles,
S.A. acquired 65 percent of Pegaso Telecommunicaciones, S.A. de C.V.,
with the Burillo Group continuing to own 35 percent. As a result of
this transaction, we received approximately $99 million in cash and
expect to receive an additional $435 million on or before November 9,
2002. We will use approximately $139 million of that total to
acquire Pegaso debt. After this transaction, QUALCOMM will own
approximately $482 million in senior secured debt. Telefonica
recently indicated its intention to deploy GSM in Mexico. In the
event that Telefonica initiates the commercialization of GSM or TDMA
services in Pegaso's spectrum, Pegaso would be obliged to prepay $285
million of the $482 million owed to us, pursuant to the terms of our
financing agreement.
QUALCOMM Incorporated ( www.qualcomm.com ) is a leader in developing and
delivering innovative digital wireless communications products and services
based on the Company's CDMA digital technology. Headquartered in San Diego,
Calif., QUALCOMM is included in the S&P 500 Index and traded on The Nasdaq
Stock Market(R) under the ticker symbol QCOM.
Except for the historical information contained herein, this news release
contains forward-looking statements that are subject to risks and
uncertainties. Actual results may differ substantially from those referred to
herein due to a number of factors, including but not limited to risks
associated with: changing global economic conditions, particularly in the
telecommunications and Internet-related industries and the resulting
uncertainty in forecasting future results; timing and receipt of license fees
and royalties; integrated circuit inventory and order levels; the Company's
ability to execute additional 3G licenses; the scale-up, acceptance and
operations of CDMA systems, including CDMA2000 1xEV-DO and systems in new
markets such as China and India; the ability to sustain or improve operational
efficiency and profitability; decreases in the rate of growth in CDMA-based
wireless data and Internet access or the CDMA subscriber population; strategic
investments, loans, acquisitions or divestitures the Company has or may
pursue; the performance of the Vesper Companies business in Brazil; changes in
the fair values of marketable securities and derivative instruments held; the
development, deployment and commercial acceptance of evolving CDMA technology
standards; developments in current or future litigation; customer receivables
and performance guarantees; component shortages; and international business
activities, as well as the other risks detailed from time-to-time in the
Company's SEC reports.
QUALCOMM(R), QCT(R), QUALCOMM Wireless Business Solutions(R),
OmniTRACS(R), OmniOne(TM), OmniExpress(TM), MSM(TM), MSM6100(TM), MSM6200(TM),
MSM6300(TM), radioOne(TM), SnapTrack(R), WIRELESS KNOWLEDGE(R), and
Vesper(TM), and BREW(TM) are trademarks and/or service marks of QUALCOMM
Incorporated. All other trademarks are the property of their respective
owners.
For further information, please contact, Julie Cunningham, Sr. Vice
President, Investor Relations of QUALCOMM Incorporated, +1-858-658-4224, fax,
+1-858-651-9303, juliec@qualcomm.com .
QUALCOMM Incorporated
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
THE PRO FORMA RESULTS TO THE GAAP REPORTED RESULTS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
__________________________________
September September
30, 30,
2001 2002 %
Pro Forma Pro Forma Change
__________ ________ _________
Revenues $650,831 $839,671 29%
__________ ________
Operating expenses:
Cost of revenues 237,149 261,880 10%
Research and development 113,789 107,365 (6%)
Selling, general and administrative 91,585 102,284 12%
Amortization of goodwill and other
acquisition-related intangible
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