Fiscal 2009 Revenues $10.4 Billion, EPS $0.95Pro Forma EPS $1.31
Nov. 4, 2009 (PR Newswire) -- SAN DIEGO, Nov. 4 /PRNewswire-FirstCall/ -- Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for the fourth fiscal quarter and year ended September 27, 2009.
"I am very pleased with the performance of our businesses this past year, despite a challenging and uncertain global economic environment," said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. "Our revenues for fiscal year 2009 were in line with our guidance at the outset of the year. Our operating performance remained strong, driven by continued 3G growth, execution in our chipset business and disciplined management of operating expenses. I am also pleased to announce that we recently extended our license agreement with Samsung, covering both 3G and 4G."
"We continue to forecast growth for 3G CDMA in 2009, despite industry forecasts of a decline in the total handset market. We anticipate accelerated CDMA device growth in calendar year 2010 as the global migration to 3G continues. Our broad chipset portfolio continues to expand, including additional low-cost single-chip solutions to further enable the 3G migration as well as increased investments in software and application processors to strengthen our leadership position in supporting higher-end, feature-rich devices. We remain well positioned to drive innovation given our strong balance sheet and operating cash flow while maintaining our focus on overall operating expenses."
For comparison purposes, we note the following items:
-- The fourth quarter of fiscal 2009 results included a $230 million
charge, or $0.14 diluted loss per share, related to an estimated fine
expected to be levied by the Korea Fair Trade Commission.
-- Fiscal 2009 results included a $783 million charge, or $0.45 diluted
loss per share, related to a litigation settlement and patent agreement
with Broadcom Corporation, including $748 million, or $0.43 diluted loss
per share, recorded in the second quarter of fiscal 2009 and $35
million, or $0.02 diluted loss per share, recorded in the fourth quarter
of fiscal 2009 resulting from the write-off of assets that were
initially capitalized.
-- The fourth quarter of fiscal 2008 results included $560 million in
revenues, or $0.20 diluted earnings per share, as a result of the
execution of license and settlement agreements with Nokia
Corporation/Nokia Inc. (Nokia).
-- The fourth quarter of fiscal 2009 GAAP results included a $155 million
tax benefit, or $0.09 diluted earnings per share, related to prior years
as a result of tax audits. The tax benefit was excluded from our pro
forma results.
GAAP Results
Qualcomm results are reported in accordance with generally accepted accounting principles (GAAP).
Fourth Quarter
-- Revenues: $2.69 billion, down 19 percent year-over-year and 2 percent
sequentially.
-- Operating income: $597 million, down 55 percent year-over-year and 33
percent sequentially.
-- Net income: $803 million, down 9 percent year-over-year and up 9
percent sequentially.
-- Diluted earnings per share: $0.48, down 8 percent year-over-year and up
9 percent sequentially.
-- Effective tax rate: Negative 8 percent for the quarter, primarily due
to the $155 million tax benefit related to prior years.
-- Operating cash flow: $1.32 billion, up 33 percent year-over-year; 49
percent of revenues.
-- Return of capital to stockholders: $283 million, or $0.17 per share, of
cash dividends paid.
Fiscal 2009
-- Revenues: $10.42 billion, down 7 percent year-over-year.
-- Operating income: $2.23 billion, down 40 percent year-over-year.
-- Net income: $1.59 billion, down 50 percent year-over-year.
-- Diluted earnings per share: $0.95, down 50 percent year-over-year.
-- Effective tax rate: 23 percent.
-- Operating cash flow: $7.17 billion, including a $2.5 billion payment
received from Nokia related to the license and settlement agreements.
-- Return of capital to stockholders: $1.38 billion, including $1.09
billion of cash dividends, or $0.66 per share; and $284 million to
repurchase 8.9 million shares of our common stock.
Pro Forma Results
Pro forma results exclude the Qualcomm Strategic Initiatives (QSI) segment, certain estimated share-based compensation, certain tax items related to prior years and acquired in-process research and development (R&D) expense.
Fourth Quarter
-- Revenues: $2.68 billion, down 19 percent year-over-year and 2 percent
sequentially.
-- Operating income: $831 million, down 47 percent year-over-year and 26
percent sequentially.
-- Net income: $811 million, down 23 percent year-over-year and 10 percent
sequentially.
-- Diluted earnings per share: $0.48, down 24 percent year-over-year and
11 percent sequentially. The current quarter excludes $0.05 diluted
loss per share attributable to the QSI segment, $0.05 diluted loss per
share attributable to certain estimated share-based compensation and
$0.09 diluted earnings per share attributable to certain tax items
related to prior years.
-- Effective tax rate: 18 percent for the quarter.
-- Free cash flow: $1.29 billion, up 63 percent year-over-year; 48 percent
of revenues (defined as net cash from operating activities less capital
expenditures).
Fiscal 2009
-- Revenues: $10.39 billion, down 7 percent year-over-year.
-- Operating income: $3.15 billion, down 32 percent year-over-year.
-- Net income: $2.19 billion, down 42 percent year-over-year.
-- Diluted earnings per share: $1.31, down 42 percent year-over-year. The
current fiscal year excludes $0.15 diluted loss per share attributable
to the QSI segment, $0.27 diluted loss per share attributable to certain
estimated share-based compensation and $0.07 diluted earnings per share
attributable to certain tax items related to prior years.
-- Effective tax rate: 28 percent.
-- Free cash flow: $6.91 billion, including a $2.5 billion payment
received from Nokia related to the license and settlement agreements.
Detailed reconciliations between results reported in accordance with generally accepted accounting principles (GAAP) and pro forma results are included at the end of this news release. Prior period reconciliations are presented on Qualcomm's Investor Relations web page at www.qualcomm.com.
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled approximately $17.7 billion at the end of the fourth quarter of fiscal 2009, compared to $15.7 billion at the end of the third quarter of fiscal 2009 and $11.3 billion a year ago. On October 2, 2009, we announced a cash dividend of $0.17 per share, payable on December 23, 2009 to stockholders of record at the close of business on November 25, 2009.
The value of our marketable securities has improved significantly as financial markets have stabilized. At September 27, 2009, we had net unrealized gains on marketable securities of $674 million as compared to $25 million of net unrealized losses as of June 28, 2009.
Research and Development
Estimated
Share-Based
($ in millions) Pro Forma Compensation QSI GAAP
--------- ------------ --- ----
Fourth quarter fiscal
2009 $518 $71 $25 $614
As a % of revenues 19% N/M 23%
Fourth quarter fiscal
2008 $528 $69 $24 $621
As a % of revenues 16% N/M 19%
Year-over-year change($) (2%) 3% 4% (1%)
N/M - Not Meaningful
Pro forma R&D expenses primarily related to the development of integrated circuit products, next-generation CDMA and OFDMA technologies, the expansion of our intellectual property portfolio and other initiatives to support the acceleration of advanced wireless products and services. Pro forma R&D expenses decreased 2 percent year-over-year, primarily due to cost reduction efforts and a decrease in other employee-related expenses. QSI R&D expenses were related to our FLO TV(TM) subsidiary.
Selling, General and Administrative
Estimated
Share-Based
($ in millions) Pro Forma Compensation QSI GAAP
--------- ------------ --- ----
Fourth quarter fiscal
2009 $300 $66 $24 $390
As a % of revenues 11% N/M 14%
Fourth quarter fiscal
2008 $346 $67 $43 $456
As a % of revenues 10% N/M 14%
Year-over-year change
($) (13%) (1%) (44%) (14%)
Pro forma selling, general and administrative (SG&A) expenses decreased by 13 percent year-over-year, primarily due to cost reduction efforts and a decrease in other employee-related expenses. QSI SG&A expenses were primarily related to FLO TV.
Effective Income Tax Rate
Our fiscal 2009 effective income tax rates were 23 percent for GAAP and 28 percent for pro forma. The fourth quarter and fiscal 2009 GAAP results included a $155 million tax benefit as a result of tax audits to adjust our estimates of uncertain tax positions for prior years. This tax benefit was excluded from our fiscal 2009 pro forma results to provide a clearer understanding of our ongoing tax rate and after tax earnings.
Qualcomm Strategic Initiatives
The QSI segment is composed of our strategic investments, including FLO TV. GAAP results for the fourth quarter of fiscal 2009 included a $0.05 diluted loss per share for the QSI segment. The fourth quarter of fiscal 2009 QSI results included $93 million in operating expenses, primarily related to FLO TV.
Business Outlook
The following statements are forward looking and actual results may differ materially. The "Note Regarding Forward-Looking Statements" at the end of 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.
The volatility in financial markets may continue to have an impact on the value of our marketable securities and net investment income (loss). While we do not forecast impairments, we have temporary unrealized losses on marketable securities that could be recognized as other-than-temporary losses in future periods if market conditions do not improve.
Our outlook does not include provisions for the consequences of injunctions, damages or fines related to any pending legal matters. In addition, due to their nature, certain income and expense items, such as realized investment gains or losses, gains and losses on certain derivative instruments or asset impairments, cannot be accurately forecast. Accordingly, we exclude forecasts of such items from our business outlook, and actual results may vary materially from the business outlook if we incur any such income or expense items.
The following table summarizes GAAP and pro forma guidance based on the current business outlook. The pro forma business outlook provided below is presented consistent with the presentation of pro forma results elsewhere herein.
The following estimates are approximations and are based on the current business outlook:
Qualcomm's Business Outlook Summary
FIRST FISCAL QUARTER
--------------------
Q1 FY09 Current Guidance
Results Q1 FY10 Estimates (3)
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Pro Forma
Revenues $2.51B $2.55B - $2.75B
Year-over-year change Increase 2% - 10%
Diluted earnings per share (EPS) $0.31 $0.54 - $0.58
Year-over-year change Increase 74% - 87%
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GAAP
Revenues $2.52B $2.55B - $2.75B
Year-over-year change increase 1% - 9%
Diluted EPS $0.20 $0.41 - $0.45
Year-over-year change increase 105% - 125%
Diluted EPS
attributable to QSI ($0.05) ($0.05)
Diluted EPS
attributable to estimated
share-based compensation ($0.06) ($0.06)
Diluted EPS
attributable to
certain tax items (4) n/a ($0.02)
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Metrics
MSM shipments approx. 63M approx. 89M - 92M
CDMA/WCDMA devices shipped (1) approx. 125M* approx. 130M - 135M*
CDMA/WCDMA device
wholesale average
selling price (1) approx. $212* approx. $198*
*Shipments in Sept. quarter, reported in Dec. quarter
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FISCAL YEAR
FY 2009 Current Guidance
Results (2) FY 2010 Estimates (3)
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Pro Forma
Revenues $10.39B $10.50B - $11.30B
Year-over-year change increase 1% - 9%
Operating income $3.15B $4.00B - $4.50B
Year-over-year change increase 27% - 43%
Diluted EPS $1.31 $2.10 - $2.30
Year-over-year change increase 60% - 76%
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GAAP
Revenues $10.42B $10.50B - $11.30B
Year-over-year change increase 1% - 8%
Operating income $2.23B $2.80B - $3.30B
Year-over-year change increase 26% - 48%
Operating income (loss)
attributable to QSI ($0.34B) ($0.50B)
Operating income (loss)
attributable to estimated
share-based compensation ($0.58B) ($0.70B)
Operating income (loss)
attributable to
in-process R&D ($0.01B) n/a
Diluted EPS $0.95 $1.56 - $1.76
Year-over-year change increase 64% - 85%
Diluted EPS
attributable to QSI ($0.15) ($0.19)
Diluted EPS
attributable to
estimated
share-based compensation ($0.27) ($0.28)
Diluted EPS
attributable to
in-process R&D $0.00 n/a
Diluted EPS
attributable to
certain tax items (4) $0.07 ($0.07)
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Metrics
Fiscal year* CDMA/WCDMA
device wholesale average
selling price (1) approx. $200 approx. $189
*Shipments in Sept. to June quarters, reported in Dec. to Sept. quarters
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CDMA/WCDMA device shipments (1)
Prior Guidance Current Guidance Current Guidance
Calendar 2009 Calendar 2009 Calendar 2010
Estimates Estimates Estimates
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March quarter approx. 111M approx. 111M not provided
June
quarter approx. 127 - 132M approx. 127M not provided
September approx.
quarter not provided 130M - 135M not provided
December
quarter not provided not provided not provided
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Calendar year
range (approx.) 540M - 590M 515M - 530M 600M - 650M
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Midpoint Midpoint Midpoint
CDMA/WCDMA
units approx. 565M approx. 523M approx. 625M
CDMA units approx. 217M approx. 213M approx. 231M
WCDMA units approx. 348M approx. 310M approx. 394M
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(1) CDMA/WCDMA device shipments and average selling prices are for
estimated worldwide device shipments, including shipments not reported
to Qualcomm.
(2) Fiscal 2009 results included a $783 million charge, or $0.45 diluted
loss per share, related to a litigation settlement and patent
agreement with Broadcom Corporation, as well as a $230 million
charge, or $0.14 diluted loss per share, related to an estimated fine
expected to be levied by the Korea Fair Trade Commission.
