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| 8-K - FORM 8-K - QUALCOMM INC/DE | qcom63013er8-k.htm |
Exhibit 99.1
Qualcomm Contact:
Warren Kneeshaw
Phone: 1-858-658-4813
e-mail: ir@qualcomm.com
Qualcomm Announces Third Quarter Fiscal 2013 Results
Revenues $6.2 billion
GAAP EPS $0.90, Non-GAAP EPS $1.03
- Record Quarterly Revenues; Raising Fiscal 2013 EPS Guidance -
SAN DIEGO - July 24, 2013 - Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for the third quarter of fiscal 2013 ended June 30, 2013.
“We delivered another strong quarter as our Qualcomm Snapdragon solutions were prominent in a broad set of flagship smartphones, and 3G/4G device average selling prices were stronger than expected. We also focused on return of capital to stockholders and increased our stock repurchases and dividends paid during the quarter,” said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm. “This quarter, we continued our technology leadership, with our Snapdragon 800 processor powering the world’s first LTE-Advanced smartphone. We see expanding opportunities for growth of 3G/4G devices around the globe, driven by the strong pace of innovation in the industry.”
Third Quarter Results (GAAP)*
• | Revenues: 1 $6.24 billion, up 35 percent year-over-year (y-o-y) and 2 percent sequentially. |
• | Operating income: 1 $1.68 billion, up 21 percent y-o-y and down 11 percent sequentially. |
• | Net income: 2 $1.58 billion, up 31 percent y-o-y and down 15 percent sequentially. |
• | Diluted earnings per share: 2 $0.90, up 30 percent y-o-y and down 15 percent sequentially. |
• | Effective tax rate: 1 17 percent for the quarter. |
• | Operating cash flow: $2.08 billion, up 125 percent y-o-y; 33 percent of revenues. |
• | Return of capital to stockholders: $1.64 billion, including $1.04 billion through repurchases of 16.7 million shares of common stock and $604 million, or $0.35 per share, of cash dividends paid. |
__________________________
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 Third Quarter of Fiscal 2013 Results Page 2 of 18
Non-GAAP Third Quarter Results*
Non-GAAP results exclude the QSI (Qualcomm Strategic Initiatives) segment and certain share-based compensation, acquisition-related items and tax items.
• | Revenues: $6.24 billion, up 35 percent y-o-y and 2 percent sequentially. |
• | Operating income: $2.04 billion, up 18 percent y-o-y and down 9 percent sequentially. |
• | Net income: $1.82 billion, up 23 percent y-o-y and down 12 percent sequentially. |
• | Diluted earnings per share: $1.03, up 21 percent y-o-y and down 12 percent sequentially. |
• | 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 181 percent y-o-y; 30 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.
*The following should be considered in regards to the year-over-year and sequential comparisons: Third quarter fiscal 2013 GAAP and Non-GAAP results included a $158 million loss, or $0.06 per share, that resulted from an impairment charge on certain long-lived assets related to our QMT division.
Third Quarter Key Business Metrics
• | MSMTM chip shipments: 172 million units, up 22 percent y-o-y and down 1 percent sequentially. |
• | March quarter total reported device sales: approximately $56.5 billion, up 18 percent y-o-y and down 8 percent sequentially. |
◦ | March quarter estimated 3G/4G device shipments: approximately 244 to 248 million units, at an estimated average selling price of approximately $227 to $233 per unit. |
Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled $30.4 billion at the end of the third quarter of fiscal 2013, compared to $26.5 billion a year ago and $30.5 billion at the end of the second quarter of fiscal 2013. On July 17, 2013, we announced a cash dividend of $0.35 per share payable on September 25, 2013 to stockholders of record as of September 4, 2013. During the third quarter of fiscal 2013, we repurchased and retired 16.7 million shares of common stock for $1.04 billion. Since June 30, 2013, we repurchased and retired an additional 8.4 million shares of common stock for $512 million.
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 3 of 18
Research and Development
($ in millions) | Non-GAAP | QSI | Share-Based Compensation | Acquisition-Related Items | GAAP | ||||||||||||||
Third quarter fiscal 2013 | $ | 1,130 | $ | 1 | $ | 166 | $ | 1 | $ | 1,298 | |||||||||
As % of revenues | 18 | % | 21 | % | |||||||||||||||
Third quarter fiscal 2012 | $ | 832 | $ | 1 | $ | 141 | $ | — | $ | 974 | |||||||||
As % of revenues | 18 | % | 21 | % | |||||||||||||||
Year-over-year change ($) | 36 | % | N/M | 18 | % | N/M | 33 | % | |||||||||||
N/M - Not Meaningful
Non-GAAP research and development (R&D) expenses increased 36 percent y-o-y primarily due to an increase in costs to develop CDMA-based 3G, OFDMA-based 4G LTE and other technologies for integrated circuit and related software products and to expand our intellectual property portfolio.
Selling, General and Administrative
($ in millions) | Non-GAAP | QSI | Share-Based Compensation | Acquisition-Related Items | GAAP | ||||||||||||||
Third quarter fiscal 2013 | $ | 505 | $ | 6 | $ | 96 | $ | 6 | $ | 613 | |||||||||
As % of revenues | 8 | % | 10 | % | |||||||||||||||
Third quarter fiscal 2012 | $ | 423 | $ | 10 | $ | 104 | $ | 7 | $ | 544 | |||||||||
As % of revenues | 9 | % | 12 | % | |||||||||||||||
Year-over-year change ($) | 19 | % | N/M | (8 | %) | N/M | 13 | % | |||||||||||
N/M - Not Meaningful
Non-GAAP selling, general and administrative (SG&A) expenses increased 19 percent y-o-y primarily due to increases in employee-related expenses, selling and marketing expenses and professional fees, partially offset by a decrease in costs related to litigation and other legal matters.
Effective Income Tax Rates
Our fiscal 2013 annual effective income tax rates are estimated to be approximately 16 percent for GAAP and approximately 17 to 18 percent for Non-GAAP, consistent with our prior estimates. The third quarter effective income tax rates were 17 percent for GAAP and 18 percent for Non-GAAP.
QSI Segment
QSI makes strategic investments, many of which are in early-stage companies, and holds wireless spectrum. GAAP results for the third quarter of fiscal 2013 included $0.02 earnings per share for QSI. In the third quarter of fiscal 2013, QSI deconsolidated the subsidiaries that hold the BWA spectrum in India.
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 4 of 18
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 Third Quarter of Fiscal 2013 Results Page 5 of 18
Qualcomm’s Business Outlook Summary
FOURTH FISCAL QUARTER | |||||||
Q4 FY12 Results | Current Guidance Q4 FY13 Estimates | ||||||
Revenues | $4.87 | B | $5.9B - $6.6B | ||||
Year-over-year change | increase 21% - 35% | ||||||
Non-GAAP Diluted earnings per share (EPS) | $0.89 | $1.02 - $1.10 | |||||
Year-over-year change | increase 15% - 24% | ||||||
Diluted EPS attributable to QSI | $0.01 | $0.00 | |||||
Diluted EPS attributable to share-based compensation | ($0.13 | ) | ($0.13 | ) | |||
Diluted EPS attributable to acquisition-related items | ($0.04 | ) | ($0.03 | ) | |||
Diluted EPS attributable to tax items | $0.01 | N/A | |||||
GAAP Diluted EPS | $0.73 | $0.86 - $0.94 | |||||
Year-over-year change | increase 18% - 29% | ||||||
Metrics | |||||||
MSM chip shipments | 141M | 171M - 181M | |||||
Year-over-year change | increase 21% - 28% | ||||||
Total reported device sales (1) | approx. $46.5B* | approx. $55.0B - $60.0B* | |||||
Year-over-year change | increase 18% - 29% | ||||||
*Est. sales in June quarter, reported in September quarter | |||||||
FISCAL YEAR | ||||||||||
FY 2012 Results (2) | Prior Guidance FY 2013 Estimates (3) | Current Guidance FY 2013 Estimates (3) | ||||||||
Revenues | $19.12 | B | $24.0B - $25.0B | $24.3B - $25.0B | ||||||
Year-over-year change | increase 26% - 31% | increase 27% - 31% | ||||||||
Non-GAAP Diluted earnings per share (EPS) | $3.71 | $4.40 - $4.55 | $4.48 - $4.56 | |||||||
Year-over-year change | increase 19% - 23% | increase 21% - 23% | ||||||||
Diluted EPS attributable to QSI | $0.40 | $0.01 | $0.04 | |||||||
Diluted EPS attributable to share-based compensation | ($0.47 | ) | ($0.51 | ) | ($0.50 | ) | ||||
Diluted EPS attributable to acquisition-related items | ($0.14 | ) | ($0.16 | ) | ($0.16 | ) | ||||
Diluted EPS attributable to tax items | $0.01 | $0.04 | $0.04 | |||||||
GAAP Diluted EPS | $3.51 | $3.78 - $3.93 | $3.90 - $3.98 | |||||||
Year-over-year change | increase 8% - 12% | increase 11% - 13% | ||||||||
Metrics | ||||||||||
Est. fiscal year* CDMA-based device average selling price range (1) | approx. $216 - $222 | approx. $216 - $224 | approx. $223 - $229 | |||||||
*Shipments in Sept. to June quarters, reported in Dec. to Sept. quarters | ||||||||||
CALENDAR YEAR Device Estimates (1) | ||||
Calendar 2012 Estimates | Prior Guidance Calendar 2013 Estimates | Current Guidance Calendar 2013 Estimates | ||
Est. 3G/4G device shipments | ||||
March quarter | approx. 206M - 211M | not provided | approx. 244M - 248M | |
June quarter | approx. 210M - 214M | not provided | not provided | |
September quarter | approx. 233M - 237M | not provided | not provided | |
December quarter | approx. 279M - 283M | not provided | not provided | |
Est. calendar year range (approx.) | 928M - 945M | 1,015M - 1,085M | 1,015M - 1,085M | |
Est. calendar year midpoint (approx.) (4) | 937M | 1,050M | 1,050M | |
(1) | Total reported device sales is the sum of all reported sales in U.S. dollars (as reported to us by our licensees) of all licensed CDMA-based, OFDMA-based and CDMA/OFDMA multimode subscriber devices (including handsets, modules, modem cards and other subscriber devices) by our licensees during a particular period (collectively, 3G/4G devices). The reported quarterly estimated ranges of average selling prices (ASPs) and unit shipments are determined based on the information as reported to us by our licensees during the relevant period and our own estimates of the selling prices and unit shipments for licensees that do not provide such information. Not all licensees report sales, selling prices and/or unit shipments the same way (e.g., some licensees report 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) | 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. |
(3) | FY 2013 guidance for tax items includes $0.04 EPS related to a tax benefit that resulted from the retroactive reinstatement of the federal R&D tax credit related to fiscal 2012, which was excluded from Non-GAAP results. |
(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 Third Quarter of Fiscal 2013 Results Page 6 of 18
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 | |||||||||||||||||
Q3 - FISCAL 2013 | |||||||||||||||||||||||||||
Revenues | $4,222 | $1,867 | $158 | ($4) | $6,243 | $— | $— | $— | $— | $6,243 | |||||||||||||||||
Change from prior year | 47 | % | 17 | % | (1 | %) | N/M | 35 | % | 35 | % | ||||||||||||||||
Change from prior quarter | 8 | % | (9 | %) | 2 | % | N/M | 2 | % | 2 | % | ||||||||||||||||
Operating income (loss) | $2,035 | ($7) | ($280) | ($71) | $— | $1,677 | |||||||||||||||||||||
Change from prior year | 18 | % | 36 | % | (6 | %) | (16 | %) | 21 | % | |||||||||||||||||
Change from prior quarter | (9 | %) | (40 | %) | (4 | %) | 14 | % | (11 | %) | |||||||||||||||||
EBT | $738 | $1,633 | ($16) | ($145) | $2,210 | $51 | ($280) | ($71) | $— | $1,910 | |||||||||||||||||
Change from prior year | 56 | % | 16 | % | N/M | N/M | 15 | % | N/M | (6 | %) | (16 | %) | 21 | % | ||||||||||||
Change from prior quarter | 8 | % | (9 | %) | N/M | N/M | (10 | %) | 55 | % | (4 | %) | 14 | % | (11 | %) | |||||||||||
EBT as % of revenues | 17 | % | 87 | % | N/M | N/M | 35 | % | 31 | % | |||||||||||||||||
Net income (loss) | $1,823 | $43 | ($222) | ($64) | $— | $1,580 | |||||||||||||||||||||
Change from prior year | 23 | % | N/M | (6 | %) | (10 | %) | N/A | 31 | % | |||||||||||||||||
Change from prior quarter | (12 | %) | 19 | % | (1 | %) | 20 | % | N/M | (15 | %) | ||||||||||||||||
Diluted EPS | $1.03 | $0.02 | ($0.13) | ($0.04) | $— | $0.90 | |||||||||||||||||||||
Change from prior year | 21 | % | N/M | (8 | %) | (33 | %) | N/A | 30 | % | |||||||||||||||||
Change from prior quarter | (12 | %) | — | % | (8 | %) | 20 | % | N/M | (15 | %) | ||||||||||||||||
Diluted shares used | 1,765 | 1,765 | 1,765 | 1,765 | 1,765 | 1,765 | |||||||||||||||||||||
Q2 - FISCAL 2013 | |||||||||||||||||||||||||||
Revenues | $3,916 | $2,057 | $155 | ($4) | $6,124 | $— | $— | $— | $— | $6,124 | |||||||||||||||||
Operating income (loss) | 2,233 | (5) | (268) | (83) | $ | 1,877 | |||||||||||||||||||||
EBT | $681 | $1,803 | $— | ($30) | 2,454 | 33 | (268) | (83) | $ | 2,136 | |||||||||||||||||
Net income (loss) | 2,066 | 36 | (220) | (80) | 64 | 1,866 | |||||||||||||||||||||
Diluted EPS | $1.17 | $0.02 | ($0.12) | ($0.05) | $0.04 | $1.06 | |||||||||||||||||||||
Diluted shares used | 1,763 | 1,763 | 1,763 | 1,763 | 1,763 | 1,763 | |||||||||||||||||||||
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 | — | (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 | |||||||||||||||||||||
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 | |||||||||||||||||||||
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 7 of 18
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 | ||||||||||||||||
9 MONTHS - FISCAL 2013 | ||||||||||||||||||||||||||
Revenues | $12,258 | $5,680 | $459 | ($12) | $18,385 | $— | $— | $— | $— | $18,385 | ||||||||||||||||
Change from prior year | 36 | % | 19 | % | (3 | %) | N/M | 29 | % | 29 | % | |||||||||||||||
Operating income (loss) | $6,716 | ($20) | ($829) | ($225) | $— | $5,642 | ||||||||||||||||||||
Change from prior year | 22 | % | 82 | % | (10 | %) | (26 | %) | 27 | % | ||||||||||||||||
EBT | $2,487 | $4,968 | ($20) | ($75) | $7,360 | $66 | ($829) | ($225) | $— | $6,372 | ||||||||||||||||
Change from prior year | 37 | % | 18 | % | (33 | %) | N/M | 20 | % | N/M | (10 | %) | (26 | %) | 27 | % | ||||||||||
EBT as % of revenues | 20 | % | 87 | % | N/M | N/M | 40 | % | 35 | % | ||||||||||||||||
Net income (loss) | $6,094 | $67 | ($661) | ($212) | $64 | $5,352 | ||||||||||||||||||||
Change from prior year | 24 | % | (90 | %) | (12 | %) | (28 | %) | N/M | 11 | % | |||||||||||||||
Diluted EPS | $3.46 | $0.04 | ($0.38) | ($0.12) | $0.04 | $3.04 | ||||||||||||||||||||
Change from prior year | 22 | % | (90 | %) | (12 | %) | (33 | %) | N/M | 9 | % | |||||||||||||||
Diluted shares used | 1,760 | 1,760 | 1,760 | 1,760 | 1,760 | 1,760 | ||||||||||||||||||||
9 MONTHS - FISCAL 2012 | ||||||||||||||||||||||||||
Revenues | $9,012 | $4,755 | $471 | $13 | $14,251 | $— | $— | $— | $— | $14,251 | ||||||||||||||||
Operating income (loss) | 5,489 | (112) | (751) | (178) | — | 4,448 | ||||||||||||||||||||
EBT | $1,810 | $4,215 | ($15) | $105 | 6,115 | (149) | (751) | (178) | — | 5,037 | ||||||||||||||||
Discontinued operations, net of tax | — | 754 | (1) | — | — | 753 | ||||||||||||||||||||
Net income (loss) | 4,917 | 675 | (589) | (165) | — | 4,838 | ||||||||||||||||||||
Diluted EPS | $2.83 | $0.39 | ($0.34) | ($0.09) | $— | $2.78 | ||||||||||||||||||||
Diluted shares used | 1,740 | 1,740 | 1,740 | 1,740 | 1,740 | 1,740 | ||||||||||||||||||||
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 consisted primarily of 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 Third Quarter of Fiscal 2013 Results Page 8 of 18
Conference Call
Qualcomm’s third quarter fiscal 2013 earnings conference call will be broadcast live on July 24, 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 information reconciling these Non-GAAP financial measures to the Company’s financial results prepared in accordance with GAAP, as well as other financial and statistical information to be discussed on the conference call, will be posted at www.qualcomm.com/investor immediately prior to commencement of the call. An audio replay will be available at http://investor.qualcomm.com/events.cfm and via telephone following the live call for 30 days thereafter. To listen to the replay via telephone, U.S. callers may dial (855) 859-2056, and international callers may dial (404) 537-3406. Callers should use reservation number 15022636.
Note Regarding Use of Non-GAAP Financial Measures
The Non-GAAP financial information presented herein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, “Non-GAAP” is not a term defined by GAAP, and as a result, the Company’s measure of Non-GAAP results might be different than similarly titled measures used by other companies. Reconciliations between GAAP and Non-GAAP results are presented herein.
The Company uses Non-GAAP financial information (i) to evaluate, assess and benchmark the Company’s operating results on a consistent and comparable basis; (ii) to measure the performance and efficiency of the Company’s ongoing core operating businesses, including the QCT (Qualcomm CDMA Technologies), QTL (Qualcomm Technology Licensing) and QWI (Qualcomm Wireless & Internet) segments; and (iii) to compare the performance and efficiency of these segments against each other and against competitors. 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 Non-GAAP financial measures applicable to the Company and its business segments. The Company presents Non-GAAP financial information to provide greater
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 9 of 18
transparency to investors with respect to its use of such information in financial and operational decision-making.
Non-GAAP information used by management excludes QSI and certain share-based compensation, acquisition-related items and 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 the Company’s ongoing core businesses. 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 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 contracts that limit the use of the acquired intellectual property. These 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 businesses. 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. |
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. In addition, management uses this measure to evaluate the Company’s performance and to compare its operating performance with other companies in the industry.
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 10 of 18
About Qualcomm
Qualcomm Incorporated (Nasdaq: QCOM) is a world leader in 3G, 4G and next-generation wireless technologies. Qualcomm Incorporated includes Qualcomm’s licensing business, QTL, and the vast majority of its patent portfolio. Qualcomm Technologies, Inc., a wholly-owned subsidiary of Qualcomm Incorporated, operates, along with its subsidiaries, substantially all of Qualcomm's engineering, research and development functions, and substantially all of its products and services businesses, including its semiconductor business, QCT. For more than 25 years, Qualcomm ideas and inventions have driven the evolution of digital communications, linking people everywhere more closely to information, entertainment and each other. For more information, visit www.qualcomm.com.
Note Regarding Forward-Looking Statements
In addition to the historical information contained herein, this news release contains forward-looking statements that are inherently subject to risks and uncertainties, including but not limited to statements regarding the expanding opportunities for growth of 3G/4G devices around the globe driven by the strong pace of innovation in the industry; our business outlook; and our 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 shipments, ranges and midpoints. 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 forward-looking 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; 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 third quarter ended June 30, 2013 filed with the SEC. Our reports filed with the SEC are available on
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 11 of 18
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 Third Quarter of Fiscal 2013 Results Page 12 of 18
Qualcomm Incorporated
Supplemental Information for the Three Months Ended June 30, 2013
(Unaudited)
Non-GAAP Results | QSI | Share-Based Compensation | Acquisition-Related Items (a) | GAAP Results | ||||||||||||||||||||||
($ in millions, except per share data) | ||||||||||||||||||||||||||
Cost of equipment and services revenues | $ | 2,415 | $ | — | $ | 18 | $ | 64 | $ | 2,497 | ||||||||||||||||
R&D | 1,130 | 1 | 166 | 1 | 1,298 | |||||||||||||||||||||
SG&A | 505 | 6 | 96 | 6 | 613 | |||||||||||||||||||||
Other operating expenses | 158 | (b) | — | — | — | 158 | ||||||||||||||||||||
Operating income (loss) | 2,035 | (7 | ) | (280 | ) | (71 | ) | 1,677 | ||||||||||||||||||
Investment income, net | $ | 175 | (c) | $ | 58 | (d) | $ | — | $ | — | $ | 233 | ||||||||||||||
Tax rate | 18 | % | 20 | % | 21 | % | 10 | % | 17 | % | ||||||||||||||||
Net income (loss) | $ | 1,823 | $ | 43 | $ | (222 | ) | $ | (64 | ) | $ | 1,580 | ||||||||||||||
Diluted earnings (loss) per share (EPS) | $ | 1.03 | $ | 0.02 | $ | (0.13 | ) | $ | (0.04 | ) | $ | 0.90 | ||||||||||||||
Operating cash flow | $ | 2,157 | $ | (5 | ) | $ | (75 | ) | $ | — | $ | 2,077 | ||||||||||||||
Operating cash flow as % of revenues | 35 | % | N/A | N/A | N/A | 33 | % | |||||||||||||||||||
Free cash flow (e) | $ | 1,850 | $ | (12 | ) | $ | (75 | ) | $ | — | $ | 1,763 | ||||||||||||||
Free cash flow as % of revenues | 30 | % | N/A | N/A | N/A | 28 | % | |||||||||||||||||||
(a) | Included amortization and impairment of certain intangible assets and the recognition of the step-up of inventories to fair value. |
(b) | Included a $158 million loss, or $0.06 per share, that resulted from an impairment charge on certain long-lived assets related to our QMT division. |
(c) | Included $179 million in interest and dividend income, $15 million in net realized gains on investments and $5 million in net gains on derivatives, partially offset by $22 million in other-than-temporary losses on investments, $1 million in losses on deconsolidation of subsidiaries and $1 million in interest expense. |
(d) | Included $45 million in net realized gains on investments, $22 million in gains on deconsolidation of subsidiaries and $3 million in interest and dividend income, partially offset by $6 million in interest expense, $5 million in other-than-temporary losses on investments and $1 million in equity in net losses of investees. |
(e) | Free cash flow is defined as net cash provided by operating activities less capital expenditures. Reconciliation of these amounts is included in the “Reconciliation of Non-GAAP Free Cash Flows to Net Cash Provided by Operating Activities (GAAP) and Other Supplemental Disclosures” for the three months ended June 30, 2013 included herein. |
N/A - Not Applicable
Sums may not equal totals due to rounding.
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 13 of 18
Qualcomm Incorporated
Supplemental Information for the Nine Months Ended June 30, 2013
(Unaudited)
Non-GAAP Results | QSI | Share-Based Compensation | Acquisition-Related Items (a) | Tax Items (b) | GAAP Results | ||||||||||||||||||||||||||
($ in millions, except per share data) | |||||||||||||||||||||||||||||||
Cost of equipment and services revenues | $ | 6,848 | $ | — | $ | 55 | $ | 203 | $ | — | $ | 7,106 | |||||||||||||||||||
R&D | 3,135 | 3 | 478 | 2 | — | 3,618 | |||||||||||||||||||||||||
SG&A | 1,528 | 17 | 296 | 20 | — | 1,861 | |||||||||||||||||||||||||
Other operating expenses | 158 | (c) | — | — | — | 158 | |||||||||||||||||||||||||
Operating income (loss) | 6,716 | (20 | ) | (829 | ) | (225 | ) | — | 5,642 | ||||||||||||||||||||||
Investment income, net | $ | 644 | (d) | $ | 86 | (e) | $ | — | $ | — | $ | — | $ | 730 | |||||||||||||||||
Tax rate | 17 | % | 9 | % | 20 | % | 6 | % | N/A | 16 | % | ||||||||||||||||||||
Net income (loss) | $ | 6,094 | $ | 67 | $ | (661 | ) | $ | (212 | ) | $ | 64 | $ | 5,352 | |||||||||||||||||
Diluted earnings (loss) per share (EPS) | $ | 3.46 | $ | 0.04 | $ | (0.38 | ) | $ | (0.12 | ) | $ | 0.04 | $ | 3.04 | |||||||||||||||||
Operating cash flow | $ | 6,469 | $ | (23 | ) | $ | (178 | ) | $ | — | $ | — | $ | 6,268 | |||||||||||||||||
Operating cash flow as % of revenues | 35 | % | N/A | N/A | N/A | N/A | 34 | % | |||||||||||||||||||||||
Free cash flow (f) | $ | 5,696 | $ | (58 | ) | $ | (178 | ) | $ | — | $ | — | $ | 5,460 | |||||||||||||||||
Free cash flow as % of revenues | 31 | % | N/A | N/A | N/A | N/A | 30 | % | |||||||||||||||||||||||
(a) | Included amortization and impairment of certain intangible assets, expense associated with the termination of a contract and the recognition of the step-up of inventories to fair value. |
(b) | Included a $64 million tax benefit as a result of the retroactive reinstatement of the federal R&D tax credit related to fiscal 2012. |
(c) | Included a $158 million loss, or $0.06 per share, that resulted from an impairment charge on certain long-lived assets related to our QMT division. |
(d) | Included $521 million in interest and dividend income, $147 million in net realized gains on investments and $17 million in net gains on derivatives, partially offset by $36 million in other-than-temporary losses on investments, $4 million in interest expense and $1 million in losses on deconsolidation of subsidiaries. |
(e) | Included $92 million in net realized gains on investments, $22 million in gains on deconsolidation of subsidiaries and $8 million in interest and dividend income, partially offset by $18 million in interest expense, $13 million in other-than-temporary losses on investments and $5 million in equity in net losses of investees. |
(f) | Free cash flow is defined 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 nine months ended June 30, 2013 included herein. |
N/A - Not Applicable
Sums may not equal totals due to rounding.
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 14 of 18
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 June 30, 2013 | |||||||||||||||
Non-GAAP | QSI | Share-Based Compensation | GAAP | ||||||||||||
Net cash provided (used) by operating activities | $ | 2,157 | $ | (5 | ) | $ | (75 | ) | (a) | $ | 2,077 | ||||
Less: capital expenditures | (307 | ) | (7 | ) | — | (314 | ) | ||||||||
Free cash flow | $ | 1,850 | $ | (12 | ) | $ | (75 | ) | $ | 1,763 | |||||
Revenues | $ | 6,243 | $ | — | $ | — | $ | 6,243 | |||||||
Free cash flow as % of revenues | 30 | % | N/A | N/A | 28 | % | |||||||||
Nine Months Ended June 30, 2013 | |||||||||||||||
Non-GAAP | QSI | Share-Based Compensation | GAAP | ||||||||||||
Net cash provided (used) by operating activities | $ | 6,469 | $ | (23 | ) | $ | (178 | ) | (a) | $ | 6,268 | ||||
Less: capital expenditures | (773 | ) | (35 | ) | — | (808 | ) | ||||||||
Free cash flow | $ | 5,696 | $ | (58 | ) | $ | (178 | ) | $ | 5,460 | |||||
Revenues | $ | 18,385 | $ | — | $ | — | $ | 18,385 | |||||||
Free cash flow as % of revenues | 31 | % | N/A | N/A | 30 | % | |||||||||
Three Months Ended June 24, 2012 | |||||||||||||||
Non-GAAP | QSI | Share-Based Compensation | GAAP | ||||||||||||
Net cash provided (used) by operating activities | $ | 972 | $ | (21 | ) | $ | (29 | ) | (a) | $ | 922 | ||||
Less: capital expenditures | (314 | ) | (85 | ) | — | (399 | ) | ||||||||
Free cash flow | $ | 658 | $ | (106 | ) | $ | (29 | ) | $ | 523 | |||||
Nine Months Ended June 24, 2012 | |||||||||||||||
Non-GAAP | QSI | Share-Based Compensation | GAAP | ||||||||||||
Net cash provided (used) by operating activities | $ | 4,906 | $ | (190 | ) | $ | (127 | ) | (a) | $ | 4,589 | ||||
Less: capital expenditures | (949 | ) | (85 | ) | — | (1,034 | ) | ||||||||
Free cash flow | $ | 3,957 | $ | (275 | ) | $ | (127 | ) | $ | 3,555 | |||||
(a) | Incremental tax benefits from share-based compensation during the period. |
N/A - Not Applicable
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 15 of 18
Qualcomm Incorporated
Reconciliation of Non-GAAP Tax Rates to GAAP Tax Rates (a)
(In millions)
(Unaudited)
Three Months Ended June 30, 2013 | |||||||||||||||||||||||
Non-GAAP Results | QSI | Share-Based Compensation | Acquisition-Related Items | Tax Items | GAAP Results | ||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 2,210 | $ | 51 | $ | (280 | ) | $ | (71 | ) | $ | — | $ | 1,910 | |||||||||
Income tax (expense) benefit | (387 | ) | (10 | ) | 58 | 7 | — | (332 | ) | ||||||||||||||
Income (loss) from continuing operations | $ | 1,823 | $ | 41 | $ | (222 | ) | $ | (64 | ) | $ | — | $ | 1,578 | |||||||||
Tax rate | 18 | % | 20 | % | 21 | % | 10 | % | N/A | 17 | % | ||||||||||||
Nine Months Ended June 30, 2013 | |||||||||||||||||||||||
Non-GAAP Results | QSI | Share-Based Compensation | Acquisition-Related Items | Tax Items (b) | GAAP Results | ||||||||||||||||||
Income (loss) from continuing operations before income taxes | $ | 7,360 | $ | 66 | $ | (829 | ) | $ | (225 | ) | $ | — | $ | 6,372 | |||||||||
Income tax (expense) benefit | (1,267 | ) | (6 | ) | 168 | 13 | 64 | (1,028 | ) | ||||||||||||||
Income (loss) from continuing operations | $ | 6,093 | $ | 60 | $ | (661 | ) | $ | (212 | ) | $ | 64 | $ | 5,344 | |||||||||
Tax rate | 17 | % | 9 | % | 20 | % | 6 | % | N/A | 16 | % | ||||||||||||
(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. |
(b) | During the second quarter of fiscal 2013, we recorded a tax benefit of $64 million related to fiscal 2012 due to the retroactive reinstatement of the federal R&D tax credit. |
Sums may not equal totals due to rounding.
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 16 of 18
Qualcomm Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
June 30, 2013 | September 30, 2012 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,533 | $ | 3,807 | |||
Marketable securities | 8,928 | 8,567 | |||||
Accounts receivable, net | 1,949 | 1,459 | |||||
Inventories | 1,727 | 1,030 | |||||
Deferred tax assets | 329 | 309 | |||||
Other current assets | 506 | 473 | |||||
Total current assets | 15,972 | 15,645 | |||||
Marketable securities | 18,941 | 14,463 | |||||
Deferred tax assets | 1,446 | 1,412 | |||||
Assets held for sale | — | 1,109 | |||||
Property, plant and equipment, net | 2,974 | 2,851 | |||||
Goodwill | 3,995 | 3,917 | |||||
Other intangible assets, net | 2,690 | 2,938 | |||||
Other assets | 791 | 677 | |||||
Total assets | $ | 46,809 | $ | 43,012 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Trade accounts payable | $ | 1,850 | $ | 1,298 | |||
Payroll and other benefits related liabilities | 713 | 664 | |||||
Unearned revenues | 482 | 545 | |||||
Liabilities held for sale | — | 1,072 | |||||
Other current liabilities | 1,983 | 1,723 | |||||
Total current liabilities | 5,028 | 5,302 | |||||
Unearned revenues | 3,679 | 3,739 | |||||
Other liabilities | 519 | 426 | |||||
Total liabilities | 9,226 | 9,467 | |||||
Stockholders’ equity: | |||||||
Qualcomm stockholders’ equity: | |||||||
Preferred stock, $0.0001 par value; issuable in series; 8 shares authorized; none outstanding | — | — | |||||
Common stock, $0.0001 par value; 6,000 shares authorized; 1,722 and 1,706 shares issued and outstanding, respectively | — | — | |||||
Paid-in capital | 12,316 | 11,956 | |||||
Retained earnings | 25,564 | 20,701 | |||||
Accumulated other comprehensive income | 698 | 866 | |||||
Total Qualcomm stockholders’ equity | 38,578 | 33,523 | |||||
Noncontrolling interests | 5 | 22 | |||||
Total stockholders’ equity | 38,583 | 33,545 | |||||
Total liabilities and stockholders’ equity | $ | 47,809 | $ | 43,012 | |||
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 17 of 18
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, 2013 | June 24, 2012 | June 30, 2013 | June 24, 2012 | ||||||||||||
Revenues: | |||||||||||||||
Equipment and services | $ | 4,286 | $ | 2,948 | $ | 12,474 | $ | 9,253 | |||||||
Licensing | 1,957 | 1,678 | 5,911 | 4,998 | |||||||||||
Total revenues | 6,243 | 4,626 | 18,385 | 14,251 | |||||||||||
Operating expenses: | |||||||||||||||
Cost of equipment and services revenues | 2,497 | 1,719 | 7,106 | 5,255 | |||||||||||
Research and development | 1,298 | 974 | 3,618 | 2,801 | |||||||||||
Selling, general and administrative | 613 | 544 | 1,861 | 1,643 | |||||||||||
Other | 158 | 7 | 158 | 104 | |||||||||||
Total operating expenses | 4,566 | 3,244 | 12,743 | 9,803 | |||||||||||
Operating income | 1,677 | 1,382 | 5,642 | 4,448 | |||||||||||
Investment income, net | 233 | 199 | 730 | 589 | |||||||||||
Income from continuing operations before income taxes | 1,910 | 1,581 | 6,372 | 5,037 | |||||||||||
Income tax expense | (332 | ) | (375 | ) | (1,028 | ) | (993 | ) | |||||||
Income from continuing operations | 1,578 | 1,206 | 5,344 | 4,044 | |||||||||||
Discontinued operations, net of income taxes | — | (3 | ) | — | 753 | ||||||||||
Net income | 1,578 | 1,203 | 5,344 | 4,797 | |||||||||||
Net loss attributable to noncontrolling interests | 2 | 4 | 8 | 41 | |||||||||||
Net income attributable to Qualcomm | $ | 1,580 | $ | 1,207 | $ | 5,352 | $ | 4,838 | |||||||
Basic earnings per share attributable to Qualcomm: | |||||||||||||||
Continuing operations | $ | 0.91 | $ | 0.70 | $ | 3.11 | $ | 2.40 | |||||||
Discontinued operations | — | — | — | 0.45 | |||||||||||
Net income | $ | 0.91 | $ | 0.70 | $ | 3.11 | $ | 2.85 | |||||||
Diluted earnings per share attributable to Qualcomm: | |||||||||||||||
Continuing operations | $ | 0.90 | $ | 0.69 | $ | 3.04 | $ | 2.35 | |||||||
Discontinued operations | — | — | — | 0.43 | |||||||||||
Net income | $ | 0.90 | $ | 0.69 | $ | 3.04 | $ | 2.78 | |||||||
Shares used in per share calculations: | |||||||||||||||
Basic | 1,727 | 1,715 | 1,720 | 1,699 | |||||||||||
Diluted | 1,765 | 1,758 | 1,760 | 1,740 | |||||||||||
Dividends per share announced | $ | 0.35 | $ | 0.25 | $ | 0.85 | $ | 0.68 | |||||||
Qualcomm Announces Third Quarter of Fiscal 2013 Results Page 18 of 18
Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
June 30, 2013 | June 24, 2012 | June 30, 2013 | June 24, 2012 | ||||||||||||
Operating Activities: | |||||||||||||||
Net income | $ | 1,578 | $ | 1,203 | $ | 5,344 | $ | 4,797 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Depreciation and amortization | 255 | 221 | 744 | 640 | |||||||||||
Gain on sale of wireless spectrum | — | — | — | (1,179 | ) | ||||||||||
Revenues related to non-monetary exchanges | (31 | ) | (31 | ) | (93 | ) | (92 | ) | |||||||
Income tax provision in excess of (less than) income tax payments | 59 | (261 | ) | 220 | 239 | ||||||||||
Non-cash portion of share-based compensation expense | 281 | 264 | 831 | 752 | |||||||||||
Incremental tax benefits from share-based compensation | (75 | ) | (29 | ) | (178 | ) | (127 | ) | |||||||
Net realized gains on marketable securities and other investments | (60 | ) | (70 | ) | (239 | ) | (214 | ) | |||||||
Other items, net | 195 | 38 | 274 | 26 | |||||||||||
Changes in assets and liabilities, net of effects of acquisitions: | |||||||||||||||
Accounts receivable, net | (21 | ) | (54 | ) | (445 | ) | (249 | ) | |||||||
Inventories | (245 | ) | (32 | ) | (699 | ) | (53 | ) | |||||||
Other assets | 90 | (21 | ) | (111 | ) | (31 | ) | ||||||||
Trade accounts payable | 221 | (90 | ) | 598 | 197 | ||||||||||
Payroll, benefits and other liabilities | (151 | ) | (151 | ) | 52 | (412 | ) | ||||||||
Unearned revenues | (19 | ) | (65 | ) | (30 | ) | 295 | ||||||||
Net cash provided by operating activities | 2,077 | 922 | 6,268 | 4,589 | |||||||||||
Investing Activities: | |||||||||||||||
Capital expenditures | (314 | ) | (399 | ) | (808 | ) | (1,034 | ) | |||||||
Purchases of available-for-sale securities | (4,663 | ) | (4,768 | ) | (12,112 | ) | (11,804 | ) | |||||||
Proceeds from sales of available-for-sale securities | 2,805 | 2,231 | 7,337 | 5,774 | |||||||||||
Purchases of trading securities | (862 | ) | (641 | ) | (2,658 | ) | (2,280 | ) | |||||||
Proceeds from sales of trading securities | 767 | 646 | 2,365 | 1,297 | |||||||||||
Proceeds from sale of wireless spectrum | — | — | — | 1,925 | |||||||||||
Acquisitions and other investments, net of cash acquired | (47 | ) | (348 | ) | (179 | ) | (677 | ) | |||||||
Other items, net | (2 | ) | (23 | ) | 68 | (76 | ) | ||||||||
Net cash used by investing activities | (2,316 | ) | (3,302 | ) | (5,987 | ) | (6,875 | ) | |||||||
Financing Activities: | |||||||||||||||
Borrowing under loans and debentures | 534 | 478 | 534 | 710 | |||||||||||
Repayment of loans and debentures | (492 | ) | (440 | ) | (492 | ) | (591 | ) | |||||||
Proceeds from issuance of common stock | 217 | 223 | 964 | 1,358 | |||||||||||
Incremental tax benefits from share-based compensation | 75 | 29 | 178 | 127 | |||||||||||
Repurchases and retirements of common stock | (1,039 | ) | (373 | ) | (1,289 | ) | (472 | ) | |||||||
Dividends paid | (604 | ) | (429 | ) | (1,463 | ) | (1,158 | ) | |||||||
Change in obligation under securities lending | 27 | 242 | 27 | 203 | |||||||||||
Other items, net | 10 | 83 | 8 | 83 | |||||||||||
Net cash (used) provided by financing activities | (1,272 | ) | (187 | ) | (1,533 | ) | 260 | ||||||||
Changes in cash and cash equivalents held for sale | (46 | ) | — | (15 | ) | — | |||||||||
Effect of exchange rate changes on cash | (3 | ) | (19 | ) | (7 | ) | (24 | ) | |||||||
Net decrease in cash and cash equivalents | (1,560 | ) | (2,586 | ) | (1,274 | ) | (2,050 | ) | |||||||
Cash and cash equivalents at beginning of year | 4,093 | 5,998 | 3,807 | 5,462 | |||||||||||
Cash and cash equivalents at end of year | $ | 2,533 | $ | 3,412 | $ | 2,533 | $ | 3,412 | |||||||