0001728949-19-000071.txt : 20191106 0001728949-19-000071.hdr.sgml : 20191106 20191106160325 ACCESSION NUMBER: 0001728949-19-000071 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20191106 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20191106 DATE AS OF CHANGE: 20191106 FILER: COMPANY DATA: COMPANY CONFORMED NAME: QUALCOMM INC/DE CENTRAL INDEX KEY: 0000804328 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 953685934 STATE OF INCORPORATION: DE FISCAL YEAR END: 0929 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19528 FILM NUMBER: 191196231 BUSINESS ADDRESS: STREET 1: 5775 MOREHOUSE DR CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 8585871121 MAIL ADDRESS: STREET 1: 5775 MOREHOUSE DR CITY: SAN DIEGO STATE: CA ZIP: 92121 8-K 1 qcom092919er8-k.htm 8-K Document
false0000804328QUALCOMM INC/DE 0000804328 2019-11-06 2019-11-06
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT

Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

November 6, 2019
Date of Report (Date of earliest event reported)
 
QUALCOMM Incorporated
(Exact name of registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of incorporation)

000-19528
 
95-3685934
(Commission File Number)
 
(IRS Employer Identification No.)

 
5775 Morehouse Drive,
San Diego,
California
 
92121
 
 
(Address of principal executive offices)
 
(Zip Code)
 

858-587-1121
(Registrant’s telephone number, including area code)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.0001 par value
 QCOM
Nasdaq Stock Market



Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.




Item 2.02.    Results of Operations and Financial Condition.
On November 6, 2019, QUALCOMM Incorporated (the Company) issued a press release regarding the Company’s financial results for its fourth quarter and fiscal year ended September 29, 2019. A copy of that press release is furnished as Exhibit 99.1 hereto and incorporated herein by reference.
The press release includes non-GAAP financial measures as defined in Regulation G. The press release also includes the most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States (GAAP), information reconciling the non-GAAP financial measures to the GAAP financial measures and a discussion of the reasons why the Company’s management believes that presentation of the non-GAAP financial measures provides useful information to investors regarding the Company’s financial condition and results of operations. The non-GAAP financial measures presented therein should be considered in addition to, not as a substitute for, or superior to, financial measures calculated and presented in accordance with GAAP.






Item 9.01.    Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
 
Description
 
 
Press Release by QUALCOMM Incorporated dated November 6, 2019.
 
104
 
Cover Page Interactive Data File, formatted in Inline XBRL and included as Exhibit 101.
 




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
QUALCOMM Incorporated
 
 
 
 
 
Date:
November 6, 2019
 
By:
/s/ Akash Palkhiwala
 
 
 
 
Akash Palkhiwala
 
 
 
 
Executive Vice President and
Chief Financial Officer


EX-99.1 2 qcom092919erex991.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1
FOR IMMEDIATE RELEASE

Qualcomm Contact:
Mauricio Lopez-Hodoyan
Vice President, Investor Relations
Phone: 1-858-658-4813
e-mail: ir@qualcomm.com






Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Fiscal 2019 GAAP Revenues $24.3 billion
Fiscal 2019 Non-GAAP Revenues $19.4 billion
GAAP EPS $3.59, Non-GAAP EPS $3.54

SAN DIEGO - November 6, 2019 - Qualcomm Incorporated (NASDAQ: QCOM) today announced results for its fiscal fourth quarter and year ended September 29, 2019.

“We delivered a strong quarter, with Non-GAAP earnings per share above the high end of our guidance range, primarily on solid performance in our QTL segment,” said Steve Mollenkopf, CEO of Qualcomm Incorporated. “We exit the fiscal year having successfully executed on our strategic priorities: helping to drive the commercialization of 5G globally, completing a number of important anchor license agreements and executing well across our product roadmap. Our technology and inventions leave us extremely well positioned as 5G accelerates in 2020.”

GAAP Results*
Fourth Quarter Fiscal 2019
 
Q4 Fiscal 2019
 
Q4 Fiscal 2018 1
 
Year-Over-Year Change 2
 
Q3 Fiscal 2019
 
Sequential Change 2
Revenues
$4.8B
 
$5.8B
 
(17%)
 
$9.6B
 
(50%)
Operating income (loss)
$0.7B
 
($0.7B)
 
N/M
 
$5.3B
 
(87%)
Net income (loss)
$0.5B
 
($0.5B)
 
N/M
 
$2.1B
 
(76%)
Diluted earnings (loss) per share
$0.42
 
($0.36)
 
N/M
 
$1.75
 
(76%)
Operating cash flow 3 
$1.2B
 
($0.4B)
 
N/M
 
$4.9B
 
(75%)

1 As previously disclosed, we identified an immaterial error related to the recognition of certain royalty revenues of our QTL (Qualcomm Technology Licensing) segment in the quarterly and annual periods in fiscal 2018 and third and fourth quarters and annual period in fiscal 2017. We have corrected this error in our GAAP and Non-GAAP results for all impacted prior periods presented herein. See Notes to Consolidated Financial Statements, “Note 1. Significant Accounting Policies” and “Note 12. Revision of Prior Period Financial Statements” included in our Annual Report on Form 10-K for the fiscal year ended September 29, 2019 filed with the SEC.
2 Throughout this news release, percentage changes are calculated based on the dollar amounts as disclosed in millions.
3 In the first quarter of fiscal 2019, we adopted new accounting guidance that changed the classification and presentation of certain cash receipts and cash payments and that requires companies to include restricted cash and cash equivalents as a component in total cash and cash equivalents in the statement of cash flows. As a result, prior period cash flow amounts presented herein have been adjusted to conform to the current year presentation.

N/M - Not Meaningful



Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 2 of 17

 
 
 
 
 
 
Fiscal 2019
 
Fiscal
2019
 
Fiscal
2018
 
Year-Over-Year Change
Revenues
$24.3B
 
$22.6B
 
+7%
Operating income
$7.7B
 
$0.6B
 
N/M
Net income (loss)
$4.4B
 
($5.0B)
 
N/M
Diluted earnings (loss) per share
$3.59
 
($3.39)
 
N/M
Operating cash flow
$7.3B
 
$3.9B
 
+86%

Non-GAAP Results*
Non-GAAP results exclude the QSI (Qualcomm Strategic Initiatives) segment and certain share-based compensation, acquisition-related items, tax items and other items. Further discussion regarding our use of Non-GAAP financial measures and reconciliations between GAAP and Non-GAAP results are included within this news release.

Fourth Quarter Fiscal 2019
 
Q4 Fiscal 2019
 
Q4 Fiscal 2018
 
Year-Over-Year Change
 
Q3 Fiscal 2019
 
Sequential Change
Revenues
$4.8B
 
$5.8B
 
(17%)
 
$4.9B
 
(2%)
Operating income
$1.1B
 
$1.3B
 
(9%)
 
$1.2B
 
(6%)
Net income
$0.9B
 
$1.3B
 
(25%)
 
$1.0B
 
(4%)
Diluted earnings per share
$0.78
 
$0.89
 
(12%)
 
$0.80
 
(3%)

Fiscal 2019
 
Fiscal
2019
 
Fiscal
2018
 
Year-Over-Year Change
Revenues
$19.4B
 
$22.6B
 
(14%)
Operating income
$4.7B
 
$5.5B
 
(15%)
Net income
$4.3B
 
$5.3B
 
(19%)
Diluted earnings per share
$3.54
 
$3.62
 
(2%)

* In April 2019, we entered into settlement agreements with Apple and its contract manufacturers to dismiss all outstanding litigation between the parties. In the third quarter of fiscal 2019, we recognized licensing revenues of $4.7 billion resulting from the settlement, which have been excluded from our Non-GAAP results. In addition, our QTL results for the third and fourth quarter of fiscal 2019 included royalties from Apple and its contract manufacturers for sales made in the June 2019 and September 2019 quarter, respectively. QTL revenues in the fourth quarter and fiscal 2018, and the first six months of fiscal 2019, did not include royalties due on sales of Apple or other products by Apple’s contract manufacturers.



Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 3 of 17

QTL revenues in the fourth quarter and fiscal 2018 included $100 million and $600 million, respectively, received under an interim agreement with Huawei. QTL revenues in fiscal 2019 included $450 million paid under a second interim agreement with Huawei that concluded in the third quarter of fiscal 2019, and although negotiations continue, we have not reached a final agreement with Huawei. This represents a minimum, non-refundable amount and does not reflect the full amount of royalties due under the underlying license agreement. We did not record any revenues in the fourth quarter of fiscal 2019 for royalties due on the sales of Huawei’s products.

The following should be considered in regard to the year-over-year and sequential comparisons:
Fiscal 2019 GAAP results included:
$4.7 billion of revenues, or $3.23 per share, resulting from settlement agreements with Apple and its contract manufacturers in the third quarter of fiscal 2019, which were not allocated to our segment results.
$2.5 billion tax expense, or ($2.01) per share, due to the derecognition of a deferred tax asset in the third quarter of fiscal 2019 as a result of an agreement with the Internal Revenue Service (IRS) under which we relinquished the federal tax basis step-up in certain distributed intellectual property.
$275 million charge, or ($0.22) per share, for the fine imposed by the European Commission (EC) recognized in the third quarter of fiscal 2019 (2019 EC fine), for which we have provided a financial guarantee to satisfy the obligation in lieu of a cash payment while we appeal the EC’s decision.
$213 million of restructuring and restructuring-related charges, or ($0.16) per share, related to our Cost Plan that was announced in the second quarter of fiscal 2018.
Fiscal 2019 GAAP and Non-GAAP results included:
$570 million tax benefit, or $0.47 per share, for GAAP and $552 million tax benefit, or
$0.45 per share, for Non-GAAP relating to certain tax elections made in the first quarter of
fiscal 2019.
$450 million of revenues, or $0.32 per share, resulting from our second interim agreement with Huawei.
Fiscal 2018 GAAP results included:
$6.0 billion charge, or ($4.03) per share, related to the enactment of the Tax Cuts and Jobs Act in the United States in the first quarter of fiscal 2018.



Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 4 of 17

$2.0 billion charge, or ($1.41) per share, related to a termination fee paid to NXP Semiconductors N.V. (NXP) in the fourth quarter of fiscal 2018 resulting from the termination of the purchase agreement to acquire NXP.
$1.2 billion charge, or ($0.76) per share, for the fine imposed by the EC (2018 EC fine) recognized in the first quarter of fiscal 2018, for which we have provided financial guarantees to satisfy the obligation in lieu of a cash payment while we appeal the EC’s decision.
$687 million of restructuring and restructuring-related charges, or ($0.37) per share, related to our Cost Plan.
$676 million gain, or $0.48 per share, related to the settlement of the Taiwan Fair Trade Commission investigation in the fourth quarter of fiscal 2018.
Fiscal 2018 GAAP and Non-GAAP results included:
$600 million of revenues, or $0.31 per share for GAAP and $0.30 per share for Non-GAAP (based on diluted shares of 1,463 million and 1,475 million, respectively), resulting from an interim agreement with Huawei for royalties due after the second quarter of fiscal 2017.

Segment Results
Fourth Quarter Fiscal 2019
(in millions, except percentages)
Q4 Fiscal 2019
 
Q4 Fiscal 2018
 
Year-Over-Year Change
 
Q3 Fiscal 2019
 
Sequential Change
QCT
 
 
 
 
 
 
 
 
 
Revenues
$3,611
 
$4,647
 
(22%)
 
$3,567
 
+1%
EBT 1
$499
 
$796
 
(37%)
 
$504
 
(1%)
EBT as % of revenues
14%
 
17%
 
(3%)
 
14%
 
—%
MSMTM chip shipments
152
 
232
 
(34%)
 
156
 
(3%)
QTL
 
 
 
 
 
 
 
 
 
Revenues
$1,158
 
$1,113
 
+4%
 
$1,292
 
(10%)
EBT
$792
 
$714
 
+11%
 
$898
 
(12%)
EBT as % of revenues
68%
 
64%
 
+4%
 
70%
 
(2%)
1 Earnings (loss) before taxes



Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 5 of 17

Fiscal 2019
(in millions, except percentages)
Fiscal
2019
 
Fiscal
2018
 
Year-Over-Year Change
QCT
 
 
 
 
 
Revenues
$14,639
 
$17,282
 
(15%)
EBT
$2,143
 
$2,966
 
(28%)
EBT as % of revenues
15%
 
17%
 
(2%)
MSMTM chip shipments
650
 
855
 
(24%)
QTL
 
 
 
 
 
Revenues
$4,591
 
$5,042
 
(9%)
EBT
$2,954
 
$3,404
 
(13%)
EBT as % of revenues
64%
 
68%
 
(4%)

We adopted accounting guidance (ASC 606) in the first quarter of fiscal 2019 that requires us to estimate and recognize QTL royalty revenues in the period in which the licensees’ sales occur, resulting in an acceleration of royalty revenues by one quarter. As a result of recognizing revenues in the period in which the licensees’ sales occur using estimates, adjustments to revenues are required in subsequent periods to reflect changes in estimates as new information becomes available, primarily resulting from actual amounts reported by our licensees. Prior period results have not been restated and continue to be reported in accordance with the accounting guidance in effect for those periods (ASC 605).

Return of Capital to Stockholders
The following table summarizes stock repurchases, before commissions, and dividends paid during the fourth quarter and fiscal 2019 (in millions, except per-share amounts):
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchases
 
Dividends
 
Total
 
Shares (1)
 
Amount
 
Per Share
 
Amount
 
Amount
Q4 fiscal 2019
9.4
 
$706
 
$0.62
 
$711
 
$1,417
Fiscal 2019
27.1
 
$1,793
 
$2.48
 
$2,968
 
$4,761
(1)
In fiscal 2018, we entered into three accelerated share repurchase agreements (the ASR Agreements) to repurchase an aggregate of $16.0 billion of our common stock, with 178.4 million shares initially delivered to us under the ASR Agreements and retired. The ASR Agreements were completed during the fourth quarter of fiscal 2019, and an additional 68.7 million shares were delivered to us, comprising the final delivery of shares under the ASR Agreements, which have not been included in the stock repurchase share amounts for the fourth quarter and fiscal 2019.
At September 29, 2019, $7.1 billion remained authorized for repurchase under our $30 billion stock repurchase program announced in the fourth quarter of fiscal 2018. Since September 29, 2019, we repurchased and retired 3.9 million shares of common stock for $300 million. On October 15, 2019, we announced a cash dividend of $0.62 per share, payable on December 19, 2019 to stockholders of record at the close of business on December 5, 2019.



Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 6 of 17

Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled $12.3 billion at the end of the fourth quarter of fiscal 2019, compared to $12.1 billion a year ago and $14.4 billion at the end of the third quarter of fiscal 2019.

Effective Income Tax Rates
Our annual effective income tax rates for fiscal 2019 were 41% provision for GAAP and 1% benefit for Non-GAAP. Our fiscal 2019 GAAP annual effective tax rate reflected the impact of a $2.5 billion charge due to the derecognition of a deferred tax asset as a result of an agreement with the IRS under which we relinquished the federal tax basis step-up in certain distributed intellectual property resulting from temporary regulations issued by the United States Treasury Department (which was recorded discretely in the third quarter of fiscal 2019), the 2019 EC fine (which is not deductible for tax purposes) and the impact of the Apple settlement. Our GAAP and Non-GAAP annual effective income tax rates reflected income tax benefits of $570 million and $552 million, respectively, related to tax elections made in the first quarter of fiscal 2019, which were recorded discretely. Our effective income tax rates for the fourth quarter of fiscal 2019 were 18% for GAAP and 10% for Non-GAAP.




Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 7 of 17

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 most recent annual report on file with the Securities and Exchange Commission (SEC) provides 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 certain investment, certain derivative and foreign currency transaction gains or losses, cannot be accurately forecast. Accordingly, we only include such items in our financial outlook to the extent they are reasonably certain; however, actual results may differ materially from the outlook.

The second interim agreement with Huawei concluded in the third quarter of fiscal 2019, and although negotiations continue, we have not reached a final agreement with Huawei. If no agreement is reached, Huawei may continue to not make any other payments or may not make full payments due under the underlying license agreement. Our financial guidance for the first quarter of fiscal 2020 excludes QTL revenues for royalties due on sales of products by Huawei.



Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 8 of 17

The following table summarizes GAAP and Non-GAAP guidance based on the current outlook. The Non-GAAP outlook presented below is consistent with the presentation of Non-GAAP results included elsewhere herein.

Qualcomm’s Business Outlook Summary and Reconciliation
 
 
Q1 FY19
Results (1)
Current Guidance
Q1 FY20 Estimates (2)(3)
 
 
Revenues
$4.8B
$4.4B - $5.2B

 
 
Year-over-year change
 
decrease 9% - increase 7%

 
 
GAAP diluted EPS
$0.87
$0.51 - $0.61

 
 
Year-over-year change
 
decrease 30% - 41%

 
 
Less diluted EPS attributable to QSI
$0.01

$0.00

 
 
Less diluted EPS attributable to share-based compensation
($0.15)

($0.22
)
 
 
Less diluted EPS attributable to other items
($0.18)

($0.07
)
 
 
Non-GAAP diluted EPS
$1.20
$0.80 - $0.90

 
 
Year-over-year change
 
decrease 25% - 33%

 
 
Other Information
 
 
 
 
MSM chip shipments
186M
145M - 165M

 
 
Year-over-year change
 
decrease 11% - 22%

 
 
QTL revenues
$1.0B
$1.3B - $1.5B

 
 
Year-over-year change
 
increase 28% - increase 47%

 

(1)
The first quarter of fiscal 2019 results excluded QTL revenues for royalties due on sales of Apple or other products by Apple’s contract manufacturers. The first quarter of fiscal 2019 results included a $570 million tax benefit for GAAP and $552 million tax benefit for Non-GAAP relating to certain tax elections made and $150 million of revenues resulting from an interim agreement with Huawei. Diluted EPS attributable to other items for the first quarter of fiscal 2019 was primarily attributable to restructuring and restructuring-related charges related to our Cost Plan and acquisition-related items.
(2)
Our guidance for diluted EPS attributable to other items for the first quarter of fiscal 2020 is primarily attributable to acquisition-related items.
(3)
Our financial guidance for the first quarter of fiscal 2020 excludes QTL revenues for royalties due on sales of products by Huawei.

Sums may not equal total due to rounding.



Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 9 of 17

Reconciliations of GAAP Results to Non-GAAP Results
The following tables reconcile our GAAP results to our Non-GAAP results (in millions, except per share data and percentages):
 
GAAP Results
Less QSI
Less Share-Based Compensation
Less Other Items
(a) (b)
Non-GAAP Results
Q4 FISCAL 2019
 
 
 
 
 
 
 
Revenues
$4,814
 
$10
 

$—

 

$—

 
$4,804
 
Operating income (loss)
701
 
3
 
(339)
 
(100)
 
1,137
 
EBT
615
 
7
 
(339)
 
(102)
 
1,049
 
EBT as % of revenues
13
%
 
 
 
 
 
 
 
22
%
 
Net income (loss)
506
 
5
 
(282)
 
(164)
 
947
 
Diluted EPS
$0.42
 
$0.00
 
($0.23)
 
($0.14)
 
$0.78
 
Diluted shares
1,211
 
1,211
 
1,211
 
1,211
 
1,211
 
Q3 FISCAL 2019
 
 
 
 
 
 
 
Revenues
$9,635
 
$18
 

$—

 
$4,723
 
$4,894
 
Operating income (loss)
5,317
 
10
 
(246)
 
4,339
 
1,214
 
EBT
5,501
 
312
 
(246)
 
4,334
 
1,101
 
EBT as % of revenues
57
%
 
 
 
 
 
 
 
22
%
 
Net income (loss)
2,149
 
237
 
(198)
 
1,128
 
982
 
Diluted EPS
$1.75
 
$0.19
 
($0.16)
 
$0.92
 
$0.80
 
Diluted shares
1,231
 
1,231
 
1,231
 
1,231
 
1,231
 
Q4 FISCAL 2018
 
 
 
 
 
 
 
Revenues
$5,778
 
$20
 

$—

 
($50)
 
$5,808
 
Operating (loss) income
(679)
 
2
 
(224)
 
(1,712)
 
1,255
 
EBT
(800)
 
(20)
 
(224)
 
(1,800)
 
1,244
 
EBT as % of revenues
N/M

 
 
 
 
 
 
 
21
%
 
Net (loss) income
(513)
 
(11)
 
(195)
 
(1,567)
 
1,260
 
Diluted EPS
($0.36)
 
($0.01)
 
($0.14)
 
($1.10)
 
$0.89
 
Diluted shares
1,417
 
1,429
 
1,429
 
1,429
 
1,429
 
FISCAL 2019
 
 
 
 
 
 
 
 
 
 
Revenues
$24,273
 
$152
 

$—

 
$4,723
(c)
$19,398
 
Operating income (loss)
7,667
 
113
 
(1,037)
 
3,891
 
4,700
 
EBT
7,481
 
344
 
(1,037)
 
3,889
 
4,285
 
EBT as % of revenues
31
%
 
 
 
 
 
 
 
22
%
 
Net income (loss)
4,386
 
271
 
(853)
 
645
 
4,323
 
Diluted EPS
$3.59
 
$0.22
 
($0.70)
 
$0.53
 
$3.54
 
Diluted shares
1,220
 
1,220
 
1,220
 
1,220
 
1,220
 
FISCAL 2018
 
 
 
 
 
 
 
 
 
 
Revenues
$22,611
 
$100
 

$—

 
($100)
 
$22,611
 
Operating income (loss)
621
 
23
 
(883)
 
(4,018)
 
5,499
 
EBT
392
 
24
 
(883)
 
(4,132)
 
5,383
 
EBT as % of revenues
2
%
 
 
 
 
 
 
 
24
%
 
Net (loss) income
(4,964)
 
22
 
(743)
 
(9,586)
 
5,343
 
Diluted EPS
($3.39)
 
$0.01
 
($0.50)
 
($6.53)
 
$3.62
 
Diluted shares
1,463
 
1,475
 
1,475
 
1,475
 
1,475
 

(a)
At fiscal year end, 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 included in the tax provision (benefit) in the “Other Items” column. See the “Reconciliations of GAAP Tax Rates to Non-GAAP Tax Rates” herein for further details.
(b)
Further details of amounts included in the “Other Items” column for the current period are included in the “Supplemental Information and Reconciliations” and the “Reconciliations of GAAP Tax Rates to Non-GAAP Tax Rates” sections herein. Details of amounts included in the “Other Items” column for prior periods as well as other notes related to prior periods are included in the news releases for those periods.
(c)
In fiscal 2019, other items excluded from Non-GAAP revenues were comprised of licensing revenues resulting from the settlement with Apple and its contract manufacturers, which were not allocated to our segment results.

Sums may not equal totals due to rounding.




Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 10 of 17

Supplemental Information and Reconciliations
(Unaudited)
 
Q4 FISCAL 2019
 
 
($ in millions)
GAAP Results
Less QSI
Less Share-Based Compensation
Less Other Items (a)
Non-GAAP
Results
 
Cost of revenues
 
$2,118
 
 
$4
 
 
$12
 
 
$88
 
 
$2,014
 
 
Research and development (R&D) expenses
 
1,441
 
 

 
 
246
 
 
1
 
 
1,194
 
 
Selling, general and administrative (SG&A) expenses
 
548
 
 
3
 
 
81
 
 
5
 
 
459
 
 
Other expenses
 
6
 
 

 
 

 
 
6
 
 

 
 
Interest expense
 
150
 
 

 
 

 
 
6
 
 
144
 
 
Investment and other income, net
 
64
 
 
4
 
 

 
 
4
 
 
56
 

(a)
Other items excluded from Non-GAAP results included $96 million of acquisition-related charges, $5 million of interest expense related to the 2018 EC fine and $4 million of net restructuring and restructuring-related charges primarily related to our Cost Plan, partially offset by $3 million of foreign currency transaction gains related to the 2019 EC fine.

 
FISCAL 2019
 
 
($ in millions)
GAAP Results
Less QSI
Less Share-Based Compensation
Less Other Items (b)
Non-GAAP
Results
 
Cost of revenues
 
$8,599
 
 
$26
 
 
$35
 
 
$387
 
 
$8,151
 
 
Research and development (R&D) expenses
 
5,398
 
 

 
 
725
 
 
4
 
 
4,669
 
 
Selling, general and administrative (SG&A) expenses
 
2,195
 
 
13
 
 
277
 
 
27
 
 
1,878
 
 
Other expenses
 
414
 
 

 
 

 
 
414
 
 

 
 
Interest expense
 
627
 
 

 
 

 
 
22
 
 
605
 
 
Investment and other income, net
 
441
 
 
231
 
 

 
 
20
 
 
190
 

(b)
Other items excluded from Non-GAAP results included $418 million of acquisition-related charges, a $275 million charge related to the 2019 EC fine, $213 million of net restructuring and restructuring-related charges primarily related to our Cost Plan and $21 million of interest expense related to the 2018 EC fine, partially offset by a $43 million gain (and $13 million of interest) due to the partial recovery of a fine imposed in fiscal 2009 resulting from our appeal of the Korea Fair Trade Commission (KFTC) decision, a $31 million benefit related to a favorable legal settlement and $6 million of foreign currency transaction gains related to the 2018 and 2019 EC fines, net of associated losses on derivative instruments.



Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 11 of 17

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliations of GAAP Tax Rates to Non-GAAP Tax Rates
(Unaudited)
($ in millions)
 
GAAP Results
 
 
Less QSI
Less Share-Based Compensation
Less Other Items (b) (c)
 
Non-GAAP Results
 
Q4 FISCAL 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
$
615

 
 
$
7
 
 
 
$
(339
)
 
 
$
(102
)
 
 
$
1,049

 
Income tax (expense) benefit
 
(109
)
 
 
(2
)
 
 
57
 
 
 
(62
)
 
 
(102
)
 
Net income (loss)
 
$
506

 
 
$
5
 
 
 
$
(282
)
 
 
$
(164
)
 
 
$
947

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax rate
 
18
%
 
 
%
(a)

 
 
%
(a)
 
 
8
%
(a)

 
 
10
%
 
FISCAL 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
$
7,481

 
 
$
344
 
 
 
$
(1,037
)
 
 
$
3,889
 
 
 
$
4,285

 
Income tax (expense) benefit
 
(3,095
)
 
 
(73
)
 
 
184
 
 
 
(3,244
)
 
 
38

 
Net income (loss)
 
$
4,386

 
 
$
271
 
 
 
$
(853
)
 
 
$
645
 
 
 
$
4,323

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax rate
 
41
%
 
 
(2
%)
(a)

 
 
6
%
(a)

 
 
38
%
(a)

 
 
(1
%)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)
The incremental effect of our adjustments to the Non-GAAP tax rate is calculated by allocating the difference between (i) the tax expense (benefit) calculated based on the GAAP tax rate and (ii) the actual or estimated tax expense (benefit) for each column.
(b)
In the fourth quarter of fiscal 2019, the tax expense in the “Other Items” column included a $66 million charge for the foreign currency loss related to a refund claim for withholding taxes paid to Korea in prior periods, a $23 million charge to reconcile the tax provision for each column to the total GAAP tax provision for the quarter, a $20 million charge related to a proposed settlement with the IRS and a $17 million charge for the combined effect of other items in EBT, partially offset by a $47 million benefit for release of a valuation allowance and a $17 million benefit for the tax effect of acquisition-related items in EBT.
(c)
In fiscal 2019, the tax expense in the “Other Items” column included a $2.5 billion charge for the write-off of a deferred tax asset, a $786 million charge for the combined effect of other items in EBT, a $70 million charge related to certain other impacts of final U.S. regulations issued in the third quarter of fiscal 2019, a $66 million charge for the foreign currency loss related to a refund claim for withholding taxes paid to Korea in prior periods and a $20 million charge related to a proposed settlement with the IRS, partially offset by a $79 million benefit for release of a valuation allowance, a $72 million benefit for the tax effect of acquisition-related items in EBT and an $18 million tax benefit related to a prior year.

Conference Call
Qualcomm’s fiscal fourth quarter 2019 earnings conference call will be broadcast live on November 6, 2019, 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 our 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
http://investor.qualcomm.com/ immediately prior to the 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 (877) 660-6853 and international callers may dial (201) 612-7415. Callers should use reservation number 13695634.




Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 12 of 17

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, our measure of Non-GAAP results might be different than similarly titled measures used by other companies. Reconciliations between GAAP and Non-GAAP results used herein are presented herein.

We use Non-GAAP financial information: (i) to evaluate, assess and benchmark our operating results on a consistent and comparable basis; (ii) to measure the performance and efficiency of our ongoing core operating businesses, including the QCT (Qualcomm CDMA Technologies) and QTL (Qualcomm Technology Licensing) segments; and (iii) to compare the performance and efficiency of these segments against competitors. Non-GAAP measurements used by us include revenues, cost of revenues, R&D expenses, SG&A expenses, other income or expenses, operating income, interest expense, net investment and other income, income or earnings before income taxes, effective tax rate, net income and diluted earnings per share. We are able to assess what we believe is a more meaningful and comparable set of financial performance measures for Qualcomm and its business segments by using Non-GAAP information. In addition, the HR and Compensation Committee of the Board of Directors uses certain Non-GAAP financial measures in establishing portions of the performance-based incentive compensation programs for our executive officers. We present Non-GAAP financial information to provide greater transparency to investors with respect to our use of such information in financial and operational decision-making. This Non-GAAP financial information is also used by institutional investors and analysts in evaluating our business and assessing trends and future expectations.

Non-GAAP information excludes our QSI segment and certain share-based compensation, acquisition-related items, tax items and other items.
QSI is excluded because we expect to exit our strategic investments in the foreseeable future, and the effects of fluctuations in the value of such investments and realized gains or losses are viewed as unrelated to our operational performance.
Share-based compensation expense primarily relates to restricted stock units. We believe that excluding non-cash share-based compensation from the Non-GAAP financial information allows us and investors to make additional comparisons of the operating activities of our ongoing core businesses over time and with respect to other companies.



Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 13 of 17

Certain other items are excluded because we view such items as unrelated to the operating activities of our ongoing core businesses, as follows:
Acquisition-related items include amortization of certain intangible assets, recognition of the step-up of inventories and property, plant and equipment to fair value and the related tax effects of these items, as well as any effects from restructuring the ownership of such acquired assets. Additionally, we exclude third-party acquisition and integration services costs and costs related to temporary debt facilities and letters of credit executed prior to the close of an acquisition.
We exclude certain other items that we view as unrelated to our ongoing businesses, such as major restructuring and restructuring-related costs, goodwill and indefinite- and long-lived asset impairments and awards, settlements and/or damages arising from legal or regulatory matters.
Certain tax items that are unrelated to the fiscal year in which they are recorded are excluded in order to provide a clearer understanding of our ongoing Non-GAAP tax rate and after-tax earnings. In fiscal 2018, we excluded the full impact of the estimated one-time repatriation tax on deemed repatriated earnings and profits of U.S.-owned foreign subsidiaries, including the portion that relates to earnings and profits of U.S.-owned foreign subsidiaries generated in the first quarter of fiscal 2018.

About Qualcomm
Qualcomm invents breakthrough technologies that transform how the world connects, computes and communicates. When we connected the phone to the Internet, the mobile revolution was born. Today, our inventions are the foundation for life-changing products, experiences, and industries.  As we lead the world to 5G, we envision this next big change in cellular technology spurring a new era of intelligent, connected devices and enabling new opportunities in connected cars, remote delivery of health care services, and the IoT - including smart cities, smart homes and wearables. Qualcomm Incorporated includes our licensing business, QTL, and the vast majority of our patent portfolio.  Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated, operates, along with its subsidiaries, substantially all of our engineering, research and development functions, and substantially all of our products and services businesses, including our QCT semiconductor business. For more information, visit www.qualcomm.com.




Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 14 of 17

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: our technology and inventions leaving us extremely well-positioned as 5G accelerates in 2020; the possibility that if we do not reach a final agreement with Huawei, Huawei may continue to not make any other payments or may not make full payments due under their underlying licensing agreement, and the financial impact thereof; our adoption of new revenue recognition accounting guidance, and the financial impact thereof; our business outlook; and our estimates and guidance related to revenues, earnings per share and MSM chip shipments. Forward-looking statements are generally identified by words such as “estimates,” “guidance,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks” 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: our ability to reach a final license agreement with Huawei; commercial network deployments, expansions and upgrades of CDMA, OFDMA and other communications technologies, our customers’ and licensees’ sales of products and services based on these technologies and our customers’ demand for our products and services; competition in an environment of rapid technological change; our dependence on a small number of customers and licensees, which increasingly includes a small number of Chinese OEMs; our dependence on the premium-tier device segment; attacks on our licensing business model, including current and future legal proceedings and governmental investigations and proceedings, including potential adverse outcomes relating to the Federal Trade Commission lawsuit against us, and actions of quasi-governmental bodies and standards and industry organizations; potential changes in our patent licensing practices, whether due to governmental investigations, private legal proceedings challenging those practices, or otherwise; the difficulties in enforcing and protecting our intellectual property rights; our ability to extend our technologies, products and services into new and expanded product areas and adjacent industry segments and applications outside of traditional cellular industries; risks associated with the operation and control of our manufacturing facilities; the continued and future success of our licensing programs, which requires us to continue to evolve our patent portfolio, and which may be impacted by the proliferation of devices in new industry segments, and the need to renew or renegotiate license agreements that are expiring; our dependence on a limited number of third-party suppliers; claims by third parties that we infringe their intellectual property; strategic acquisitions, transactions and investments and our ability to consummate planned strategic acquisitions; our compliance with laws, regulations, policies and standards; our use of open source software; the cyclical nature of the semiconductor industry, and our stock price and earnings volatility; our indebtedness and our significant stock repurchase program; security breaches of our information technology systems or other misappropriation of our intellectual property or proprietary or confidential information; potential tax liabilities; global, regional or local economic conditions or political actions that impact the industries in which we operate; our ability to attract and retain qualified employees; foreign currency fluctuations; and failures in our products or services or in the products or services of our customers or licensees, including those resulting from security vulnerabilities, defects or errors. These and other risks are set forth in our Annual Report on Form 10-K for the fiscal year ended September 29, 2019 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 and MSM are trademarks of Qualcomm Incorporated, registered in the United States and other countries. Other products and brand names may be trademarks or registered trademarks of their respective owners.

MSM is a product of Qualcomm Technologies, Inc.



Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 15 of 17

QUALCOMM Incorporated
CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)

 
September 29,
2019
 
September 30,
2018
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
11,839

 
$
11,777

Marketable securities
421

 
311

Accounts receivable, net
2,471

 
2,904

Inventories
1,400

 
1,693

Other current assets
634

 
699

Total current assets
16,765

 
17,384

Deferred tax assets
1,196

 
936

Property, plant and equipment, net
3,081

 
2,975

Goodwill
6,282

 
6,498

Other intangible assets, net
2,172

 
2,955

Other assets
3,461

 
1,970

Total assets
$
32,957

 
$
32,718

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
 
 
 
Trade accounts payable
$
1,368

 
$
1,825

Payroll and other benefits related liabilities
1,048

 
1,081

Unearned revenues
565

 
500

Short-term debt
2,496

 
1,005

Other current liabilities
3,458

 
6,978

Total current liabilities
8,935

 
11,389

Unearned revenues
1,160

 
1,620

Income taxes payable
2,088

 
2,312

Long-term debt
13,437

 
15,365

Other liabilities
2,428

 
1,225

Total liabilities
28,048

 
31,911

 
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock, $0.0001 par value; 8 shares authorized; none outstanding

 

Common stock and paid-in capital, $0.0001 par value; 6,000 shares authorized; 1,145 and 1,219 shares issued and outstanding, respectively
343

 

Retained earnings
4,466

 
542

Accumulated other comprehensive income
100

 
265

Total stockholders’ equity
4,909

 
807

Total liabilities and stockholders’ equity
$
32,957

 
$
32,718




Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 16 of 17

QUALCOMM Incorporated
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)

 
Three Months Ended
 
Twelve Months Ended
 
September 29,
2019
 
September 30,
2018
 
September 29,
2019
 
September 30,
2018
Revenues:
 
 
 
 
 
 
 
Equipment and services
$
3,573

 
$
4,650

 
$
14,611

 
$
17,400

Licensing
1,241

 
1,128

 
9,662

 
5,211

Total revenues
4,814

 
5,778

 
24,273

 
22,611

Costs and expenses:
 
 
 
 
 
 
 
Cost of revenues
2,118

 
2,850

 
8,599

 
10,244

Research and development
1,441

 
1,388

 
5,398

 
5,625

Selling, general and administrative
548

 
689

 
2,195

 
2,986

Other
6

 
1,530

 
414

 
3,135

Total costs and expenses
4,113

 
6,457

 
16,606

 
21,990

Operating income
701

 
(679
)
 
7,667

 
621

Interest expense
(150
)
 
(207
)
 
(627
)
 
(768
)
Investment and other income, net
64

 
86

 
441

 
539

Income before income taxes
615

 
(800
)
 
7,481

 
392

Income tax (expense) benefit
(109
)
 
287

 
(3,095
)
 
(5,356
)
Net income (loss)
$
506

 
$
(513
)
 
$
4,386

 
$
(4,964
)
 
 
 
 
 
 
 
 
Basic earnings (loss) per share attributable to Qualcomm
$
0.42

 
$
(0.36
)
 
$
3.63

 
$
(3.39
)
Diluted earnings (loss) per share attributable to Qualcomm
$
0.42

 
$
(0.36
)
 
$
3.59

 
$
(3.39
)
Shares used in per share calculations:
 
 
 
 
 
 
 
Basic
1,197

 
1,417

 
1,210

 
1,463

Diluted
1,211

 
1,417

 
1,220

 
1,463




Qualcomm Announces Fourth Quarter and Fiscal 2019 Results
Page 17 of 17

QUALCOMM Incorporated
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

 
Three Months Ended
 
Twelve Months Ended
 
September 29,
2019
 
September 30,
2018
 
September 29,
2019
 
September 30,
2018
Operating Activities:
 
 
 
 
 
 
 
Net income (loss)
$
506

 
$
(513
)
 
$
4,386

 
$
(4,964
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
 
 
Depreciation and amortization expense
350

 
396

 
1,401

 
1,561

Income tax provision (less than) in excess of income tax payments
(230
)
 
(477
)
 
1,976

 
4,481

Non-cash portion of share-based compensation expense
339

 
224

 
1,037

 
883

Net gains on marketable securities and other investments
(16
)
 
(23
)
 
(356
)
 
(124
)
Indefinite and long-lived asset impairment charges

 
177

 
203

 
273

Impairment losses on marketable securities and other investments
24

 
35

 
135

 
75

Other items, net
(65
)
 
(3
)
 
(272
)
 
(49
)
Changes in assets and liabilities:
 
 
 
 
 
 
 
Accounts receivable, net
(78
)
 
264

 
1,373

 
734

Inventories
368

 
92

 
273

 
337

Other assets
63

 
(48
)
 
78

 
24

Trade accounts payable
(176
)
 
202

 
(443
)
 
(94
)
Payroll, benefits and other liabilities
158

 
(693
)
 
(2,376
)
 
1,005

Unearned revenues
(16
)
 
(56
)
 
(129
)
 
(234
)
Net cash provided (used) by operating activities
1,227

 
(423
)
 
7,286

 
3,908

Investing Activities:
 
 
 
 
 
 
 
Capital expenditures
(317
)
 
(159
)
 
(887
)
 
(784
)
Purchases of debt and equity marketable securities

 
(101
)
 

 
(5,936
)
Proceeds from sales and maturities of debt and equity marketable securities
15

 
83

 
139

 
9,188

Purchases of other marketable securities

 

 

 
(49
)
Proceeds from sales and maturities of other marketable securities

 
50

 

 
50

Acquisitions and other investments, net of cash acquired
(67
)
 
(134
)
 
(252
)
 
(326
)
Proceeds from other investments
23

 
15

 
68

 
222

Other items, net
9

 
12

 
126

 
16

Net cash (used) provided by investing activities
(337
)
 
(234
)
 
(806
)
 
2,381

Financing Activities:
 
 
 
 
 
 
 
Proceeds from short-term debt
1,181

 
1,746

 
5,989

 
11,131

Repayment of short-term debt
(1,679
)
 
(3,929
)
 
(6,492
)
 
(11,127
)
Repayment of long-term debt

 
(3,942
)
 

 
(5,513
)
Proceeds from issuance of common stock
150

 
216

 
414

 
603

Repurchases and retirements of common stock
(705
)
 
(21,155
)
 
(1,793
)
 
(22,580
)
Dividends paid
(711
)
 
(866
)
 
(2,968
)
 
(3,466
)
Payments of tax withholdings related to vesting of share-based awards
(41
)
 
(7
)
 
(266
)
 
(280
)
Payment of purchase consideration related to RF360 Holdings
(1,119
)
 

 
(1,163
)
 
(157
)
Other items, net
(16
)
 
(57
)
 
(107
)
 
(111
)
Net cash used by financing activities
(2,940
)
 
(27,994
)
 
(6,386
)
 
(31,500
)
Effect of exchange rate changes on cash and cash equivalents
(34
)
 
(22
)
 
(32
)
 
(41
)
Net (decrease) increase in total cash and cash equivalents
(2,084
)
 
(28,673
)
 
62

 
(25,252
)
Total cash and cash equivalents at beginning of period
13,923

 
40,450

 
11,777

 
37,029

Total cash and cash equivalents at end of period
$
11,839

 
$
11,777

 
$
11,839

 
$
11,777



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Cover Page Cover Page
Nov. 06, 2019
Cover page.  
Entity Registrant Name QUALCOMM INC/DE
Entity Central Index Key 0000804328
Amendment Flag false
Document Type 8-K
Document Period End Date Nov. 06, 2019
Entity Incorporation, State or Country Code DE
Entity File Number 000-19528
Entity Tax Identification Number 95-3685934
Entity Address, Address Line One 5775 Morehouse Drive,
Entity Address, City or Town San Diego,
Entity Address, State or Province CA
Entity Address, Postal Zip Code 92121
City Area Code 858
Local Phone Number 587-1121
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.0001 par value
Trading Symbol  QCOM
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
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