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
April 19, 2006
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)
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| 000-19528
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95-3685934 |
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| (Commission File Number)
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(IRS Employer Identification No.) |
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| 5775 Morehouse Drive, San Diego,
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CA
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92121 |
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(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:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
TABLE OF CONTENTS
Item 2.02. Results of Operations and Financial Condition
On April 19, 2006, QUALCOMM Incorporated (the “Company”) issued a press release regarding
the Company’s financial results for its second quarter ended March 26, 2006. The full text of the
Company’s press release is attached hereto as Exhibit 99.1.
The attached press release presents pro forma financial information that is used by
management (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 QUALCOMM CDMA Technologies, QUALCOMM Technology
Licensing and QUALCOMM Wireless & Internet segments, and (iii) to compare the performance and
efficiency of these segments against each other and against competitors outside the Company. Pro
forma measurements of the following financial data are used by the Company’s management:
revenues, R&D expenses, SG&A expenses, total operating expenses, operating income, net investment
income, income before income taxes, effective tax rate, net income, diluted earnings per share,
operating cash flow and free cash flow.
The attached press release presents pro forma information used by management excluding the
QUALCOMM Strategic Initiatives (QSI) segment, estimated share-based compensation, certain tax
benefits related to prior years and acquired in-process R&D expense. The QSI segment 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 are viewed by management as unrelated to the
Company’s operational performance. Estimated share-based compensation is excluded because
management views the valuation of options and other share-based compensation as theoretical and
unrelated to the Company’s operational performance as it is affected by factors that are subject
to change on each grant date including the Company’s stock price, stock market volatility,
expected option life, risk-free interest rates and expected dividend payouts in future years.
Moreover, it is not an expense that requires or will require cash payment by the Company. Certain
tax benefits related to prior years are excluded in order to provide a clearer understanding of
the Company’s ongoing tax rate and after tax earnings. Acquired in-process R&D expense in fiscal
2006 is excluded because such expense is incurred infrequently and is viewed by management as
unrelated to the operating activities of the Company’s ongoing core businesses.
Management is able to assess what it believes is a more fundamentally pure and comparable
set of financial performance measures for the Company and its business segments by eliminating
the episodic impact of strategic investments in QSI and items such as acquired in-process R&D, as
well as the inherent, non-operational volatility of share-based compensation. As a result,
management compensation decisions and the review of executive compensation by the Compensation
Committee of the Board of Directors focus primarily on pro forma financial measures applicable to
the Company and its business segments.
The attached press release presents pro forma cash flow information including marketable
securities. The Company’s management uses pro forma cash flow information including marketable
securities to analyze increases and decreases in certain of its liquid assets, comprised of cash,
cash equivalents and marketable securities. Management views certain marketable securities as
liquid assets available on short notice to fund operations, acquisitions, strategic initiatives,
stock repurchases and dividends even though these marketable securities do not meet the definition
of cash equivalents in accordance with Statement of Financial Accounting Standards No. 95,
“Statement of Cash Flows.” The GAAP statements of cash flows report the purchases and sales of
marketable securities as inflows and outflows. For internal analysis of the Company’s cash
position, management does not view these transactions as inflows and outflows from the business,
but as cash management transactions. The Company believes that this non-GAAP presentation is a
helpful and practical measure of the Company’s liquidity.
The attached press release presents free cash flow, defined as net cash provided by operating
activities less capital expenditures. The Company’s management uses free cash flow to facilitate
an understanding of
the amount of cash flow generated that is available to grow its business and to create
long-
term shareholder value. The Company believes that this presentation is useful in evaluating
its operating performance and financial strength. In addition, management uses this measure to
value the Company and to compare its operating performance with other companies in the industry.
The non-GAAP pro forma financial information presented in the attached press release should be
considered in addition to, not as a substitute for, or superior to, financial measures calculated
in accordance with Generally Accepted Accounting Principles (GAAP). In addition, pro forma is not
a term defined by GAAP, and, as a result, the Company’s measure of pro forma results might be
different than similarly titled measures used by other companies. Reconciliations between total
QUALCOMM (GAAP) results and QUALCOMM pro forma results and total QUALCOMM (GAAP) cash flow and
QUALCOMM pro forma changes in cash, cash equivalents and marketable securities are presented in the
attached press release.
Item 9.01. Exhibits.
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Exhibit |
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No. |
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Description |
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99.1 |
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April 19, 2006 Press Release by QUALCOMM Incorporated |