FOR IMMEDIATE RELEASE
Qualcomm Contact:
Warren Kneeshaw
Vice President, Investor Relations
Phone: 1-858-658-4813
e-mail: ir@qualcomm.com

Qualcomm Announces Third Quarter Fiscal 2015 Results
Revenues $5.8 billion
GAAP EPS $0.73, Non-GAAP EPS $0.99
- Record $6.2 billion of Capital Returned to Stockholders - Announces Strategic Realignment Plan SAN DIEGO - July 22, 2015 - 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 2015 ended June 28, 2015.
“Our fiscal third quarter revenues, MSM chip shipments and EPS were within prior expectations, and we
took a significant step towards our increased capital return commitments through the initiation of a $5
billion accelerated share repurchase as part of our plan to repurchase an additional $10 billion in stock by
March 2016,” said Steve Mollenkopf, CEO of Qualcomm Incorporated. “During the quarter, we also
launched a comprehensive review of our cost structure and announced today a Strategic Realignment Plan
designed to improve execution, enhance financial performance and drive profitable growth. Importantly,
the changes we are announcing today are designed to enable us to right-size our cost structure and
reposition Qualcomm for improved financial and operating performance. We will continue to invest to
build upon our technology leadership position and capitalize on the significant long-term opportunities
before us in order to create sustainable long-term value for stockholders.”
Additional details on the Strategic Realignment Plan were released today by Qualcomm in a separate news
release.

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 2 of 17

Third Quarter Results (GAAP)*

Revenues 1
Operating income
Net income

1

2

Diluted earnings per share

2

Operating cash flow

Q3 Fiscal
2015

Q3 Fiscal
2014

Year-OverYear Change

Q2 Fiscal
2015

Sequential
Change

$5.8B

$6.8B

(14%)

$6.9B

(15%)

$1.2B

$2.1B

(40%)

$1.3B

(8%)

$1.2B

$2.2B

(47%)

$1.1B

+12%

$0.73

$1.31

(44%)

$0.63

+16%

$2.1B

$2.7B

(21%)

($0.7B)

N/M

1

Throughout this news release, 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 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.

Non-GAAP Third Quarter Results*
Q3 Fiscal
2015

Q3 Fiscal
2014

Year-OverYear Change

Q2 Fiscal
2015

Sequential
Change

Revenues

$5.8B

$6.8B

(14%)

$6.9B

(15%)

Operating income

$1.7B

$2.4B

(30%)

$2.7B

(37%)

Net income

$1.6B

$2.5B

(35%)

$2.3B

(31%)

Diluted earnings per share

$0.99

$1.44

(31%)

$1.40

(29%)

Non-GAAP results exclude the QSI (Qualcomm Strategic Initiatives) segment and certain share-based
compensation, acquisition-related items, tax items and other items. Beginning in the first quarter of fiscal
2015, we changed our methodology for reporting Non-GAAP results to exclude third-party acquisition
and integration services costs and certain other items, which may include major restructuring and
restructuring-related costs, goodwill and long-lived asset impairment charges and litigation settlements
and/or damages. Detailed reconciliations between 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:
•

The third quarter of fiscal 2015 GAAP results included:
$142 million of charges, or $0.08 per share, that resulted from an impairment of goodwill
and long-lived assets related to one of our display businesses.

•

The second quarter of fiscal 2015 GAAP results included:
$975 million charge, or $0.58 per share, related to the resolution reached with the China
National Development and Reform Commission (NDRC) regarding its investigation of us
under China’s Anti-Monopoly Law; and

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 3 of 17

Operating cash flow also was impacted by the prepayment of $950 million to secure longterm capacity commitments at a supplier of our integrated circuit products.
•

The third quarter of fiscal 2014 Non-GAAP and GAAP results included:
$208 million of income, or $0.12 per share, of which $184 million was recorded in other
income, due to the reversal of accruals related to our litigation with ParkerVision; and
$164 million of charges, or $0.08 per share, that resulted from an impairment of goodwill
and long-lived assets related to one of our display businesses.

Third Quarter Key Business Metrics
Q3 Fiscal
2015

Q3 Fiscal
2014

Year-Over-Year
Change (1)

Q2 Fiscal
2015

Sequential
Change (1)

MSMTM chip shipments

225M

225M

—%

233M

(3%)

Total reported device sales (2)
Est. reported 3G/4G device
shipments (approx.) (2)
Est. reported 3G/4G average
selling price (approx.) (2)

$60.4B

$58.1B

+4%

$75.8B

(20%)

289M - 293M

250M - 254M

+15%

384M - 388M

(25%)

$205 - $211

$228 - $234

(10%)

$193 - $199

+6%

(1)
(2)

The midpoints of the estimated ranges are used for comparison purposes only and do not indicate a higher degree of confidence in the midpoints.
The third quarter of fiscal 2014 and 2015 are based on sales by our licensees in the March quarter as reported to us in the June quarter, and the second
quarter of fiscal 2015 is based on sales by our licensees in the December quarter as reported to us in the March quarter.

Cash and Marketable Securities
Our cash, cash equivalents and marketable securities totaled $35.2 billion at the end of the third quarter of
fiscal 2015, compared to $32.7 billion a year ago and $29.6 billion at the end of the second quarter of
fiscal 2015. In May 2015, we issued an aggregate principal amount of $10.0 billion of unsecured floatingand fixed-rate notes.
Return of Capital to Stockholders
During the third quarter of fiscal 2015, we returned $6.2 billion to stockholders, including $5.4 billion
through repurchases of 63.7 million shares of common stock (which includes the 57.7 million shares
initially delivered under the $5 billion accelerated share repurchase agreements (ASR Agreements)) and
$757 million, or $0.48 per share, of cash dividends paid. The final number and the average purchase price
of the shares to be delivered under the ASR Agreements will be determined upon settlement of the
transactions, which is expected to occur in or before November 2015. Since June 28, 2015, we
repurchased and retired 8.0 million shares of common stock for $510 million. On July 7, 2015, we
announced a cash dividend of $0.48 per share payable on September 23, 2015 to stockholders of record as
of the close of business on September 2, 2015.

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 4 of 17

Effective Income Tax Rates
Our fiscal 2015 annual effective income tax rates are estimated to be approximately 19 percent for GAAP
and approximately 18 percent for Non-GAAP, both of which include the United States federal research
and development (R&D) tax credit generated through December 31, 2014, the date on which the credit
expired. The effective income tax rates for the third quarter of fiscal 2015 were 15 percent for both GAAP
and Non-GAAP. Our estimated annual tax rates for fiscal 2015 GAAP and Non-GAAP decreased from
our prior estimates of 21 percent and 19 percent, respectively, primarily resulting from an increase in the
allocation of expenses to our United States operations.
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 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 financial outlook to the extent they are
reasonably certain; however, actual results may differ materially from the outlook. Our outlook includes
an estimate of the benefit related to stock repurchases that we plan to complete.
We have not included any estimates related to the proposed acquisition of CSR plc in our fiscal 2015
outlook. The acquisition is expected to close by the end of the summer of 2015. We expect the
acquisition to be accretive to Non-GAAP earnings per share in fiscal 2016, the first full year of combined
operations.
Strategic Realignment Plan
Today, we announced a Strategic Realignment Plan designed to improve execution, enhance financial
performance and drive profitable growth as we work to create sustainable long-term value for
stockholders. As part of this, among other actions, we are implementing a cost reduction plan to reduce
our annual costs from fiscal 2015 levels of $7.3 billion (adjusted for variable compensation) by

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 5 of 17

approximately $1.1 billion through a series of targeted reductions that will not jeopardize our growth
objectives or core technology roadmap. We also plan to reduce annual share-based compensation grants
by approximately $300 million. We expect these cost initiatives to be fully implemented by the end of
fiscal 2016. In connection with this plan, we expect to incur approximately $350 million to $450 million
in restructuring and restructuring-related charges, of which approximately $100 million to $200 million is
included in our fourth quarter fiscal 2015 GAAP EPS guidance. Refer to the full text of that release on our
investor relations website at: http://investor.qualcomm.com/results.cfm
QCT Outlook
We have reduced our outlook for our semiconductor business, QCT, in the fiscal fourth quarter compared
to our prior expectations driven primarily by factors impacting premium-tier demand, including:
•

Increased concentration within the premium tier causing reduced demand for certain OEM devices
that include our chipset;

•

Lower demand for our premium-tier chipsets from a vertical customer; and

•

Lower sell through in China of certain handset models using our premium-tier chipsets.

QTL Outlook
In the second quarter of fiscal 2015, we reached a resolution with the NDRC regarding its investigation
and agreed to implement a rectification plan that modifies certain of our business practices in China.
However, we continue to believe that certain licensees in China are not fully complying with their
contractual obligations to report their sales of licensed products to us (which includes 3G/4G units that we
believe are not being reported by certain licensees). We continue to make progress, with licensees
executing agreements based on the new China terms, and with several other licensees informing us that
they intend to retain the terms of their existing agreements. Negotiations with certain other licensees are
ongoing, and we expect it will take some time to conclude these negotiations. We believe that the
conclusion of new agreements with these licensees will result in improved reporting by these licensees,
including with respect to sales of three-mode devices (i.e., devices that implement GSM, TD-SCDMA,
and LTE) sold in China. Our current outlook for our licensing business, QTL, also reflects the following:
•

We expect global 3G/4G device shipments to be approximately 1.52 billion to 1.6 billion for
calendar year 2015. At this time, we are not providing a forecast for calendar year 2015 reported
3G/4G device shipments.

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

•

Page 6 of 17

Our guidance for estimated fiscal fourth quarter and fiscal 2015 3G/4G total reported device sales
includes an estimate of some prior period activity (i.e., devices shipped in prior periods) that may
be reported to us.

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

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 7 of 17

Qualcomm’s Business Outlook Summary
FOURTH FISCAL QUARTER
Q4 FY14
Results
Revenues

$6.7B

Year-over-year change

Current Guidance
Q4 FY15 Estimates (1)
$4.7B - $5.7B
decrease 15% - 30%

Non-GAAP diluted earnings per share (EPS)

$1.26

Year-over-year change

$0.75 - $0.95
decrease 25% - 40%

Diluted EPS attributable to QSI
Diluted EPS attributable to share-based compensation
Diluted EPS attributable to other items
GAAP diluted EPS

$0.02
($0.12)
($0.05)
$1.11

Year-over-year change

($0.01)
($0.13)
($0.05) - ($0.10)
$0.51 - $0.76
decrease 32% - 54%

Metrics
MSM chip shipments

236M

Year-over-year change

170M - 190M
decrease 19% - 28%

Total reported device sales* (2)

approx. $57.4B

Year-over-year change
*Est. sales in June quarter, reported in September quarter

approx. $60.5B - $66.5B (3)
increase 5% - 16%

FISCAL YEAR

Revenues

FY 2014
Results
$26.5B

Year-over-year change

Non-GAAP diluted EPS

$5.27

Year-over-year change

Diluted EPS attributable to QSI
Diluted EPS attributable to share-based compensation
Diluted EPS attributable to other items
GAAP diluted EPS

$0.01
($0.50)
($0.13)
$4.65

Year-over-year change

Metrics
Total reported device sales* (2)
Year-over-year change
*Est. sales in Sept. to June quarters, reported in Dec. to Sept. quarters

(1)
(2)

(3)

Prior Guidance
FY 2015 Estimates
$25.0B - $27.0B

Current Guidance
FY 2015 Estimates (1)
$24.5B - $25.5B

decrease 6% - increase 2%

decrease 4% - 8%

$4.60 - $5.00

$4.50 - $4.70

decrease 5% - 13%

decrease 11% - 15%

($0.04)
($0.54)
($0.74)
$3.28 - $3.68
decrease 21% - 29%

approx. $243.6B

approx. $255.0B - $275.0B (3)
increase 5% - 13%

($0.04)
($0.52)
($0.84) - ($0.89)
$3.05 - $3.30
decrease 29% - 34%

approx. $253.0B - $259.0B (3)
increase 4% - 6%

Our guidance range for GAAP for the fourth quarter of fiscal 2015 includes an estimate of restructuring and restructuring-related charges of $100 million to
$200 million; these charges are excluded from our Non-GAAP guidance.
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
sales net of permitted deductions, including transportation, insurance, packing costs and other items, while other licensees report sales 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. In addition, certain
licensees may not report (in the quarter in which they are contractually obligated to report) their sales of certain types of subscriber units, which (as a result
of audits, legal actions or for other reasons) may be reported in a subsequent quarter. Accordingly, 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.
Our guidance range for the fourth quarter of fiscal 2015 and fiscal 2015 total reported device sales reflects estimated 3G/4G total reported device sales that
we currently expect to be reported to us, which includes an estimate of some prior period activity (i.e., devices shipped in prior periods) that may be
reported to us.

Sums may not equal totals due to rounding.

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 8 of 17

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

$3,853

$1,931

Non-GAAP
Reconciling
Items (a)

Non-GAAP

Share-Based Other Items
Compensation (b) (c) (d)

QSI

GAAP

Q3 - FISCAL 2015
Revenues
Change from prior year
Change from prior quarter

(22%)
(13%)

7%
(20%)

$48
4%
4%

Cost of equipment and services revenues
Research and development
Selling, general and administrative
Other expenses
Operating income (loss)

Change from prior year
Change from prior quarter

EBT as % of revenues
Net income (loss)

$—

$1,654

($43)

$—

$191
$1,900

N/M
N/M
(e)

($28)
($49)

7%
(23%)

N/M
N/M

(33%)
(35%)

8%

86%

N/M

33%
$1,611

($26)

(35%)
(31%)

N/M
4%

Diluted EPS

$0.99

Change from prior year
Change from prior quarter

(31%)
(29%)

Diluted shares used

$10
176
85
—
($271)

2
19
—
($21)

(74%)
(61%)

Change from prior year
Change from prior quarter

$—

$5,832
(14%)
(15%)

(30%)
(37%)

$289

$—

(14%)
(15%)

$2,386
1,226
491
20
$1,709

Change from prior year
Change from prior quarter

Investment income, net
EBT

$5,832

N/M
(53%)

($0.02)
N/M
—%

1%
(9%)
(f)

$—
($271)
1%
(9%)

($213)
8%
(3%)

($0.13)
7%
(8%)

$55
3
(18)
142
($182)
N/M
84%

$—
($182)

$2,451
1,407
577
162
$1,235
(40%)
(8%)

$163
$1,398

N/M
84%

(44%)
(9%)

($188)

24%
$1,184

N/M
82%

(47%)
12%

($0.12)
N/M
81%

$0.73
(44%)
16%

1,629

1,629

1,629

1,629

1,629

$6,894
2,707
2,938
2,339
$1.40
1,667

$—
(4)
(32)
(27)
($0.02)
1,667

$—
(249)
(249)
(206)
($0.12)
1,667

$—
(1,118)
(1,118)
(1,053)
($0.63)
1,667

$6,894
1,336
1,539
1,053
$0.63
1,667

$6,806
2,425
2,843
2,470
$1.44
1,714

$—
(5)
(1)
—
$0.00
1,714

$—
(274)
(274)
(232)
($0.14)
1,714

$—
(71)
(71)
—
$0.00
1,714

$6,806
2,075
2,497
2,238
$1.31
1,714

Q2 - FISCAL 2015
Revenues
Operating income (loss)
EBT
Net income (loss)
Diluted EPS
Diluted shares used

$4,434

$2,414

$46

$750

$2,162

$26

$4,957

$1,803

$46

$1,116

$1,550

$177

Q3 - FISCAL 2014
Revenues
Operating income (loss)
EBT
Net income (loss)
Diluted EPS
Diluted shares used

Q4 - FISCAL 2014
Revenues
$4,849
$1,795
$48
$6,692
$—
$—
$—
$6,692
Operating income (loss)
2,323
(3)
(252)
(76)
1,992
EBT
$1,045
$1,536
($30)
2,551
29
(252)
(76)
2,252
Net income (loss)
2,143
28
(199)
(78)
1,894
Diluted EPS
$1.26
$0.02
($0.12)
($0.05)
$1.11
Diluted shares used
1,701
1,701
1,701
1,701
1,701
(a) 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 consisted primarily of certain research and development expenses, selling, general and administrative
expenses, other expenses or income and certain investment income that are not allocated to the segments for management reporting purposes;
nonreportable segment results; and the elimination of intersegment profit.
(b) Beginning in the first quarter of fiscal 2015, we changed our methodology for reporting Non-GAAP results to exclude third-party acquisition and
integration services costs and certain other items, which may include major restructuring and restructuring-related costs, goodwill and long-lived asset
impairment charges and litigation settlements and/or damages. In the third quarter of fiscal 2015, other items excluded from Non-GAAP EBT included
impairment charges of $131 million and $11 million related to goodwill and intangible assets, respectively, $78 million of acquisition-related items and $6
million of severance costs related to restructurings, partially offset by a $44 million gain on the sale of certain assets.
(c) In the third quarter of fiscal 2015, the tax expense in the “Other Items” column included a $4 million tax expense to reconcile the tax provision for each
column to the total GAAP tax provision for the quarter, a $1 million tax expense for the tax effect of other items in EBT and a $1 million tax expense for
the tax effect of acquisition-related items. 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. In interim quarters of prior fiscal years, this
difference was allocated to the tax provisions (benefits) among the columns. See the “Reconciliation of Non-GAAP Tax Rates to GAAP Tax Rates”
herein.
(d) Details of amounts included in the “Other Items” column for prior periods are included in the releases for those periods.
(e) Included $127 million in interest and dividend income, $109 million in net realized gains on investments and $1 million in other net investment income,
partially offset by $32 million in interest expense and $14 million in other-than-temporary losses on investments.
(f) Included $41 million in other-than-temporary losses on investments, partially offset by $13 million in other net investment income.

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

SEGMENTS

9 MONTHS - FISCAL 2015
Revenues

Change from prior year

QCT
$13,529
(2%)

QTL
$6,162
7%

Page 9 of 17

Non-GAAP
Reconciling
Items (a)
$134
(35%)

Non-GAAP
$19,825

$—
$—

Research and development
Selling, general and administrative
Other expenses
Operating income (loss)

3,582
1,366
20
$6,948

5
27
—
($32)

5%

$5,395

$18

Change from prior year

$2,185
(21%)

7%

N/M

EBT as % of revenues
Net income (loss)

16%

88%

N/M

Change from prior year
Change from prior year

Revenues
Operating income (loss)
EBT
Discontinued operations, net of tax
Net income (loss)
Diluted EPS
Diluted shares used

—%

38%
$6,213
$3.74
(7%)

Diluted shares used

9 MONTHS - FISCAL 2014

$650
$7,598

(10%)

Diluted EPS

$13,816

$5,774

$205

$2,762

$5,054

($217)

$—

GAAP
$19,825
—%

$7,909

Change from prior year

$—

—%

Cost of equipment and services revenues

Investment income, net
EBT

Share-Based Other Items
Compensation (d) (g) (h)

QSI

(100%)
(i)

$33

$184

$8,126

508
252
—
($793)

38
44
1,221
($1,487)

4,133
1,689
1,241
$4,636

2%

N/M

$—
($793)

$—
($1,487)

N/M

2%

N/M

(20%)

($53)

($648)

($1,303)

26%
$4,209

($50)
($82)

(j)

N/M

1%

N/M

($0.03)

($0.39)

($0.78)

N/M

(3%)

N/M

(17%)

$600
$5,236

(31%)

$2.53
(28%)

1,661

1,661

1,661

1,661

1,661

$19,795
6,611
7,599
430
6,888
$4.01
1,718

$—
(16)
(36)
—
(13)
($0.01)
1,718

$—
(806)
(806)
—
(655)
($0.38)
1,718

$—
(231)
(231)
—
(147)
($0.08)
1,718

$19,795
5,558
6,526
430
6,073
$3.53
1,718

12 MONTHS - FISCAL 2014
Revenues
$18,665
$7,569
$253 $26,487
$—
$—
$—
$26,487
Operating income (loss)
8,933
(18)
(1,059)
(306)
7,550
EBT
$3,807
$6,590
($247)
10,150
(7)
(1,059)
(306)
8,778
Discontinued operations, net of tax
430
—
—
430
—
Net income (loss)
9,032
15
(856)
(224)
7,967
Diluted EPS
$5.27
$0.01
($0.50)
($0.13)
$4.65
Diluted shares used
1,714
1,714
1,714
1,714
1,714
(g) In the nine months ended June 28, 2015, other items excluded from Non-GAAP EBT included $975 million related to the resolution reached with the
NDRC, $240 million of acquisition-related items, $235 million related to goodwill impairment charges, $43 million of severance costs related to
restructurings and $38 million in impairment charges related to intangible assets, partially offset by a $44 million gain on the sale of certain assets.
(h) In the nine months ended June 28, 2015, the tax benefit in the “Other Items” column included a $101 million tax benefit related to fiscal 2014 as a result of
the retroactive reinstatement of the federal R&D tax credit, a $61 million tax benefit as a result of an agreement reached with the Internal Revenue Service
related to Atheros’ pre-acquisition tax returns, a $25 million tax benefit for the tax effect of other items in EBT and a $3 million tax benefit related to fiscal
2014 as a result of the retroactive reinstatement of other tax laws, partially offset by a $6 million tax expense to reconcile the tax provisions for each column
to the total GAAP tax provision for the nine months ended June 28, 2015. See the “Reconciliation of Non-GAAP Tax Rates to GAAP Tax Rates” herein.
(i) Included $397 million in interest and dividend income, $371 million in net realized gains on investments and $6 million in other net investment income,
partially offset by $90 million in other-than-temporary losses on investments and $34 million in interest expense.
(j) Included $71 million in other-than-temporary losses on investments and $18 million in equity in losses of investees, partially offset by $28 million in net
realized gains on investments and $11 million in other net investment income.
N/M - Not Meaningful
Sums may not equal totals due to rounding.

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 10 of 17

Reconciliation of Non-GAAP Tax Rates to GAAP Tax Rates
(Unaudited)
Three Months Ended June 28, 2015
Non-GAAP
Results

($ in millions)
Income (loss) from continuing operations before income taxes

$

Income tax (expense) benefit

1,900

QSI
$

(49)

(289)

Income (loss) from continuing operations

$

Tax rate

1,611

Share-Based
Compensation
$

22
$

(27)

15%

(271)

Other
Items
$

58
$

45%

(213)

(182)

GAAP
Results
$

1,398

$

1,183

(6)
$

21%

(188)

(215)

(3%)

15%

Nine Months Ended June 28, 2015
($ in millions)
Income (loss) from continuing operations before income taxes

Non-GAAP
Results
$

Income tax (expense) benefit
Income (loss) from continuing operations

7,598

QSI
$

(1,385)
$

Tax rate

6,213

(82)

Share-Based
Compensation
$

27
$

18%

(55)
33%

(793)

Other
Items
$

145
$

(648)
18%

(1,487)

GAAP
Results
$

184
$

(1,303)

5,236
(1,029)

$

4,207

12%

20%

Conference Call
Qualcomm’s fiscal third quarter 2015 earnings conference call will be broadcast live on July 22, 2015,
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 78002754.
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, “NonGAAP” 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.

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 11 of 17

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) and QTL (Qualcomm Technology Licensing) segments; and (iii) to compare the
performance and efficiency of these segments against each other and against competitors. Non-GAAP
measurements used by the Company include revenues, cost of equipment and services revenues, R&D
expenses, SG&A expenses, other expenses, operating income, net investment income, income or earnings
before income taxes, effective tax rate, net income and diluted earnings per share. 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
transparency to investors with respect to its use of such information in financial and operational decisionmaking.
Non-GAAP information used by management excludes QSI and certain share-based compensation,
acquisition-related items, tax items and other items.
•

QSI is excluded because the Company expects to exit its strategic investments in the foreseeable
future, 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. Non-cash share-based
compensation is excluded because management views such expenses as unrelated to the operating
activities of the Company’s ongoing core businesses.

•

Certain other items are excluded because management views such expenses as unrelated to the
operating activities of the Company’s ongoing core businesses, as follows:
•

Acquisition-related items include amortization 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, the Company excludes
expenses related to the termination of contracts that limit the use of the acquired intellectual
property. Starting in the first quarter of fiscal 2015, the Company excludes third-party

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 12 of 17

acquisition and integration services costs. Prior year amounts have not been reclassified to
conform to the current presentation.
•

Starting in the first quarter of fiscal 2015, the Company excludes certain other items that
management views as unrelated to the Company’s ongoing business, such as major
restructuring and restructuring-related costs, goodwill and long-lived asset impairments and
litigation settlements and/or damages. Prior year amounts have not been reclassified to
conform to the current presentation.

•

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 the Company’s ongoing Non-GAAP tax rate and
after tax earnings. Also, the provision (benefit) to reconcile the tax provisions (benefits) for
each column to the total GAAP tax provision for the quarter is excluded. 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. In interim quarters of prior
fiscal years, this difference was allocated to the tax provisions (benefits) among the columns.

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 30 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 our capital return commitments, including our plan to repurchase an additional $10 billion in
stock by March 2016, our ASR program, including the final number and average purchase price of
shares to be delivered thereunder and the timing thereof, and the benefit to our outlook related to stock
repurchases we intend to complete; our reduced outlook for our semiconductor business and the factors

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 13 of 17

driving the reduced outlook; our Strategic Realignment Plan and the actions and goals related thereto,
including our cost reduction plan and our expectations regarding reducing annual costs and share-based
compensation, as well as the restructuring and restructuring-related charges we expect to incur and the
timing thereof; our intent to continue to invest to build upon our technology leadership position and
capitalize on the long-term opportunities before us; our proposed acquisition of CSR plc, including the
expected timing and financial impact of, and our ability to complete, the acquisition; certain licensees in
China not fully complying with their contractual obligations to report their sales of licensed products to
us; progress with licensees executing agreements based on the new China terms and with several other
licensees informing us that they intend to retain the terms of their existing agreements, our expectations
that it will take some time to conclude negotiations with certain other licensees, and our belief that the
conclusion of new agreements with these licensees will result in improved reporting by these licensees,
including with respect to sales of three-mode devices; our business outlook; and our estimates and
guidance related to revenues, GAAP and Non-GAAP diluted earnings per share, MSM chip shipments,
total reported device sales, global 3G/4G and reported 3G/4G device shipments, 3G/4G average selling
prices and effective income tax rates. 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 risks associated with
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 ability to drive 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; the continued and future success of our licensing programs; attacks on our
licensing business model, including current and future legal proceedings or actions of governmental or
quasi-governmental bodies or standards or industry organizations; the enforcement and protection of our
intellectual property rights; government regulations and policies, or adverse rulings in enforcement or
other proceedings; the commercial success of our new technologies, products and services; the execution
of our Strategic Realignment Plan; claims by third parties that we infringe their intellectual property;
acquisitions (including the possibility that the CSR acquisition may not be completed timely, if at all),
strategic transactions and investments; our dependence on a limited number of third-party suppliers; our
stock price and earnings volatility; our indebtedness; our ability to attract and retain qualified
employees; global economic conditions that impact the mobile communications industry; foreign
currency fluctuations and failures in our products or services or in the products or services of our

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 14 of 17

customers or licensees, including those resulting from security vulnerabilities, defects or errors. These
and other risks are set forth in the Company’s Quarterly Report on Form 10-Q for the third quarter ended
June 28, 2015 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, 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 2015 Results

Page 15 of 17

Qualcomm Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
June 28,
2015

September 28,
2014

ASSETS
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable, net
Inventories
Deferred tax assets
Other current assets
Total current assets
Marketable securities
Deferred tax assets
Property, plant and equipment, net
Goodwill
Other intangible assets, net
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable
Payroll and other benefits related liabilities
Unearned revenues
Short-term debt
Other current liabilities
Total current liabilities
Unearned revenues
Long-term debt
Other liabilities
Total liabilities
Stockholders’ equity:
Qualcomm 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; 1,578 and 1,669
shares issued and outstanding, respectively
Retained earnings
Accumulated other comprehensive income
Total Qualcomm stockholders’ equity
Noncontrolling interests
Total stockholders’ equity
Total liabilities and stockholders’ equity

$

$

$

9,987
11,344
1,961
1,583
472
581
25,928
13,894
1,275
2,574
4,259
2,405
1,960
52,295

$

1,412
697
680
1,000
2,294
6,083
2,576
9,913
527
19,099

$

$

—

$

—
32,699
503
33,202
(6)
33,196
52,295 $

7,907
9,658
2,412
1,458
577
401
22,413
14,457
1,174
2,487
4,488
2,580
975
48,574

2,183
802
785
—
2,243
6,013
2,967
—
428
9,408

—
7,736
30,799
634
39,169
(3)
39,166
48,574

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 16 of 17

Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended
June 28,
June 29,
2015
2014

Nine Months Ended
June 28,
June 29,
2015
2014

Revenues:
Equipment and services

$

Licensing

3,840

$

4,922

$

13,459

$

13,803

1,992

1,884

6,366

5,992

5,832

6,806

19,825

19,795

Cost of equipment and services revenues

2,451

2,740

8,126

7,929

Research and development

Total revenues
Costs and expenses:

1,407

1,429

4,133

4,113

Selling, general and administrative

577

582

1,689

1,745

Other

162

(20)

1,241

450

Total costs and expenses

4,597

4,731

15,189

14,237

Operating income

1,235

2,075

4,636

5,558

Investment income, net

163

422

600

968

1,398

2,497

5,236

6,526

Income from continuing operations before income taxes
Income tax expense

(215)

Income from continuing operations
Discontinued operations, net of income taxes
Net income
Net loss attributable to noncontrolling interests
Net income attributable to Qualcomm

(260)

(1,029)

(886)

1,183

2,237

4,207

5,640

—

—

—

430

1,183

2,237

4,207

6,070

1

1

2

3

$

1,184

$

2,238

$

4,209

$

6,073

$

0.74

$

1.33

$

2.57

$

3.35

$

0.74

$

1.33

$

2.57

$

3.60

$

0.73

$

1.31

$

2.53

$

3.28

$

0.73

$

1.31

$

2.53

Basic earnings per share attributable to Qualcomm:
Continuing operations
Discontinued operations
Net income

—

—

—

0.25

Diluted earnings per share attributable to Qualcomm:
Continuing operations
Discontinued operations
Net income

—

—

—

0.25
$

3.53

Shares used in per share calculations:
Basic

1,608

1,683

1,638

1,686

Diluted

1,629

1,714

1,661

1,718

Dividends per share announced

$

0.48

$

0.42

$

1.32

$

1.12

 Qualcomm Announces Third Quarter of Fiscal 2015 Results

Page 17 of 17

Qualcomm Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
June 28,
June 29,
2015
2014
Operating Activities:
Net income
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense
Gain on sale of discontinued operations
Long-lived asset and goodwill impairment charges
Income tax provision in excess of (less than) income tax payments
Non-cash portion of share-based compensation expense
Incremental tax benefits from share-based compensation
Net realized gains on marketable securities and other investments
Impairment losses on marketable securities and other investments
Other items, net
Changes in assets and liabilities:
Accounts receivable, net
Inventories
Other assets
Trade accounts payable
Payroll, benefits and other liabilities
Unearned revenues
Net cash provided by operating activities
Investing Activities:
Capital expenditures
Purchases of available-for-sale securities
Proceeds from sales and maturities of available-for-sale securities
Purchases of trading securities
Proceeds from sales and maturities of trading securities
Purchases of other marketable securities
Proceeds from sale of discontinued operations, net of cash sold
Proceeds from sales of property, plant and equipment
Acquisitions and other investments, net of cash acquired
Other items, net
Net cash (used) provided by investing activities
Financing Activities:
Proceeds from short-term debt

$

1,183

$

Nine Months Ended
June 28,
June 29,
2015
2014

2,237

$

6,070

292
—
164
(24)
274
(70)
(298)
11
15

888
—
304
159
793
(98)
(399)
161
(29)

853
(665)
642
244
806
(239)
(685)
170
(5)

100
281
241
(261)
(1)
(162)
2,116

139
(37)
9
286
(235)
(90)
2,673

438
(122)
(897)
(769)
(406)
(408)
3,822

43
116
136
321
(337)
(202)
7,268

(366)
(4,360)
3,266
(339)
298
—
—
128
(130)
(27)
(1,530)

(158)
(2,488)
4,060
(1,054)
826
(220)
—
36
(100)
4
906

(815)
(13,118)
11,897
(1,034)
1,008
—
—
161
(308)
(11)
(2,220)

(955)
(10,315)
9,744
(2,868)
2,619
(220)
788
37
(447)
65
(1,552)

—

Proceeds from long-term debt

9,937

Repayment of short-term debt

(1,813)

$

4,207

297
—
166
86
271
(20)
(122)
55
2

1,718

Proceeds from issuance of common stock
Repurchases and retirements of common stock
Dividends paid
Incremental tax benefits from share-based compensation
Other items, net
Net cash provided (used) by financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

$

154
(5,405)
(757)
20
50
3,904
5
4,495
5,492
9,987 $

2,813

—

—

9,937

—

—

(1,814)

—

194
(1,350)
(706)
70
(184)
(1,976)
4
1,607
6,337
7,944 $

571
(9,016)
(2,142)
98
41
488
(10)
2,080
7,907
9,987 $

1,147
(3,354)
(1,884)
239
(65)
(3,917)
3
1,802
6,142
7,944