Qualcomm 1999 Annual Report Download

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Big Ideas
enabled by CDMA
99Annual Report
QUALCOMM
The Internet Unleashed
HDR
High Data Rate
Technology

Table of contents

  • Page 1
    99 Annual Report QUALCOMM Big Ideas HDR High Data Rate Technology The Internet Unleashed enabled by CDMA

  • Page 2
    ... or pending. But there's more to QUALCOMM than technology. There's a culture here that celebrates knowledge and achievement. You can feel it in the campus-like environment at our headquarters in San Diego, California. Recreational facilities mixed in with offices and labs. Plenty of places for...

  • Page 3
    We believe education is a global riority. That's why we have over 00 different training programs or our employees around the world. We're dedicated to inspirng young students and teachers n the community to pursue math and science careers. In fact, QUALCOMM supports the community through many ...

  • Page 4
    ... company: CSM and MSM 24 . Licensing our technology: wireless partners 26 . Business development: market drivers 27 . The road to the future: continuing technology 28. Year at a glance: summary of news releases 33. Financial information: table of contents 62. Officers and corporate information...

  • Page 5
    ... M is a company full of people w ith big ideas. Those ideas lead to technology and products that help people communicate. Behind every phone, integrated circuit and satellite ground station is an innovative w ay of problem solving. Take Code Division M ultiple Access (CDM A) technology for example...

  • Page 6
    ...is proud to employ many of the best people in the industry. The Company is headquartered in San Diego, California and has offices in 13 countries around the w orld. Since its founding in 1985, QUALCOMM has developed and commercialized innovative communications technologies that benefit people. Today...

  • Page 7
    QUALCOMM CDMA TECHNOLOGIES QCT QUALCOMM TECHNOLOGY LICENSING QCT is a leading developer and supplier of CDMA* chipsets and software solutions for wireless voice and data products. The division provides manufacturers with tools and support to make small, fast and functional digital wireless phones...

  • Page 8
    ... leading telecom manufacturers around the globe licensed to build and sell products based on cdmaOneâ„¢ technology. In September, FORTUNE magazine moved QUALCOMM up from the 74th position to number 16 on its list of America's Fastest-Grow ing Companies. wireless local loop systems both terrestrial...

  • Page 9
    ...500 Stock Split 0 S&P 500 +19.53% 01 02 03 04 05 06 07 08 09 10 11 12 99 (Data Source: Bridge Systems) 05 This was a year of big operating earnings growth and improvements for QUALCOMM. A key driver for us has been the growing worldwide market for products and services based on CDMA...

  • Page 10
    ...a year of big recognition for our Company. FORTUNE named QUALCOMM number 16 on its list of America's Fastest-Grow ing Companies. It recognizes companies with 30% growth in revenue and earnings h h their top 100 list for exemplifying the highest level of operational and strategic excellence. And, for...

  • Page 11
    .... As part of the deal, Ericsson purchased certain assets of our terrestrial CDMA wireless infrastructure business located in San Diego, California and Boulder, Colorado. The infrastructure business met its strategic goal of driving CDMA forward into new markets. Ericsson is well equipped to enter...

  • Page 12
    ... Technologies Our first commercial venture, the OmniTRACS system, has now streamlined operations for many of the major trucking firms in the U.S., and contributed significantly to highway safety along the way. The system enables transportation companies to manage fleet information, track truck...

  • Page 13
    ... a year of major milestones for QUALCOMM. Our Company was named to the prestigious FORTUNE 500 list, which highlights the largest companies in America. We are extremely proud to have entered the Standard & Poor's 500 Stock Index and to have been named the top performing stock on the S&P 500 in 1999.

  • Page 14
    RECORD REVENUES FOR ONE QUARTER... 10 This was a year of big revenues for our Company. In the third quarter of fiscal 1999, for the first time, QUALCOMM earned more than a billion dollars in revenues. $1, 000, 000,000.

  • Page 15
    ... hours standby time and 50% smaller package size. Leading The Way Growing interest in computing and the Internet has fueled public demand for faster communications technologies. To support market needs and solidify our leadership in this field, QUALCOMM has developed High Data Rate (HDR) technology...

  • Page 16
    ... our operational and strategic excellence by naming QUALCOMM a recipient of the 1999 CIO-100 award for companies possessing the strategy to prosper into the next century. DR. IRWIN MARK JACOBS Chairman and Chief Executive Officer RICHARD SULPIZIO President and Chief Operating Officer 12

  • Page 17
    DR. IRWIN MARK JACOBS RICHARD SULPIZIO 13

  • Page 18
    the journey of a thousand miles begins w ith a single chip 14

  • Page 19
    Enabling manufacturers...Our chipsets and softw are solutions have been sold to CDM A manufacturers w orldw ide and can be found on six continents. > Inspiring CDMA manufacturers to make smaller, smarter phones with unprecedented capabilities. 15

  • Page 20
    the phone is greater than the sum of its parts > Giving people power and control with technology that matters and makes life easier. 16

  • Page 21
    Enriching lives...We help people lead more mobile, productive lives w ith CDM A digital w ireless phones that provide a variety of time-saving features and crystal clear voice clarity. 17

  • Page 22
    no one is an island w ith CDM A > Bringing people together by fueling the most advanced wireless networks and offering wireless solutions for business. 18

  • Page 23
    Linking people...We develop the semiconductor chipsets and system softw are that help drive the w orldw ide grow th of CDM A digital netw orks. 19

  • Page 24
    w hat a w ireless w eb w e w eave > Breaking the speed barrier with high data rate capabilities allowing for very fast wireless Internet access. 20

  • Page 25
    Delivering services...Our innovative satellite technology delivers pow erful tracking and information services to the transportation industry. And the ground stations and satellite phones w e build for the Globalstar netw ork are enabling communications from virtually anyw here in the w orld. 21

  • Page 26
    ... O M PA N Y These timelines represent a roadmap, tracing the evolution of technology that put our Company on the map and changing the w ay people communicate. It's a complex story, but here's w hat it really means. About a decade ago, QUALCOM M engineers pioneered the development of a revolutionary...

  • Page 27
    ... MSM (MSM2300) • Highly cost-effective chipset developed 89 90 91 92 93 94 KEY 95 96 97 98 99 23 CDMA: QUALCOMM's pioneering Code Division Multiple Access wireless telecommunications technology. CSM: Cell Site Modem. A chipset and system software solution used in CDMA wireless network...

  • Page 28
    ...E S S NETWORKS INFRASTRUCTURE TEST EQUIPMENT QUALCOMM's CDMA technology is the engine for the networks that deliver the world's most sophisticated digital wireless technology. Commercial cdmaOneâ„¢ networks around the world served over 41 million subscribers by September of 1999, and the number is...

  • Page 29
    ...Telecom Co., Ltd. QUALCOMM's CDMA chipsets and system software solutions are used by manufacturers to build smaller, faster, smarter phones. Our MSM3000â„¢ single-chip Mobile Station Modem (MSMâ„¢) baseband processing solution offers many new features, including longer standby times and higher data...

  • Page 30
    ... the chipsets and software that can launch the new standard. But being innovative means being there first. We're commercializing a wireless data solution right now to offer 3G benefits sooner. HDR is a versatile high-capacity, high-speed wireless telecommunications technology that can change the way...

  • Page 31
    ... on next generation products gain cost advantages and faster time-to-market. Users will truly have untethered communications at high transmission speeds. Whether you're a network operator, a manufacturer or an end user, CDMA 3G is the promise of the future. CDM A is the technology for the next...

  • Page 32
    ...Best Companies List FORTUNE magazine names QUALCOMM to its list of "100 Best Companies to Work for in America." 01.19.99 First Quarter Results QUALCOMM reports the highest quarterly revenues in its 13-year history. • 1st quarter fiscal 1999 revenues: $941M (up 20% over Q1 FY98) • 1st quarter net...

  • Page 33
    ... R&D resources, located in San Diego, California and Boulder, Colorado. 04.09.99 FORTUNE 500 List FORTUNE magazine names QUALCOMM to its 1999 FORTUNE 500 ® list, which highlights the largest companies in America. 04.14.99 Stock Split The Board declares a 2-for-1 stock split of the Company's Common...

  • Page 34
    ...Thin Phone, for its CDMA network in 14 Western and Midwestern states. Customers will have advanced CDMA digital services, including wireless Internet access. 05.19.99 High-Speed Packet Data To Asia QUALCOMM's innovative new software solution facilitates HighSpeed Packet Data (HSPD) service in Japan...

  • Page 35
    ... QUALCOMM ships samples of the 6th generation MSM3100 CDMA chipset and system software that supports data rates up to 86.4 kbps. pdQ smartphone to Israel Israel's Pele-phone Communications buys QUALCOMM's pdQ smartphones for its national network. New Mobile Station Modem Family The iMSM product...

  • Page 36
    32

  • Page 37
    ... Balance Sheets 43 . Consolidated Statements of Income 44 . Consolidated Statements of Cash Flows 45 . Consolidated Statements of Stockholders' Equity 46. Notes To Consolidated Financial Statements 61. Report of Independent Accountants 62. Corporate Information 63. Board of Directors 33

  • Page 38
    FINANCIAL PERFORMANCE QUALCOMM Incorporated...Profit Earnings Per Share (Diluted) $2.99 Research & Development ...Reported Operating (excluding non-recurring charges) Pro Forma (excluding non-recurring charges and operating results associated with wireless infrastructure business) Research & Development

  • Page 39
    ...(In thousands, except per share data) QUALCOMM Incorporated Years Ended September 30,(1) 1999 STATEMENT OF INCOME DATA: 1998 1997 1996 1995 Revenues Operating expenses: Cost of revenues Research and development Selling, general and administrative Other (2) Total operating expenses Operating income...

  • Page 40
    ... 6,900,000 shares of common stock at a net price of $156.50 per share. The net proceeds of the offering were approximately $1 billion. On May 24, 1999 (the "Closing Date"), QUALCOMM sold certain assets related to the Company's terrestrial CDMA wireless infrastructure business to Ericsson pursuant to...

  • Page 41
    FINANCIAL REVIEW QUALCOMM Incorporated Pursuant to the Agreement, Ericsson purchased certain assets related to the Company's terrestrial CDMA wireless infrastructure business, including its R&D resources, located in San Diego, California and Boulder, Colorado, and assumed selected customer ...

  • Page 42
    ... was primarily due to new chipset product initiatives and software development efforts, offset by a decrease in terrestrial CDMA wireless infrastructure product research and development as a result of the sale of the business in May 1999. For fiscal 1999, selling, general and administrative expenses...

  • Page 43
    ... position technology in a mobile handset for CDMA cellular and PCS networks. In October 1999, QCT also announced further development plans for MSM solutions that will support the single worldwide CDMA standard for third generation systems. The new chipsets and systems will pave the way for QUALCOMM...

  • Page 44
    ... management tool, from customer and contact data to sales forecasting and opportunity tracking plus clear CDMA voice capabilities. LIQUIDITY AND CAPITAL RESOURCES On July 27, 1999, the Company completed an offering of 6,900,000 shares of common stock at a net price of $156.50 per share. The net...

  • Page 45
    ... as of September 30, 1999, none of which are collateralized. As part of the Company's strategy of supporting the commercialization and sale of its CDMA technology and products, the Company may from time to time enter into strategic alliances with domestic and international emerging wireless...

  • Page 46
    ... per share data) QUALCOMM Incorporated September 30 1999 ASSETS 1998 Current Assets: Cash and cash equivalents Investments Accounts receivable, net Finance receivables Inventories, net Other current assets Total current assets Property, plant and equipment, net Investments Finance receivables, net...

  • Page 47
    ... S TAT E M E N T S O F I N C O M E (In thousands, except per share data) QUALCOMM Incorporated Years Ended September 30 1999 1998 1997 Revenues Operating expenses: Cost of revenues Research and development Selling, general and administrative Other Total operating expenses Operating income Interest...

  • Page 48
    ...In thousands) QUALCOMM Incorporated Years Ended September 30 1999 OPERATING ACTIVITIES: 1998 1997 Net income Depreciation and amortization Acquired in-process research and development Restructuring, impairments and other non-cash charges Gain on sale of trading securities Gain on sale of available...

  • Page 49
    ... (26,100) 12,701 110,690 $ 2,871,755 Net income Exercise of stock options Tax benefit from exercise of stock options Issuance for Employee Stock Purchase and Executive Retirement Plans Foreign currency translation BALANCE AT SEPTEMBER 30, 1997 Net income Exercise of stock options Tax benefit from...

  • Page 50
    ... The Company QUALCOMM Incorporated (the "Company" or "QUALCOMM"), a Delaware corporation, designs, develops manufactures and markets digital wireless communications products and services based on its Code Division Multiple Access ("CDMA") technology. The Company licenses and receives royalty...

  • Page 51
    ... the related revenue is recognized. Stock-Based Compensation The Company measures compensation expense for its stock-based employee and non-employee directors compensation plans using the intrinsic value method and provides pro forma disclosures of net income and net earnings per common share as...

  • Page 52
    ... position or results of operations. 2 SPIN-OFF OF LEAP WIRELESS INTERNATIONAL, INC. Foreign currency translation Change in unrealized gain on securities, net of income taxes $ (27,778) $ 110,690 (1,678) $ - (1,678) $ 60 - 60 $ 82,912 $ Stock Split On April 14, 1999, the Company's Board...

  • Page 53
    ... Finance receivables result from sales under arrangements in which the Company has agreed to provide customers with long-term interest bearing debt financing for the purchase of equipment and/or services. Such financing is generally collateralized by the related equipment. At September 30, 1999 and...

  • Page 54
    ...associated with the sale of certain assets to Ericsson (Note 13). September 30, 1999 1998 (In thousands) Inventories, net: Raw materials Work-in-process Finished goods Property, plant and equipment, net: Land Buildings and improvements Computer equipment Machinery and equipment Furniture and office...

  • Page 55
    ..., to receive the Company's common stock or other securities, cash or other assets having a market value, as defined, equal to twice such purchase price. The Rights, which expire on September 25, 2005, are redeemable in whole, but not in part, at the Company's option at any time for a price of...

  • Page 56
    .... Stock Option Plans The Board of Directors may grant options to selected employees, directors and consultants to the Company to purchase shares of the Company's common stock at a price not less than the fair market value of the stock at the date of grant. The 1991 Stock Option Plan (the "Plan...

  • Page 57
    .... Accounting for Stock-Based Compensation Pro forma information regarding net income and net earnings per common share has been estimated at the date of grant using the BlackScholes option-pricing model based on the following assumptions: Stock Option Plans 1999 1998 1997 1999 Employee Stock...

  • Page 58
    ... to sell the GTL shares on a near term basis. The Company sold the GTL common stock during the third quarter of fiscal 1997 resulting in an aggregate realized gain of $13 million. The Company and Globalstar have entered into a development agreement under which Globalstar is funding the Company to...

  • Page 59
    ... costs to sell. Total consideration will be based on a final determination of net assets as of the Closing Date. The Company has received notice of Ericsson's intention to dispute the purchase price (Note 14). In addition, the Company and Ericsson agreed to jointly support a single worldwide CDMA...

  • Page 60
    ... Company's new claims seek damages and an injunction against Motorola's sale of infringing phones. Motorola has filed counterclaims alleging breach of the Patent License Agreement and a DS-CDMA Technology License Agreement also signed in 1990. On or about June 5, 1997, Elisra Electronic Systems Ltd...

  • Page 61
    ...unvested stock options, 1,016 elected to participate in the Retention Bonus Plan offered by QUALCOMM and Ericsson, which provides several benefits including cash compensation based upon a portion of the value of their unvested options, and includes a written release of claims against the Company. On...

  • Page 62
    ... generally provide for contract offsets to the extent the products are not delivered by scheduled delivery dates or the systems fail to meet specified performance criteria. The Company is dependent in part on the performance of its suppliers and strategic partners to provide products and services...

  • Page 63
    ... CDMA wireless and satellite networks and provides satellite-based two-way data messaging, position reporting equipment and services to transportation companies. "Consumer Products" (QCP) - designs, manufactures and markets wireless handsets and accessories using CDMA technology for use in mobile...

  • Page 64
    ... of management, necessary for a fair statement of the results of the interim periods. Summarized quarterly data for fiscal 1999 and 1998 is as follows (in thousands, except per share data): 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter The Company distinguishes revenues from external customers by...

  • Page 65
    ... position of QUALCOMM Incorporated and its subsidiaries at September 30, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 1999 in conformity with generally accepted accounting principles. These financial statements...

  • Page 66
    .... Stock Price Additional Information To receive copies, without charge, of QUALCOMM's 1999 Form 10-K, which is filed with the Securities and Exchange Commission, write to: Investor Relations QUALCOMM Incorporated 5775 Morehouse Drive San Diego, CA 92121-1714 Inquiries from analysts, investors and...

  • Page 67
    ... Chairman and Chief Executive Officer of the Corporation for National Research Initiatives and is the former Director of the Information Processing Techniques Office for the U.S. Defense Advanced Research Projects Agency. Dr. Kahn has received numerous awards for his pioneering work on the Internet...

  • Page 68
    Corporate Headquarters QUALCOMM Incorporated 5775 Morehouse Drive San Diego, California 92121-1714 www.qualcomm.com p p UNITED STATES Atlanta, Georgia Boulder, Colorado Irving, Texas Kansas City, Missouri Las Vegas, Nevada Bethesda, Maryland Pittsburgh, Pennsylvania Portland, Oregon Miami, Florida...