Qualcomm 2005 Annual Report Download - page 80
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RECONCILIATION OF PRO FORMA AND GAAP NET INCOME AND DILUTED EARNINGS (LOSS) PER SHARE
(in millions, except per share data) 2005 2004 2003 2002 2001
Total GAAP net income(a) $2,143 $1,720 $ 827 $ 360 $ (578)
Less: QSI net income (loss) 102 12 (334) (180) (931)
Less: Other pro forma adjustments, net of tax(b) 71 (92) 1 (237) (344)
Pro forma net income $1,970 $1,800 $1,160 $ 777 $ 697
Total GAAP diluted earnings per share(a) $ 1.26 $ 1.03 $ 0.51 $ 0.22 $(0.38)
Less: QSI diluted earnings per share 0.06 0.01 (0.20) (0.11) (0.62)
Less: Other pro forma adjustments, net of tax(b) 0.04 (0.06) – (0.15) (0.23)
Pro forma diluted earnings per share(d) $ 1.16 $ 1.07 $ 0.71 $ 0.48 $ 0.43
Shares used in per share calculations:(c)
GAAP diluted shares 1,694 1,675 1,636 1,619 1,512
Pro forma diluted shares(d) 1,694 1,675 1,636 1,619 1,614
(a) In the fourth quarter of fi scal 2004, the Company adopted a new method of recording royalties, based solely on reports received from licensees for royalty-bearing
sales of equipment in the prior quarter. Under the prior method of recording royalties, the Company recorded an estimate of earned royalties for certain licensees
in the quarter preceding its receipt of licensee reports. This change was made on a prospective basis in the fourth quarter of fi scal 2004 and as a result, GAAP
results for fi scal 2004 refl ect only partial economic performance of the Company’s licensing business as royalty revenue that would have been recognized in the
fourth quarter of fi scal 2004 was recognized in the fi rst quarter of fi scal 2005.
(b) Other pro forma adjustments are comprised of:
Results for QTL under the new method of recording royalty revenue(a) $ — $ (151) $ 1 $ 28 $ 22
Amortization of goodwill and other intangible assets — — — (259) (256)
Stock option payroll tax expense — — — (6) (13)
Globalstar — — — 4 (57)
Legal settlement — — — — (69)
Other — — — 8 (11)
Total pro forma adjustments before taxes $ — $ (151) $ 1 $ (225) $ (384)
One-time tax benefi t recorded in fi scal 2005 related to fi scal 2004 71 — — — —
Income tax benefi t (expense) related to pro forma adjustments before taxes — 59 — (12) 58
Accounting change, net of tax — — — — (18)
Total pro forma adjustments, net of tax $ 71 $ (92) $ 1 $ (237) $ (344)
Net pro forma adjustments on a diluted per share basis $ 0.04 $ (0.06) $ 0.00 $(0.15) $(0.23)
(c) The Company effected a two-for-one stock split in August 2004. All references to number of shares and per share amounts have been restated to refl ect this
stock split.
(d) The diluted share base used for fi scal 2001 GAAP results excludes the potential dilutive effect of 102 million common share equivalents related to outstanding
stock options, calculated using the treasury stock method, as these shares are anti-dilutive. For fi scal 2001 pro forma results, these shares are dilutive and are,
therefore, included in the pro forma per share calculation.
RECONCILIATION OF FREE CASH FLOW TO NET CASH PROVIDED BY OPERATING ACTIVITIES
(in millions) 2005 2004 2003 2002 2001
Net cash provided by operating activities (GAAP) $2,686 $2,481 $1,824 $1,263 $1,051
Less capital expenditures (GAAP) (576) (332) (202) (127) (114)
Free Cash Flow $2,110 $2,149 $1,622 $1,136 $ 937
Reconciliation of Non-GAAP Financial Measures