Qualcomm 2006 Annual Report Download - page 94

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80 qualcomm 2006
reconciliation oF Pro Forma and gaaP net income and diluted earnings Per share
(In millions, except per share data) 2006 2005 2004 2003 2002
Total GAAP net income(1) $2,470 $2,143 $1,720 $ 827 $ 360
Less: QSI net (loss) income (32) 102 12 (334) (180)
Less: Other pro forma adjustments, net of tax(2) (302) 71 (92) 1 (237)
Pro forma net income $2,804 $1,970 $1,800 $1,160 $ 777
Total GAAP diluted earnings per share(1) $ 1.44 $ 1.26 $ 1.03 $ 0.51 $ 0.22
Less: QSI diluted (loss) earnings per share (0.02) 0.06 0.01 (0.20) (0.11)
Less: Other pro forma adjustments, net of tax per share(2) (0.18) 0.04 (0.06) 0.00 (0.15)
Pro forma diluted earnings per share $ 1.64 $ 1.16 $ 1.07 $ 0.71 $ 0.48
Shares used in per share calculations:(3)
Diluted shares 1,711 1,694 1,675 1,636 1,619
(1) In the fourth quarter of 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 scal 2004,
and consequently, GAAP results for scal 2004 reect only partial economic performance of the Company’s licensing business as royalty revenue that would
have been recognized in the fourth quarter of scal 2004 was recognized in the rst quarter of scal 2005.
(2) Other pro forma adjustments are comprised of:
2006 2005 2004 2003 2002
Estimated share-based compensation $ (495) $ — $ — $ — $ —
Acquired in-process research and development (22) — — — —
Adjustment to reect the new method of recording royalty revenue(1) — — (151) 1 28
Amortization of goodwill and other intangible assets — — — — (259)
Stock option payroll tax expense — — — — (6)
Globalstar — — — — 4
Other — — — — 8
Total pro forma adjustments before taxes $ (517) $ — $ (151) $ 1 $ (225)
Tax adjustments related to prior years 40 71 — — —
Income tax benet (expense) related to pro forma adjustments before taxes 175 — 59 — (12)
Total pro forma adjustments, net of tax $ (302) $ 71 $ (92) $ 1 $ (237)
Net pro forma adjustments on a diluted per share basis $ (0.18) $ 0.04 $ (0.06) $ 0.00 $ (0.15)
(3) 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 reect
this stock split.
reconciliation oF Free cash Flow to net cash Provided by oPerating activities
(In millions) 2006 2005 2004* 2003* 2002*
Net cash provided by operating activities (GAAP) $3,253 $2,686 $2,469 $1,782 $1,109
Less capital expenditures (GAAP) (685) (576) (333) (231) (142)
Free cash ow $2,568 $2,110 $2,136 $1,551 $ 967
* Cash ows for scal years 2004, 2003 and 2002 have been revised to combine cash ows from continuing operations with cash ows from discontinued
operations, which resulted from the sale of the Company’s former subsidiaries, the Vésper Operating Companies, and the Vésper Towers and the return of
the personal mobile service licenses to Anatel, the telecommunications regulatory agency in Brazil.
Reconciliation of Non-GAAP Financial Measures