Qualcomm 2006 Annual Report Download - page 95

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qualcomm 2006 81
(1) During scal 2004, the Company sold its consolidated subsidiaries, the
Vésper Operating Companies, and the Vésper Towers and returned personal
mobile service licenses to Anatel, the telecommunications regulatory
agency in Brazil. The results of operations, including gains and losses realized
on the sales transactions and the licenses, are presented as discontinued
operations. As such, revenue and gross margin results presented do not
include the results from these discontinued operations.
(2) 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 as a result, GAAP results for scal 2004 reect only partial eco-
nomic 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.
(3) The Company effected a two-for-one stock split in August 2004. All ref-
erences to per share amounts have been restated to reect the stock split.
(4) See “Note Regarding Use of Non-GAAP Financial Measures” on page 79
and “Reconciliation of Non-GAAP Financial Measures” on page 80.
(5) Free Cash Flow is calculated as net cash from operating activities less
capital expenditures, both of which are presented in the GAAP statement
of cash ows.
(6) Free Cash Flow for scal years 2002, 2003 and 2004 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.
Financial Highlights Notes continued from page 03