Qualcomm 2002 Annual Report Download - page 53

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unrealized gain on a warrant to purchase 4,500,000 shares of Leap Wireless common
stock issued to us in connection with our spin-off of Leap Wireless in September 1998.
OUR SEGMENT RESULTS FOR FISCAL 2002 COMPARED TO FISCAL 2001
QUALCOMM CDMA TECHNOLOGIES SEGMENT (QCT)
QCT segment revenues for fiscal 2002 were $1,591 million, compared to $1,365
million for fiscal 2001. Earnings before taxes for fiscal 2002 were $441 million, com-
pared to $306 million for fiscal 2001. Revenues and earnings before taxes increased
primarily due to an increase in unit shipments of MSM integrated circuits and the
effect of the change in product mix toward the higher end devices utilizing our
CDMA2000 1X products. Approximately 65 million MSM integrated circuits were sold
during fiscal 2002, compared to approximately 58 million for fiscal 2001.
Approximately 10 million CSM infrastructure integrated circuits equivalent voice
channels were sold during fiscal 2002, compared to approximately 9 million for fiscal
2001. Both research and development and selling and marketing expenses
were $22 million higher for fiscal 2002 as compared to fiscal 2001 primarily associated
with new integrated circuit product and technology initiatives to support high-speed
wireless Internet access and multi-band, multimode, multi-network products including
cdmaOne, CDMA2000 1X/1xEV-DO, GSM/ GPRS, WCDMA and position location
technologies. QCT inventories decreased by 27% during fiscal 2002 primarily as a
result of strong demand for 1X products across our customer base and improved
component availability.
QUALCOMM TECHNOLOGY LICENSING SEGMENT (QTL)
QTL segment revenues for fiscal 2002 were $847 million, compared to $782 mil-
lion for fiscal 2001. Revenues from royalties paid by third party licensees were $725
million in fiscal 2002, compared to $661 million in fiscal 2001. Revenues from license
fees were $55 million in fiscal 2002, compared to $67 million in fiscal 2001. Earnings
before taxes for fiscal 2002 were $756 million, compared to $706 million for fiscal
2001. The increase in revenues and earnings before taxes was primarily due to an
increase in sales of CDMA products by licensees resulting from higher demand for
CDMA products across all major regions of CDMA deployment. During fiscal 2002, we
recognized $6 million in revenue related to equity received as consideration for
license fees, compared to $7 million in fiscal 2001.
QUALCOMM WIRELESS & INTERNET SEGMENT (QWI)
QWI segment revenues for fiscal 2002 were $439 million, compared to $426 million
for fiscal 2001. Losses before taxes for fiscal 2002 were $9 million, compared to earn-
ings before taxes of $33 million for fiscal 2001. Revenues increased primarily due to
an increase in software development and services revenues related to our BREW
products and QChat licensing agreement. Earnings before taxes decreased primarily
due to a $35 million increase in our development, support and marketing efforts
related to products and services of our QIS division, including the BREW product and
a $14 million increase in QWBS research and development expenditures. We shipped
approximately 46,000 OmniTRACS and other related communications systems during
fiscal 2002, compared to approximately 43,000 in fiscal 2001.
QUALCOMM STRATEGIC INITIATIVES SEGMENT (QSI)
QSI segment revenues for fiscal 2002 were $126 million, primarily related to the
consolidation of Vésper Holding. QSI segment losses before taxes for fiscal 2002 were
$507 million, compared to $1,125 million for fiscal 2001. The decrease in losses was
primarily due to $568 million in charges incurred in fiscal 2001 related to Globalstar.
During fiscal 2002, we recorded a $130 million loss, net of minority interest, due to
the consolidation of Vésper Holding and $30 million of equity losses in the Vésper
Operating Companies (pre-acquisition) and VeloCom, as compared with $150 million
of equity losses for the Vésper Operating Companies in fiscal 2001. During fiscal 2002,
we recorded $180 million in other-than-temporary losses on Leap Wireless mar-
ketable securities, compared to an $11 million realized gain in fiscal 2001. We also
recorded $59 million in losses related to changes in the fair values of Leap Wireless
derivative investments in fiscal 2002, compared to $213 million in losses in fiscal
2001. Losses on Leap Wireless derivative investments resulted from declines in the
market price of Leap Wireless common stock during those fiscal years. During fiscal
2001, we recorded a $120 million charge to write down a note receivable from
VeloCom to its fair value as a result of the reorganization of the Vésper Operating
Companies initiated during fiscal 2001.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents and marketable securities were $3,176 million at
September 30, 2002, an increase of $596 million from September 30, 2001. The
increase during fiscal 2002 was primarily the result of $968 million in cash provided
by operating activities, $120 million in net proceeds from the issuance of common
stock under our stock option and employee stock purchase plans, $16 million in col-
lections on notes receivable, $10 million in proceeds received from Vésper Holding’s
minority interest shareholders and $9 million in proceeds received from the sale of
other investments, partially offset by $321 million in cash used for other investments
and acquisitions, $142 million in capital expenditures, an $81 million decrease in the
fair values of marketable securities and $6 million of cash used to purchase our
shares. We expect Vésper Holding to require approximately $60 to $70 million in cash
funding during the first six months of fiscal 2003.
Accounts receivable increased by 4% during fiscal 2002. The increase in accounts
receivable was primarily due to an increase in revenues and the consolidation of
QUALCOMM 2002 ANNUAL REPORT