Qualcomm 2002 Annual Report Download - page 54

Vésper Holding receivables, partially offset by the timing of cash receipts for royalty
receivables. Excluding Vésper Holding receivables and revenues, days sales out-
standing, using a daily three month rolling average, were 53 days at September 30,
2002 compared to 72 days at September 30, 2001. The change in days sales out-
standing is consistent with the increase in revenue and improved cash collections
resulting in the accounts receivable balance remaining relatively unchanged.
We believe our current cash and cash equivalents, marketable securities and cash
generated from operations will satisfy our expected working and other capital
requirements for the foreseeable future based on current business plans, including
investments in other companies and other assets to support the growth of our business,
financing for customers of CDMA infrastructure products in accordance with the
agreements with Ericsson, financing under agreements with CDMA telecommunications
carriers, and other commitments. We intend to continue our strategic investment
activities to promote the worldwide adoption of CDMA products and the growth of
CDMA-based wireless data and wireless Internet products. As part of these invest-
ment activities, we may provide financing to facilitate the marketing and sale of CDMA
equipment by authorized suppliers. In the event additional needs for cash arise, we
may raise additional funds from a combination of sources including potential debt
and equity issuance.
At September 30, 2002, our outstanding commitments included (in millions):
Long-term financing under Ericsson arrangement (excluding Pegaso) $368
Senior credit facility with Leap Wireless(a) 125
Pegaso:
Commitment to acquire long-term financing to be provided by Ericsson 105
Other 4
Equity investments:
Inquam 27
Other 30
Other debt commitments 6
Total debt and equity commitments 665
Long-term purchase commitments(b) 71
Operating leases(b) 124
Other 3
Total $863
(a) Under the terms of our senior secured credit facility with Leap Wireless, we are committed to fund
up to $125 million in connection with Leap Wireless’ bid for PCS spectrum licenses in the FCC’s
Auction No. 35, however it appears unlikely that Leap Wireless will be able to use this credit facility.
See “Notes to Consolidated Financial Statements, Note 11 — Commitments and Contingencies.”
(b) Information regarding our long-term purchase commitments and operating leases at
September 30, 2002 is provided in the Consolidated Financial Statements. See “Notes to
Consolidated Financial Statements, Note 11 — Commitments and Contingencies.”
The majority of these commitments do not have fixed funding dates, and the
expected funding dates cannot be forecast.
At September 30, 2002, commitments to extend long-term financing to certain
CDMA customers of Ericsson totaled approximately $473 million. The commitment to
fund $346 million of this amount expires on November 6, 2003. The funding of the
remaining $127 million, if it occurs, is not subject to a fixed expiration date, however,
on November 12, 2002, $9 million of this commitment was cancelled. The financing
commitments are subject to the CDMA customers meeting conditions prescribed in
the financing arrangements and, in certain cases, to Ericsson also financing a
portion of such sales and services. Such financing is generally collateralized by the
related equipment. Commitments represent the maximum amounts to be financed
under these arrangements; actual financing may be in lesser amounts. Financing
provided by us to Pegaso included $203 million funded under these commitments
with Ericsson. Financing provided by us to the Vésper Operating Companies included
$108 million funded under these commitments. All other financings made related to
these commitments were repaid prior to September 30, 2002.
The Inquam equity investment commitment is expected to be funded by March
2003, and the remaining equity commitments are expected to be funded through
fiscal 2009. Our existing commitments over the next 12 months related to long-term
purchase commitments (including capital expenditures), future minimum operating
lease payments, capital leases and long-term debt total $70 million. We expect
Vésper Holding to require approximately $60 to $70 million in cash funding during the
first six months of fiscal 2003, including license payments.
In December 2001, we agreed to invest up to $200 million in exchange for up to 4%
of the common shares of Reliance Infocomm Limited (RIL), formerly Reliance
Communications Limited, a wireless carrier in India. RIL intends to construct and
operate a CDMA commercial network deploying CDMA2000 1X technology to provide
basic telephone services, Wireless Local Loop (WLL) with limited mobility, national
long distance and international long distance services in India. Our obligation to make
this investment became subject to termination during fiscal 2002 because RIL failed
to meet certain milestones. However, we may purchase the shares upon RIL’s com-
pletion of certain closing conditions. If we complete the investment, funding is likely
to occur through September 2003. At September 30, 2002, we had not purchased any
shares related to this agreement.
Information regarding our other financial commitments at September 30, 2002 is
provided in the Notes to the Consolidated Financial Statements. See “Notes to
Consolidated Financial Statements, Note 4 — Investments in Other Entities, Note 11 –
Commitments and Contingencies and Note 13 — Acquisitions.”
MANAGEMENT’S DISCUSSION AND ANALYSIS continued