Qualcomm 2004 Annual Report Download - page 85

(4)฀Free฀Cash฀Flow฀is฀calculated฀as฀cash฀fl฀ow฀from฀operations฀less฀capital฀expenditures,฀both฀of฀which฀are฀presented฀in฀the฀GAAP฀statement฀of฀cash฀fl฀ows.
(5)฀฀In฀the฀fourth฀quarter฀of฀fi฀scal฀2004,฀the฀Company฀ceased฀accruing฀estimated฀earned฀royalties฀before฀the฀actual฀amounts฀are฀reported฀by฀the฀Company’s฀licensees.฀For฀fi฀nancial฀reporting฀purposes,฀
the฀change฀resulting฀from฀the฀new฀royalty฀estimation฀method฀is฀made฀prospectively฀and฀has฀the฀one-time฀effect฀of฀reducing฀royalty฀revenues฀in฀fi฀scal฀2004.฀Therefore,฀GAAP฀results฀for฀fi฀scal฀2004฀
do฀not฀refl฀ect฀a฀full฀year฀of฀economic฀performance฀of฀the฀Company’s฀licensing฀business,฀as฀royalty฀revenue฀that฀would฀have฀been฀recognized฀in฀the฀fourth฀quarter฀of฀fi฀scal฀2004฀is฀expected฀to฀be฀
recognized฀in฀the฀fi฀rst฀fi฀scal฀quarter฀of฀fi฀scal฀2005฀when฀the฀actual฀royalty฀reports฀are฀received฀from฀the฀licensees.฀Results฀presented฀for฀fi฀scal฀2000-2003฀are฀under฀the฀“Prior฀Method”฀of฀
estimating฀royalties.฀Results฀presented฀for฀fi฀scal฀2004฀include฀the฀fi฀rst฀three฀quarters฀under฀the฀“Prior฀Method”฀of฀estimating฀royalties,฀with฀the฀fourth฀quarter฀refl฀ecting฀the฀prospective฀
change฀from฀the฀“Prior฀Method”฀to฀the฀“New฀Method”฀of฀estimating฀royalties.฀Further฀details฀regarding฀the฀change฀from฀the฀“Prior฀Method”฀to฀the฀“New฀Method”฀of฀estimating฀royalties฀can฀
be฀found฀in฀the฀Financials฀section฀of฀this฀Annual฀Report,฀beginning฀on฀page฀32.฀A฀full฀comparison฀of฀the฀“Prior฀Method”฀and฀the฀“New฀Method”฀of฀estimating฀royalties฀for฀fi฀scal฀years฀2001฀
through฀2004฀is฀presented฀on฀our฀website฀at฀http://www.qualcomm.com/ir/earnings.html.
The฀wireless฀world฀is฀migrating฀to฀the฀third-฀
generation฀(3G)฀technology฀innovated฀by฀QUALCOMM.฀
That฀spells฀enormous฀opportunity฀for฀everyone฀
in฀the฀wireless฀value฀chain:
Manufacturers฀of฀3G฀network฀infrastructure฀equipment฀
and฀mobile฀devices
Operators฀of฀high-speed฀wireless฀networks฀who฀offer฀
data฀services฀to฀differentiate฀their฀offerings
Publishers฀and฀Developers฀of฀downloadable฀applications฀
and฀content฀that฀go฀way฀beyond฀buzzers฀and฀bells
Consumers฀and฀Business฀Users฀who฀will฀benefi฀t฀
from฀the฀premium฀services,฀advanced฀devices฀and฀
compelling฀applications
QUALCOMM฀Posted฀Record฀Results฀in฀2004
฀*฀฀Financial฀results฀include฀the฀results฀of฀the฀terrestrial฀wireless฀consumer฀phone฀business฀prior฀to฀the฀sale฀of฀this฀business.฀In฀February฀2000,฀the฀Company฀completed฀the฀sale฀of฀the฀
terrestrial฀wireless฀consumer฀products฀business฀to฀Kyocera฀Wireless.฀
(1)฀฀During฀fi฀scal฀2004,฀the฀Company฀sold฀its฀consolidated฀subsidiaries,฀the฀Vésper฀Operating฀Companies฀and฀TowerCo,฀and฀returned฀personal฀mobile฀service฀(SMP)฀licenses฀to฀Anatel,฀the฀
telecommunications฀regulatory฀agency฀in฀Brazil.฀The฀results฀of฀operations฀of฀the฀Vésper฀Operating฀Companies฀and฀TowerCo,฀including฀gains฀and฀losses฀realized฀on฀the฀sales฀transactions฀
and฀the฀SMP฀licenses,฀are฀presented฀as฀discontinued฀operations.฀The฀Company’s฀statements฀of฀operations฀and฀cash฀fl฀ows฀for฀all฀prior฀periods฀have฀been฀adjusted฀to฀present฀the฀dis-
continued฀operations.฀As฀such,฀Revenue,฀Gross฀Margin,฀and฀Free฀Cash฀Flow฀results฀presented฀above฀do฀not฀include฀the฀results฀from฀these฀discontinued฀operations.
(2)฀฀The฀Company฀effected฀a฀four-for-one฀stock฀split฀in฀December฀1999฀and฀a฀two-for-one฀stock฀split฀in฀August฀2004.฀All฀references฀to฀share฀amounts฀have฀been฀restated฀to฀refl฀ect฀these฀
stock฀splits.
(3)฀See฀“Note฀Regarding฀Use฀of฀Non-GAAP฀Financial฀Measures”฀and฀reconciliations฀on฀page฀33.
Cash, Cash Equivalents and
Marketable Securities
($ millions)
0
1527
3054
4581
6108
7635
         
$2,521 $2,581
$3,200
$5,372
$7,635
Revenue and Gross Margin
($ millions)
0
976
1952
2928
3904
4880
0
976
1952
2928
3904
4880
Gross Margin
Revenue
(1), (5)
         
53% 61%
67%
67%
70%
$3,197*
$2,680 $2,915
$3,847
$4,880
Research and Development
($ millions)
0.0
144.2
288.4
432.6
576.8
721.0
0.0
144.2
288.4
432.6
576.8
721.0
         
11% 15% 15% 14% 15%
$340*
$415 $452
$523
$720
% of Revenue
R & D
Diluted Net Income (Loss)
Per Share
0
206
412
618
824
1030
(2), (5)
         
$0.39*
($0.38)
$0.22
$0.51
$1.03
Pro Forma Diluted Net Income
Per Share
0
200
400
600
800
1000
(2), (3)
         
$0.46 $0.44 $0.49
$0.71
$1.00
Free Cash Flow
($ millions)
0.000000
429.800018
859.600037
1289.400055
1719.200073
(1), (4)
        
$628
$937
$1,136
$1,622
$2,149
01฀฀ Letter฀to฀Stockholders
06฀฀ Envision
10฀฀ Innovate
16฀฀ Enable
24฀฀ Business฀Units฀
30฀฀ Working.฀Learning.฀Giving.
31฀฀ Awards฀and฀Honors
32฀฀ Financials
Board฀of฀Directors
Corporate฀Offi฀cers
฀DR.฀IRWIN฀MARK฀JACOBS฀
Member:฀Strategic฀Committee
Title:฀Chairman฀of฀the฀Board฀of
Directors฀and฀Chief฀Executive฀Offi฀cer,฀
QUALCOMM฀Incorporated฀
฀DR.฀RICHARD฀C.฀ATKINSON
Member:฀Audit฀Committee,฀
Compensation฀Committee฀
Title:฀President฀Emeritus฀of
the฀University฀of฀California
฀ADELIA฀A.฀COFFMAN฀
Title:฀Self-Employed,฀Personal
Financial฀Consultant
฀RAYMOND฀V.฀DITTAMORE฀
Chair:฀Compensation฀Committee
Member:฀Audit฀Committee,฀
Title:฀Retired฀Audit฀Partner,฀
Ernst฀&฀Young฀LLP
฀THE฀HONORABLE฀
฀DIANA฀LADY฀DOUGAN
Chair:฀Strategic฀Committee
Member:฀Finance฀Committee
Title:฀Chairwoman,฀Cyber฀
Century฀Forum฀and฀Senior฀
Advisor,฀Center฀for฀Strategic฀
and฀International฀Studies
฀DR.฀ROBERT฀E.฀KAHN
Member:฀Strategic฀Committee,฀
Governance฀Committee
Title:฀Chairman,฀Chief฀Executive฀
Offi฀cer฀and฀President,฀
Corporation฀for฀National฀Research฀
Initiatives
฀DUANE฀A.฀NELLES฀฀
Chair:฀Audit฀Committee
Member:฀Governance฀Committee
Title:฀Self-Employed,฀Personal
Investment฀Business
฀PETER฀M.฀SACERDOTE฀
Chair:฀Finance฀Committee
Member:฀Governance฀Committee
Title:฀Advisory฀Director,฀
Goldman฀Sachs฀&฀Co.
฀GENERAL฀BRENT฀SCOWCROFT฀
Member:฀Governance฀Committee,฀
Strategic฀Committee
Title:฀President,฀The฀Scowcroft฀Group
฀MARC฀I.฀STERN฀
Chair:฀Governance฀Committee
Member:฀Compensation฀Committee
Title:฀President,฀The฀TCW฀Group,฀Inc.
฀RICHARD฀SULPIZIO
Member:฀Finance฀Committee,฀
Strategic฀Committee
Title:฀Former฀QUALCOMM฀President
฀DR.฀IRWIN฀MARK฀JACOBS฀
Chairman฀of฀the฀Board฀of฀Directors฀
and฀Chief฀Executive฀Offi฀cer
฀ANTHONY฀S.฀THORNLEY฀
President฀and฀Chief฀
Operating฀Offi฀cer
฀STEVEN฀R.฀ALTMAN฀
Executive฀Vice฀President฀
and฀President,฀QUALCOMM฀
Technology฀Licensing
฀FRANKLIN฀P.฀ANTONIO฀
Executive฀Vice฀President฀
and฀Chief฀Scientist
฀SCOTT฀J.฀BECKER฀
Senior฀Vice฀President฀and฀
General฀Manager,฀QUALCOMM฀
Wireless฀Systems
฀JEFFREY฀A.฀JACOBS฀
Senior฀Vice฀President฀and฀President,฀
QUALCOMM฀Global฀Development
฀DR.฀PAUL฀E.฀JACOBS฀
Executive฀Vice฀President฀
and฀President,฀QUALCOMM฀
Wireless฀and฀Internet฀Group
฀DR.฀SANJAY฀K.฀JHA฀
Executive฀Vice฀President฀
and฀President,฀QUALCOMM฀
CDMA฀Technologies฀Group
฀MARGARET฀L.฀“PEGGY”฀JOHNSON฀
Senior฀Vice฀President฀and฀President,฀
QUALCOMM฀Internet฀Services
฀WILLIAM฀E.฀KEITEL฀
Executive฀Vice฀President฀and฀
Chief฀Financial฀Offi฀cer
฀KIMBERLY฀M.฀KORO฀
Senior฀Vice฀President฀and฀President,฀
QUALCOMM฀Government฀Technologies
฀LOUIS฀M.฀LUPIN฀
Senior฀Vice฀President฀and฀
General฀Counsel
฀DR.฀ROBERTO฀PADOVANI฀
Executive฀Vice฀President฀and฀
Chief฀Technology฀Offi฀cer
฀DR.฀DANIEL฀L.฀SULLIVAN฀
Executive฀Vice฀President,฀
Human฀Resources
฀CHRIS฀A.฀WOLFE
Senior฀Vice฀President฀and฀
President,฀QUALCOMM฀Wireless฀
Business฀Solutions
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