Qualcomm 2005 Annual Report Download - page 50
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Please find page 50 of the 2005 Qualcomm annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Management’s Discussion and Analysis continued
46 qualcomm 2005
QSI Segment. QSI’s losses before taxes from continuing operations
for fi scal 2004 were $31 million, compared to $168 million for fi scal
2003. Equity in losses of investees decreased by $42 million primarily
due to a decrease in losses incurred by Inquam during fi scal 2004 as
compared to fi scal 2003, of which our share was $59 million for fi scal
2004 as compared to $99 million for fi scal 2003. During fi scal 2004,
we recorded $12 million in other-than-temporary losses on market-
able securities and other investments as compared to $127 million
for fi scal 2003. During fi scal 2003, we also recorded a $34 million
impairment loss on our wireless licenses in Australia due to develop-
ments that affected strategic alternatives for using the spectrum.
These improvements in QSI’s losses before taxes were partially off-
set by a $31 million decrease in interest income resulting from the
prepayment of the Pegaso debt facility in the fi rst quarter of fi scal
2004 and $28 million in MediaFLO USA operating expenses.
Liquidity and Capital Resources
Cash and cash equivalents and marketable securities were $8.7 billion
at September 25, 2005, an increase of $1.0 billion from September 26,
2004. The increase was primarily the result of $2.7 billion in cash
provided by operating activities and $386 million in net proceeds
from the issuance of common stock under our stock option and
employee stock purchase plans, partially offset by $953 million in
repurchases of our common stock under our stock repurchase pro-
gram, $576 million in capital expenditures, $524 million in dividends
paid and $249 million invested in other entities and acquisitions.
On March 8, 2005, we authorized the repurchase of up to $2 billion
of our common stock under a stock repurchase program with no
expiration date. Through November 2, 2005, we repurchased and
retired approximately 27,083,000 shares of our common stock for
$953 million. In connection with this stock repurchase program,
we have two put options outstanding, with expiration dates of
December 7, 2005 and March 21, 2006, that may require us to
repurchase 11,500,000 shares for $411 million (net of the option
premiums received). At November 2, 2005, $636 million remained
authorized for repurchases under our stock repurchase program.
We announced dividends totaling $524 million, $307 million and
$135 million, or $0.320, $0.190 and $0.085 per share, during
fi scal 2005, 2004 and 2003, respectively. On October 10, 2005,
we announced a cash dividend of $0.09 per share on our common
stock, payable on January 4, 2006 to stockholders of record as of
December 7, 2005. We intend to continue to pay quarterly dividends
subject to capital availability and periodic determinations that cash
dividends are in the best interest of our stockholders.
Accounts receivable decreased by 6% during fi scal 2005. Days sales
outstanding, on a consolidated basis, were 30 days at September 25,
2005, compared to 43 days at September 26, 2004. The change in
days sales outstanding is consistent with the increase in revenue and
the decrease in accounts receivable resulting from cash collections.
We started construction of two facilities in San Diego, California
in fi scal 2003, totaling approximately one million additional square
feet, to meet the requirements projected in our business plan. The
remaining cost of these new facilities is expected to be approximately
$149 million through fi scal 2007. In fi scal 2005, we announced our
plans to expand our backup Network Management Center in Las
Vegas, Nevada, which uses satellite and terrestrial-based technologies
to track freight transportation and shipping nationwide. We expect
the remaining cost of this expansion will be approximately $35 million
through fi scal 2008. In fi scal 2005, our MediaFLO USA subsidiary,
a wireless multimedia operator, began the development of a nation-
wide mediacast network based on our FLO technology and MediaFLO
MDS. As part of this development, MediaFLO USA has executed a
number of lease agreements at broadcast tower sites and has begun
the installation of equipment and leasehold improvements at some
of these sites. The remaining costs for our existing tower sites under
lease, including equipment and leasehold improvements as well as
the costs of installation, are expected to be approximately $18 million
through fi scal 2006.
On August 11, 2005, we announced our intention to acquire Flarion, a
developer of OFDMA technology. Upon completion of the acquisition,
which is anticipated in the fi rst half of fi scal 2006, pending regulatory
approval and other customary closing conditions, we estimate that
we will pay approximately $545 million in consideration, including
approximately $235 million in cash. Upon achievement of certain
agreed upon milestones on or prior to the eighth anniversary of the
close of this transaction, we may issue additional aggregate consider-
ation of $205 million, including approximately $173 million payable
in cash, to Flarion stockholders.
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
investment activities, we may provide fi nancing or other support 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.
We believe our current cash and cash equivalents, marketable secu-
rities and cash generated from operations will satisfy our expected
working and other capital requirements for the foreseeable future
based on current business plans, including acquisitions, investments
in other companies and other assets to support the growth of our
business, fi nancing and other commitments, the payment of dividends
and possible additional stock repurchases.
Contractual Obligations/Off-Balance Sheet Arrangements
We have no signifi cant contractual obligations not fully recorded on
our Consolidated Balance Sheets or fully disclosed in the Notes to our
Consolidated Financial Statements. We have no material off-balance
sheet arrangements as defi ned in S-K 303(a)(4)(ii).