QUALCOMM ANNOUNCES RECORD RESULTS FOR FISCAL 1999; FOURTH QUARTER OPERATING EPS $.91, FISCAL YEAR OPERATING EPS $2.46 SAN DIEGO, Nov. 2 /PRNewswire-AsiaNet/ -- QUALCOMM Incorporated (Nasdaq: QCOM) today reported record revenues of $3.9 billion and earnings of $420 million or $2.46 earnings per share for fiscal 1999, excluding non-recurring charges. Pro Forma net income was $515 million or $2.99 earnings per share for fiscal 1999, excluding non-recurring charges and operating results associated with the Company's terrestrial Code Division Multiple Access (CDMA) wireless infrastructure business which was sold to Ericsson in May, 1999. Net income for the fourth quarter of fiscal 1999 was $170 million or $.91 earnings per share, excluding non-recurring charges. These record results were driven by the growing worldwide market for CDMA products and services based on technology using the Company's intellectual property rights (IPR). Earnings 1999 Per Share Fiscal (Diluted) (1) Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Operating (2) $0.33 $0.41 $0.75 $0.91 $2.46 Pro Forma (3) $0.59 $0.60 $0.86 $0.91 $2.99 Reported $0.33 $(0.29) $0.35 $0.73 $1.24 (1) Earnings per share are computed independently for each of the quarters presented. Therefore, the sum of the quarterly net earnings per share will not necessarily equal the total for the year. Tax rates consistent with reported results have been assumed for purposes of this presentation. (2) Operating financial information is provided for the purpose of evaluating the Company's results excluding non-recurring charges primarily related to the sale of the Infrastructure business and reduction in carrying value of certain other related assets. (3) Pro Forma financial information is provided for the purpose of evaluating what the Company's operating results would have been excluding both non-recurring charges in Note (2) and the operating results of the terrestrial CDMA wireless infrastructure business. "It has been another eventful year for QUALCOMM. We achieved significant progress in profitability, shareholder return, and CDMA subscriber growth while creating a strong foundation for continuing improvements," noted Dr. Irwin Jacobs, chairman and CEO of QUALCOMM. "CDMA market acceptance is expanding, wherever permitted by government regulatory bodies, and work is progressing on the IMT-2000 third generation CDMA standard which will allow CDMA advantages to be fully realized worldwide. Although mobile voice continues to be the principal market driver, data activity is rapidly accelerating as 64 kilobit CDMA service is launched in Korea and Japan." "Efforts are well underway to introduce the initial third generation capabilities during the year 2000, using the same bandwidth as today's cdmaOne(TM) networks, but approximately doubling the capacity for voice and supporting even higher data rates," Dr. Jacobs continued. "Further, we are demonstrating data rates of up to 2 megabits per second with our new HDR technology to support rapid Internet access for fixed and mobile applications. QUALCOMM continues to lead in developing and delivering the chipsets and software to support these exciting developments." Revenues for the fourth quarter of fiscal 1999 were $1.1 billion, an increase of 14 percent compared to $926 million in the year ago period. Despite the sale of the terrestrial CDMA wireless infrastructure business during fiscal 1999, revenues grew 18 percent to $3.9 billion, compared to $3.3 billion in the year ago period. Reported net income was $201 million or $1.24 earnings per share for fiscal year 1999, compared to $109 million or $.73 earnings per share for fiscal year 1998, an increase of 85 percent. Reported net income was $136 million or $.73 earnings per share for the fourth quarter of fiscal 1999 compared to $40 million or $.27 earnings per share for the year ago quarter, an increase of 241 percent. Operating income for the fourth quarter increased to $258 million, excluding non-recurring charges, compared to $85 million during the year ago quarter, increasing 204 percent and exceeding total operating income for all of fiscal year 1998. Operating income as a percent of revenues more than doubled, increasing to 24 percent for the fourth quarter of fiscal 1999, excluding non-recurring charges, from 9 percent in the year ago period. Operating expenses (research and development, selling and marketing, general and administrative) for the fourth quarter of fiscal 1999 decreased to 17 percent of revenues, compared to 24 percent of revenues during the year ago period. The Company's annual effective tax rate for fiscal 1999 was 35 percent, compared to 30 percent for fiscal 1998. "During the fourth quarter, we achieved record shipments in all of our businesses," said Richard Sulpizio, president and chief operating officer of QUALCOMM. "We shipped 14 million MSM phone chips, 15 thousand OmniTRACS(R) units and 1.9 million CDMA phones. Component shortages in the phone business are beginning to ease, although these improvements were offset by lower phone prices. We also began production of our tri-mode Globalstar(TM) phones during the quarter. We look forward to the first quarter of fiscal 2000 with the goal of setting new records." QUALCOMM achieved a number of significant milestones during fiscal 1999: -- Reached a comprehensive agreement with Ericsson resulting in: 1) joint support of a single CDMA third generation (3G) standard; 2) sale of certain assets related to the Company's CDMA infrastructure equipment division to Ericsson; 3) resolution of all legal disputes between the companies relating to CDMA technology; and 4) cross-licensing of CDMA technology. -- Issued 6.9 million shares of common stock with cash proceeds of $1.1 billion. -- Added to Standard & Poor's 500 (S&P 500) Stock Index and FORTUNE 500. -- Named on FORTUNE magazine's "100 Best Companies to Work for in America." -- Formed the WirelessKnowledge joint venture with Microsoft. Results of Business Segments Under new operating segment disclosure requirements identified by the Financial Accounting Standards Board (FASB), QUALCOMM has established four reportable business segments. The adoption of these new disclosure requirements does not affect results of operations or financial position. Following is a brief description of each segment: QUALCOMM CDMA Technologies (QCT) (formerly ASIC Products) - the leading developer and supplier of CDMA chipsets, system software and tools to the world's leading CDMA handset and infrastructure manufacturers. QUALCOMM Technology Licenses (QTL) (formerly reported as License, Development and Royalty Fees) - develops and patents CDMA technology and generates fees and ongoing royalties from the worldwide sales of CDMA phones, chipsets, infrastructure and test equipment by the Company's more than 75 licensees. QUALCOMM Wireless Systems (QWS) - (comprised of three separate operating businesses, Wireless Business Solutions (formerly OmniTRACS), Wireless Systems (formerly Globalstar) and Wireless Infrastructure Products). The OmniTRACS system is a satellite-based mobile communications and tracking system that provides real-time messaging and position reporting between transportation fleets and their operations centers. The Globalstar system is an advanced low-earth-orbiting (LEO) satellite communications network that will provide affordable fixed and mobile communications services to a broad range of users. The Wireless Infrastructure Products business was sold in May 1999. QUALCOMM Consumer Products (QCP) (formerly Subscriber Products) - A leading supplier of digital wireless phones and data solutions that utilize cdmaOne technology. Phone manufacturing is done through QUALCOMM Personal Electronics (QPE), a joint venture of subsidiaries of QUALCOMM and Sony Electronics. The table below presents revenues and earnings before taxes (EBT) for reportable segments for fiscal years 1999 and 1998 (in thousands): Fiscal Year 1999 Reconciling Items Total Segments QCT QTL QWS (1) QCP (2)(3) QUALCOMM Revenue 1,133,422 454,163 939,780 1,469,637 (59,703) 3,937,299 % change from prior year 29% 57% (10%) 72% (122%) 18% Earnings Before Taxes 427,994 404,947 20,220 (39,983) (506,492) 306,686 % of revenue 38% 89% 2% (3%) 848% 8% Fiscal Year 1998 Reconciling Total Segments QCT QTL QWS QCP Items (2) QUALCOMM Revenue 879,858 289,934 1,048,957 855,101 274,020 3,347,870 Earnings Before Taxes 258,369 256,401 (53,054) (168,714) (144,328) 148,674 % of revenue 29% 88% (5%) (20%) (53%) 4% (1) QWS - On May 24, 1999, QUALCOMM sold certain assets related to the Company's terrestrial CDMA wireless infrastructure business. (2) Reconciling Items consist of other non-reportable segments, intersegment eliminations, and unallocated corporate expenses and non-recurring charges. (3) Earnings before taxes include $51 million of non-recurring charges for the fourth quarter of fiscal 1999, and totaling $334 million for fiscal 1999. 1999 Highlights of Business Segments QUALCOMM CDMA Technologies (QCT) -- Increased book-to-bill ratio for the fourth quarter of fiscal 1999 to .91 compared to .75 in the year ago period. Seasonal factors associated with the QCT business typically cause orders to be lower in the fourth and first fiscal quarters. The Company expects unit shipments to increase in the first quarter of fiscal 2000 over fourth quarter of fiscal 1999. -- Shipped 14 million Mobile Station Modem (MSM(TM)) phone chips to customers worldwide, including QPE, during the fourth quarter of fiscal 1999. Shipped over 39 million total MSM phone chips during fiscal 1999 and over 65 million total cumulative shipments of MSM phone chips. -- Twenty-nine CDMA phone manufacturers selected the industry-leading MSM3000(TM) chipset and system software. -- Introduced and shipped on-time samples of the sixth-generation MSM3100(TM) chipset and system software. -- Announced several new phone chips including the MSM5000(TM) and CSM5000(TM) to support third generation applications, and the iMSM(TM) family of chipsets for expanded data capabilities and advanced wireless Internet services. QUALCOMM Technology Licenses (QTL) -- Recorded license, development and royalty fees from the Company's licensees of $113 million in the fourth quarter and $326 million in fiscal 1999. Additional revenues are from royalties charged to other QUALCOMM business segments. -- Signed several new license agreements for cdmaOne technology, bringing the total number of companies licensed to over 75. QUALCOMM Wireless Systems (QWS) -- Shipped an all time high of over 48,000 OmniTRACS and TruckMAIL(TM) units in fiscal year 1999. Cumulative unit shipments of over 300,000 to customers operating in 37 countries. -- Signed over 200 new U.S. customers in fiscal year 1999, bringing the total U.S. customer base to over 1,100. -- Received Chinese government approval to provide satellite data services in China. -- Shipped a cumulative total of 38 commercial gateways for the Globalstar system. -- Began production and shipment of the Company's tri-mode mobile and fixed Globalstar phones. QUALCOMM Consumer Products (QCP) QUALCOMM recently announced it is considering several strategic options including the sale of its terrestrial-based phone business. QUALCOMM has received multiple preliminary offers for the QCP business and expects to enter into an agreement before the end of the 1999 calendar year. -- Exceeded 14 million CDMA phones shipped since production began. -- Introduced the ThinPhone, QUALCOMM's fifth generation of CDMA wireless phones and the pdQ(R) phone, the first phone to utilize the Palm Pilot(R) operating system. QUALCOMM Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on the Company's CDMA digital technology. The Company's major business areas include CDMA phones; integrated CDMA chipsets and system software; technology licensing; and satellite-based systems including OmniTRACS(R) and portions of the Globalstar(TM) system. Headquartered in San Diego, Calif., QUALCOMM is included in the S&P 500 Index and is a 1999 FORTUNE 500(R) company traded on the Nasdaq under the ticker symbol QCOM. Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ substantially from those referred to herein due to a number of factors, including but not limited to the risk that, despite receiving multiple preliminary offers, the Company will not be successful in entering into an agreement for the sale of its terrestrial CDMA phone business by the end of calendar 1999, if at all; risks that the rate of growth in the CDMA subscriber population will decrease; risks that the Company may not achieve increased shipments of CDMA chipsets in the first quarter of fiscal 2000; risks associated with strategic opportunities or acquisitions the Company may pursue; risks associated with the scale-up and operations of CDMA systems; risks associated with component shortages; risks associated with the ability to sustain or improve operational efficiency and profitability; risks associated with developments in current or future litigation; risks associated with customer receivables and performance guarantees; risks associated with timing and receipt of license fees and royalties; risks associated with international business activities; as well as the other risks detailed from time to time in the Company's SEC reports. QUALCOMM, OmniTRACS and Eudora are registered trademarks of QUALCOMM Incorporated. MSM, CSM, iMSM and TruckMAIL are trademarks of QUALCOMM Incorporated. Globalstar is a trademark of Loral QUALCOMM Satellite Services, Incorporated. All other trademarks are the property of their respective manufacturers. SOURCE QUALCOMM Incorporated CONTACT: Julie Cunningham, Vice President, Investor Relations of QUALCOMM Incorporated, 858-658-4224, or fax, 858-651-9303, [email protected] Web site: http://www.qualcomm.com