Qualcomm Announces Third Quarter Fiscal 2010 Results

Posted July 21, 2010

Revenues $2.7 Billion, EPS $0.47

SAN DIEGO, July 21 /PRNewswire-FirstCall/ -- Qualcomm Incorporated (Nasdaq:
QCOM), a leading developer and innovator of advanced wireless technologies,
products and services, today announced results for the third quarter of fiscal
2010 ended June 27, 2010.

"Our financial performance this quarter exceeded our prior expectations, driven
by record MSM chipset shipments, favorable product mix and continued strong
demand for 3G devices around the world," said Dr. Paul E. Jacobs, chairman and
CEO of Qualcomm. "Looking forward, we continue to see healthy CDMA-based device
growth of approximately 23 percent in calendar year 2010, and are raising both
our revenue and earnings guidance for the fiscal year."

Third Quarter Results (GAAP)

-- Revenues: $2.71 billion, down 2 percent year-over-year and up 2 percent
sequentially.
-- Operating income: $792 million, down 11 percent year-over-year and up 2
percent sequentially.
-- Net income: $767 million, up 4 percent year-over-year and down 1 percent
sequentially.
-- Diluted earnings per share: $0.47, up 7 percent year-over-year and 2
percent sequentially.
-- Effective tax rate: 21 percent for the quarter.
-- Operating cash flow: $951 million, down 13 percent year-over-year; 35
percent of revenues.
-- Return of capital to stockholders: $1.49 billion, including $309
million, or $0.19 per share, of cash dividends paid, and $1.18 billion
to repurchase 32.4 million shares of our common stock.

Pro Forma Third Quarter Results

Pro forma results exclude the Qualcomm Strategic Initiatives (QSI) segment,
certain share-based compensation, certain tax items that are not related to the
current year and acquired in-process research and development (R&D) expense.

-- Revenues: $2.70 billion, down 2 percent year-over-year and up 1 percent
sequentially.
-- Operating income: $991 million, down 12 percent year-over-year and 7
percent sequentially.
-- Net income: $936 million, up 4 percent year-over-year and down 5 percent
sequentially.
-- Diluted earnings per share: $0.57, up 6 percent year-over-year and down
3 percent sequentially. The current quarter excludes $0.07 loss per
share attributable to certain share-based compensation and $0.03 loss
per share attributable to certain tax items.
-- Effective tax rate: 19 percent for the quarter.
-- Free cash flow: $954 million, down 8 percent year-over-year; 35 percent
of revenues (defined as net cash from operating activities less capital
expenditures).

Detailed reconciliations between results reported in accordance with generally
accepted accounting principles (GAAP) and pro forma results are included at the
end of this news release.

Third Quarter Key Business Metrics

-- CDMA-based Mobile Station Modem(TM) (MSM(TM)) shipments: approximately
103 million units, up 10 percent year-over-year and 11 percent
sequentially.
-- March quarter total reported device sales: approximately $25.2 billion,
up 19 percent year-over-year and down 9 percent sequentially.
o March quarter estimated CDMA-based device shipments: approximately 134
to 138 million units at an estimated average selling price of
approximately $183 to $189 per unit.

Cash and Marketable Securities

Our cash, cash equivalents and marketable securities totaled approximately $17.6
billion at the end of the third quarter of fiscal 2010, compared to $18.2
billion at the end of the second quarter of fiscal 2010 and $15.7 billion a year
ago. On July 8, 2010, we announced a cash dividend of $0.19 per share payable on
September 24, 2010 to stockholders of record as of August 27, 2010.

Research and Development

($ in millions) Share-Based In-Process
Pro Forma Compensation R&D QSI GAAP
--------- ------------ --- --- ----
Third quarter fiscal 2010 $546 $74 $- $29 $649
As a % of revenues 20% N/M 24%
Third quarter fiscal 2009 $523 $72 $- $23 $618
As a % of revenues 19% N/M 22%
Year-over-year change ($) 4% 3% N/M 26% 5%

N/M -Not Meaningful

Pro forma R&D expenses increased 4 percent year-over-year, primarily due to an
increase in costs related to the development of integrated circuit products,
next-generation CDMA and OFDMA technologies, and other initiatives to support
the acceleration of advanced wireless products and services. QSI R&D expenses
were primarily related to our FLO TV(TM) subsidiary.

Selling, General and Administrative

($ in millions) Share-Based
Pro Forma Compensation QSI GAAP
--------- ------------ --- ----
Third quarter fiscal 2010 $321 $65 $(26) $360
As a % of revenues 12% N/M 13%
Third quarter fiscal 2009 $285 $68 $24 $377
As a % of revenues 10% N/M 14%
Year-over-year change ($) 13% (4%) (208%) (5%)

Pro forma selling, general and administrative (SG&A) expenses increased 13
percent year-over-year primarily due to an increase in patent-related costs.
Third quarter fiscal 2010 QSI SG&A expenses included a $62 million gain on the
sale of our Australia spectrum license. Other QSI SG&A expenses increased by $12
million primarily due to selling and marketing expenses related to FLO TV.

Effective Income Tax Rate

Our fiscal 2010 effective income tax rates are estimated to be approximately 20
percent for GAAP and approximately 20 to 21 percent for pro forma. Our estimate
of the fiscal 2010 GAAP effective tax rate includes tax expense of approximately
$130 million that arises because deferred revenue related to the 2008 license
and settlement agreements with Nokia is taxable in fiscal 2010, but the
resulting deferred tax asset will reverse in future years when our state tax
rate will be lower as a result of California tax legislation enacted in 2009.
During the third quarter of fiscal 2010, we recorded $20 million of tax expense
as a result of prior year tax audits completed during the third fiscal quarter.
The tax expense related to these items was excluded from our pro forma results
to provide a clearer understanding of our ongoing tax rate and after tax
earnings.

Qualcomm Strategic Initiatives

The QSI segment is composed of our strategic investments, including FLO TV and
the Broadband Wireless Access (BWA) spectrum recently won in the auction in
India. GAAP results for the third quarter of fiscal 2010 included a net loss of
$4 million for the QSI segment. The third quarter of fiscal 2010 QSI results
included $118 million in operating expenses, primarily related to FLO TV,
partially offset by a $62 million gain on the sale of our Australia spectrum
license. In June 2010, in connection with the India BWA spectrum purchase, we
entered into a bank loan agreement that is payable in full in Indian rupees in
December 2010. At the end of the third quarter of fiscal 2010, the carrying
value of the loan was $1.06 billion.

Business Outlook

The following statements are forward looking and actual results may differ
materially. The "Note Regarding Forward-Looking Statements" at the end of this
news release provides a description of certain risks that we face, and our
annual and quarterly reports on file with the Securities and Exchange Commission
(SEC) provide a more complete description of risks.

Our outlook does not include provisions for the consequences of injunctions,
damages or fines related to any pending legal matters unless awarded or imposed
by a court, governmental entity or other regulatory body. In addition, due to
their nature, certain income and expense items, such as realized investment
gains or losses, gains and losses on certain derivative instruments or asset
impairments, cannot be accurately forecast. Accordingly, we exclude forecasts of
such items from our business outlook, and actual results may vary materially
from the business outlook if we incur any such income or expense items.

The following table summarizes GAAP and pro forma guidance based on the current
business outlook. The pro forma business outlook presented below is consistent
with the presentation of pro forma results elsewhere herein.

The following estimates are approximations and are based on the current business
outlook:

Qualcomm's Business Outlook Summary

FOURTH FISCAL QUARTER
---------------------
Q4 FY09 Current Guidance
Results Q4 FY10 Estimates
------- -----------------
Pro Forma
Revenues $2.68B $2.67B - $2.93B
Year-over-year change even - increase 9%
Diluted earnings per share
(EPS) $0.48 $0.55 - $0.59
Year-over-year change increase 15% - 23%

GAAP
Revenues $2.69B $2.67B - $2.93B
decrease 1% -
Year-over-year change increase 9%
Diluted EPS $0.48 $0.39 - $0.43
Year-over-year change decrease 10% - 19%
Diluted EPS attributable to
QSI ($0.05) ($0.07)
Diluted EPS attributable to
share-based compensation ($0.05) ($0.07)
Diluted EPS attributable to
certain tax items (1) $0.09 ($0.02)

Metrics
MSM shipment approx. 91M approx. 106M - 111M
Year-over-year change increase 16% - 22%
Total reported device sales
(2) $24.9B* $26.5B - $28.5B*
Est. CDMA-based devices
shipped (2) approx. 120M-124M* not provided
Est. CDMA-based device
average selling price (2) approx. $200-$206* not provided
*Est. sales in June quarter,
reported in September
quarter

FISCAL YEAR
-----------

Prior Current
Guidance Guidance
FY 2009 FY 2010 FY 2010
Results Estimates Estimates
------- --------- ---------
Pro Forma
Revenues $10.39B $10.4B - $11.0B $10.7B - $11.0B
Year-over-year change even -increase 6% increase 3% - 6%
Diluted EPS $1.31 $2.21 - $2.32 $2.33 - $2.37
Year-over-year
change increase 69% - 77% increase 78% - 81%

GAAP
Revenues $10.42B $10.4B - $11.0B $10.7B - $11.0B
Year-over-year change even -increase 6% increase 3% - 6%
Diluted EPS $0.95 $1.71 - $1.82 $1.82 - $1.86
Year-over-year
change increase 80% - 92% increase 92% - 96%
Diluted EPS
attributable to QSI ($0.15) ($0.15) ($0.15)
Diluted EPS
attributable to
share-based
compensation ($0.27) ($0.27) ($0.27)
Diluted EPS
attributable to
certain tax items(1) $0.07 ($0.08) ($0.09)

Metrics
Est. fiscal year*
CDMA-based device
average selling approx. approx. approx.
price range (2) $202 - $208 $182 - $188 $184 - $188

*Shipments in Sept. to June quarters, reported in Dec. to Sept. quarters
-------------------

CALENDAR YEAR Device Estimates (2)
----------------------------------
Prior Current
Guidance Guidance
Calendar 2009 Calendar 2010 Calendar 2010
Estimates Estimates Estimates
--------- --------- ---------
Est. CDMA-based
device shipments

March quarter approx. 106M-110M not provided approx. 134M-138M
June quarter approx. 120M-124M not provided not provided
September quarter approx. 126M-130M not provided not provided
December quarter approx. 148M-152M not provided not provided
---------------- ----------------- ------------ ------------
Est. Calendar year
range (approx.) 500M - 516M 600M - 650M 600M - 650M
------------------ ----------- ----------- -----------
Midpoint Midpoint Midpoint
Est. total CDMA-based
units approx. 508M approx. 625M approx. 625M
Est. CDMA units approx. 213M approx. 236M approx. 236M
Est. WCDMA units approx. 295M approx. 389M approx. 389M
---------------- ------------ ------------ ------------

(1) The estimate of our fiscal 2010 GAAP effective tax rate includes
tax expense of approximately $130 million that arises because
deferred revenue related to the 2008 license and settlement
agreements with Nokia is taxable in fiscal 2010 but the resulting
deferred tax asset will reverse in future years when our state tax
rate will be lower as a result of California tax legislation enacted
in 2009.
(2) Total reported device sales is the sum of all reported sales in
U.S. dollars (as reported to us by our licensees) of all licensed
CDMA-based subscriber devices (including handsets, modules, modem
cards and other subscriber devices) by our licensees during a
particular period. The reported quarterly estimated ranges of ASPs
and unit shipments are determined based on the information as
reported to us by our licensees during the relevant period and our
own estimates of the selling prices and unit shipments for licensees
that do not provide such information. Not all licensees report
sales, selling prices and/or unit shipments the same (e.g., some
licensees report selling prices net of permitted deductions, such as
transportation, insurance and packing costs, while other licensees
report selling prices and then identify the amount of permitted
deductions in their reports), and the way in which licensees report
such information may change from time to time. Total reported
device sales, estimated unit shipments and estimated ASPs for a
particular period may include prior period activity that is reported
with the activity for the particular period. For results using
assumptions in effect for quarters prior to the second quarter of
fiscal 2010, please refer to the "Changes to QTL Metrics" table of
our April 21, 2010 earnings release that was furnished to the
Securities and Exchange Commission on Form 8-K.

Results of Business Segments (in millions, except per share data):

Pro Forma
Reconciling
Items Pro Forma
SEGMENTS QCT QTL QWI (1)(5) (5)
-------- --- --- --- ----- ------
Q3 - FISCAL 2010
----------------
Revenues $1,691 $847 $162 $- $2,700
Change from prior
year (5%) 5% 9% N/M (2%)
Change from prior
quarter 10% (13%) 7% N/M 1%
Operating income
(loss) $991
Change from prior
year (12%)
Change from prior
quarter (7%)
EBT $404 $673 $6 $78 $1,161
Change from prior
year (26%) 2% N/M N/M (3%)
Change from prior
quarter 17% (18%) N/M N/M (8%)
EBT as a % of
revenues 24% 79% 4% N/M 43%
Net income (loss) $936
Change from prior
year 4%
Change from prior
quarter (5%)
Diluted EPS $0.57
Change from prior
year 6%
Change from prior
quarter (3%)
Diluted shares used 1,642

Share- In-
Based Tax Process
SEGMENTS Compensation(2) Items(3) R&D QSI(4) GAAP(5)
-------- --------------- ------- ---- ----- ------
Q3 - FISCAL 2010
----------------
Revenues $- $- $- $6 $2,706
Change from prior
year (33%) (2%)
Change from prior
quarter 200% 2%
Operating income
(loss) ($149) $- $- ($50) $792
Change from prior
year 1% N/A 35% (11%)
Change from prior
quarter 3% N/M 62% 2%
EBT ($149) $- $- ($41) $971
Change from prior
year 1% N/A 38% (1%)
Change from prior
quarter 3% N/M 70% 1%
EBT as a % of
revenues N/M N/M N/M 36%
Net income (loss) ($111) ($54) $- ($4) $767
Change from prior
year 13% N/A N/A 90% 4%
Change from prior
quarter (13%) N/M N/M 95% (1%)
Diluted EPS ($0.07) ($0.03) $- $- $0.47
Change from prior
year 13% N/A N/A N/M 7%
Change from prior
quarter (17%) N/M N/M N/M 2%
Diluted shares used 1,642 1,642 1,642 1,642 1,642

Pro Forma
Reconciling
Items Pro Forma
SEGMENTS QCT QTL QWI (1)(5) (5)
-------- --- --- --- ----- ------
Q2 - FISCAL 2010
----------------
Revenues $1,537 $974 $152 ($2) $2,661
Operating income
(loss) 1,065
EBT 344 821 (1) 94 1,258
Net income (loss) 989
Diluted EPS $0.59
Diluted shares used 1,678

Share- In-
Based Tax Process
SEGMENTS Compensation(2) Items(3) R&D QSI(4) GAAP(5)
-------- --------------- ------- ---- ----- ------
Q2 - FISCAL 2010
----------------
Revenues $- $- $- $2 $2,663
Operating income
(loss) (154) - (3) (132) 776
EBT (154) - (3) (136) 965
Net income (loss) (98) (33) (3) (81) 774
Diluted EPS ($0.06) ($0.02) $- ($0.05) $0.46
Diluted shares used 1,678 1,678 1,678 1,678 1,678

Pro Forma
Reconciling
Items Pro Forma
SEGMENTS QCT QTL QWI (1)(5) (5)
-------- --- --- --- ----- ------
Q3 - FISCAL 2009
----------------
Revenues $1,786 $807 $148 $3 $2,744
Operating income
(loss) 1,122
EBT 548 663 (3) (7) 1,201
Net income (loss) 903
Diluted EPS $0.54
Diluted shares used 1,675

Share- In-
Based Tax Process
SEGMENTS Compensation(2) Items(3) R&D QSI(4) GAAP(5)
-------- --------------- ------- ---- ----- ------
Q3 - FISCAL 2009
----------------
Revenues $- $- $- $9 $2,753
Operating income
(loss) (151) - - (77) 894
EBT (151) - - (66) 984
Net income (loss) (127) - - (39) 737
Diluted EPS ($0.08) $- $- ($0.02) $0.44
Diluted shares used 1,675 1,675 1,675 1,675 1,675

Pro Forma
Reconciling
Items Pro Forma
SEGMENTS QCT QTL QWI (1)(5) (5)
-------- --- --- --- ----- ------
Q4 - FISCAL 2009
----------------
Revenues $1,699 $837 $146 $1 $2,683
Operating income
(loss) 831
EBT 508 693 (5) (211) 985
Net income (loss) 811
Diluted EPS $0.48
Diluted shares used 1,688

Share- In-
Based Tax Process
SEGMENTS Compensation(2) Items(3) R&D QSI(4) GAAP(5)
-------- --------------- ------- ---- ----- ------
Q4 - FISCAL 2009
----------------
Revenues $- $- $- $7 $2,690
Operating income
(loss) (148) - - (86) 597
EBT (148) - - (95) 742
Net income (loss) (85) 155 - (78) 803
Diluted EPS ($0.05) $0.09 $- ($0.05) $0.48
Diluted shares used 1,688 1,688 1,688 1,688 1,688

Pro Forma
Reconciling
Items Pro Forma
SEGMENTS QCT QTL QWI (1)(5) (5)
-------- --- --- --- ----- ------
9 MONTHS -FISCAL
2010
----------------
Revenues $4,835 $2,738 $456 $1 $8,030
Change from prior
year 9% (1%) (8%) N/M 4%
Operating income
(loss) $3,189
Change from prior
year 37%
EBT $1,173 $2,266 $14 $274 $3,727
Change from prior
year 26% (5%) (44%) N/M 83%
Net income (loss) $2,967
Change from prior
year 116%
Diluted EPS $1.78
Change from prior
year 117%
Diluted shares used 1,670

Share- In-
Based Tax Process
SEGMENTS Compensation(2) Items(3) R&D QSI(4) GAAP(5)
-------- --------------- ------- ---- ----- ------
9 MONTHS -FISCAL
2010
----------------
Revenues $- $- $- $9 $8,039
Change from prior
year (59%) 4%
Operating income
(loss) ($453) $- ($3) ($286) $2,447
Change from prior
year (4%) N/M (14%) 50%
EBT ($453) $- ($3) ($283) $2,988
Change from prior
year (4%) N/M (6%) 124%
Net income (loss) ($322) ($119) ($3) ($141) $2,382
Change from prior
year 13% N/M N/M 19% 202%
Diluted EPS ($0.19) ($0.07) $- ($0.08) $1.43
Change from prior
year 14% N/M N/M 20% 204%
Diluted shares used 1,670 1,670 1,670 1,670 1,670

Pro Forma
Reconciling
Items Pro Forma
SEGMENTS QCT QTL QWI (1)(5) (5)
-------- --- --- --- ----- ------
9 MONTHS -FISCAL
2009
----------------
Revenues $4,436 $2,769 $494 $5 $7,704
Operating income
(loss) 2,323
EBT 933 2,376 25 (1,292) 2,042
Net income (loss) 1,376
Diluted EPS $0.82
Diluted shares used 1,668

Share- In-
Based Tax Process
SEGMENTS Compensation(2) Items(3) R&D QSI(4) GAAP(5)
-------- --------------- ------- ---- ----- ------
9 MONTHS -FISCAL
2009
----------------
Revenues $- $- $- $22 $7,726
Operating income
(loss) (436) - (6) (251) 1,630
EBT (436) - (6) (266) 1,334
Net income (loss) (370) (36) (6) (174) 790
Diluted EPS ($0.22) ($0.02) $- ($0.10) $0.47
Diluted shares used 1,668 1,668 1,668 1,668 1,668

Pro Forma
Reconciling
Items Pro Forma
SEGMENTS QCT QTL QWI (1)(5) (5)
-------- --- --- --- ----- ------
FISCAL YEAR 2009
----------------
Revenues $6,135 $3,605 $641 $6 $10,387
Operating income
(loss) 3,153
EBT 1,441 3,068 20 (1,502) 3,027
Net income (loss) 2,187
Diluted EPS $1.31
Diluted shares used 1,673
------------------- -----

Share- In-
Based Tax Process
SEGMENTS Compensation(2) Items(3) R&D QSI(4) GAAP(5)
-------- --------------- ------- ---- ----- ------
FISCAL YEAR 2009
----------------
Revenues $- $- $- $29 $10,416
Operating income
(loss) (584) - (6) (337) 2,226
EBT (584) - (6) (361) 2,076
Net income (loss) (455) 118 (6) (252) 1,592
Diluted EPS ($0.27) $0.07 $- ($0.15) $0.95
Diluted shares used 1,673 1,673 1,673 1,673 1,673
------------------- ----- ----- ----- ----- -----

(1) Pro forma reconciling items related to revenues consist
primarily of other nonreportable segment revenues less intersegment
eliminations. Pro forma reconciling items related to earnings
before taxes consist primarily of certain investment income or
losses, research and development expenses, sales and marketing
expenses and other operating expenses that are not allocated to the
segments for management reporting purposes, nonreportable segment
results and the elimination of intersegment profit.
(2) Certain share-based compensation is included in operating
expenses as part of employee-related costs but is not allocated to
the Company's segments as such costs are not considered relevant by
management in evaluating segment performance.
(3) During the first, second and third quarters of fiscal 2010, the
Company recorded $32 million, $33 million and $32 million in state
tax expense, respectively, or $0.02 diluted loss per share for each
quarter, that arises because deferred revenue related to the license
and settlement agreements with Nokia is taxable in fiscal 2010 but
the resulting deferred tax asset will reverse in future years when
the Company's state tax rate will be lower. During the third quarter
of fiscal 2010, the Company recorded $22 million of tax expense, or
$0.01 diluted loss per share, as a result of prior year tax audits
completed during the third quarter.
(4) At fiscal year-end, the sum of the quarterly tax provisions for
each column, including QSI, equals the annual tax provisions for
each column computed in accordance with GAAP. In interim quarters,
the tax provision for the QSI operating segment is computed by
subtracting the pro forma tax provision, the tax items column and
the tax provision related to share-based compensation from the GAAP
tax provision.
(5) Fiscal 2009 results included a $783 million charge related to a
litigation settlement and patent agreement with Broadcom
Corporation, including $748 million recorded in the second quarter
of fiscal 2009 and $35 million recorded in the fourth quarter of
2009. The fourth quarter of fiscal 2009 results also included a
$230 million charge related to a fine that had been announced by the
Korea Fair Trade Commission.
N/M - Not Meaningful
Sums may not equal totals due to rounding.

Conference Call

Qualcomm's third quarter fiscal 2010 earnings conference call will be broadcast
live on July 21, 2010 beginning at 1:45 p.m. Pacific Time (PT) on the Company's
web site at: www.qualcomm.com. This conference call may contain forward-looking
financial information and will include a discussion of "non-GAAP financial
measures" as that term is defined in Regulation G. The most directly comparable
GAAP financial measures and information reconciling these non-GAAP financial
measures to the Company's financial results prepared in accordance with GAAP, as
well as the other material financial and statistical information to be discussed
in the conference call, will be posted on the Company's Investor Relations web
site at www.qualcomm.com immediately prior to commencement of the call. A taped
audio replay will be available via telephone on July 21, 2010, beginning at
approximately 5:30 p.m. PT through August 21, 2010 at 9:00 p.m. PT. To listen to
the replay, U.S. callers may dial (800) 642-1687 and international callers may
dial (706) 645-9291. U.S. and international callers should use reservation
number 83946397. An audio replay of the conference call will be available on the
Company's web site at www.qualcomm.com following the live call.

Editor's Note: To view the web slides that accompany this earnings release and
conference call, please go to the Qualcomm Investor Relations website at:
http://investor.qualcomm.com/results.cfm

Qualcomm Incorporated (Nasdaq: QCOM) is the world leader in next-generation
mobile technologies. For 25 years, Qualcomm ideas and inventions have driven the
evolution of wireless communications, connecting people more closely to
information, entertainment and each other. Today, Qualcomm technologies are
powering the convergence of mobile communications and consumer electronics,
making wireless devices and services more personal, affordable and accessible to
people everywhere. For more information, please visitwww.qualcomm.com

Note Regarding Use of Non-GAAP Financial Measures

The Company presents pro forma financial information that is used by management
(i) to evaluate, assess and benchmark the Company's operating results on a
consistent and comparable basis; (ii) to measure the performance and efficiency
of the Company's ongoing core operating businesses, including the Qualcomm CDMA
Technologies, Qualcomm Technology Licensing and Qualcomm Wireless & Internet
segments; and (iii) to compare the performance and efficiency of these segments
against each other and against competitors outside the Company. Pro forma
measurements of the following financial data are used by the Company's
management: revenues, R&D expenses, SG&A expenses, total operating expenses,
operating income (loss), net investment income (loss), income (loss) before
income taxes, effective tax rate, net income (loss), diluted earnings (loss) per
share, operating cash flow and free cash flow. Management is able to assess what
it believes is a more meaningful and comparable set of financial performance
measures for the Company and its business segments by using pro forma
information. As a result, management compensation decisions and the review of
executive compensation by the Compensation Committee of the Board of Directors
focus primarily on pro forma financial measures applicable to the Company and
its business segments.

Pro forma information used by management excludes the QSI segment, certain
share-based compensation, certain tax items and acquired in-process R&D. The QSI
segment is excluded because the Company expects to exit its strategic
investments at various times, and the effects of fluctuations in the value of
such investments are viewed by management as unrelated to the Company's
operational performance. Share-based compensation, other than amounts related to
share-based awards granted under a bonus program that may result in the issuance
of unrestricted shares of the Company's common stock, is excluded because
management views such share-based compensation as unrelated to the Company's
operational performance. Further, share-based compensation related to stock
options is affected by factors that are subject to change, including the
Company's stock price, stock market volatility, expected option life, risk-free
interest rates and expected dividend payouts in future years. Certain tax items
that were recorded in reported earnings in each fiscal year presented, but were
unrelated to the fiscal year in which they were recorded, are excluded in order
to provide a clearer understanding of the Company's ongoing pro forma tax rate
and after tax earnings. Acquired in-process R&D is excluded because such expense
is viewed by management as unrelated to the operating activities of the
Company's ongoing core businesses.

The Company presents free cash flow, defined as net cash provided by operating
activities less capital expenditures, to facilitate an understanding of the
amount of cash flow generated that is available to grow its business and to
create long-term shareholder value. The Company believes that this presentation
is useful in evaluating its operating performance and financial strength. In
addition, management uses this measure to evaluate the Company's performance, to
value the Company and to compare its operating performance with other companies
in the industry.

The non-GAAP pro forma financial information presented herein should be
considered in addition to, not as a substitute for, or superior to, financial
measures calculated in accordance with GAAP. In addition, "pro forma" is not a
term defined by GAAP, and, as a result, the Company's measure of pro forma
results might be different than similarly titled measures used by other
companies. Reconciliations between GAAP results and pro forma results are
presented herein.

Note Regarding Forward-Looking Statements

In addition to 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 risks associated with: the rate
of deployment and adoption of, and demand for, our technologies in wireless
networks and of wireless communications, equipment and services, including
CDMA2000 1X, 1xEV-DO, WCDMA, HSPA, TD-SCDMA and OFDMA both domestically and
internationally; the uncertainty of global economic conditions and its potential
impact on demand for our products, services or applications and the value of our
marketable securities; attacks on our business model, including results of
current and future litigation and arbitration proceedings, as well as actions of
governmental or quasi-governmental bodies, and the costs we incur in connection
therewith, including potentially damaged relationships with customers and
operators who may be impacted by the results of these proceedings; our
dependence on major customers and licensees; our dependence on third-party
manufacturers and suppliers; our ability to maintain and improve operational
efficiencies and profitability; foreign currency fluctuations; strategic
investments and transactions we have or may pursue; the development, deployment
and commercial acceptance of the FLO TV network and MediaFLO(TM) technology; the
development and commercial acceptance of the mirasol® display technology; as
well as the other risks detailed from time-to-time in our SEC reports, including
the report on Form 10-K for the year ended September 27, 2009 and most recent
Form 10-Q. The Company undertakes no obligation to update, or continue to
provide information with respect to, any forward-looking statement or risk
factor, whether as a result of new information, future events or otherwise.

Qualcomm is a registered trademark of Qualcomm Incorporated. FLO TV and MediaFLO
are trademarks of Qualcomm Incorporated. mirasol is a registered trademark of
Qualcomm MEMS Technologies, Inc. CDMA2000 is a registered trademark of the
Telecommunications Industry Association (TIA USA). All other trademarks are the
property of their respective owners.

Qualcomm Contact:
Warren Kneeshaw
Phone: 1-858-658-4813
e-mail: ir@qualcomm.com

Qualcomm Incorporated
CONSOLIDATED STATEMENTS OF OPERATIONS
This schedule is to assist the reader in reconciling from
Pro Forma results to GAAP results
(In millions, except per share data)
(Unaudited)

Three Months Ended June 27, 2010
--------------------------------
Share-
Pro Based Tax
Forma Compensation Items QSI GAAP
------ ------------ ----- --- ----
Revenues:
Equipment
and
services $1,766 $- $- $6 $1,772
Licensing
and
royalty
fees 934 - - - 934
Total
revenues 2,700 - - 6 2,706
----- --- --- --- -----
Operating
expenses:
Cost
of equipment
and services
revenues 842 10 - 53 905
Research
and
development 546 74 - 29 649
Selling,
general and
administrative 321 65 - (26) 360
Total operating
expenses 1,709 149 - 56 1,914
----- --- --- --- -----

Operating
income (loss) 991 (149) - (50) 792

Investment
income (loss),
net 170(a) - - 9(b) 179
--- --- --- --- ---
Income
(loss) before
income taxes 1,161 (149) - (41) 971
Income
tax (expense)
benefit (225)(c) 38(h) (54)(e) 37(d) (204)(c)
==== === === === ====
Net income
(loss) $936 $(111) $(54) $(4) $767
==== ===== ==== === ====

Earnings (loss)
per common
share:
Diluted $0.57 $(0.07) $(0.03) $(0.00) $0.47
===== ====== ====== ====== =====

Shares used
in per
share
calculations:
Diluted 1,642 1,642 1,642 1,642 1,642
===== ===== ===== ===== =====

Supplemental
Financial
Data:
------------
Operating Cash
Flow $1,051 $(3)(g) $- $(97) $951
Operating Cash
Flow as a % of
Revenues 39% N/M 35%
Free Cash
Flow (f) $954 $(3)(g) $- $(117) $834
Free Cash
Flow as a % of
Revenues 35% N/M 31%

(a) Included $127 million in interest and dividend income related to
cash, cash equivalents and marketable securities, which were not
part of the Company's strategic investment portfolio, and $78
million in net realized gains on investments, partially offset by
$28 million in other-than-temporary losses on investments, $5
million in interest expense and $2 million in losses on derivatives.
(b) Included $14 million in net realized gains on investments, $4
million in interest and dividend income related to cash, cash
equivalents and marketable securities and $1 million in equity in
earnings of investees, partially offset by $9 million in interest
expense and $1 million in other-than-temporary losses on
investments.
(c) The third quarter of fiscal 2010 effective tax rates were 21%
for GAAP and 19% for pro forma.
(d) At fiscal year-end, the sum of the quarterly tax provisions for
each column, including QSI, equals the annual tax provisions for
each column computed in accordance with GAAP. In interim quarters,
the tax provision for the QSI operating segment is computed by
subtracting the pro forma tax provision, the tax items column and
the tax provision related to share-based compensation from the GAAP
tax provision.
(e) During the third quarter of fiscal 2010, the Company recorded
(i) a $32 million state tax expense, or $0.02 diluted loss per
share, that arises because deferred revenue related to the license
and settlement agreements with Nokia is taxable in fiscal 2010 but
the resulting deferred tax asset will reverse in future years when
the Company's state tax rate will be lower, and (ii) a $22 million
tax expense, or $0.01 diluted loss per share, as a result of prior
year tax audits completed during the third quarter of fiscal 2010.
(f) Free Cash Flow is calculated as net cash provided by operating
activities less capital expenditures. Reconciliation of these
amounts is included in the Reconciliation of Pro Forma Free Cash
Flows to Net Cash Provided by Operating Activities (GAAP) and other
supplemental disclosures for the three months ended June 27, 2010,
included herein.
(g) Incremental tax benefits from stock options exercised during the
period.
(h) The third quarter of fiscal 2010 tax benefit related to share-
based compensation includes a $2 million tax benefit as a result of
prior year tax audits completed during the third quarter of fiscal
2010.

Nine Months Ended June 27, 2010
-------------------------------
Share-Based
Pro Forma Compensation Tax Items
--------- ------------ ---------
Revenues:
Equipment and services $5,021 $- $-
Licensing and royalty fees 3,009 - -
Total revenues 8,030 - -
----- --- ---
Operating expenses:
Cost of equipment and
services revenues 2,345 30 -
Research and development 1,594 221 -
Selling, general and
administrative 902 202 -
Total operating expenses 4,841 453 -
----- --- ---

Operating income (loss) 3,189 (453) -

Investment income (loss), net 538(a) - -
--- --- ---
Income (loss) before
income taxes 3,727 (453) -
Income tax (expense) benefit (760)(c) 131(h) (119)(e)
---- --- ----
Net income (loss) $2,967 $(322) $(119)
====== ===== =====

Earnings (loss) per common
share:
Diluted $1.78 $(0.19) $(0.07)
===== ====== ======

Shares used in per share
calculations:
Diluted 1,670 1,670 1,670
===== ===== =====

Supplemental Financial Data:
---------------------------
Operating Cash Flow $3,297 $(34)(g) $-
Operating Cash Flow as a %
of Revenues 41%
Free Cash Flow (f) $3,048 $(34)(g) $-
Free Cash Flow as a % of
Revenues 38%

Nine Months Ended June 27, 2010
-------------------------------
In-Process
R&D QSI GAAP
--- --- ----
Revenues:
Equipment and services $- $9 $5,030
Licensing and royalty fees - - 3,009
Total revenues - 9 8,039
--- --- -----
Operating expenses:
Cost of equipment and
services revenues - 154 2,529
Research and development 3 74 1,892
Selling, general and
administrative - 67 1,171
Total operating expenses 3 295 5,592
--- --- -----

Operating income (loss) (3) (286) 2,447

Investment income (loss), net - 3(b) 541
--- --- ---
Income (loss) before
income taxes (3) (283) 2,988
Income tax (expense) benefit - 142(d) (606)(c)
--- --- ----
Net income (loss) $(3) $(141) $2,382
=== ===== ======

Earnings (loss) per common
share:
Diluted $(0.00) $(0.08) $1.43
====== ====== =====

Shares used in per share
calculations:
Diluted 1,670 1,670 1,670
===== ===== =====

Supplemental Financial Data:
----------------------------
Operating Cash Flow $- $(280) $2,983
Operating Cash Flow as a %
of Revenues N/M 37%
Free Cash Flow (f) $- $(344) $2,670
Free Cash Flow as a % of
Revenues N/M 33%

(a) Included $401 million in interest and dividend income related to
cash, cash equivalents and marketable securities, which were not
part of the Company's strategic investment portfolio, and $249
million in net realized gains on investments, partially offset by
$94 million in other-than-temporary losses on investments, $15
million in interest expense and $3 million in losses on derivatives.
(b) Included $25 million in net realized gains on investments and $4
million in interest and dividend income related to cash, cash
equivalents and marketable securities, partially offset by $15
million in interest expense, $8 million in other-than-temporary
losses on investments and $3 million in equity in losses of
investees.
(c) The effective tax rates for the first nine months of fiscal 2010
were 20% for both GAAP and pro forma.
(d) At fiscal year-end, the sum of the quarterly tax provisions for
each column, including QSI, equals the annual tax provisions for
each column computed in accordance with GAAP. In interim quarters,
the tax provision for the QSI operating segment is computed by
subtracting the pro forma tax provision, the tax items column and
the tax provision related to share-based compensation from the GAAP
tax provision.
(e) During the first nine months of fiscal 2010, the Company
recorded (i) a $97 million state tax expense, or $0.06 diluted loss
per share, that arises because deferred revenue related to the
license and settlement agreements with Nokia is taxable in fiscal
2010 but the resulting deferred tax asset will reverse in future
years when the Company's state tax rate will be lower, and (ii) a
$22 million tax expense, or $0.01 diluted loss per share, as a
result of prior year tax audits completed during the third quarter
of fiscal 2010.
(f) Free Cash Flow is calculated as net cash provided by operating
activities less capital expenditures. Reconciliation of these
amounts is included in the Reconciliation of Pro Forma Free Cash
Flows to Net Cash Provided by Operating Activities (GAAP) and other
supplemental disclosures for the nine months ended June 27, 2010,
included herein.
(g) Incremental tax benefits from stock options exercised during the
period.
(h) The first nine months of fiscal 2010 tax benefit related to
share-based compensation includes a $2 million tax benefit as a
result of prior year tax audits completed during the third quarter
of fiscal 2010.

Qualcomm Incorporated
Reconciliation of Pro Forma Free Cash Flows to
Net Cash Provided by Operating Activities (GAAP)
and other supplemental disclosures
(In millions)
(Unaudited)

Three Months Ended June 27, 2010
--------------------------------
Share-Based Tax
Pro Forma Compensation Items
--------- ------------ -----
Net cash provided (used) by
operating activities $1,051 $(3)(a) $-
Less: capital expenditures (97) - -
--- --- ---
Free cash flow $954 $(3) $-
==== === ===

Other supplemental cash
disclosures:
Cash transfers from QSI (1) $104 $- $-
Cash transfers to QSI (2) (133) - -
---- --- ---
Net cash transfers $(29) $- $-
==== === ===

Three Months Ended June 27, 2010
--------------------------------
In-Process
R&D QSI GAAP
--- --- ----
Net cash provided (used) by
operating activities $- $(97) $951
Less: capital expenditures - (20) (117)
--- --- ----
Free cash flow $- $(117) $834
=== ===== ====

Other supplemental cash
disclosures:
Cash transfers from QSI (1) $- $(104) $-
Cash transfers to QSI (2) - 133 -
--- --- ---
Net cash transfers $- $29 $-
=== === ===

Nine Months Ended June 27, 2010
-------------------------------
Share-Based Tax
Pro Forma Compensation Items
--------- ------------ -----
Net cash provided (used) by
operating activities $3,297 $(34)(a) $-
Less: capital expenditures (249) - -
---- --- ---
Free cash flow $3,048 $(34) $-
====== ==== ===

Other supplemental cash
disclosures:
Cash transfers from QSI (1) $117 $- $-
Cash transfers to QSI (2) (376) - -
---- --- ---
Net cash transfers $(259) $- $-
===== === ===

Nine Months Ended June 27, 2010
-------------------------------
In-Process
R&D QSI GAAP
--- --- ----
Net cash provided (used) by
operating activities $- $(280) $2,983
Less: capital expenditures - (64) (313)
--- --- ----
Free cash flow $- $(344) $2,670
=== ===== ======

Other supplemental cash
disclosures:
Cash transfers from QSI (1) $- $(117) $-
Cash transfers to QSI (2) - 376 -
--- --- ---
Net cash transfers $- $259 $-
=== ==== ===

(1) Cash from sale of equity investments and Australia spectrum license.
(2) Funding for strategic debt and equity investments, capital
expenditures and other QSI operating expenses.

Three Months Ended June 28, 2009
-------------------------------
Share-Based Tax
Pro Forma Compensation Items
--------- ------------ -----
Net cash provided (used) by
operating activities $1,157 $(22)(a) $-
Less: capital expenditures (118) - -
Free cash flow $1,039 $(22) $-

Three Months Ended June 28, 2009
--------------------------------
In-Process
R&D QSI GAAP
--- --- ----
Net cash provided (used) by
operating activities $- $(48) $1,087
Less: capital expenditures - (31) (149)
Free cash flow $- $(79) $938

Nine Months Ended June 28, 2009
-------------------------------
Share-Based Tax
Pro Forma Compensation Items
--------- ------------ -----
Net cash provided (used) by
operating activities $6,145 $(54)(a) $-
Less: capital expenditures (533) - -
Free cash flow $5,612 $(54) $-

Nine Months Ended June 28, 2009
-------------------------------
In-Process
R&D QSI GAAP
--- --- ----
Net cash provided (used) by
operating activities $- $(240) $5,851
Less: capital expenditures - (84) (617)
Free cash flow $- $(324) $5,234

(a) Incremental tax benefits from stock options exercised during the
period.

Qualcomm Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)

ASSETS

June 27, September 27,
2010 2009
---- ----
Current assets:
Cash and cash equivalents $2,541 $2,717
Marketable securities 7,427 8,352
Accounts receivable, net 798 700
Inventories 446 453
Deferred tax assets 213 149
Other current assets 189 199
--- ---
Total current assets 11,614 12,570
Marketable securities 7,618 6,673
Deferred tax assets 1,774 843
Property, plant and equipment, net 2,38

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