QUALCOMM Announces Second Quarter Fiscal 2006 Results

San Diego (ots/PRNewswire) -

- Revenues US$1.83 Billion, Diluted EPS US$0.34

SAN DIEGO, April 19 /PRNewswire/ --

- Pro Forma Revenues US$1.83 Billion, Diluted EPS US$0.41

SAN DIEGO, April 19 /PRNewswire/ --

- Third Consecutive Quarter of Record Revenues and Chip Shipments;
Financial Guidance Increased for Fiscal 2006

QUALCOMM Incorporated (Nasdaq: QCOM) today announced results for
the second fiscal quarter ended March 26, 2006.

Total QUALCOMM (GAAP) Second Quarter Results:

Total QUALCOMM results are reported in accordance with Generally
Accepted Accounting Principles (GAAP).

- Revenues: US$1.83 billion, up 34 percent year-over-year and 5 percent
sequentially.
- Net income: US$593 million, up 11 percent year-over-year and down
4 percent sequentially.
- Diluted earnings per share: US$0.34, up 10 percent year-over-year and
down 6 percent sequentially.
- Effective tax rate: 25 percent for the quarter. Fiscal 2006 estimate of
approximately 22 percent.
- Estimated share-based compensation: US$78 million, net of tax.
- Operating cash flow: US$889 million, up 8 percent year-over-year;
48 percent of revenue.
- Return of capital to stockholders: US$298 million in cash dividends
paid.

QUALCOMM Pro Forma Second Quarter Results:

Pro forma results exclude the QUALCOMM Strategic Initiatives (QSI)
segment, estimated share-based compensation, acquired in-process
research and development (R&D) expense and tax benefits related to
prior years.

- Revenues: US$1.83 billion, up 34 percent year-over-year and 5 percent
sequentially.
- Net income: US$706 million, up 45 percent year-over-year and 6 percent
sequentially.
- Diluted earnings per share: US$0.41, up 41 percent year-over-year and
5 percent sequentially; excludes US$0.01 loss per share attributable to
the QSI segment, US$0.05 loss per share attributable to estimated
share-based compensation and US$0.01 loss per share related to acquired
in-process R&D expense.
- Effective tax rate: 27 percent for the quarter and estimated for
fiscal 2006.
- Free cash flow: US$947 million, up 28 percent year-over-year; 52
percent of revenue. (Defined as net cash from operating activities less
capital expenditures)

Detailed reconciliations between total QUALCOMM (GAAP) results and
QUALCOMM pro forma results and cash flows are included at the end of
this news release. Prior period reconciliations are presented on our
Investor Relations web page at www.qualcomm.com.

"QUALCOMM's record revenue this quarter was driven by greater
overall CDMA handset shipments and record demand for our chipsets,"
said Dr. Paul E. Jacobs, CEO of QUALCOMM. "I am pleased that demand
for our chipsets was spread across our broadly segmented products
with particular strength in higher tier chipsets for CDMA2000(R)
1xEV-DO and WCDMA/HSPDA and in the lower tier MSM6000(R) chipsets for
CDMA2000 emerging markets. This broad demand is testimony to the fact
that CDMA-based networks enable advanced data capabilities for
developed markets as well as effectively serving more voice centric
developing markets. CDMA market growth is an important goal for
QUALCOMM and a key ingredient to increasing shareholder value. We
will focus on that goal by enabling our partners with products and
services to meet the increasing needs of their customers."

"While we continue to execute well on meeting the needs of our
partners with existing products and services, I am optimistic about
the market acceptance of new and future products including DO
Revision A and B, HSDPA, HSUPA, MediaFLO(TM), single chip solutions
and uiOne(TM) for customizing the user interface on a wireless
handset. Being first to market with chipsets for DO, DO Revision A,
HSDPA and HSUPA is indicative of our technology leadership and our
ability to execute on our research and development investments."

Cash and Marketable Securities

QUALCOMM's cash, cash equivalents and marketable securities
totaled approximately US$10.2 billion at the end of the second
quarter of fiscal 2006, compared to US$9.4 billion at the end of the
prior quarter and US$8.3 billion a year ago. During the second
quarter of fiscal 2006, we paid US$285 million in cash for
acquisitions, and we announced a 33 percent increase in our quarterly
dividend from US$0.09 to US$0.12 per share. A cash dividend of
US$0.12 per common share is payable on June 23, 2006 to stockholders
of record at the close of business on May 26, 2006.

Estimated Share-Based Compensation

In the first quarter of fiscal 2006, we adopted the revised
Statement of Financial Accounting Standards No. 123, Share-Based
Payment (FAS 123R), which requires that share-based compensation be
recorded in our financial statements. We have implemented FAS 123R
using the modified prospective method. Under this method, prior
periods are not revised for comparative purposes. Estimated
share-based compensation is included in operating expenses, however,
it is not allocated to business segments or included in pro forma
results because we do not consider it relevant when evaluating the
operating performance of our business. Total QUALCOMM (GAAP) net
income for the second quarter of fiscal 2006 included estimated
share-based compensation of US$78 million, net of tax, or US$0.05 per
share.

Research and Development
(US$ in millions) Estimated Total
QUALCOMM Share-Based In-Process QUALCOMM
Pro Forma Compensation R&D Expense QSI (GAAP)
Second quarter
fiscal 2006 $302 $52 $21 $15 $390
Second quarter
fiscal 2005 $242 $-- $-- $10 $252
Year-over-year
change 25% 50% 55%

Pro forma R&D expenses increased 25 percent year-over-year,
primarily due to additional engineering resources for the development
of integrated circuit products and other initiatives to support
low-cost phones, multimedia applications, high-speed wireless
Internet access and multimode, multiband, multinetwork products and
technologies, including CDMA2000, 1xEV-DO, DO Revision A, WCDMA
(including GSM/GPRS/EDGE), HSDPA, HSUPA and OFDMA, and the
development of our iMoD(TM) display products using MEMS technology.
QSI R&D expenses increased year-over-year primarily due to increased
R&D activities related to MediaFLO USA.

Selling, General and Administrative
(US$ in millions) Estimated Total
QUALCOMM Share-Based QUALCOMM
Pro Forma Compensation QSI (GAAP)
Second quarter
fiscal 2006 $188 $58 $17 $263
Second quarter
fiscal 2005 $149 $-- $6 $155
Year-over-year
change 26% 183% 70%

Pro forma selling, general and administrative (SG&A) expenses
increased 26 percent year-over-year, largely attributable to
increases in employee related expenses to support our growing
worldwide customer base, and professional fees related to legal
activities. The year-over-year increase in QSI SG&A expenses is
primarily related to MediaFLO USA.

Effective Income Tax Rate

Our fiscal 2006 effective income tax rate is estimated to be
approximately 22 percent. The second quarter tax rate of 25 percent
for total QUALCOMM is higher than the estimated annual effective tax
rate due primarily to US$56 million of tax benefits recorded in the
first quarter related to the expected impact of prior year tax audits
completed during that quarter. Our fiscal 2006 QUALCOMM pro forma
effective tax rate is estimated to be approximately 27 percent,
compared to our previous estimate of approximately 26 percent.

QUALCOMM Strategic Initiatives

The QSI segment includes our strategic investments, including our
MediaFLO USA subsidiary, and related income and expenses. Total
QUALCOMM (GAAP) results for the second quarter of fiscal 2006
included US$0.01 loss per share for the QSI segment consistent with
the second quarter of fiscal 2005. The second quarter fiscal 2006 QSI
results include US$32 million of operating expenses, primarily
related to MediaFLO USA, and US$10 million of equity in losses of
investees, partially offset by US$6 million of realized gains on
investments.

Business Outlook

The following statements are forward-looking and actual results
may differ materially. Please see "Note Regarding Forward-Looking
Statements" at the end of this news release for a description of
certain risk factors and QUALCOMM's annual and quarterly reports on
file with the Securities and Exchange Commission (SEC) for a more
complete description of risks. Due to their nature, certain income
and expense items, such as realized investment gains or losses in
QSI, gains and losses on certain derivative instruments or asset
impairments, cannot be accurately forecast. Accordingly, the Company
excludes forecasts of such items from its business outlook, and
actual results may vary materially from the business outlook if the
Company incurs any such income or expense items.

The following table summarizes total QUALCOMM (GAAP) and QUALCOMM
pro forma guidance for the third quarter of fiscal 2006 based on the
current business outlook. Total QUALCOMM (GAAP) guidance for the
third fiscal quarter of 2006 includes approximately US$0.05 diluted
loss per share related to estimated share-based compensation.
Estimated share-based compensation in future periods may vary
materially from the business outlook as the methodology used to
calculate this estimate is dependent on a variety of assumptions
which are subject to market fluctuations and other factors. A pro
forma business outlook is provided below consistent with the
presentation of pro forma results provided elsewhere herein.

Our updated guidance, as compared to our prior guidance, reflects
an increase in our revenue and earnings guidance for fiscal 2006. In
addition, we are increasing our estimate for calendar 2006 handset
shipments by approximately 8%, which is based on indications of
increased market demand. Our handset shipment forecast will be
discussed in more detail during our second quarter conference call.
This call is scheduled for 1:45pm (PDT) on Wednesday, April 19, 2006.
Refer to conference call dial-in information included at the end of
this press release.

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

(All figures are in US$)
Business Outlook Summary
THIRD QUARTER
Current Guidance
Q3'05 Q3'06
Results Estimates
QUALCOMM Pro Forma
Revenues $1.36B $1.77B - $1.87B
Year-over-year change increase 30% - 38%
Diluted earnings per share (EPS) $0.28 $0.36 - $0.38
Year-over-year change increase 29% - 36%
Total QUALCOMM (GAAP)
Revenues $1.36B $1.77B - $1.87B
Year-over-year change increase 30% - 38%
Diluted earnings per share (EPS) $0.33 $0.30 - $0.32
Year-over-year change decrease 3% - 9%
Diluted EPS attributable to QSI $0.05 ($0.01)
Diluted EPS attributable to
estimated share-based compensation n/a ($0.05)
EPS attributable to tax benefit
related to prior years $0.01 n/a
Metrics
MSM Shipments approx. 36M approx. 50M - 53M
CDMA/WCDMA handset units
shipped approx. 43M(i) approx. 62M - 64M(i)
CDMA/WCDMA handset unit
wholesale average
selling price approx. $231(i) approx. $203(i)
(i) Shipments in Mar. quarter, reported in Jun. quarter
FISCAL YEAR
Prior Guidance Current Guidance
FY 2005 FY 2006 FY 2006
Results Estimates Estimates
QUALCOMM Pro Forma
Revenues $5.67B $6.7B - $7.1B $7.1B - $7.4B
Year-over-year
change increase 18% - 25% increase 25% - 30%
Diluted earnings
per share (EPS) $1.16 $1.43 - $1.47 $1.53 - $1.57
Year-over-year
change increase 23% - 27% increase 32% - 35%
Total QUALCOMM
(GAAP)
Revenues $5.67B $6.7B - $7.1B $7.1B - $7.4B
Year-over-year
change increase 18% - 25% increase 25% - 30%
Diluted earnings
per share (EPS) $1.26 $1.19 - $1.23 $1.31 - $1.35
Year-over-year
change decrease 2% - 6% increase 4% - 7%
Diluted EPS
attributable
to in-process R&D n/a ($0.01) ($0.01)
Diluted EPS
attributable
to QSI $0.06 ($0.06) ($0.04)
Diluted EPS
attributable
to estimated
share-based
compensation n/a ($0.20) ($0.20)
Diluted EPS
attributable
to tax benefit
related to prior
years $0.04 $0.03 $0.03
Metrics
Fiscal year(ii)
CDMA/WCDMA
handset unit
wholesale average
selling price approx. $215 approx. $210 approx. $207
(ii)Shipments in Sep. to June quarters, reported in Dec. to Sep.
quarters
CALENDAR YEAR Handset Estimates
CDMA/WCDMA handset
unit shipments Prior Guidance Current Guidance
Calendar 2006 Calendar 2006
Calendar 2005 Estimates Estimates
March quarter approx. 43M not provided approx. 62 - 64M
June quarter approx. 48M not provided not provided
September quarter approx. 52M not provided not provided
December quarter approx. 67M not provided not provided
Calendar year
range approx. 210M approx. 255M - 270M approx. 275M - 290M
Midpoint Midpoint Midpoint
CDMA/WCDMA units approx. 210M approx. 262M approx. 283M
CDMA units approx. 160M approx. 176M approx. 187M
WCDMA units approx. 50M approx. 86M approx. 96M
Sums may not equal totals due to rounding

Results of Business Segments
(dollars in millions, except per share data):
Second Quarter - Fiscal Year 2006
QUALCOMM
Reconciling Pro
Segments QCT QTL QWI Items(1) Forma
Revenues $1,018 $679 $162 $(25) $1,834
Change from prior year 36% 38% 7% N/M 34%
Change from prior
quarter (1%) 20% (2%) N/M 5%
EBT $252 $626 $16 $68 $962
Change from prior year 59% 40% 100% N/M 44%
Change from prior
quarter (16%) 21% (6%) N/M 6%
Net income (loss) 706
Change from prior year 45%
Change from prior
quarter 6%
Diluted EPS $0.41
Change from prior year 41%
Change from prior
quarter 5%
Diluted shares used 1,721
Second Quarter - Fiscal Year 2006
Estimated
Share- Total
Based In-Process QUALCOMM
Segments Compensation(2) R&D(3) QSI(4) (GAAP)
Revenues $- $- $- $1,834
Change from prior year - - - 34%
Change from prior quarter - - - 5%
EBT $(120) $(21) $(36) $785
Change from prior year N/M N/M N/M 24%
Change from prior quarter N/M N/M N/M 7%
Net income (loss) (78) (21) (14) $593
Change from prior year N/M N/M N/M 11%
Change from prior quarter N/M N/M N/M (4%)
Diluted EPS $(0.05) $(0.01) $(0.01) $0.34
Change from prior year N/M N/M N/M 10%
Change from prior quarter N/M N/M N/M (6%)
Diluted shares used 1,721 1,721 1,721 1,721
First Quarter - Fiscal Year 2006
QUALCOMM
Reconciling Pro
Segments QCT QTL QWI Items(1) Forma
Revenues $1,033 $564 $166 $(22) $1,741
EBT 300 517 17 72 906
Net income (loss) 667
Diluted EPS $0.39
Diluted shares used 1,702
First Quarter - Fiscal Year 2006
Estimated
Share- Total
Based Tax QUALCOMM
Segments Compensation(2) Adjustment(5) QSI(4) (GAAP)
Revenues $- $- $- $1,741
EBT (122) - (48) $736
Net income (loss) (82) 56 (21) 620
Diluted EPS $(0.05) $0.03 $(0.01) $0.36
Diluted shares used 1,702 1,702 1,702 1,702
Second Quarter - Fiscal Year 2005
Segments Reconciling
QCT QTL QWI Items(1)
Revenues $746 $493 $151 $(25)
EBT 158 448 8 52
Net income (loss)
Diluted EPS
Diluted shares used
Second Quarter - Fiscal Year 2005
Total
Segments QUALCOMM Tax QUALCOMM
Pro Forma Adjustments(6) QSI(4) (GAAP)
Revenues $1,365 $- $- $1,365
EBT 666 - (33) $633
Net income (loss) 487 55 (10) $532
Diluted EPS $0.29 $0.03 $(0.01) $0.31
Diluted shares used 1,704 1,704 1,704 1,704
Third Quarter - Fiscal Year 2005
Segments Reconciling
QCT QTL QWI Items(1)
Revenues $766 $448 $164 $(20)
EBT 186 407 12 51
Net income
Diluted EPS
Diluted shares used
Third Quarter - Fiscal Year 2005
Segments Total
QUALCOMM Tax QUALCOMM
Pro Forma Adjustments(7) QSI(4) (GAAP)
Revenues $1,358 $- $- $1,358
EBT 656 - 30 $686
Net income 465 16 79 $560
Diluted EPS $0.28 $0.01 $0.05 $0.33
Diluted shares used 1,683 1,683 1,683 1,683
Twelve Months - Fiscal Year 2005
Segments QCT QTL QWI Reconciling
Items (1)
Revenues $3,290 $1,839 $644 $(100)
EBT 852 1,663 57 227
Net income
Diluted EPS
Diluted shares used
Twelve Months - Fiscal Year 2005
Segments Total
QUALCOMM Tax QUALCOMM
Pro Forma Adjustments(6)(7) QSI(4) (GAAP)
Revenues $5,673 $- $- $5,673
EBT 2,799 - 10 $2,809
Net income 1,970 71 102 $2,143
Diluted EPS $1.16 $0.04 $0.06 $1.26
Diluted shares used 1,694 1,694 1,694 1,694
Six Months - Fiscal Year 2006
QUALCOMM
Reconciling Pro
Segments QCT QTL QWI Items(1) Forma
Revenues $2,051 $1,243 $328 $(47) $3,575
Change from prior year 27% 39% 6% N/M 30%
EBT $552 $1,143 $34 $139 $1,868
Change from prior year 38% 42% 42% N/M 41%
Net income (loss) 1,373
Change from prior year 43%
Diluted EPS $0.80
Change from prior year 43%
Diluted shares used 1,711
Six Months - Fiscal Year 2006
Estimated
Share- In- Total
Based Tax Process QUALCOMM
Segments Compensation(2) Adjustment(5) R&D(3) QSI(4) (GAAP)
Revenues $- $- $- $- $3,575
Change from prior
year - - - - 30%
EBT $(242) $- $(21) $(84) $1,521
Change from prior
year N/M - - N/M 14%
Net income (loss) (160) 56 (21) (35) $1,213
Change from prior
year N/M N/M N/M N/M 16%
Diluted EPS $(0.09) $0.03 $(0.01) $(0.02) $0.71
Change from prior
year N/M N/M N/M N/M 16%
Diluted shares
used 1,711 1,711 1,711 1,711 1,711
Six Months - Fiscal Year 2005
Segments QCT QTL QWI Reconciling
Items(1)
Revenues $1,611 $893 $310 $(60)
EBT 400 805 24 100
Net income
Diluted EPS
Diluted shares used
Six Months - Fiscal Year 2005
Segments Total
QUALCOMM Tax QUALCOMM
Pro Forma Adjustments(6) QSI(4) (GAAP)
Revenues $2,754 $- $- $2,754
EBT 1,329 - 8 1,337
Net income 961 55 29 1,045
Diluted EPS $0.56 $0.03 $0.02 $0.61
Diluted shares used 1,704 1,704 1,704 1,704

(1) Reconciling items related to revenues consist primarily of other non-
reportable segment revenues less intersegment eliminations.
Reconciling items related to earnings before taxes consist primarily
of corporate expenses, charges that are not allocated to the segments
for management reporting purposes, unallocated net investment income,
non-reportable segment results, interest expense and the elimination
of intercompany profit.
(2) During the first quarter of fiscal 2006, the Company adopted the fair
value recognition provisions of FAS 123R using a modified prospective
application. Under this method, prior periods are not revised for
comparative purposes. Share-based compensation is included in
operating expenses as part of employee-related costs but is not
allocated to our segments as these estimated costs are not considered
relevant by management in evaluating segment performance.
(3) During the second quarter of fiscal 2006, the Company recorded
US$21 million of expenses related to acquired in-process R&D
associated with the acquisitions of Berkana Wireless Inc. and Flarion
Technologies, Inc. For fiscal 2006 pro forma presentation, results
have been adjusted to exclude these expenses as they are unrelated to
the Company's ongoing core operating businesses and are also not
allocated to our segments as these costs are not considered relevant
by management in evaluating segment performance.
(4) At fiscal year-end, the sum of the quarterly tax provisions for each
column, including QSI, will equal 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 tax provision for QUALCOMM pro forma, the tax
adjustment column and the tax provision related to estimated share
based compensation from the tax provision for total QUALCOMM (GAAP).
(5) During the first quarter of fiscal 2006, the Company recorded a
US$56 million tax benefit, or US$0.03 per share, related to the
expected impact of prior year tax audits completed during the
quarter. For fiscal 2006 pro forma presentation, results have been
adjusted to exclude this tax benefit attributable to prior years.
(6) During the second quarter of fiscal 2005, the Company decreased its
estimate of R&D costs allocable to the Company's foreign operations
under an intercompany cost sharing agreement. Due to this change in
estimate, the effective tax rate in the second quarter for total
QUALCOMM (GAAP) included a US$55 million benefit, or US$0.03 diluted
earnings per share, related to fiscal 2004. For fiscal 2005 pro
forma presentation, results have been adjusted to exclude the tax
benefit attributable to fiscal 2004.
(7) During the third quarter of fiscal 2005, the Company made an election
to compute its California tax on the basis of its U.S. operations
only, which resulted in a US$38 million tax benefit. Our effective
tax rate in the third quarter of fiscal 2005 for total QUALCOMM
(GAAP) includes a US$16 million tax benefit, or US$0.01 diluted
earnings per share, for this California tax election related to
fiscal 2004. For fiscal 2005 pro forma presentation, results have
been adjusted to exclude the tax benefit attributable to fiscal 2004.
N/M - Not Meaningful
Sums may not equal totals due to rounding.

Business Segment Information
QUALCOMM CDMA Technologies (QCT)
- For the third consecutive quarter, QCT shipped a record number of MSM
chips. Approximately 49 million MSM chips were shipped to customers
worldwide during the second quarter of fiscal 2006, compared to
approximately 37 million units in the same quarter of fiscal 2005 and
approximately 47 million units in the first quarter of fiscal 2006.
- More than 30 equipment manufacturers are designing or offering
more than 120 WCDMA devices based on our MSM chipsets. We sampled the
MSM7200(TM) chipset, which is the first to support HSUPA as well as
WCDMA/HSDPA networks.
- More than 250 devices are now in design or have been commercially
launched based on our MSM solutions for 1xEV-DO. QCT's 1xEV-DO
portfolio was augmented with the sampling of the MSM6800(TM), our
first 1xEV-DO Revision A product and the first chipset based on 65nm
process technology.
- More than five leading manufacturers are already designing devices
featuring the first generation of QUALCOMM Single-Chip (QSC(TM))
solutions, which integrate multiple components for slimmer and more
cost-efficient handsets. Handsets based on QSC products are expected
to launch by the end of calendar year 2006.
QUALCOMM Technology Licensing (QTL)
- In the second quarter of fiscal 2006, five new licensees entered into
CDMA license agreements including two licensed for CDMA2000, two
licensed for WCDMA, and one licensed for both WCDMA and CDMA2000.
- We entered into a royalty bearing license agreement with a licensee
covering sales by that licensee of OFDM/OFDMA subscriber units and
infrastructure equipment.
- Licensee information for the first quarter of fiscal 2006 as reported
by licensees in the second quarter of fiscal 2006:
-- Worldwide shipments of approximately 67 million CDMA2000 and WCDMA
subscriber units at an average selling price of approximately
US$208 were reported.
-- We estimate WCDMA royalties contributed approximately 46 percent
of total royalties reported compared to approximately 40 percent
reported in the prior quarter and approximately 32 percent in the
year ago quarter.
QUALCOMM Wireless & Internet Group (QWI)
QUALCOMM Internet Services (QIS)
- QUALCOMM has 66 BREW(R) customers in 31 countries.
- The BREW solution has driven a number of milestones for operators
around the world including Verizon Wireless which stated the
company saw a 36 percent growth in gaming downloads over the last
year since launching premium BREW 3D games as part of their V CAST
service. KDDI announced that as of December 2005, their
subscribers have downloaded more than 75 million data applications
on more than 20 million BREW devices.
- Asia Pacific Broadband Wireless Communication (APBW) commercially
launched BREW services in Taiwan.
QUALCOMM Wireless Business Solutions(R) (QWBS)
- We shipped approximately 8,200 satellite-based systems
(OmniTRACS(R), EutelTRACS(TM) and TruckMAIL(TM)) in the second
quarter of fiscal 2006, compared to approximately 8,800 in the
second quarter of fiscal 2005 and approximately 11,800 in the first
quarter of fiscal 2006. This brings the cumulative total
satellite-based systems shipped worldwide to more than 586,000.
- We shipped approximately 8,000 terrestrial-based systems
(OmniExpress(R), GlobalTRACS(R) and T2 Untethered TrailerTRACS(TM))
in the second quarter of fiscal 2006, compared to approximately
13,800 terrestrial-based systems in the second quarter of fiscal
2005 and approximately 15,100 terrestrial-based systems in the
first quarter of fiscal 2006. This brings the cumulative total
terrestrial-based systems shipped worldwide to more than 108,000.
QUALCOMM Strategic Initiatives (QSI)
- MediaFLO USA and Network LIVE, a joint venture between AOL, XM
Satellite Radio and AEG, announced an agreement to provide Network
LIVE content and programming for MediaFLO USA's wireless multimedia
service offering.
- We provided city-wide coverage of FLO(TM) Technology and conducted
live, over-the-air MediaFLO demonstrations at CTIA Wireless 2006 in
Las Vegas. These demonstrations included nine channels of live
video and datacasting applications on eight proof-of-concept
devices (including one UMTS/FLO handset) from leading handset
manufacturers including, Kyocera, LG Electronics, Motorola,
Pantech, Samsung Electronics Co., Ltd. and Sharp Corporation.
- The FLO Forum announced the ratification of key technical
specifications developed by its Test and Certification Committee.
The technical and performance requirements captured in the
documents assure interoperability and compatibility for FLO based
terrestrial mobile multimedia multicast devices and transmitters.
- We announced a joint investment in China with TechFaith to found a
new company, TechFaith Software (China) Limited or "TechSoft," that
will develop application software for 3G CDMA devices.
Other
- We completed the acquisition of Flarion Technologies, Inc., a
developer of OFDMA technology.
- We completed the acquisition of Berkana Wireless Inc., a fabless
semiconductor company that develops complementary metal oxide
semiconductor (CMOS) radio frequency integrated circuits (RFICs).

Conference Call

QUALCOMM's second quarter fiscal 2006 earnings conference call
will be broadcast live on April 19, 2006 beginning at 1:45 p.m.
Pacific Daylight Time on the Company's web site at: www.qualcomm.com.
This conference call may contain forward-looking financial
information. The conference call 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 April 19, 2006 beginning at approximately 5:30 p.m.
(PDT) through May 3, 2006 at 5:30 p.m. (PDT). To listen to the
replay, U.S. callers may dial +1-800-642-1687 and international
callers may dial +1-706-645-9291. U.S. and international callers
should use reservation number 7286389. An audio replay of the
conference call will be available on the Company's web site at
www.qualcomm.com for two weeks following the live call.

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.
Headquartered in San Diego, Calif., QUALCOMM is included in the S&P
500 Index and is a 2005 FORTUNE 500(R) company traded on The Nasdaq
Stock Market(R) under the ticker symbol QCOM.

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, net investment
income, income before income taxes, effective tax rate, net income,
diluted earnings per share, operating cash flow and free cash flow.

Pro forma information used by management excludes the QUALCOMM
Strategic Initiatives (QSI) segment, estimated share-based
compensation, certain tax benefits related to prior years and
acquired in-process R&D expense. 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. Estimated share-based compensation is
excluded because management views the valuation of options and other
share-based compensation as theoretical and unrelated to the
Company's operational performance as it is affected by factors that
are subject to change on each grant date including the Company's
stock price, stock market volatility, expected option life, risk-free
interest rates and expected dividend payouts in future years.
Moreover, it is not an expense that requires or will require cash
payment by the Company. Certain tax benefits related to prior years
are excluded in order to provide a clearer understanding of the
Company's ongoing tax rate and after tax earnings. Acquired
in-process R&D expense in fiscal 2006 is excluded because such
expense is incurred infrequently and is viewed by management as
unrelated to the operating activities of the Company's ongoing core
businesses.

Management is able to assess what it believes is a more
fundamentally pure and comparable set of financial performance
measures for the Company and its business segments by eliminating the
episodic impact of strategic investments in QSI and items such as
acquired in-process R&D, as well as the inherent, non-operational
volatility of share-based compensation. 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.

The Company's management uses pro forma cash flow information
including marketable securities to analyze increases and decreases in
certain of its liquid assets, comprised of cash, cash equivalents and
marketable securities. Management views certain marketable securities
as liquid assets available on short notice to fund operations,
acquisitions, strategic initiatives, stock repurchases and dividends
even though these marketable securities do not meet the definition of
cash equivalents in accordance with Statement of Financial Accounting
Standards No. 95, "Statement of Cash Flows." The GAAP statements of
cash flows report the purchases and sales of marketable securities as
inflows and outflows. For internal analysis of the Company's cash
position, management does not view these transactions as inflows and
outflows from the business, but as cash management transactions. The
Company believes that this non-GAAP presentation is a helpful and
practical measure of the Company's liquidity.

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 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 total QUALCOMM (GAAP) results and QUALCOMM
pro forma results and total QUALCOMM (GAAP) cash flow and QUALCOMM
pro forma changes in cash, cash equivalents and marketable securities
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 development,
deployment and commercial acceptance of CDMA-based networks and
CDMA-based technology, including CDMA2000 1X,

1xEV-DO, WCDMA and HSDPA both domestically and internationally;
our dependence on major customers and licensees; fluctuations in the
demand for CDMA-based products, services or applications; foreign
currency fluctuations; strategic loans, investments and transactions
the Company has or may pursue; our dependence on third party
manufacturers and suppliers; our ability to maintain and improve
operational efficiencies and profitability; developments in current
and future litigation; the development, deployment and commercial
acceptance of the MediaFLO USA network and FLO technology; as well as
the other risks detailed from time-to-time in the Company's SEC
reports.

(C) 2006 QUALCOMM Incorporated. All rights reserved. QUALCOMM is a
registered trademark of QUALCOMM Incorporated. CDMA2000(R) is a
registered trademark of the Telecommunications Industry Association.
All other trademarks are the property of their respective owners.

QUALCOMM Contact:
Bill Davidson
Vice President, Investor Relations
+1-858-658-4813 (ph) +1-858-651-9303 (fax)
e-mail: ir@qualcomm.com

(All figures are in US$)
QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
PRO FORMA RESULTS TO TOTAL QUALCOMM RESULTS
(In millions, except per share data)
(Unaudited)
Three Months Ended March 26, 2006
Estimated
Share- In- Total
QUALCOMM Based Process QUALCOMM
Pro Forma Compensation R&D QSI (GAAP)
Revenues:
Equipment and
services $1,122 $- $- $- $1,122
Licensing and
royalty fees 712 - - - 712
1,834 - - - 1,834
Operating expenses:
Cost of equipment
and services
revenues 511 10 - - 521
Research and
development 302 52 21 15 390
Selling, general
and administrative 188 58 - 17 263
Total operating
expenses 1,001 120 21 32 1,174
Operating income
(loss) 833 (120) (21) (32) 660
Investment income
(expense), net 129(a) - - (4)(b) 125
Income (loss) before
income taxes 962 (120) (21) (36) 785
Income tax (expense)
benefit (256)(c) 42 - 22(d) (192)(c)
Net income (loss) $706 $(78) $(21) $(14) $593
Earnings (loss) per
common share:
Diluted $0.41 $(0.05) $(0.01) $(0.01) $0.34
Shares used in per
share calculations:
Diluted 1,721 1,721 1,721 1,721 1,721
Supplemental Financial
Data:
Operating Cash Flow $1,072 $(172)(f) $- $(11) $889
Operating Cash Flow
as a % of Revenue 58% 48%
Free Cash Flow (e) $947 $(172)(f) $- $(47) $728
Free Cash Flow as
a % of Revenue 52% 40%
(a) Includes US$102 million in interest and dividend income related to
cash, cash equivalents and marketable securities, which are not part
of the Company's strategic investment portfolio, US$34 million in net
realized gains on investments and US$3 million in gains on derivative
instruments, partially offset by US$9 million in other-than-temporary
losses on investments and US$1 million of interest expense.
(b) Includes US$10 million in equity in losses of investees, partially
offset by US$6 million in realized gains on investments.
(c) The second quarter of fiscal 2006 tax rate of 25% for total QUALCOMM
(GAAP) is higher than the estimated annual effective tax rate of 22%
due primarily to US$56 million of tax benefits recorded during the
first quarter related to the expected impact of prior year tax audits
completed in that quarter. The fiscal year 2006 estimated effective
tax rate is approximately 22% for total QUALCOMM (GAAP) and
approximately 27% for QUALCOMM pro forma.
(d) At fiscal year-end, the sum of the quarterly tax provisions for each
column, including QSI, will equal 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 tax provision for QUALCOMM pro forma and the tax
provision related to estimated share-based compensation from the tax
provision for total QUALCOMM (GAAP).
(e) Free Cash Flow is calculated as net cash provided by operating
activities less capital expenditures. Reconciliation of these
amounts is included in the Condensed Consolidated Statements of Cash
Flows and Marketable Securities for the three months ended March 26,
2006, included herein.
(f) Tax benefits from stock options exercised during the quarter.

QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING FROM
PRO FORMA RESULTS TO TOTAL QUALCOMM RESULTS
(In millions, except per share data)
(Unaudited)
Six Months Ended March 26, 2006
Estimated In- Total
QUALCOMM Share-Based Tax Process QUALCOMM
Pro Forma Compensation Adjustment R&D QSI (GAAP)
Revenues:
Equipment
and
services $2,271 $- $- $- $- $2,271
Licensing
and royalty
fees 1,304 - - - - 1,304
3,575 - - - - 3,575
Operating
expenses:
Cost of
equipment
and services
revenues 1,015 22 - - - 1,037
Research and
development 575 104 - 21 31 731
Selling,
general
and
administrative 357 116 - - 29 502
Total
operating
expenses 1,947 242 - 21 60 2,270
Operating income
(loss) 1,628 (242) - (21) (60) 1,305
Investment
income
(expense), net 240(a) - - - (24)(b) 216
Income (loss)
before income
taxes 1,868 (242) - (21) (84) 1,521
Income tax
(expense)
benefit (495)(c) 82 56 - 49(d) (308)(c)
Net income
(loss) $1,373 $(160) $56 $(21) $(35) $1,213
Earnings (loss)
per common
share:
Diluted $0.80 $(0.09) $0.03 $(0.01) $(0.02) $0.71
Shares used in
per share
calculations:
Diluted 1,711 1,711 1,711 1,711 1,711 1,711
Supplemental
Financial Data:
Operating Cash
Flow $1,785 $(273)(f) $- $- $(27) $1,485
Operating Cash
Flow as a %
of Revenue 50% 42%
Free Cash
Flow(e) $1,478 $(273)(f) $- $- $(94) $1,111
Free Cash Flow
as a % of
Revenue 41% 31%
(a) Includes US$192 million in interest and dividend income related to
cash, cash equivalents and marketable securities, which are not part
of the Company's strategic investment portfolio, US$54 million in
net realized gains on investments and US$7 million in gains on
derivative instruments, partially offset by US$12 million in
other-than-temporary losses on investments and US$1 million of
interest expense.
(b) Includes US$30 million in equity in losses of investees, partially
offset by US$6 million in net realized gains on investments.
(c) The tax rate of 20% for the first six months of fiscal 2006 for total
QUALCOMM (GAAP) is lower than the estimated annual effective tax rate
of 22% due primarily to US$56 million of tax benefits recorded in the
first quarter related to the expected impact of prior year tax audits
completed in that quarter.
(d) At fiscal year-end, the sum of the quarterly tax provisions for each
column, including QSI, will equal 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 tax provision for QUALCOMM pro forma, the tax
adjustment column and the tax provision related to estimated
share-based compensation from the tax provision for total QUALCOMM
(GAAP).
(e) Free Cash Flow is calculated as net cash provided by operating
activities less capital expenditures. Reconciliation of these
amounts is included in the Condensed Consolidated Statements of Cash
Flows and Marketable Securities for the six months ended March 26,
2006, included herein.
(f) Tax benefits from stock options exercised during the quarter.

QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING PRO FORMA CASH FLOWS
FROM CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES TO TOTAL
QUALCOMM CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended March 26, 2006
Estimated
QUALCOMM Share- In- Total
Pro Based Process QUALCOMM
Forma Compensation R&D QSI (GAAP)
Earnings before taxes,
depreciation,
amortization and other
adjustments(1) $980 $(172) $- $(30) $778
Working capital changes
and taxes paid (2) 92 - - 19 111
Net cash provided (used)
by operating activities 1,072 (172) - (11) 889
Capital expenditures (125) - - (36) (161)
Free cash flow (Net cash
provided by operating
activities less capital
expenditures) 947 (172) - (47) 728
Net additional share capital 287 - - - 287
Tax benefits from stock
options exercised during
the quarter - 172 - - 172
Dividends paid (298) - - - (298)
Other investments and
acquisitions, net of
cash acquired (259) - - (5) (264)
Other items, net (3) - - 1 (2)
Changes in fair value and
other changes to
marketable securities 64 - - 19 83
Marketable securities pending
settlement 63 - - - 63
Transfer from QSI (3) 13 - - (13) -
Transfer to QSI (4) (49) - - 49 -
Net increase in cash, cash
equivalents and marketable
securities (5) $765 $- $- $4 $769
(1) Reconciliation to GAAP:
Net income (loss) $706 $(78) $(21) $(14) $593
Share-based
compensation - 78 - - 78
Other non-cash
adjustments (a) 232 (172)(b) 21 (10) 71
Net realized gains on
marketable securities
and other investments (34) - - (6) (40)
Net taxes paid 76 - - - 76
Earnings before taxes,
depreciation,
amortization
and other
adjustments $980 $(172) $- $(30) $778
(2) Reconciliation to GAAP:
Increase in cash
resulting
from changes in
working capital $168 $- $- $19 $187
Net taxes paid (76) - - - (76)
Working capital changes
and taxes paid $92 $- $- $19 $111
(3) Cash from loan payments
and sale of equity
securities.
(4) Funding for strategic
debt and equity
investments and
other QSI operating
expenses.
(5) Reconciliation to GAAP
cash flow statement:
Net increase in cash
and cash equivalents
(GAAP) $202 $- $- $- $202
Plus: Net purchases
and maturities
of marketable
securities 436 - - (15) 421
Plus: Net increase
in fair value and
other changes to
marketable
securities 64 - - 19 83
Plus: Net increase
in marketable
securities
pending settlement 63 - - - 63
Net increase in cash,
cash equivalents and
marketable
securities $765 $- $- $4 $769
(a) See detail below.
(b) Tax benefits from stock options exercised during the quarter.

QUALCOMM Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS AND MARKETABLE SECURITIES
THIS SCHEDULE IS TO ASSIST THE READER IN RECONCILING PRO FORMA CASH FLOWS
FROM CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES TO TOTAL
QUALCOMM CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended March 26, 2006
Estimated In- Total
QUALCOMM Share-Based Tax Process QUALCOMM
Pro Forma Compensation Adjustment R&D QSI (GAAP)
Earnings
before
taxes,
depreciation,
amortization
and other
adjustments(1) $1,907 $(273) $- $- $(57) $1,577
Working capital
changes and
taxes paid(2) (122) - - - 30 (92)
Net cash provided
(used) by
operating
activities 1,785 (273) - - (27) 1,485
Capital
expenditures (307) - - - (67) (374)
Free cash
flow (Net cash
provided by
operating
activities
less capital
expenditures) 1,478 (273) - - (94) 1,111
Net additional
share capital 468 - - - - 468
Tax benefits
from stock
options exercised
during the
period - 273 - - - 273
Dividends paid (298) - - - - (298)
Other investments
and acquisitions (263) - - - (7) (270)
Other items, net - - - - 4 4
Changes in fair
value and other
changes to
marketable
securities 113 - - - 25 138
Marketable
securities
pending
settlement 60 - - - - 60
Transfer from
QSI(3) 21 - - - (21) -
Transfer to
QSI(4) (103) - - - 103 -
Net increase in
cash, cash
equivalents and
marketable
securities(5) $1,476 $- $- $- $10 $1,486
(1) Reconciliation
to GAAP:
Net income
(loss) $1,373 $(160) $56 $(21) $(35) $1,213
Share-based
compensation - 160 - - - 160
Other non
-cash
adjustments
(a) 500 (273)(b) (56) 21 (16) 176
Net realized
gains on
marketable
securities
and other
investments (54) - - - (6) (60)
Net taxes
paid 88 - - - - 88
Earnings
before
taxes,
depreciation,
amortization
and other
adjustments $1,907 $(273) $- $- $(57) $1,577
(2) Reconciliation
to GAAP:
Increase in
cash
resulting
from
changes in
working
capital $(34) $- $- $- $30 $(4)
Net taxes
paid (88) - - - - (88)
Working
capital
changes and
taxes
paid $(122) $- $- $- $30 $(92)
(3) Cash from
loan payments
and sale of
equity
securities.
(4) Funding for
strategic
debt and equity
investments
and other QSI
operating expenses.
(5) Reconciliation
to GAAP cash
flow statement:
Net increase
in cash and
cash
equivalents
(GAAP) $(291) $- $- $- $- $(291)
Plus: Net
purchases
and
maturities
of
marketable
securities 1,594 - - - (15) 1,579
Plus: Net
increase
in fair
value and
other
changes to
marketable
securities 113 - - - 25 138
Plus: Net
increase in
marketable

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