SAN DIEGO, Feb. 21, 2018 /PRNewswire/ -- Qualcomm
Incorporated (NASDAQ: QCOM) today issued the following statement in
response to today's reduced proposal by Broadcom Limited (NASDAQ:
AVGO) to acquire all outstanding shares of Qualcomm for
$79.00 per share ($57.00 in cash and $22.00 in Broadcom stock):
"Broadcom's reduced proposal has made an inadequate offer even
worse despite the clear increase in value to Qualcomm stockholders
from providing certainty around the NXP acquisition. Broadcom has
refused and continues to refuse to engage with Qualcomm on
price.
The acquisition of NXP Semiconductors will be 40% accretive to
our Non-GAAP results1, enables us to accelerate our
growth strategy, and provides stockholders greater certainty around
Qualcomm's fiscal 2019 Non-GAAP EPS commitment of $6.75-$7.50, which
includes $1.50 per share of accretion
from NXP.
In deciding unanimously to amend its original offer, made in
October 2016, the Qualcomm Board
concluded that Qualcomm is far more valuable with NXP than without,
and took into account the following:
- NXP's non-GAAP operating income has increased by 20% – which
means the $127.50 per share price is
actually at a lower multiple than the original deal price
- NXP provides significant strategic benefits to Qualcomm
including increased revenue diversification, substantial expansion
of total available markets (TAM) and greater scale in higher growth
end markets of Auto and IoT
- The strong market dynamics and positive outlook for key
segments
- High confidence in annualized cost synergies of at least
$500 million based on integration
planning
Broadcom is well aware there is no 'reduction of value by
$4.10 per share' because the
transaction could not be completed at $110.00 per share.
The Qualcomm Board is committed to maximizing value for Qualcomm
stockholders, whether that be through executing its growth strategy
or selling the company. Broadcom's revised $79.00 per share proposal materially undervalues
Qualcomm, fails to take into account the strategic and financial
benefits of acquiring NXP, and continues to face a long and highly
uncertain path to regulatory approvals."
About Qualcomm
Qualcomm invents breakthrough technologies that transform how the
world connects and communicates. When we connected the phone to
the Internet, the mobile revolution was born. Today, our
inventions are the foundation for life-changing products,
experiences, and industries. As we lead the world to 5G, we
envision this next big change in cellular technology spurring a new
era of intelligent, connected devices and enabling new
opportunities in connected cars, remote delivery of health care
services, and the IoT — including smart cities, smart homes, and
wearables. Qualcomm Incorporated includes our licensing business,
QTL, and the vast majority of our patent portfolio. Qualcomm
Technologies, Inc., a subsidiary of Qualcomm Incorporated,
operates, along with its subsidiaries, all of our engineering,
research and development functions, and all of our products and
services businesses, including, the QCT semiconductor business. For
more information, visit Qualcomm's website, OnQ
blog, Twitter and Facebook pages.
ADDITIONAL INFORMATION
Qualcomm has filed a definitive proxy statement and WHITE proxy
card with the U.S. Securities and Exchange Commission (the "SEC")
in connection with its solicitation of proxies for its 2018 Annual
Meeting of Stockholders (the "2018 Annual Meeting"). QUALCOMM
STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ THE DEFINITIVE PROXY
STATEMENT (AND ANY AMENDMENTS AND SUPPLEMENTS THERETO) AND
ACCOMPANYING WHITE PROXY CARD AS THEY CONTAIN IMPORTANT
INFORMATION. Stockholders may obtain the proxy statement, any
amendments or supplements to the proxy statement and other
documents as and when filed by Qualcomm with the SEC without charge
from the SEC's website at www.sec.gov.
CERTAIN INFORMATION REGARDING PARTICIPANTS
Qualcomm, its directors and certain of its executive officers may
be deemed to be participants in connection with the solicitation of
proxies from Qualcomm's stockholders in connection with the matters
to be considered at the 2018 Annual Meeting. Information
regarding the identity of potential participants, and their direct
or indirect interests, by security holdings or otherwise, is set
forth in the proxy statement and other materials to be filed with
the SEC. These documents can be obtained free of charge from
the sources indicated above.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Any statements contained in this document that are not historical
facts are forward-looking statements as defined in the U.S. Private
Securities Litigation Reform Act of 1995. Additionally, statements
regarding operating results for future years, growth in operating
results and the factors contributing to future operating results;
the resolution of licensing disputes and the impact and timing
thereof; expected market, industry, geographic and organic growth
and trends; future serviceable addressable market size and growth;
anticipated contributions from and growth in new opportunities;
benefits from planned cost reductions; technology and product
leadership and trends; Qualcomm's positioning to benefit from any
of the above; potential benefits and upside to Qualcomm's
stockholders related to any of the above; and the regulatory
process and regulatory uncertainty are forward-looking statements.
Words such as "anticipate," "believe," "estimate," "expect,"
"forecast," "intend," "may," "plan," "project," "predict,"
"should," "will" and similar expressions are intended to identify
such forward-looking statements. These statements are based on
Qualcomm's current expectations or beliefs, and are subject to
uncertainty and changes in circumstances. Actual results may differ
materially from those expressed or implied by the statements herein
due to changes in economic, business, competitive, technological,
strategic and/or regulatory factors, and other factors affecting
the operations of Qualcomm. More detailed information about these
factors may be found in Qualcomm's filings with the SEC, including
those discussed in Qualcomm's most recent Annual Report on Form
10-K and in any subsequent periodic reports on Form 10-Q and Form
8-K, each of which is on file with the SEC and available at the
SEC's website at www.sec.gov. SEC filings for Qualcomm are also
available in the Investor Relations section of Qualcomm's website
at www.qualcomm.com. Qualcomm is not obligated to update these
forward-looking statements to reflect events or circumstances after
the date of this document. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as
of their dates.
NOTE REGARDING USE OF NON-GAAP FINANCIAL MEASURES
The Non-GAAP 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,
"Non- GAAP" is not a term defined by GAAP, and as a result, the
Company's measure of Non-GAAP results might be different than
similarly titled measures used by other companies. Reconciliations
between GAAP and Non-GAAP results are presented herein.
The Company uses Non-GAAP financial information: (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 QCT (Qualcomm CDMA Technologies) and QTL (Qualcomm
Technology Licensing) segments; and (iii) to compare the
performance and efficiency of these segments against competitors.
Non-GAAP measurements used by the Company include revenues, cost of
revenues, R&D expenses, SG&A expenses, other income or
expenses, operating income, interest expense, net investment and
other income, income or earnings before income taxes, effective tax
rate, net income and diluted earnings per share. The Company 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 Non-GAAP information. In addition, the
Compensation Committee of the Board of Directors uses certain
Non-GAAP financial measures in establishing portions of the
performance-based incentive compensation programs for our executive
officers. The Company presents Non-GAAP financial information to
provide greater transparency to investors with respect to its use
of such information in financial and operational decision-making.
This Non-GAAP financial information is also used by institutional
investors and analysts in evaluating the Company's business and
assessing trends and future expectations.
Non-GAAP information used by management excludes its QSI segment
and certain share-based compensation, acquisition-related items,
tax items and other items.
- QSI is excluded because the Company expects to exit its
strategic investments in the foreseeable future, and the effects of
fluctuations in the value of such investments and realized gains or
losses are viewed by management as unrelated to the Company's
operational performance.
- Share-based compensation expense primarily relates to
restricted stock units. Management believes that excluding non-cash
share-based compensation from the Non-GAAP financial information
allows management and investors to make additional comparisons of
the operating activities of the Company's ongoing core businesses
over time and with respect to other companies.
- Certain other items are excluded because management views such
items as unrelated to the operating activities of the Company's
ongoing core businesses, as follows:
-
- Acquisition-related items include amortization of certain
intangible assets, recognition of the step-up of inventories to
fair value and the related tax effects of these items, as well as
any effects from restructuring the ownership of such acquired
assets. Additionally, the Company excludes expenses related to the
termination of contracts that limit the use of the acquired
intellectual property, third-party acquisition and integration
services costs and costs related to temporary debt facilities and
letters of credit executed prior to the close of an acquisition.
Starting with acquisitions in the second quarter of fiscal 2017,
the Company excludes recognition of the step-up of property, plant
and equipment from the net book value based on the original cost
basis to fair value. Such charges related to acquisitions that were
completed prior to the second quarter of fiscal 2017 continue to be
allocated to the segments, and such amounts are not material.
- The Company excludes certain other items that management views
as unrelated to the Company's ongoing business, such as major
restructuring and restructuring-related costs, goodwill and
indefinite- and long-lived asset impairments and awards,
settlements and/or damages arising from legal or regulatory
matters.
- Certain tax items that are unrelated to the fiscal year in
which they are recorded are excluded in order to provide a clearer
understanding of the Company's ongoing Non-GAAP tax rate and after
tax earnings.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Qualcomm Fiscal
2019 Estimated Earnings Per Share (EPS)
|
Fiscal
2019
|
GAAP diluted
EPS
|
$4.47 -
$5.22
|
Less: Diluted EPS
attributable to QSI
|
$0.02
|
Less: Diluted EPS
attributable to share-based compensation
|
($0.73)
|
Less: Diluted EPS
attributable to other items (1)
|
($1.57)
|
Non-GAAP diluted
EPS
|
$6.75 -
$7.50
|
Less: Diluted EPS
attributable to income from customers involved in licensing
disputes
|
$1.50 -
$2.25
|
Non-GAAP EPS,
before impact of expected licensing resolution
|
$5.25
|
Fiscal 2019
Accretion from NXP
|
Fiscal
2019
|
GAAP diluted
EPS
|
$0.08
|
Less: Diluted EPS
attributable to QSI
|
N/A
|
Less: Diluted EPS
attributable to share-based compensation
|
($0.16)
|
Less: Diluted EPS
attributable to other items(1)
|
($1.26)
|
Non-GAAP diluted
EPS
|
$1.50
|
Fiscal 2019 estimated EPS and EPS accretion assume close of the
pending NXP acquisition. Estimated amortization of intangible
assets included in other items was based on a preliminary purchase
price and are subject to change when the formal valuation and other
studies are finalized. The differences that will occur between the
preliminary estimates and the final purchase accounting could be
material.
(1) Other items excluded from Non-GAAP consist primarily of
acquisition-related items.
Sums may not equal totals due to rounding.
1 Versus consensus EPS.
Qualcomm Contacts:
Pete Lancia, Corporate
Communications
Phone: 1-858-845-5959
Email: corpcomm@qualcomm.com
John Sinnott, Investor
Relations
Phone: 1-858-658-5431
Email: ir@qualcomm.com
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SOURCE Qualcomm Incorporated