Available Stock Repurchase Authorization Now $15 Billion
Annualized Dividend Increased 14% to $1.92 per Share
Plans to Repurchase $10 Billion in Stock within Approximately Twelve Months in Addition to Commitment to Return a Minimum of 75% of Free Cash Flow to Stockholders
Qualcomm Incorporated (NASDAQ: QCOM) today announced that its Board of Directors has approved a major increase in the Company’s capital return program to deliver value for stockholders. Effective immediately, the Board has authorized the Company to repurchase up to $15 billion of its common stock. The $15 billion program replaces the previous program, which had a $2.1 billion authorization remaining.
Qualcomm intends to repurchase $10 billion of its common stock within approximately twelve months of the date of this announcement, in addition to its current commitment to return a minimum of 75% of its free cash flow to stockholders through stock repurchases and dividends.
The Board also approved a 14 percent increase in Qualcomm’s quarterly cash dividend, raising the annualized dividend payout to $1.92 per share of common stock. The cash dividend will increase from $0.42 to $0.48 per share of common stock and will be effective for quarterly dividends payable after March 25, 2015. The Company plans to finance the capital return program primarily by accessing the public debt markets in 2015.
“Our business continues to generate substantial operating cash flow, and today’s announcement represents an important step in returning that cash to our owners while still preserving the strategic flexibility needed to drive stockholder value through growth,” said Steve Mollenkopf, CEO of Qualcomm Incorporated. “I am pleased that we continue to build on our track record of returning capital to stockholders, having exceeded each of our capital return commitments in 2014 and returned approximately $37 billion to stockholders since these programs began in 2003.”
As of March 9, 2015, $2.1 billion had remained available under the Company’s prior stock repurchase authorization. To date in fiscal 2015, the Company has returned $3.9 billion to stockholders through $3.2 billion in stock repurchases and $697 million in cash dividends. In fiscal 2014, the Company exceeded its commitment to return 75% of its free cash flow to stockholders through stock repurchases and dividends, returning a record $7.1 billion, or 93% of free cash flow.
The timing of stock repurchases and the number of shares of common stock to be repurchased will depend upon prevailing market conditions and other factors. Repurchases may be made in the open market, through 10b5-1 programs, through privately negotiated transactions or through the use of derivative instruments. The Company expects to implement an Accelerated Share Repurchase program during its third fiscal quarter for a portion of the $10 billion incremental program. Repurchases under this program will be made using the Company’s cash resources and proceeds from the contemplated public debt offering and may be commenced or suspended from time-to-time at the Company’s discretion without prior notice.
Qualcomm is hosting its annual meeting of stockholders today, March 9, 2015, in San Diego, California. The meeting will be simulcast on the Company’s Investor Relations website at http://investor.qualcomm.com/events.cfm.
Non-GAAP Financial Information
This release includes references to free cash flow and return of capital to stockholders as a percent of free cash flow. These are financial measures that were not prepared in accordance with GAAP. We define “free cash flow” as net cash provided by operating activities less capital expenditures and “return of capital to stockholders” as cash paid to repurchase shares of our common stock and cash dividends paid.
The non-GAAP financial information presented 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, our measure of non-GAAP results might be different than similarly titled measures used by other companies.
We use free cash flow to facilitate an understanding of the amount of cash flow generated that is available to grow our business and to create long-term stockholder value. We believe return of capital to stockholders as a percentage of free cash flow provides insight into our cash-generating activities relative to the amount of capital returned to stockholders. These non-GAAP measures are supplemental to the comparable GAAP measures. The following is a reconciliation between GAAP and non-GAAP results for fiscal 2014 (dollars in millions):
|Net cash provided by operating activities (GAAP)||$8,887|
|Free cash flow (non-GAAP)||$7,702|
|Cash paid to repurchase shares of our common stock
|Cash dividends paid||2,586|
|Total return of capital to stockholders||$7,134|
|Total return of capital to stockholders as a percentage
of net cash provided by operating activities (GAAP)
|Total return of capital to stockholders as a percentage
of free cash flow (non-GAAP)
About Qualcomm Incorporated
Qualcomm Incorporated (NASDAQ: QCOM) is a world leader in 3G, 4G and next-generation wireless technologies. Qualcomm Incorporated includes Qualcomm’s licensing business, QTL, and the vast majority of its patent portfolio. Qualcomm Technologies, Inc., a subsidiary of Qualcomm Incorporated, operates, along with its subsidiaries, substantially all of Qualcomm’s engineering, research and development functions, and substantially all of its products and services businesses, including its semiconductor business, QCT. For more than 25 years, Qualcomm ideas and inventions have driven the evolution of digital communications, linking people everywhere more closely to information, entertainment and each other. For more information, visit www.qualcomm.com.
Note Regarding Forward-Looking Statements
In addition to the historical information contained herein, this news release contains forward-looking statements that are inherently subject to risks and uncertainties, including but not limited to statements regarding our intent to repurchase $10 billion of our common stock within approximately twelve months of the date of this announcement in addition to our commitment to return a minimum of 75% of free cash flow to stockholders through stock repurchases and dividends; the size and timing of dividends; our intent to finance our capital return program primarily by accessing the public debt markets in 2015; and the timing and number of shares to be repurchased, the types of transactions through which shares may be repurchased including our expectation of implementing an Accelerated Share Repurchase program during the third fiscal quarter for a portion of the $10 billion incremental program, and the funding sources to be used to effectuate repurchases. Forward-looking statements are generally identified by words such as “estimates,” “guidance,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks” and similar expressions. Actual results may differ materially from those referred to in the forward-looking statements due to a number of important factors, including but not limited to risks associated with our ability to generate sufficient cash flows, and to access the public debt markets, in order to achieve our return of capital commitments; commercial network deployments, expansions and upgrades of CDMA, OFDMA and other communications technologies, our customers’ and licensees’ sales of products and services based on these technologies and our ability to drive our customers’ demand for our products and services; competition in an environment of rapid technological change; our dependence on a small number of customers and licensees; the continued and future success of our licensing programs; attacks on our licensing business model, including current and future legal proceedings or actions of governmental or quasi-governmental bodies or standards or industry organizations; the enforcement and protection of our intellectual property rights; government regulations and policies, or adverse rulings in enforcement or other proceedings; the commercial success of our new technologies, products and services; claims by third parties that we infringe their intellectual property; acquisitions, strategic transactions and investments; our dependence on a limited number of third-party suppliers; our stock price and earnings volatility; our ability to attract and retain qualified employees; global economic conditions that impact the mobile communications industry; foreign currency fluctuations and failures in our products or services or in the products or services of our customers or licensees, including those resulting from security vulnerabilities, defects or errors. These and other risks are set forth in the Company’s Quarterly Report on Form 10-Q for the first quarter ended December 28, 2014 filed with the SEC. Our reports filed with the SEC are available on our website at www.qualcomm.com. We undertake 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.