Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.3.0.814
Segment Information
 12 Months Ended
Sep. 27, 2015
Segment Reporting [Abstract]  
Segment Information
Note 8. Segment Information
The Company is organized on the basis of products and services. The Company conducts business primarily through two reportable segments: QCT (Qualcomm CDMA Technologies) and QTL (Qualcomm Technology Licensing), and its QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments and includes revenues and related costs associated with development contracts with an equity method investee. The Company also has nonreportable segments, including its small cells, data center and other wireless technology and service initiatives.
The Company evaluates the performance of its segments based on earnings (loss) before income taxes (EBT) from continuing operations. Segment EBT includes the allocation of certain corporate expenses to the segments, including depreciation and amortization expense related to unallocated corporate assets. Certain income and charges are not allocated to segments in the Company’s management reports because they are not considered in evaluating the segments’ operating performance. Unallocated income and charges include certain interest expense; certain net investment income; certain share-based compensation; and certain research and development expenses, selling, general and administrative expenses and other expenses or income that were deemed to be not directly related to the businesses of the segments. Additionally, unallocated charges include recognition of the step-up of inventories to fair value, amortization and impairment of certain intangible assets and certain other acquisition-related charges, and beginning in the first quarter of fiscal 2015, third-party acquisition and integration services costs and certain other items, which may include major restructuring and restructuring-related costs, goodwill and long-lived asset impairment charges and litigation settlements and/or damages. The table below presents revenues, EBT and total assets for reportable segments (in millions):
 
QCT
 
QTL
 
QSI
 
Reconciling
Items
 
Total
2015
 
 
 
 
 
 
 
 
 
Revenues
$
17,154

 
$
7,947

 
$
4

 
$
176

 
$
25,281

EBT
2,465

 
6,882

 
(74
)
 
(2,786
)
 
6,487

Total assets
2,923

 
438

 
812

 
46,623

 
50,796

2014
 
 
 
 
 
 
 
 
 
Revenues
$
18,665

 
$
7,569

 
$
—

 
$
253

 
$
26,487

EBT
3,807

 
6,590

 
(7
)
 
(1,612
)
 
8,778

Total assets
3,639

 
161

 
484

 
44,290

 
48,574

2013
 
 
 
 
 
 
 
 
 
Revenues
$
16,715

 
$
7,554

 
$
—

 
$
597

 
$
24,866

EBT
3,189

 
6,590

 
56

 
(1,641
)
 
8,194

Total assets
3,305

 
28

 
511

 
41,672

 
45,516


The Company reports revenues from external customers by country based on the location to which its products or services are delivered, which for QCT is generally the country in which its customers manufacture their products, or for licensing revenues, the invoiced addresses of its licensees. As a result, the revenues by country presented herein are not necessarily indicative of either the country in which the devices containing our products and/or intellectual property are ultimately sold to consumers or the country in which the companies that sell the devices are headquartered. For example, China revenues could include revenues related to shipments of integrated circuits to a company that is headquartered in South Korea but that manufactures devices in China, which devices are then sold to consumers in Europe and/or the United States. Revenues by country were as follows (in millions):
 
2015
 
2014
 
2013
China (including Hong Kong)
$
13,337

 
$
13,200

 
$
12,288

South Korea
4,107

 
6,172

 
4,983

Taiwan
3,294

 
2,876

 
2,683

United States
246

 
372

 
805

Other foreign
4,297

 
3,867

 
4,107

 
$
25,281

 
$
26,487

 
$
24,866


Segment assets are comprised of accounts receivable and inventories for all reportable segments other than QSI. QSI segment assets include certain marketable securities, wireless spectrum, other investments and all assets of consolidated subsidiaries included in QSI. QSI assets at September 27, 2015, September 28, 2014 and September 29, 2013 included $163 million, $18 million and $17 million, respectively, related to investments in equity method investees. Total segment assets differ from total assets on a consolidated basis as a result of unallocated corporate assets primarily comprised of certain cash, cash equivalents, marketable securities, property, plant and equipment, deferred tax assets, intangible assets and assets of nonreportable segments. The net book values of long-lived tangible assets located outside of the United States were $414 million, $288 million and $896 million at September 27, 2015, September 28, 2014 and September 29, 2013, respectively. The net book values of long-lived tangible assets located in the United States were $2.1 billion, $2.2 billion and $2.1 billion at September 27, 2015, September 28, 2014 and September 29, 2013, respectively.
Reconciling items in the previous table were as follows (in millions):
 
2015
 
2014
 
2013
Revenues
 
 
 
 
 
Nonreportable segments
$
181

 
$
258

 
$
601

Intersegment eliminations
(5
)
 
(5
)
 
(4
)
 
$
176

 
$
253


$
597

EBT
 
 
 
 
 
Unallocated cost of equipment and services revenues
$
(314
)
 
$
(300
)
 
$
(335
)
Unallocated research and development expenses
(809
)
 
(860
)
 
(789
)
Unallocated selling, general and administrative expenses
(497
)
 
(412
)
 
(502
)
Unallocated other (expense) income
(1,289
)
 
142

 
(173
)
Unallocated interest expense
(101
)
 
(2
)
 
(3
)
Unallocated investment income, net
855

 
1,215

 
880

Nonreportable segments
(630
)
 
(1,395
)
 
(719
)
Intersegment eliminations
(1
)
 
—

 
—

 
$
(2,786
)
 
$
(1,612
)
 
$
(1,641
)

Unallocated other expense for fiscal 2015 included a $975 million charge related to the resolution reached with the NDRC, $190 million in restructuring and restructuring-related charges related to the Strategic Realignment Plan (Note 10), and $235 million and $11 million in impairment charges of goodwill and intangible assets, respectively, related to three of the Company’s nonreportable segments (Note 2), partially offset by a $122 million gain on the sale of certain property, plant and equipment. Nonreportable segments EBT for fiscal 2014 and 2013 included $607 million and $158 million in impairment charges related to property, plant and equipment and goodwill, respectively (Note 2). Unallocated acquisition-related expenses were comprised as follows (in millions):
 
2015
 
2014
 
2013
Cost of equipment and services revenues
$
272

 
$
251

 
$
264

Research and development expenses
14

 
30

 
3

Selling, general and administrative expenses
72

 
25

 
26