Quarterly report pursuant to Section 13 or 15(d)

Segment Information (Notes)

v3.6.0.2
Segment Information (Notes)
3 Months Ended
Dec. 25, 2016
Segment Reporting [Abstract]  
Segment Information
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. QCT develops and supplies integrated circuits and system software for use in mobile devices, wireless networks, broadband gateway equipment and consumer electronic devices. QTL grants licenses to use portions of its intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products. The Company also has nonreportable segments, including its mobile health, data center, small cell and other wireless technology and service initiatives.
The Company evaluates the performance of its segments based on earnings (loss) before income taxes (EBT). 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 of certain intangible assets and certain other acquisition-related charges, 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. All of the costs related to the initial research of 5G technology are included in unallocated corporate research and development expenses, whereas initial costs related to the research of 3G and 4G technology were recorded in both the QCT segment and unallocated corporate research and development expenses based on the nature of the activity. Fiscal 2016 results have not been revised as such costs were incurred prior to fiscal 2014.
Segment assets are comprised of accounts receivable and inventories for all reportable segments other than QSI. QSI segment assets are comprised primarily of certain non-marketable equity instruments and other investments and a receivable from the sale of wireless spectrum in fiscal 2016 (Note 2). 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 table below presents revenues, EBT and total assets for reportable segments (in millions):
 
QCT
 
QTL
 
QSI
 
Reconciling
Items
 
Total
For the three months ended
 
 
 
 
 
 
 
 
 
December 25, 2016
 
 
 
 
 
 
 
 
 
Revenues
$
4,101

 
$
1,811

 
$
14

 
$
73

 
$
5,999

EBT
724

 
1,532

 
(17
)
 
(1,369
)
 
870

December 27, 2015
 
 
 
 
 
 
 
 
 
Revenues
$
4,096

 
$
1,607

 
$
9

 
$
63

 
$
5,775

EBT
590

 
1,339

 
359

 
(578
)
 
1,710

 
 
 
 
 
 
 
 
 
 
Total assets
 
 
 
 
 
 
 
 
 
December 25, 2016
$
3,037

 
$
873

 
$
956

 
$
47,500

 
$
52,366

September 25, 2016
2,995

 
644

 
910

 
47,810

 
52,359


Reconciling items in the previous table were as follows (in millions):
 
Three Months Ended
 
December 25,
2016
 
December 27,
2015
Revenues
 
 
 
Nonreportable segments
$
73

 
$
64

Intersegment eliminations

 
(1
)
 
$
73

 
$
63

EBT
 
 
 
Unallocated cost of revenues
$
(95
)
 
$
(150
)
Unallocated research and development expenses
(269
)
 
(216
)
Unallocated selling, general and administrative expenses
(145
)
 
(127
)
Unallocated other expenses, net
(876
)
 
(6
)
Unallocated interest expense
(89
)
 
(70
)
Unallocated investment income, net
184

 
114

Nonreportable segments
(79
)
 
(124
)
Intersegment eliminations

 
1

 
$
(1,369
)
 
$
(578
)

Unallocated other expense in the three months ended December 25, 2016 was comprised primarily of the charge related to the KFTC investigation (Note 6). Unallocated other expense in the three months ended December 27, 2015 was comprised of net restructuring and restructuring-related charges associated with the Company’s Strategic Realignment Plan, which was substantially implemented in fiscal 2016 (Note 2).
Unallocated acquisition-related expenses were comprised as follows (in millions):
 
Three Months Ended
 
December 25,
2016
 
December 27,
2015
Cost of revenues
$
84

 
$
140

Research and development expenses
3

 
3

Selling, general and administrative expenses
61

 
29