| Restructuring Plans |
lan
In the second quarter of fiscal 2018, we announced a Cost Plan designed to align our cost structure to our long-term margin targets. As part of this plan, we initiated a series of targeted actions across our businesses with the objective to reduce annual costs by $1 billion, excluding incremental costs resulting from any future acquisition of a business. Actions taken under this plan have been completed and resulted in us achieving substantially all of this target in fiscal 2019 based on our run rate exiting the second quarter of fiscal 2019, excluding litigation costs that were in excess of the baseline spend.
Total restructuring and restructuring-related charges related to the Cost Plan were as follows (in millions):
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2019 |
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2018 (1) |
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Total |
Restructuring-related charges (2) |
$ |
151 |
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$ |
334 |
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$ |
485 |
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Restructuring charges (3) |
62 |
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|
353 |
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|
415 |
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$ |
213 |
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$ |
687 |
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$ |
900 |
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(1) |
During fiscal 2018, we recorded restructuring and restructuring-related charges of $629 million in other expenses and charges of $58 million in investment and other income, net.
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(2) |
Restructuring-related charges primarily related to asset impairment charges in fiscal 2019 and 2018 and also included a $52 million net gain in fiscal 2019 from the sale of certain assets related to wireless electric vehicle charging applications and the sale of our mobile health nonreportable segment, as well as a $41 million gain in fiscal 2018 resulting from fair value adjustments of certain
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contingent consideration related to a business combination.
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(3) |
Restructuring charges primarily consisted of severance and consulting costs in fiscal 2019 and 2018, which were payable in cash. |
The restructuring accrual, a portion of which was included in payroll and other benefits related liabilities with the remainder included in other current liabilities, is expected to be substantially paid within the next 12 months. At September 29, 2019 and September 30, 2018, the restructuring accrual was $17 million and $83 million, respectively.
Note 12. Revision of Prior Period Financial Statements
We revised certain prior period financial statements for an immaterial error related to the recognition of certain royalty revenues of our QTL segment (Note 1). A summary of revisions to our previously reported financial statements presented herein for comparative purposes is included below (in millions, except per share data).
Revised Consolidated Balance Sheets.
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As of September 30, 2018 |
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As reported |
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Adjustment |
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As revised |
Deferred tax assets (noncurrent) |
$ |
904 |
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$ |
32 |
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$ |
936 |
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Total assets |
32,686 |
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32 |
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32,718 |
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Other current liabilities |
6,825 |
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|
153 |
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6,978 |
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Total current liabilities |
11,236 |
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|
153 |
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11,389 |
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Total liabilities |
31,758 |
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|
153 |
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31,911 |
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Retained earnings |
663 |
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(121 |
) |
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542 |
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Total stockholders’ equity |
928 |
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(121 |
) |
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807 |
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Total liabilities and stockholders’ equity |
32,686 |
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32 |
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32,718 |
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Revised Consolidated Statements of Operations.
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Year Ended |
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September 30, 2018 |
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September 24, 2017 |
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As reported |
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Adjustment |
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As revised |
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As reported |
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Adjustment |
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As revised |
Licensing revenues |
$ |
5,332 |
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$ |
(121 |
) |
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$ |
5,211 |
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$ |
5,644 |
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$ |
(33 |
) |
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$ |
5,611 |
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Total revenues |
22,732 |
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(121 |
) |
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22,611 |
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22,291 |
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(33 |
) |
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22,258 |
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Operating income |
742 |
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(121 |
) |
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621 |
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2,614 |
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(33 |
) |
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2,581 |
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Income before income taxes |
513 |
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(121 |
) |
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392 |
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3,020 |
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(33 |
) |
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2,987 |
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Income tax expense |
(5,377 |
) |
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21 |
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(5,356 |
) |
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(555 |
) |
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12 |
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(543 |
) |
Net (loss) income |
(4,864 |
) |
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(100 |
) |
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(4,964 |
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2,465 |
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(21 |
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2,444 |
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Net (loss) income attributable to Qualcomm |
(4,864 |
) |
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(100 |
) |
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(4,964 |
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2,466 |
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(21 |
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2,445 |
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Basic (loss) earnings per share |
(3.32 |
) |
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(0.07 |
) |
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(3.39 |
) |
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1.67 |
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(0.01 |
) |
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1.66 |
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Diluted (loss) earnings per share |
(3.32 |
) |
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(0.07 |
) |
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(3.39 |
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1.65 |
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(0.01 |
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1.64 |
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Revised Consolidated Statements of Comprehensive Income (Loss).
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Year Ended |
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September 30, 2018 |
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September 24, 2017 |
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As reported |
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Adjustment |
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As revised |
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As reported |
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Adjustment |
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As revised |
Net (loss) income |
$ |
(4,864 |
) |
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$ |
(100 |
) |
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$ |
(4,964 |
) |
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$ |
2,465 |
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$ |
(21 |
) |
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$ |
2,444 |
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Total comprehensive (loss) income |
(4,983 |
) |
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(100 |
) |
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(5,083 |
) |
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2,421 |
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(21 |
) |
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2,400 |
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Comprehensive (loss) income attributable to Qualcomm |
(4,983 |
) |
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(100 |
) |
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(5,083 |
) |
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2,422 |
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(21 |
) |
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2,401 |
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Revised Consolidated Statements of Cash Flows.
We revised our consolidated statements of cash flows for the years ended September 30, 2018 and September 24, 2017 for this correction, which had no impact to net cash provided by operating activities in each such period.
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Year Ended September 30, 2018 |
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As reported |
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Reclassification adjustment (1) |
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Revision adjustment |
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As revised |
Operating Activities: |
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Net loss |
$ |
(4,864 |
) |
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$ |
— |
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$ |
(100 |
) |
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$ |
(4,964 |
) |
Income tax provision in excess of (less than) income tax payments |
4,502 |
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— |
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(21 |
) |
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4,481 |
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Other items, net |
129 |
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(178 |
) |
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— |
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(49 |
) |
Other assets |
30 |
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(6 |
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— |
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24 |
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Payroll, benefits and other liabilities |
687 |
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|
197 |
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|
121 |
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1,005 |
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Net cash provided by operating activities |
3,895 |
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13 |
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— |
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3,908 |
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Year Ended September 24, 2017 |
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As reported |
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Reclassification adjustment (1) |
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Revision adjustment |
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As revised |
Operating Activities: |
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Net income |
$ |
2,465 |
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$ |
— |
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$ |
(21 |
) |
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$ |
2,444 |
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Income tax provision in excess of (less than) income tax payments |
(400 |
) |
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— |
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(12 |
) |
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(412 |
) |
Other items, net |
146 |
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(172 |
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— |
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(26 |
) |
Other assets |
169 |
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(33 |
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— |
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|
136 |
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Payroll, benefits and other liabilities |
2,103 |
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|
205 |
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33 |
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2,341 |
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Net cash provided by operating activities |
5,001 |
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— |
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— |
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5,001 |
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(1) Certain previously reported amounts have been reclassified to conform to the current year presentation.
Revised Segment Information.
QTL segment results were revised for this correction (Note 8), which resulted in a decrease in QTL revenues and EBT (earnings before income taxes) of $121 million and $33 million for fiscal 2018 and 2017, respectively.
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