Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v2.4.0.6
Segment Information
6 Months Ended
Mar. 25, 2012
Notes to Financial Statements [Abstract]  
Note 7 - Segment Information
Note 7 — Segment Information
The Company is organized on the basis of products and services. The Company aggregates four of its divisions into the Qualcomm Wireless & Internet (QWI) segment and three of its divisions into the Qualcomm Strategic Initiatives (QSI) segment. Reportable segments are as follows:
Qualcomm CDMA Technologies (QCT) — develops and supplies integrated circuits and system software based on CDMA, OFDMA and other technologies for use in voice and data communications, networking, application processing, multimedia and global positioning system products;
Qualcomm Technology Licensing (QTL) — grants licenses or otherwise provides rights to use portions of the Company’s intellectual property portfolio, which, among other rights, includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products, including, without limitation, products implementing cdmaOne, CDMA2000, WCDMA, CDMA TDD (including TD-SCDMA), GSM/GPRS/EDGE and/or OFDMA standards, and collects fixed license fees and royalties in partial consideration for such licenses;
Qualcomm Wireless & Internet (QWI) — comprised of:
Qualcomm Internet Services (QIS) — provides content enablement services for the wireless industry and push-to-talk and other products and services for wireless network operators;
Qualcomm Government Technologies (QGOV) — provides development, hardware, analytical expertise and services to United States government agencies involving wireless communications technologies;
Qualcomm Enterprise Services (QES) — provides fleet management, satellite- and terrestrial-based two-way wireless information and position reporting and other services, software and hardware to transportation and logistics companies and
Firethorn — builds and manages software applications that enable certain mobile commerce services.
Qualcomm Strategic Initiatives (QSI) — comprised of the Company’s Qualcomm Ventures, Structured Finance & Strategic Investments and FLO TV divisions. QSI makes strategic investments that the Company believes will open new opportunities for its technologies, support the design and introduction of new products or services for voice and data communications or possess unique capabilities or technology. Many of these strategic investments are in early-stage companies. QSI also holds wireless spectrum. The results of QSI’s FLO TV business are presented as discontinued operations (Note 8) and are therefore not included in QSI’s revenues or loss before income taxes.
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 investment income (loss); share-based compensation (Note 1); and certain research and development expenses and other selling and marketing expenses that were deemed to be not directly related to the businesses of the segments. Additionally, starting with acquisitions in the third quarter of fiscal 2011, unallocated charges include recognition of the step-up of inventories to fair value and amortization of certain intangible assets. Such charges related to acquisitions that were completed prior to the third quarter of fiscal 2011 are allocated to the respective segments. The table below presents revenues and EBT for reportable segments (in millions):
 
QCT
 
QTL
 
QWI
 
QSI*
 
Reconciling
Items*
 
Total*
For the three months ended:
 
 
 
 
 
 
 
 
 
 
 
March 25, 2012
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
3,059

 
$
1,723

 
$
159

 
$

 
$
2

 
$
4,943

EBT
599

 
1,540

 
(10
)
 
(99
)
 
(296
)
 
1,734

March 27, 2011
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
1,962

 
$
1,746

 
$
157

 
$

 
$
5

 
$
3,870

EBT
417

 
1,575

 
(135
)
 
(45
)
 
(193
)
 
1,619

 
 
 
 
 
 
 
 
 
 
 
 
For the six months ended:
 
 
 
 
 
 
 
 
 
 
 
March 25, 2012
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
6,143

 
$
3,162

 
$
311

 
$

 
$
9

 
$
9,625

EBT
1,338

 
2,808

 
(9
)
 
(133
)
 
(549
)
 
3,455

March 27, 2011
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
4,078

 
$
2,803

 
$
329

 
$

 
$
7

 
$
7,217

EBT
1,057

 
2,467

 
(135
)
 
(67
)
 
(234
)
 
3,088


*As adjusted for discontinued operations (Note 8)
Reconciling items in the previous table were as follows (in millions):
 
Three Months Ended
 
Six Months Ended
 
March 25,
2012
 
March 27, 2011*
 
March 25,
2012
 
March 27, 2011*
Revenues
 
 
 
 
 
 
 
Other nonreportable segments
$
3

 
$
5

 
$
11

 
$
9

Elimination of intersegment revenues
(1
)
 

 
(2
)
 
(2
)
 
$
2

 
$
5

 
$
9

 
$
7

EBT
 
 
 
 
 
 
 
Unallocated cost of equipment and services revenues
$
(68
)
 
$
(17
)
 
$
(138
)
 
$
(30
)
Unallocated research and development expenses
(176
)
 
(155
)
 
(339
)
 
(272
)
Unallocated selling, general and administrative expenses
(168
)
 
(161
)
 
(283
)
 
(246
)
Unallocated investment income, net
228

 
216

 
418

 
461

Other nonreportable segments
(112
)
 
(78
)
 
(207
)
 
(147
)
Intersegment eliminations

 
2

 

 

 
$
(296
)
 
$
(193
)
 
$
(549
)
 
$
(234
)

*As adjusted for discontinued operations (Note 8)
QCT revenues for the three months and six months ended both March 25, 2012 and March 27, 2011 included $1 million and $2 million of intersegment revenues, respectively. All other revenues for all periods presented were from external customers.
Reconciling items for the three months and six months ended March 25, 2012 included $51 million and $102 million, respectively, of unallocated cost of equipment and services revenues and $6 million and $15 million of unallocated selling, general and administrative expenses, respectively, related to the amortization of intangible assets resulting from acquisitions. Other nonreportable segments’ losses before taxes during the three months and six months ended March 25, 2012 and March 27, 2011 were primarily attributable to the Company’s QMT division, a nonreportable segment developing display technology for mobile devices and other applications.
Segment assets are comprised of accounts receivable and inventories for all reportable segments other than QSI. QSI segment assets include certain marketable securities, notes receivable, spectrum licenses, other investments and all assets of QSI’s consolidated subsidiaries. QSI segment assets related to the discontinued FLO TV business totaled $135 million and $913 million at March 25, 2012 and September 25, 2011, respectively (Note 8). Reconciling items for total assets included $1.4 billion and $806 million at March 25, 2012 and September 25, 2011, respectively, of goodwill and other assets related to the Company’s QMT division. The increase in QMT’s assets primarily related to the continued construction of a new manufacturing facility in Taiwan. Total segment assets also 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, goodwill, other intangible assets and assets of nonreportable segments. Segment assets and reconciling items were as follows (in millions):
 
March 25,
2012
 
September 25,
2011
QCT
$
1,784

 
$
1,569

QTL
40

 
36

QWI
131

 
136

QSI
1,619

 
2,386

Reconciling items
37,957

 
32,295

Total consolidated assets
$
41,531

 
$
36,422