| 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 QWI segment and two of its divisions into the QSI segment. Reportable segments are as follows:
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QCT segment — 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. |
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QTL segment — 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 CDMA2000, WCDMA, CDMA TDD (including TD-SCDMA), GSM/GPRS/EDGE and/or OFDMA standards and their derivatives, and QTL collects license fees as well as royalties based on sales by licensees of products incorporating or using the Company's intellectual property. |
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QWI segment — comprised of: |
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QES division — 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; |
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QIS division — provides content enablement services for the wireless industry and push-to-talk and other software products and services for wireless network operators; |
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QGOV division — provides development and other services and related products involving wireless communications technologies to government agencies and their contractors; and |
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Firethorn division — builds and manages software applications that enable certain mobile commerce services. |
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QSI segment — comprised of the Company's Qualcomm Ventures and Structured Finance & Strategic Investments 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. QSI's FLO TV division was presented as discontinued operations in fiscal 2012. |
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 net investment income; share-based compensation; 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, 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. The table below presents revenues and EBT for reportable segments (in millions):
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QCT |
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QTL |
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QWI |
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QSI |
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Reconciling
Items
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Total |
For the three months ended: |
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December 30, 2012 |
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Revenues |
$ |
4,120 |
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$ |
1,757 |
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$ |
146 |
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$ |
— |
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$ |
(5 |
) |
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$ |
6,018 |
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EBT |
1,068 |
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1,532 |
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(3 |
) |
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(17 |
) |
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(253 |
) |
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2,327 |
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December 25, 2011 |
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Revenues |
$ |
3,085 |
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$ |
1,440 |
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$ |
152 |
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$ |
— |
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$ |
4 |
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$ |
4,681 |
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EBT |
739 |
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1,267 |
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1 |
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(34 |
) |
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(252 |
) |
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1,721 |
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Reconciling items in the previous table were as follows (in millions):
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Three Months Ended |
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December 30,
2012 |
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December 25,
2011 |
Revenues |
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Nonreportable segments |
$ |
(4 |
) |
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$ |
5 |
|
Intersegment eliminations |
(1 |
) |
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(1 |
) |
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$ |
(5 |
) |
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$ |
4 |
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EBT |
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Unallocated cost of equipment and services revenues |
$ |
(83 |
) |
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$ |
(70 |
) |
Unallocated research and development expenses |
(186 |
) |
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(162 |
) |
Unallocated selling, general and administrative expenses |
(111 |
) |
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(115 |
) |
Unallocated investment income, net |
248 |
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|
190 |
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Nonreportable segments |
(121 |
) |
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(95 |
) |
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$ |
(253 |
) |
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$ |
(252 |
) |
QCT revenues included intersegment revenues of $1 million for each of the three months ended December 30, 2012 and December 25, 2011. All other revenues for reportable segments were from external customers for all periods presented.
Reconciling items for the three months ended December 30, 2012 included $63 million and $7 million of unallocated cost of equipment and services revenues and unallocated selling, general and administrative expenses, respectively, related to the amortization and impairment of certain intangible assets, contract termination and the recognition of the step-up of inventories to fair value resulting from acquisitions. Reconciling items for the three months ended December 25, 2011 included $51 million and $9 million of unallocated cost of equipment and services revenues and unallocated selling, general and administrative expenses, respectively, related to the amortization of certain intangible assets resulting from acquisitions. Nonreportable segments' losses before taxes during the three months ended December 30, 2012 and December 25, 2011 were primarily attributable to the Company's QMT division.
Segment assets are comprised of accounts receivable and inventories for all reportable segments other than QSI. QSI segment assets include marketable securities, notes receivable, wireless spectrum, other investments and all assets of consolidated subsidiaries included in QSI. Reconciling items for total consolidated assets included $1.1 billion and $1.2 billion at December 30, 2012 and September 30, 2012, respectively, of property, plant and equipment, goodwill and other assets related to the Company's QMT division. 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):
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December 30,
2012 |
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September 30,
2012 |
QCT |
$ |
2,711 |
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$ |
2,278 |
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QTL |
74 |
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63 |
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QWI |
128 |
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129 |
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QSI |
1,475 |
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1,424 |
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Reconciling items |
40,453 |
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39,118 |
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Total consolidated assets |
$ |
44,841 |
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$ |
43,012 |
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