Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v2.4.0.6
Segment Information
 6 Months Ended
Mar. 31, 2013
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 QWI segment and two of its divisions into the QSI segment. Reportable segments are as follows:
•
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.
•
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.
•
QWI segment — comprised of:
•
Omnitracs division (formerly 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;
•
QIS division — provides content enablement services for the wireless industry and push-to-talk and other software products and services for wireless network operators;
•
QGOV division — provides development and other services and related products involving wireless communications technologies to government agencies and their contractors; and
•
QRS (Qualcomm Retail Solutions) division (formerly Firethorn) — builds and manages software applications that enable certain mobile commerce services.
•
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. All discontinued operations were attributable to Qualcomm.
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; certain 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):
 
QCT
 
QTL
 
QWI
 
QSI
 
Reconciling
Items
 
Total
For the three months ended:
 
 
 
 
 
 
 
 
 
 
 
March 31, 2013
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
3,916

 
$
2,057

 
$
155

 
$
—

 
$
(4
)
 
$
6,124

EBT
681

 
1,803

 
—

 
33

 
(381
)
 
2,136

March 25, 2012
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
3,059

 
$
1,723

 
$
159

 
$
—

 
$
2

 
$
4,943

EBT
599

 
1,540

 
(10
)
 
(99
)
 
(296
)
 
1,734

 
 
 
 
 
 
 
 
 
 
 
 
For the six months ended:
 
 
 
 
 
 
 
 
 
 
 
March 31, 2013
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
8,036

 
$
3,813

 
$
301

 
$
—

 
$
(7
)
 
$
12,143

EBT
1,749

 
3,335

 
(4
)
 
16

 
(633
)
 
4,463

March 25, 2012
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
6,143

 
$
3,162

 
$
311

 
$
—

 
$
9

 
$
9,625

EBT
1,338

 
2,808

 
(9
)
 
(133
)
 
(549
)
 
3,455


Reconciling items in the previous table were as follows (in millions):
 
Three Months Ended
 
Six Months Ended
 
March 31,
2013
 
March 25,
2012
 
March 31,
2013
 
March 25,
2012
Revenues
 
 
 
 
 
 
 
Nonreportable segments
$
(3
)
 
$
3

 
$
(5
)
 
$
11

Intersegment eliminations
(1
)
 
(1
)
 
(2
)
 
(2
)
 
$
(4
)
 
$
2

 
$
(7
)
 
$
9

EBT
 
 
 
 
 
 
 
Unallocated cost of equipment and services revenues
$
(93
)
 
$
(68
)
 
$
(177
)
 
$
(138
)
Unallocated research and development expenses
(204
)
 
(176
)
 
(389
)
 
(339
)
Unallocated selling, general and administrative expenses
(153
)
 
(168
)
 
(264
)
 
(283
)
Unallocated investment income, net
220

 
228

 
468

 
418

Nonreportable segments
(151
)
 
(112
)
 
(271
)
 
(207
)
 
$
(381
)
 
$
(296
)
 
$
(633
)
 
$
(549
)

QCT revenues for both the three and six months ended March 31, 2013 and March 25, 2012 included $1 million and $2 million of intersegment revenues, respectively. All other revenues for reportable segments were from external customers for all periods presented.
Amounts included in unallocated expenses related to the amortization and impairment of certain intangible assets, contract termination and the recognition of the step-up of inventories to fair value that resulted from acquisitions were as follows (in millions):
 
Three Months Ended
 
Six Months Ended
 
March 31,
2013
 
March 25,
2012
 
March 31,
2013
 
March 25,
2012
Unallocated cost of equipment and services revenues
$
76

 
$
51

 
$
140

 
$
102

Unallocated research and development expenses
1

 
—

 
1

 
—

Unallocated selling, general and administrative expenses
6

 
6

 
13

 
15


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 March 31, 2013 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):
 
March 31,
2013
 
September 30,
2012
QCT
$
3,127

 
$
2,278

QTL
115

 
63

QWI
116

 
129

QSI
1,455

 
1,424

Reconciling items
42,786

 
39,118

Total consolidated assets
$
47,599

 
$
43,012