Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v2.4.0.8
Segment Information
 3 Months Ended
Dec. 29, 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 two of its divisions into the QSI segment. Reportable segments are as follows:
•
QCT (Qualcomm CDMA Technologies) 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 (Qualcomm Technology Licensing) 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 (including LTE) standards and their derivatives, and QTL collects fixed license fees and/or royalties based on sales by licensees of products incorporating or using the Company’s intellectual property.
•
QSI (Qualcomm Strategic Initiatives) segment — comprised of the Company’s Qualcomm Ventures and Structured Finance & Strategic Investments divisions. QSI makes strategic investments that the Company believes may open new or expand 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.
During the first quarter of fiscal 2014, the Company reassessed its management reporting as a result of the sale of the North and Latin America operations of the Omnitracs division (Note 8), which was substantially all of the Omnitracs division, among other reasons. The Omnitracs division was previously aggregated with three other divisions into the Qualcomm Wireless & Internet (QWI) reportable segment. Starting in fiscal 2014, the QWI segment was eliminated, and revenues and operating results for the divisions that comprised the QWI reportable segment are included in nonreportable segments as components of reconciling items. Prior period segment information has been adjusted to conform to the new segment presentation.
Nonreportable segments include the Company’s QIS (Qualcomm Internet Services), QGOV (Qualcomm Government Technologies), QMT (Qualcomm MEMS Technologies) and QRS (Qualcomm Retail Solutions) divisions and other display, wireless technology and service initiatives. Nonreportable segments develop and offer products and services that include, but are not limited to: software products and content enablement services to wireless operators; development, other services and related products to U.S. government agencies and their contractors; low power consumption, high optical performance flat display modules; software applications that enable location-awareness and commerce services; 3G/LTE and Wi-Fi products designed for implementation of small cells; medical device connectivity and related data management; augmented reality; and device-to-device communication.
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 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
 
QSI
 
Reconciling
Items*
 
Total
For the three months ended:
 
 
 
 
 
 
 
 
 
December 29, 2013
 
 
 
 
 
 
 
 
 
Revenues
$
4,616

 
$
1,900

 
$
—

 
$
106

 
$
6,622

EBT
906

 
1,670

 
4

 
(823
)
 
1,757

December 30, 2012
 
 
 
 
 
 
 
 
 
Revenues
$
4,120

 
$
1,757

 
$
—

 
$
141

 
$
6,018

EBT
1,068

 
1,532

 
(17
)
 
(256
)
 
2,327


*As adjusted
QCT revenues included intersegment revenues of $1 million for each of the three months ended December 29, 2013 and December 30, 2012. All other revenues for reportable segments were from external customers for all periods presented.
Reconciling items in the previous table were as follows (in millions):
 
Three Months Ended
 
December 29,
2013
 
December 30, 2012*
Revenues
 
 
 
Nonreportable segments
$
108

 
$
142

Intersegment eliminations
(2
)
 
(1
)
 
$
106

 
$
141

EBT
 
 
 
Unallocated cost of equipment and services revenues
$
(73
)
 
$
(83
)
Unallocated research and development expenses
(217
)
 
(186
)
Unallocated selling, general and administrative expenses
(125
)
 
(111
)
Unallocated other expense
(12
)
 
—

Unallocated investment income, net
257

 
248

Nonreportable segments
(653
)
 
(124
)
 
$
(823
)
 
$
(256
)

*As adjusted
Nonreportable segments EBT included a total of $460 million in impairment charges related to the Company’s QMT and QRS divisions (Note 9).
Unallocated acquisition-related expenses were comprised as follows (in millions):
 
Three Months Ended
 
December 29,
2013
 
December 30,
2012
Cost of equipment and services revenues
$
61

 
$
63

Research and development expenses
1

 
—

Selling, general and administrative expenses
7

 
7


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 $425 million and $892 million at December 29, 2013 and September 29, 2013, respectively, of goodwill and other assets related to the Company’s QMT division. The decrease in QMT assets was primarily a result of an impairment of certain property, plant and equipment recorded in the first quarter of fiscal 2014 (Note 2). 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):
 
December 29,
2013
 
September 29,
2013
QCT
$
2,292

 
$
3,305

QTL
31

 
28

QSI
474

 
511

Reconciling items
43,485

 
41,672

Total consolidated assets
$
46,282

 
$
45,516