Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v2.4.1.9
Segment Information
3 Months Ended
Dec. 28, 2014
Notes to Financial Statements [Abstract]  
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.
QSI (Qualcomm Strategic Initiatives) segment — comprised of the Company’s Qualcomm Ventures and Structured Finance & Strategic Investments divisions. QSI makes strategic investments that are focused on opening new or expanding opportunities for its technologies and supporting the design and introduction of new products or services (or enhancing existing products or services) for voice and data communications. Many of these strategic investments are in early-stage companies. QSI also holds wireless spectrum.
Nonreportable segments include the Company’s QMT (Qualcomm MEMS Technologies), Pixtronix and Small Cells divisions and other wireless technology and service initiatives. QMT plans to license its next generation IMOD (interferometric modulator) display technology and to focus on wearable devices. Pixtronix develops and licenses display technologies based on MEMS (micro-electro-mechanical-systems) structure optimized for portable multimedia devices. Small Cells develops and supplies 3G/LTE and Wi-Fi products designed for implementation of small mobile base stations (known as small cells). Other nonreportable segments develop and offer products and services that include, but are not limited to: software products, content and push-to-talk enablement services to wireless operators; development, other services and related products to U.S. government agencies and their contractors; device-to-device communication, including software for the connected home; data center products; medical device connectivity and related data management; and augmented reality.
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, selling, general and administrative expenses and other expenses or income 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, and beginning in the first quarter of fiscal 2015, third-party acquisition and integration services costs and certain other items, which may include major restructuring and restructuring-related costs, goodwill and long-lived asset impairment charges and litigation settlements and/or damages. The table below presents revenues and EBT for reportable segments (in millions):
 
QCT
 
QTL
 
QSI
 
Reconciling
Items
 
Total
For the three months ended:
 
 
 
 
 
 
 
 
 
December 28, 2014
 
 
 
 
 
 
 
 
 
Revenues
$
5,242

 
$
1,816

 
$

 
$
41

 
$
7,099

EBT
1,146

 
1,579

 
(1
)
 
(426
)
 
2,298

December 29, 2013
 
 
 
 
 
 
 
 
 
Revenues
$
4,616

 
$
1,900

 
$

 
$
106

 
$
6,622

EBT
906

 
1,670

 
4

 
(823
)
 
1,757


Intersegment revenues included in QCT revenues were negligible in all periods presented. 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 28,
2014
 
December 29, 2013
Revenues
 
 
 
Nonreportable segments
$
43

 
$
108

Intersegment eliminations
(2
)
 
(2
)
 
$
41

 
$
106

EBT
 
 
 
Unallocated cost of equipment and services revenues
$
(79
)
 
$
(73
)
Unallocated research and development expenses
(210
)
 
(217
)
Unallocated selling, general and administrative expenses
(150
)
 
(125
)
Unallocated other expense
(69
)
 
(12
)
Unallocated investment income, net
231

 
257

Nonreportable segments
(148
)
 
(653
)
Intersegment eliminations
(1
)
 

 
$
(426
)
 
$
(823
)

Unallocated other expense for the three months ended December 28, 2014 included a $69 million goodwill impairment charge related to the Company’s business that provides push-to-talk enablement services to wireless operators (Note 10). Nonreportable segments EBT for the three months ended December 29, 2013 included a total of $444 million in impairment charges related to the Company’s QMT division.
Unallocated acquisition-related expenses were comprised as follows (in millions):
 
Three Months Ended
 
December 28,
2014
 
December 29,
2013
Cost of equipment and services revenues
$
67

 
$
61

Research and development expenses
4

 
1

Selling, general and administrative expenses
12

 
7


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, wireless spectrum, other investments and all assets of consolidated subsidiaries included in QSI. Total segment assets 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 28,
2014
 
September 28,
2014
QCT
$
3,577

 
$
3,639

QTL
365

 
161

QSI
588

 
484

Reconciling items
43,917

 
44,290

Total consolidated assets
$
48,447

 
$
48,574