Qualcomm 1999 Annual Report Download - page 63

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QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEGMENT INFORMATION
The Company adopted Statement of Financial Accounting Standards
No. 131 (“FAS 131”), “Disclosures about Segments of an Enterprise and
Related Information,” in fiscal 1999. FAS 131 establishes standards for
reporting information about operating segments in annual financial
statements and requires disclosure of selected information about operating
segments to shareholders. The statement also establishes standards
for related disclosures about products and services, geographic areas
and major customers. Under FAS 131, operating segments are determined
consistent with the way that management organizes and evaluates
financial information internally for making operating decisions and
assessing performance. The adoption of FAS 131 did not affect results of
operations or financial position.
The Company is organized on the basis of products and services.
The Company’s segments are divisions that offer different products and
services. Three segments have been aggregated into the Wireless
Systems segment. Reportable segments are as follows:
“CDMA Technologies” (QCT) – designs and supplies CDMA chipsets
and software solutions.
“Technology Licensing” (
QTL) – provides licenses to third parties
related to the design, manufacture and sale of products using the
Company’s CDMA technology.
“Wireless Systems” (QWS) – designs, manufactures, markets and
deploys infrastructure and handset products for use in terrestri-
al and non-terrestrial CDMA wireless and satellite networks and
provides satellite-based two-way data messaging, position
reporting equipment and services to transportation companies.
“Consumer Products” (QCP) – designs, manufactures and markets
wireless handsets and accessories using CDMA technology for
use in mobile and fixed wireless networks.
The Company evaluates the performance of its segments based on
earnings before income taxes (“EBT”). EBT includes the allocation of
certain corporate expenses to the segments. Segment data includes
intersegment revenues. The table below presents information about
reported segments for the years ending September 30 (in thousands):
Reconciling
QCT QTL QWS QCP Items Total
1999:
Revenues $ 1,133,422 $ 454,163 $ 939,780 $ 1,469,637 $ (59,703) $ 3,937,299
EBT 427,994 404,947 20,220 (39,983) (506,492) 306,686
Total assets 187,517 91,368 868,143 566,218 2,821,704 4,534,950
1998:
Revenues $ 879,858 $ 289,934 $ 1,048,957 $ 855,101 $ 274,020 $ 3,347,870
EBT 258,369 256,401 (53,054) (168,714) (144,328) 148,674
Total assets 156,626 49,728 599,166 446,994 1,314,199 2,566,713
1997:
Revenues $ 549,681 $ 215,966 $ 645,325 $ 520,985 $ 164,408 $ 2,096,365
EBT 62,188 195,172 (65,664) (61,505) (21,757) 108,434
Total assets 100,318 11,465 342,357 263,702 1,556,838 2,274,680
Segment assets are comprised of accounts receivable, finance
receivables and inventory. Total segment assets differ from total assets
on a consolidated basis as a result of unallocated corporate assets.
Other reconciling items for the years ended September 30 are com-
prised as follows (in thousands):
1999 1998 1997
Revenues:
Elimination of intersegment revenue $ (382,796) $ (458,259) $ (249,732)
Other products 323,093 732,279 414,140
Reconciling items $ (59,703) $ 274,020 $ 164,408
Earnings before income taxes:
Unallocated corporate expenses $ (337,723) $ (19,413) $ (6,699)
Unallocated interest expense (11,595) (4,579) (5,822)
Unallocated investment income, net 26,610 22,434 48,245
Distributions on Trust Convertible
Preferred Securities of subsidiary trust (39,297) (39,270) (23,277)
Intracompany profit (130,676) (102,418) (14,022)
Other (13,811) (1,082) (20,182)
Reconciling items $ (506,492) $ (144,328) $ (21,757)
Generally, revenues between operating segments are based on pre-
vailing market rates or an approximation thereof, with the exception of
QCT’s sales to QCP which are recorded by QCP at QCT’s cost.
Intracompany profit eliminations include the elimination of profits
recorded on QCT’s sales to QCP. Unallocated corporate expenses in fis-
cal 1999 include $331 million in charges related to the sale of certain
assets related to the Company’s terrestrial CDMA wireless infrastruc-
ture business to Ericsson, restructuring charges, and the impairment of
assets in connection with Leap Wireless’ decision to withdraw its sup-
port of Metrosvyaz.
Specified items included in segment EBT for the years ending
September 30 are as follows (in thousands):
QCT QTL QWS QCP
1999:
Revenues from external customers $ 896,484 $ 343,242 $ 928,696 $ 1,445,784
Intersegment revenues 236,938 110,921 11,084 23,853
Interest income __ __ 16,889 __
Equity in losses of investees __ __ (7,074) __
1998:
Revenues from external customers $ 583,111 $ 218,480 $ 1,012,344 $ 801,656
Intersegment revenues 296,747 71,454 36,613 53,445
Equity in losses of investees __ __ (20,551) __
1997:
Revenues from external customers $ 361,502 $ 156,318 $ 645,017 $ 519,388
Intersegment revenues 188,179 59,648 308 1,597
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