Qualcomm 2014 Annual Report Download - page 14

Seasonality. Many of our products or intellectual property are incorporated into consumer wireless devices, which are subject to seasonality
and other fluctuations in demand. As a result, QCT has tended historically to have stronger sales toward the end of the calendar year as
manufacturers prepare for major holiday selling seasons; and because QTL recognizes royalty revenues when royalties are reported by licensees,
QTL has tended to record higher royalty revenues in the first calendar quarter when licensees report their sales made during the fourth calendar
quarter. We have also experienced fluctuations in revenues due to the timing of conversions and expansions of 3G and 3G/4G networks by
wireless operators and the timing of launches of flagship wireless devices that incorporate our products and/or intellectual property. These trends
may or may not continue in the future.
Acquisitions. During fiscal 2014, we acquired 11 businesses for total cash consideration of $775 million. In October 2014, we announced
that we had reached agreement with CSR plc on the terms of a recommended cash offer to acquire the entire issued and to be issued ordinary
share capital of CSR for £9.00 per ordinary share, which values the entire issued and to be issued share capital of CSR at approximately £1.6
billion (approximately $2.5 billion based upon an exchange rate of USD: GBP 1.6057). CSR is an innovator in the development of multifunction
semiconductor platforms and technologies for the auto, consumer and voice and music market segments. The acquisition complements our
current offerings by adding products, channels and customers in the growth categories of the Internet of Everything and automotive
infotainment, accelerating our presence and path to leadership. The acquisition is subject to a number of conditions, including receipt of United
States and other regulatory approvals and the approval of CSR’s shareholders. Subject to the satisfaction of these conditions, the acquisition is
expected to close by the end of the summer of 2015. We expect to continue making strategic investments and acquisitions, the amounts of which
could vary significantly, to open new opportunities for our technologies, obtain development resources, grow our patent portfolio and/or pursue
new businesses.
Discontinued Operations. On November 25, 2013, we completed our sale of the North and Latin America operations of our Omnitracs
division to a U.S.-based private equity firm for cash consideration of $788 million (net of cash sold). As a result, we recorded a gain in
discontinued operations of $665 million ($430 million net of income tax expense) during fiscal 2014. The revenues and operating results of the
North and Latin America operations of our Omnitracs division, which comprised substantially all of our Omnitracs division, were not presented
as discontinued operations in any fiscal period because they were immaterial.
Additional information regarding our operating segments is provided in the notes to our consolidated financial statements in this Annual
Report in “Notes to Consolidated Financial Statements, Note 8. Segment Information.”
Corporate Structure
We operate our businesses through our parent company, QUALCOMM Incorporated, and multiple direct and indirect subsidiaries. We have
developed our corporate structure in order to address various legal, regulatory, tax, contractual compliance, operations and other matters.
At the beginning of fiscal 2013, we completed a corporate reorganization in which certain assets of QUALCOMM Incorporated, as well as
the stock of certain of its direct and indirect subsidiaries, were contributed to its wholly-owned subsidiary Qualcomm Technologies, Inc. (QTI).
QTL continues to be operated by QUALCOMM Incorporated, which continues to own the vast majority of our patent portfolio. Substantially all
of our products and services businesses, including QCT, and substantially all of our engineering, research and development functions, are
operated by QTI and its subsidiaries. Neither QTI nor any of its subsidiaries has any right, power or authority to grant any licenses or other rights
under or to any patents owned by QUALCOMM Incorporated.
Revenue Concentrations, Significant Customers and Geographical Information
Consolidated revenues from international customers and licensees as a percentage of total revenues were 99% , 97% and 95% in fiscal
2014 , 2013 and 2012 , respectively. During fiscal 2014 , 50% , 23% and 11%
of our revenues were from customers and licensees based in China
(including Hong Kong), South Korea and Taiwan, respectively, compared to 49% , 20% and 11% during fiscal 2013 , respectively, and 42% ,
22% and 14% during fiscal 2012 , respectively. We report revenues from external customers by country based on the location to which our
products or services are delivered, which for QCT is generally the country in which our customers manufacture their products, or for licensing
revenues, the invoiced addresses of our licensees. As a result, the revenues by country presented herein are not necessarily indicative of either
the country in which the devices containing our products and/or intellectual property are ultimately sold to consumers or the country in which the
companies that sell the devices are headquartered. For example, China revenues could include revenues related to shipments of integrated
circuits to a company that is headquartered in South Korea but that manufactures devices in China, which devices are then sold to consumers in
Europe and/or the United States. Additional geographic information is provided in the notes to our consolidated financial statements in this
Annual Report in “Notes to Consolidated Financial Statements, Note 8. Segment Information.”
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