Qualcomm 2014 Annual Report Download - page 39

Internet of Everything; automotive; very high speed connectivity; new display technologies; data centers; mobile health; wireless
charging; and machine learning, including robotics.
In addition to the foregoing business and market-based matters, we continue to devote resources to working with and educating participants
and governments in the wireless value chain as to the benefits of our business model and our extensive technology investments in promoting a
highly competitive and innovative wireless industry. However, we expect that certain companies may continue to be dissatisfied with the need to
pay reasonable royalties for the use of our technology and not welcome the success of our business model in enabling new, highly cost-effective
competitors to their products. We expect that such companies and/or governments or regulators will continue to challenge our business model in
various forums throughout the world.
Further discussion of risks related to our business is presented in the Risk Factors included in this Annual Report.
Critical Accounting Estimates
Our discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses,
and disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates and judgments, including those related to
valuation of goodwill, other indefinite-lived assets and long-
lived assets, valuation of marketable securities, income taxes and litigation. We base
our estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the
circumstances, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other sources. By their nature, estimates are subject to an inherent degree of uncertainty.
Although we believe that our estimates and the assumptions supporting our assessments are reasonable, actual results that differ from our
estimates could have a significant adverse effect on our operating results and financial position. We believe that the following significant
accounting estimates may involve a higher degree of judgment and complexity than others.
Valuation of Goodwill, Other Indefinite-Lived Assets and Long-Lived Assets. Our business acquisitions typically result in the recording of
goodwill, other intangible assets and property, plant and equipment and the recorded values of those assets may become impaired in the future.
We also acquire intangible assets in other types of transactions. At September 28, 2014 , our goodwill, other intangible assets, net of
accumulated amortization, and property, plant and equipment, net of depreciation, were $4.5 billion , $2.6 billion and $2.5 billion , respectively.
The determination of the value of intangible assets acquired in a business combination requires management to make estimates and assumptions
that affect our consolidated financial statements. The estimated fair values of such intangible assets are used to establish their recorded values.
For intangible assets acquired in a non-monetary exchange, the estimated fair values of the assets transferred (or the estimated fair values of the
assets received, if more clearly evident) are used to establish their recorded values, unless the values of neither the assets received nor the assets
transferred are determinable within reasonable limits, in which case the assets received are measured based on the carrying values of the assets
transferred. Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value. An
estimate of fair value can be affected by many assumptions that require significant judgment. For example, the income approach generally
requires assumptions related to the appropriate business model to be used to estimate cash flows, total addressable market, pricing and share
forecasts, competition, technology obsolescence, future tax rates and discount rates. Our estimate of the fair value of certain assets may differ
materially from that determined by others who use different assumptions or utilize different business models. New information may arise in the
future that affects our fair value estimates and could result in adjustments to our estimates in the future, which could have an adverse impact on
our results of operations.
Goodwill and other indefinite-lived intangible assets are tested annually for impairment and in interim periods if certain events occur
indicating that the carrying amounts may be impaired. Long-lived assets, such as property, plant and equipment and intangible assets subject to
amortization, are reviewed for impairment when there is evidence that events or changes in
34
• 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.