Qualcomm 2014 Annual Report Download - page 40

circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Our judgments regarding the existence of
impairment indicators and future cash flows related to goodwill, other indefinite-lived intangible assets and long-lived assets may be based on
operational performance of our businesses, market conditions, expected selling price and/or other factors. Although there are inherent
uncertainties in this assessment process, the estimates and assumptions we use, including estimates of future cash flows, volumes, market
penetration and discount rates, are consistent with our internal planning, when appropriate. If these estimates or their related assumptions change
in the future, we may be required to record an impairment charge on a portion or all of our goodwill, other indefinite-lived intangible assets and
long-lived assets. Furthermore, we cannot predict the occurrence of future impairment-triggering events nor the impact such events might have
on our reported asset values. Future events could cause us to conclude that impairment indicators exist and that goodwill or other intangible
assets associated with our acquired businesses are impaired. Any resulting impairment loss could have an adverse impact on our financial
position and results of operations. During fiscal 2014 , 2013 and 2012 , we recorded $607 million , $158 million and $54 million , respectively,
in impairment charges for goodwill and long-
lived assets resulting from updates to our estimates of the expected cash flows of our QMT division
as we transition to a licensing model. Goodwill of nonreportable segments that was at risk of failing step one of the goodwill impairment test
was not material at September 28, 2014.
Valuation of Marketable Securities. We hold investments in marketable securities, including U.S. Treasury and government-related
securities, corporate bonds and notes, mortgage- and asset-backed securities, auction rate securities, common and preferred stock and equity and
debt funds. The fair value of these investments totaled $24.1 billion at September 28, 2014 , with increases and decreases in fair value generally
recorded through stockholders’ equity as other comprehensive income or loss. We record impairment charges through the statement of
operations when we believe an investment has experienced a decline that is other than temporary. The determination that a decline is other than
temporary is subjective and influenced by many factors. Adverse changes in market conditions or poor operating results of investees could result
in losses or an inability to recover the carrying value of the investments, thereby requiring impairment charges. When assessing these
investments for an other-than-temporary decline in value, we consider such factors as, among other things, the significance of the decline in
value as compared to the cost basis; underlying factors contributing to a decline in the prices of securities in a single asset class; how long the
market value of the security has been less than its cost basis; the security’s relative performance versus its peers, sector or asset class; expected
market volatility; the market and economy in general; analyst recommendations and price targets; views of external investment managers; news
or financial information that has been released specific to the investee; and the outlook for the overall industry in which the investee operates, as
applicable. If we determine that a security price decline is other than temporary, we record an impairment loss, which could have an adverse
impact on our results of operations. During fiscal 2014 , 2013 and 2012 , we recorded $156 million , $72 million and $71 million , respectively,
in impairment losses on our investments in marketable securities.
Income Taxes. Our income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue
Service (IRS) and other tax authorities. In addition, the calculation of our tax liabilities involves uncertainties in the application of complex tax
regulations. We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit,
including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is
more than 50% likely of being realized upon settlement. While we believe we have appropriate support for the positions taken on our tax returns,
we regularly assess the potential outcomes of examinations by taxing authorities in determining the adequacy of our provision for income taxes.
We continually assess the likelihood and amount of potential adjustments and adjust the income tax provision, income taxes payable and
deferred taxes in the period in which the facts that give rise to a revision become known. We are participating in the IRS Compliance Assurance
Process program whereby we endeavor to agree with the IRS on the treatment of all issues prior to filing our federal return. A benefit of
participation in this program is that post-filing adjustments by the IRS are less likely to occur.
Our QCT segment’s non-United States headquarters is located in Singapore. We obtained tax incentives in Singapore that commenced in
March 2012, including a tax exemption for the first five years, provided that we meet specified employment and incentive criteria,
and as a result
of expiration of these incentives, our Singapore tax rate will increase in fiscal 2017 and again in fiscal 2027.
We consider the operating earnings of certain non-United States subsidiaries to be indefinitely reinvested outside the United States based on
our plans for use and/or investment outside of the United States and our belief that our sources of cash and liquidity in the United States will be
sufficient to meet future domestic cash needs. On a regular basis, we consider projected cash needs for, among other things, investments in our
existing businesses, future research and development, potential acquisitions and capital transactions, including repurchases of our common stock
and debt repayments. We estimate the amount of cash or other liquidity that is available or needed in the jurisdictions where these investments
are expected, as well as our ability to generate cash in those jurisdictions and our access to capital markets. This analysis enables us to conclude
whether or not we will indefinitely reinvest the current period’s foreign earnings. We have not recorded a deferred tax liability of approximately
$9.1 billion related to the United States federal and state income taxes and foreign withholding taxes on
35