Qualcomm 2014 Annual Report Download - page 41

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approximately $25.7 billion of undistributed earnings of certain non-United States subsidiaries indefinitely reinvested outside the United States.
Should we decide to no longer indefinitely reinvest such earnings outside the United States, we would have to adjust the income tax provision in
the period we make such determination.
Legal Proceedings. We are currently involved in certain legal proceedings, and we intend to continue to vigorously defend ourselves.
However, the unfavorable resolution of one or more of these proceedings could have a material adverse effect on our business, results of
operations, financial condition and/or cash flows. A broad range of remedies with respect to our business practices that are deemed to violate
applicable laws are potentially available. These remedies may include, among others, injunctions, monetary damages or fines or other orders to
pay money and the issuance of orders to cease certain conduct and/or to modify our business practices. We record our best estimate of a loss
related to pending legal proceedings when the loss is considered probable and the amount can be reasonably estimated. Where a range of loss
can be reasonably estimated with no best estimate in the range, we record the minimum estimated liability. As additional information becomes
available, we assess the potential liability related to pending legal proceedings and revise our estimates. Revisions in our estimates of the
potential liability could materially impact our results of operations. Regarding the NDRC matter, we believe that a loss is probable but that any
possible range of loss cannot be reasonably estimated at this time.
Results of Operations
The increases in equipment and services revenues in fiscal 2014 and 2013 were primarily due to increases in QCT revenues of $1.94 billion
and $4.58 billion, respectively. The increase in equipment and services revenues in fiscal 2014 was partially offset by a decrease of $305 million
as a result of the sale of our Omnitracs division during fiscal 2014. The decrease in our licensing revenues in fiscal 2014 was primarily due to a
decrease in a nonreportable segment’s revenues of $32 million, partially offset by an increase in QTL revenues of $15 million. The increase in
our licensing revenues in fiscal 2013 was primarily due to an increase in QTL revenues of $1.23 billion.
QCT and QTL segment revenues related to the products of Samsung Electronics and Hon Hai Precision Industry Co., Ltd/Foxconn, its
affiliates and other suppliers to Apple Inc. comprised 49%, 43% and 38% of total consolidated revenues in fiscal 2014, 2013 and 2012,
respectively.
Revenues from customers in China, South Korea and Taiwan comprised 50% , 23% and 11% , respectively, of total consolidated revenues
for fiscal 2014 , compared to 49% , 20% , and 11% , respectively, for fiscal 2013 , and 42% , 22% and 14% , respectively, for fiscal 2012 . 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 would 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.
36
Revenues (in millions)
Year Ended
September 28,
2014
September 29,
2013
September 30,
2012
2014 vs. 2013
Change
2013 vs. 2012
Change
Equipment and services
$
18,625
$
16,988
$
12,465
$
1,637
$
4,523
Licensing
7,862
7,878
6,656
(16
)
1,222
$
26,487
$
24,866
$
19,121
$
1,621
$
5,745
Costs and Expenses (in millions)
Year Ended
September 28,
2014
September 29,
2013
September 30,
2012
2014 vs. 2013
Change
2013 vs. 2012
Change
Cost of equipment and services (E&S) revenues
$
10,686
$
9,820
$
7,096
$
866
$
2,724
Cost as % of E&S revenues
57
%
58
%
57
%