Qualcomm 2014 Annual Report Download - page 42

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The increase in margin percentage in fiscal 2014 was primarily attributable to a net decrease in gross margin losses incurred by our
nonreportable segments, partially offset by a decrease in QCT’s gross margin. The decrease in margin percentage in fiscal 2013 was primarily
attributable to a decrease in QCT gross margin percentage. Our margin percentage may continue to fluctuate in future periods depending on the
mix of products sold and services provided, competitive pricing, new product introduction costs and other factors.
The dollar increases in research and development expenses in fiscal 2014 and 2013 were primarily attributable to increases of $395 million
and $904 million, respectively, in costs related to the development of CDMA-based 3G, OFDMA-based 4G LTE and other technologies for
integrated circuit products and to expand our intellectual property portfolio and increases of $29 million and $97 million, respectively, in share-
based compensation. Remaining dollar increases were related to research and development of other new product and licensing initiatives.
The dollar decrease in selling, general and administrative expenses in fiscal 2014 was primarily attributable to decreases of $59 million in
costs related to litigation and other legal matters, $53 million in share-based compensation, $53 million in selling and marketing expenses and
$22 million in employee-related expenses. The decrease in employee-related expenses and a portion of the decrease in share-
based compensation
in fiscal 2014 were due to the sale of our Omnitracs division during fiscal 2014. The dollar increase in selling, general and administrative
expenses in fiscal 2013 was primarily attributable to a $113 million increase in employee-related expenses, a $56 million increase in selling and
marketing expenses, a $40 million increase in patent-related expenses and a $29 million increase in depreciation and amortization expense,
partially offset by a decrease of $23 million in share-based compensation.
Other expenses in fiscal 2014 were comprised of $607 million in long-lived asset and goodwill impairment charges and $19 million in
restructuring-related costs incurred by our QMT division, a $16 million goodwill impairment charge related to our former QRS (Qualcomm
Retail Solutions) division and a $15 million legal settlement, partially offset by the reversal of a $173 million expense accrual recorded in fiscal
2013 related to the ParkerVision verdict against us. Other expenses in fiscal 2013 were comprised of the $173 million
ParkerVision charge and a
$158 million impairment charge related to certain long-lived assets of our QMT division. Other expenses in fiscal 2012 were comprised of an
$81 million charge related to the former BWA subsidiaries, a $54 million impairment charge related to certain long-lived assets of our QMT
division and $23 million in goodwill impairment charges related to our former QRS division.
In fiscal 2014, we rebalanced our marketable securities portfolio, which resulted in lower interest and dividend income, due to lower interest
rates, and higher net realized gains on marketable securities, compared to fiscal 2013. The increase in impairment losses on marketable securities
and other investments in fiscal 2014 was primarily due to an increase in our recognition of unrealized losses on marketable debt securities that
we intended to sell or that we more likely than not would sell
37
Year Ended
September 28,
2014
September 29,
2013
September 30,
2012
2014 vs. 2013
Change
2013 vs. 2012
Change
Research and development
$
5,477
$
4,967
$
3,915
$
510
$
1,052
% of revenues
21
%
20
%
20
%
Selling, general, and administrative
$
2,290
$
2,518
$
2,270
$
(228
)
$
248
% of revenues
9
%
10
%
12
%
Other
$
484
$
331
$
158
$
153
$
173
Net Investment Income (in millions)
Year Ended
September 28,
2014
September 29,
2013
September 30,
2012
2014 vs. 2013
Change
2013 vs. 2012
Change
Interest and dividend income
$
586
$
697
$
609
$
(111
)
$
88
Interest expense
(5
)
(23
)
(90
)
18
67
Net realized gains on marketable securities
770
317
342
453
(25
)
Net realized gains on other investments
56
52
27
4
25
Impairment losses on marketable securities and other
investments
(180
)
(85
)
(83
)
(95
)
(2
)
Net gains on derivative instruments
5
—
84
5
(84
)
Equity in net losses of investees
(10
)
(6
)
(9
)
(4
)
3
Net gains on deconsolidation of subsidiaries
6
12
—
(
6
)
12
$
1,228
$
964
$
880
$
264
$
84