Qualcomm 2014 Annual Report Download - page 43

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before recovery, which was also impacted by our portfolio rebalancing. We have completed the majority of our rebalancing, and as a result, we
expect to earn lower interest and dividend income and record lower realized gains in fiscal 2015, compared to fiscal 2014.
The increase in interest and dividend income in fiscal 2013 resulted from higher average balances of cash, cash equivalents and marketable
securities in fiscal 2013, compared to fiscal 2012. The decrease in interest expense in fiscal 2013 resulted from capitalizing a portion of interest
starting in fiscal 2012 related to the former BWA subsidiaries, which were deconsolidated in fiscal 2013. Net gains on derivative instruments in
fiscal 2012 primarily resulted from changes in the fair value of put options sold in connection with our stock repurchase program that expired in
fiscal 2012.
The following table summarizes the primary factors that caused our annual effective tax rates to be less than the United States federal
statutory rate:
The effective tax rate for our state income tax provision, net of federal benefit, was negligible for all years presented. The effective tax rate
for fiscal 2014
reflected a tax benefit of $66 million related to fiscal 2013 resulting from an agreement reached with the Internal Revenue Service
on components of our fiscal 2013 tax return. Additionally, the effective tax rate for fiscal 2014 as compared to fiscal 2013 reflected increased
foreign earnings taxed at less than the United States federal rate. The effective tax rate for fiscal 2013 reflected a tax benefit of $64 million
related to fiscal 2012 resulting from the retroactive extension of the United States research and development tax credit. Additionally, the
effective tax rate for fiscal 2013 as compared to fiscal 2012 reflected increased foreign earnings taxed at less than the United States federal rate.
The effective tax rate for fiscal 2012 reflected a reduction in our effective state tax rate as a result of California tax legislation previously
enacted, partially offset by increased earnings taxed at the United States tax rate. The annual effective tax rate for fiscal 2012 only reflected the
United States federal research and development credit generated through December 31, 2011, the date on which the credit expired.
Our Segment Results (in millions)
The following should be read in conjunction with the fiscal 2014 , 2013 and 2012 financial results for each reporting segment. See “
Notes to
Consolidated Financial Statements, Note 8. Segment Information.”
38
Income Tax Expense (in millions)
Year Ended
September 28,
2014
September 29,
2013
September 30,
2012
2014 vs. 2013
Change
2013 vs. 2012
Change
Income tax expense
$
1,244
$
1,349
$
1,279
$
(105
)
$
70
Effective tax rate
14
%
16
%
19
%
(2
)%
(3
%)
Year Ended
September 28,
2014
September 29,
2013
September 30,
2012
Expected income tax provision at federal statutory tax rate
35
%
35
%
35
%
Benefits from foreign income taxed at other than U.S. rates
(20
%)
(17
%)
(16
%)
Benefits related to the research and development tax credits
(1
%)
(2
%)
(1
%)
Change in valuation allowance
—
%
—
%
1
%
Effective tax rate
14
%
16
%
19
%