Qualcomm 2014 Annual Report Download - page 46

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Contractual Obligations / Off-Balance Sheet Arrangements
We have no significant contractual obligations not fully recorded on our consolidated balance sheets or fully disclosed in the notes to our
consolidated financial statements. We have no material off-balance sheet arrangements as defined in S-K 303(a)(4)(ii).
The following table summarizes the payments due by fiscal period for our outstanding contractual obligations at September 28, 2014 (in
millions):
Additional information regarding our financial commitments at September 28, 2014 is provided in the notes to our consolidated financial
statements. See “Notes to Consolidated Financial Statements, Note 7. Commitments and Contingencies.”
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09, “Revenue from
Contracts with Customers,” which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition
guidance. The new standard requires a company to recognize revenue upon transfer of goods or services to a customer at an amount that reflects
the expected consideration to be received in exchange for those goods or services. ASU 2014-09 defines a five-step approach for recognizing
revenue which may require a company to use more judgment and make more estimates than under the current guidance. This ASU will be
effective for us starting in the first quarter of fiscal 2018. The new standard allows for two methods of adoption: (a) full retrospective adoption,
meaning the standard is applied to all periods presented, or (b) modified retrospective adoption, meaning the cumulative effect of applying the
new standard is recognized as an adjustment to the fiscal 2018 opening retained earnings balance. We are in the process of determining the
adoption method as well as the effects the adoption will have on our consolidated financial statements.
Non-GAAP Financial Information
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes references to free cash flow and
return of capital to stockholders as a percent of free cash flow. These are financial measures that were not prepared in accordance with GAAP.
We define “free cash flow” as net cash provided by operating activities less capital expenditures and “return of capital to stockholders” as cash
paid to repurchase shares of our common stock and cash dividends paid.
The non-
GAAP financial information presented should be considered in addition to, not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP. In addition, “non-GAAP” is not a term defined by GAAP, and as a result, our measure of non-GAAP
results might be different than similarly titled measures used by other companies.
41
• We expect to continue making strategic investments and acquisitions, the amounts of which could vary significantly, to open new
opportunities for our technologies, obtain development resources, grow our patent portfolio and/or pursue new businesses.
Total
2015
2016-2017
2018-2019
Beyond
2019
No
Expiration
Date
Purchase obligations (1)
$
3,607
$
3,421
$
121
$
36
$
29
$
—
Operating lease obligations
304
91
137
51
25
—
Equity funding and financing commitments (2)
78
22
52
—
—
4
Other long-term liabilities (3)(4)
53
1
23
14
8
7
Total contractual obligations
$
4,042
$
3,535
$
333
$
101
$
62
$
11
(1)
Total purchase obligations include $2.8 billion in commitments to purchase integrated circuit product inventories. Integrated circuit product inventory
obligations represent purchase commitments for wafers, die, finished goods and manufacturing services, such as wafer bump, probe, assembly and final test.
Under our manufacturing relationships with our foundry suppliers and assembly and test service providers, cancelation of outstanding purchase orders is
generally allowed but requires payment of all costs incurred through the date of cancelation.
(2)
Certain of these commitments do not have fixed funding dates and are subject to certain conditions. Commitments represent the maximum amounts to be
funded under these arrangements; actual funding may be in lesser amounts or not at all.
(3)
Certain long-term liabilities reflected on our balance sheet, such as unearned revenues, are not presented in this table because they do not require cash
settlement in the future. Other long-term liabilities as presented in this table include the related current portions.
(4)
Our consolidated balance sheet at September 28, 2014 included $76 million in noncurrent liabilities for uncertain tax positions, some of which may result in
cash payment. The future payments related to uncertain tax positions have not been presented in the table above due to the uncertainty of the amounts and
timing of cash settlement with the taxing authorities.