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QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the first quarter of fiscal 2014 , as a result of discussions with potential buyers and consideration of alternative uses for the separate
asset groups that comprise one of the QMT division’s manufacturing facilities in Taiwan, the Company decreased its estimates of expected cash
flows from those assets and recorded an impairment charge of $444 million in other expenses. The Company concluded that a triggering event
had not occurred in the first quarter of fiscal 2014 that would have required impairment testing for its remaining QMT assets, including
goodwill, as QMT’s licensing business plan did not utilize this manufacturing facility. During the third quarter of fiscal 2014 , the Company
updated QMT’s licensing business plan and related internal forecasts to reflect a further decrease in expected cash flows. The updated business
plan reflects an acceleration of the Company’s plans to transition from QMT’s current generation technology to the licensing of its next
generation IMOD (interferometric modulator) display technology and to focus on wearable devices. QMT will continue to make and sell current
generation products for a period of time in support of certain existing customer requirements. As a result of this triggering event, the Company
assessed the recoverability of the QMT division’s long-lived assets, performed a goodwill impairment test of the QMT reporting unit and
recorded impairment charges of $64 million on property, plant and equipment and $100 million on goodwill, respectively, in other expenses.
During fiscal 2013 and 2012, the Company recorded $158 million and $54 million in impairment charges on property, plant and equipment as a
result of updates to internal forecasts that reflected reductions in expected cash flows. At September 28, 2014 , the carrying values of the QMT
division’s goodwill and property, plant and equipment were $35 million and $148 million , respectively, including $116 million in property,
plant and equipment that was classified as held for sale and included in other assets.
Depreciation and amortization expense related to property, plant and equipment for fiscal 2014 , 2013 and 2012 was $609 million , $515
million and $427 million , respectively. The gross book values of property under capital leases included in buildings and improvements were $1
million and $18 million at September 28, 2014 and September 29, 2013 , respectively. These capital leases principally related to base station
towers and buildings.
At September 28, 2014 and September 29, 2013 , buildings and improvements and leasehold improvements that were leased to third parties
or held for lease to third parties were negligible. Future minimum rental income on facilities leased to others is expected to be negligible.
Goodwill and Other Intangible Assets. The Company allocates goodwill to its reporting units for annual impairment testing purposes.
Goodwill was allocable to reporting units included in the Company’s reportable and nonreportable segments, as described in Note 8, as follows
(in millions):
F- 15
Inventories (in millions)
September 28,
2014
September 29,
2013
Raw materials
$
1
$
2
Work-in-process
656
631
Finished goods
801
669
$
1,458
$
1,302
Property, Plant and Equipment (in millions)
September 28,
2014
September 29,
2013
Land
$
225
$
212
Buildings and improvements
1,456
1,733
Computer equipment and software
1,349
1,425
Machinery and equipment
2,117
2,013
Furniture and office equipment
85
87
Leasehold improvements
247
218
Construction in progress
201
480
5,680
6,168
Less accumulated depreciation and amortization
(3,193
)
(3,173
)
$
2,487
$
2,995