3 unchanged sentences
We intend to continue to pay quarterly dividends, subject to capital availability and our view that cash dividends are in the best interests of our stockholders.
−Removed: Future dividends may be affected by, among other items, our views on potential future capital requirements, including those relating to research and development, creation and expansion of sales and distribution channels, investments and acquisitions, legal risks, withholding of payments by one or more of our significant licensees and/or customers, fines by government agencies and/or adverse rulings by a court or arbitrator in a legal matter, stock repurchase programs, debt issuances, changes in federal and state income tax law and changes to our business model.
+Added: Future dividends may be affected by, among other items, our views on potential future capital availability and requirements, including those relating to research and development, creation and expansion of sales and distribution channels, investments and acquisitions, legal risks, withholding of payments by one or more of our significant licensees and/or customers, fines by government agencies and/or adverse rulings by a court or arbitrator in a legal matter, stock repurchase programs, debt issuances, changes in federal and state income tax law, trade and/or national security protection policies, volatility in economies and financial markets globally, including as impacted by the COVID-19 pandemic, and changes to our business model.
Share-Based Compensation
We primarily issue restricted stock units under our equity compensation plans, which are part of a broad-based, long-term retention program that is intended to attract and retain talented employees and directors and align stockholder and employee interests.
−Removed: Our 2016 Long-Term Incentive Plan (2016 Plan) provides for the grant of both incentive and nonstatutory stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, performance units, performance shares, deferred compensation awards and other stock-based awards.
−Removed: Restricted stock units generally vest over periods of three years from the date of grant.
−Removed: Stock options vest over periods not exceeding five years and are exercisable for up to ten years from the grant date.
−Removed: The Board of Directors may amend or terminate the 2016 Plan at any time, with certain amendments also requiring stockholder approval.
+Added: Our 2016 Long-Term Incentive Plan (2016 Plan) provides for the grant of incentive and nonstatutory stock options, stock appreciation rights, restricted stock, unrestricted stock, restricted stock units, performance units, performance shares, deferred compensation awards and other stock-based awards.
+Added: We primarily grant restricted stock units, which generally vest over periods of three years from the date of grant.
+Added: Our Board of Directors may amend or terminate the 2016 Plan at any time, with certain amendments also requiring stockholder approval.
Additional information regarding our share-based compensation plans and plan activity for fiscal 2020, 2019 and 2018 is provided in this Annual Report in “Notes to Consolidated Financial Statements, Note 5.
1 unchanged sentence
Issuer Purchases of Equity Securities
−Removed: Issuer purchases of equity securities during the fourth quarter of fiscal 2019 were:
−Removed: Total Number of
−Removed: Shares Purchased
−Removed: Average Price Paid Per Share (1)
−Removed: Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
−Removed: Approximate Dollar Value of Shares that May Yet Be
−Removed: Purchased Under the Plans or Programs
−Removed: (In thousands)
−Removed: (In thousands)
−Removed: (In millions)
−Removed: July 1, 2019 to July 28, 2019
−Removed: July 29, 2019 to August 25, 2019
−Removed: August 26, 2019 to September 29, 2019
−Removed: Other repurchases
−Removed: Accelerated share repurchases (3)
−Removed: Average Price Paid Per Share excludes cash paid for commissions.
On July 26, 2018, we announced a repurchase program authorizing us to repurchase up to $30 billion of our common stock.
+Added: We did not repurchase any of our shares in the fourth quarter of fiscal 2020.
At September 27, 2020, $4.6 billion remained authorized for repurchase.
+Added: In the first quarter of fiscal 2021, we resumed stock repurchases under the stock repurchase program, which we had suspended in the third quarter of fiscal 2020 in light of COVID-19 to maintain our financial liquidity position and flexibility.
The stock repurchase program has no expiration date.
−Removed: Since September 29, 2019 , we repurchased and retired 3.9 million shares of common stock for $300 million .
−Removed: Shares withheld to satisfy statutory tax withholding requirements related to the vesting of share-based awards are not issued or considered stock repurchases under our stock repurchase program and, therefore, are excluded from the table above.
−Removed: In September 2018, we entered into three accelerated share repurchase agreements (ASR Agreements) to repurchase an aggregate of $16.0 billion of our common stock.
−Removed: During the fourth quarter of fiscal 2018, 178.4 million shares were initially delivered to us under the ASR Agreements and were retired.
−Removed: The ASR Agreements were completed during the fourth quarter of fiscal 2019, and an
−Removed: additional 68.7 million shares were delivered to us and were retired, comprising the final delivery of shares under the ASR Agreements.
−Removed: In total, 247.1 million shares were delivered to us under the ASR Agreements at an average price per share of $64.76.
+Added: Shares withheld to satisfy statutory tax withholding requirements related to the vesting of share-based awards are not issued or considered stock repurchases under our stock repurchase program.
Selected Financial Data
The following data should be read in conjunction with the annual consolidated financial statements, related notes and other financial information appearing elsewhere herein.
−Removed: We have revised our prior period financial statements for the years ended September 30, 2018 and September 24, 2017 to reflect the correction of an immaterial error as described in this Annual Report in Notes to Consolidated Financial Statements, “Note 1.
−Removed: Significant Accounting Policies” and “Note 12.
−Removed: Revision of Prior Period Financial Statements.”
Years Ended (1)
6 unchanged sentences
Statement of Operations Data:
+Added: Revenues (2) $ 23,531 $ 24,273 $ 22,611 $ 22,258 $ 23,554
Operating income (2) 6,255 7,667 621 2,581 6,495
12 unchanged sentences
(1) Our fiscal year ends on the last Sunday in September.
−Removed: The fiscal year ended September 29, 2019 , September 24, 2017 , September 25, 2016 and September 27, 2015 each included 52 weeks.
+Added: The fiscal years ended September 27, 2020, September 29, 2019, September 24, 2017 and September 25, 2016 each included 52 weeks.
The fiscal year ended September 30, 2018 included 53 weeks.
+Added: (2) Revenues in fiscal 2020 included $1.8 billion resulting from the settlement with Huawei.
+Added: Net income for fiscal 2020 was impacted by $405 million in non-marketable investment impairments.
Revenues in fiscal 2019 included $4.7 billion resulting from the settlement with Apple and its contract manufacturers.
Revenues in fiscal 2019 also reflected the impact of the adoption of the new revenue recognition guidance in the first quarter of fiscal 2019.
−Removed: Operating income in fiscal 2019 was impacted by a $275 million charge attributed to a fine imposed by the European Commission (EC) and $213 million in net charges related to our Cost Plan.
+Added: Operating income in fiscal 2019 was impacted by a $275 million charge attributed to a fine imposed by the European Commission (EC) and $213 million in net charges related to our cost plan that concluded in fiscal 2019 (Cost Plan).
Additionally, net income for fiscal 2019 was impacted by a $2.5 billion charge to income tax expense resulting from the derecognition of a deferred tax asset related to the distributed intellectual property and a tax benefit of $570 million due to establishing new U.S.
2 unchanged sentences
Operating income in fiscal 2018 was further impacted by a $2.0 billion charge related to a fee in connection with the termination of a purchase agreement to acquire NXP Semiconductors N.V., a $1.2 billion charge related to a fine imposed by the EC and $629 million in charges related to our Cost Plan, partially offset by a $676 million benefit resulting from a settlement with the Taiwan Fair Trade Commission (TFTC).
−Removed: Additionally, net loss for fiscal 2018 was impacted by the $5.7 billion charge related to the Tax Legislation.
+Added: Additionally, net loss for fiscal 2018 was impacted by a $5.7 billion charge related to the Tax Legislation.
Revenues in fiscal 2017 were negatively impacted by actions taken by Apple and its contract manufacturers and Huawei, who did not fully report or fully pay royalties due in the last three quarters of fiscal 2017, as well as a $940 million reduction to revenues recorded related to the BlackBerry arbitration.
−Removed: Operating income was further impacted by $927 million and $778 million in charges related to the fines imposed by the Korea Fair Trade Commission and TFTC, respectively.
+Added: Operating income was further impacted by $927 million and $778 million in charges related to the fines imposed by the Korea Fair Trade Commission and the TFTC, respectively.
(3) In the fourth quarter of fiscal 2018, we announced a stock repurchase program authorizing us to repurchase up to $30 billion of our common stock.
−Removed: Under this program, we completed a tender offer and paid an aggregate of $5.1 billion to repurchase shares of our common stock and entered into three accelerated share repurchase agreements to repurchase an aggregate of $16.0 billion of our
−Removed: common stock, resulting in significant reductions to the balances of our cash, cash equivalents and marketable securities, total assets and total stockholders’ equity.
−Removed: Short-term debt was comprised of outstanding commercial paper and, in fiscal 2019 and fiscal 2017, the current portion of long-term debt.
+Added: Under this program, we completed a tender offer and paid an aggregate of $5.1 billion to repurchase shares of our common stock and entered into three accelerated share repurchase agreements to repurchase an aggregate of $16.0 billion of our common stock, resulting in significant reductions to the balances of our cash, cash equivalents and marketable securities, total assets and total stockholders’ equity.
+Added: (4) Short-term debt was comprised of outstanding commercial paper and, in fiscal 2019 and 2017, the current portion of long-term debt.
(5) Long-term debt was comprised of floating- and fixed-rate notes.
−Removed: Other long-term liabilities in this balance sheet data includes non-current income taxes payable and excludes unearned revenues.
+Added: (6) Other long-term liabilities in this balance sheet data includes noncurrent income taxes payable and noncurrent liabilities for uncertain tax positions and excludes unearned revenues.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations
4 unchanged sentences
Financial Statements and Supplementary Data” of this Annual Report.
−Removed: Fiscal 2019 Overview
−Removed: Revenues were $24.3 billion , an increase of 7% from fiscal 2018, with net income of $4.4 billion , compared to net loss of $5.0 billion in fiscal 2018.
−Removed: Highlights and other events from fiscal 2019 included:
−Removed: From October 2018 through September 2019, approximately 1.4 billion smartphones are estimated to have shipped globally, representing a year-over-year decrease of approximately 4% (IDC, Mobile Phone Tracker, 2019Q3) , primarily driven by further lengthening of replacement cycles, particularly in developed regions and China where consumer demand is increasingly driven by new product launches and/or innovation cycles as the industry transitions to 5G.
−Removed: QCT results in fiscal 2019 were negatively impacted by lower modem sales to Apple.
−Removed: In April 2019, we entered into settlement agreements with Apple and its contract manufacturers to dismiss all outstanding litigation between the parties.
−Removed: We also entered into a six-year global patent license agreement with Apple, effective as of April 1, 2019, which includes an option for Apple to extend for two additional years, and a multi-year chipset supply agreement with Apple.
−Removed: In the third quarter of fiscal 2019, we recognized licensing revenues of $4.7 billion resulting from the settlement, consisting of a payment from Apple and the release of certain of our obligations to pay Apple and its contract manufacturers customer-related liabilities.
−Removed: In addition, our QTL results for the third and fourth quarters of fiscal 2019 included royalties from Apple and its contract manufacturers for sales made in such quarters.
−Removed: QTL results in fiscal 2019 reflected certain reductions made in the per unit royalty caps (which provide a maximum royalty amount payable per device) in fiscal 2019 and 2018.
−Removed: While we expect these changes to enhance stability for the long term, they negatively impacted QTL royalty revenues in fiscal 2019.
−Removed: In addition, an increasing number of new and existing licensees have elected to enter into worldwide license agreements covering only our cellular standard essential patents, resulting in lower QTL royalty revenues in fiscal 2019.
−Removed: QTL revenues in fiscal 2019 included $450 million paid under a second interim agreement with Huawei that concluded in the third quarter of fiscal 2019, and although negotiations continue, we have not reached a final agreement with Huawei.
−Removed: This represents a minimum, non-refundable amount for royalties due and does not reflect the full amount of royalties due under the underlying license agreement.
−Removed: We did not record any revenues in the fourth quarter of fiscal 2019 for royalties due on the sales of Huawei’s products.
+Added: Fiscal 2020 Overview and Other Recent Events
+Added: Revenues were $23.5 billion, a decrease of 3% compared to revenues of $24.3 billion in fiscal 2019, with net income of $5.2 billion, an increase of 19% compared to net income of $4.4 billion in fiscal 2019.
+Added: Highlights and other events from fiscal 2020 and other recent events included:
+Added: • The rapid, global spread of COVID-19 has negatively impacted consumer demand for certain devices that incorporate our products and intellectual property, which negatively impacted our business and results of operations in fiscal 2020.
+Added: The impact of the COVID-19 pandemic on sales of devices that incorporate our products and intellectual property was most significant in the March 2020 and June 2020 quarters.
+Added: The impact of COVID-19 on our ability to fulfill customer orders has been minimal.
+Added: Workforce changes that we implemented in the second quarter of fiscal 2020 remained in effect throughout fiscal 2020.
+Added: • In July 2020, we entered into a settlement agreement with Huawei to resolve our prior dispute related to our license agreement that expired on December 31, 2019.
+Added: We also entered into a new long-term, global patent license agreement that contains a cross license granting rights to certain of Huawei’s patents and applies to sales of certain wireless products by Huawei beginning on January 1, 2020.
+Added: Amounts due under the settlement agreement (which are incremental to the $1.2 billion previously paid under two interim agreements) are to be paid in installments by the end of June 2021 in accordance with an agreed upon payment schedule.
+Added: We recorded revenues of $1.8 billion in fiscal 2020, which were not allocated to our segment results, related to the amounts due from Huawei under the settlement agreement and royalties for sales made in the March 2020 and June 2020 quarters under the new global patent license agreement.
+Added: In the fourth quarter of fiscal 2020, Huawei paid the first installment under the settlement agreement and the royalties due for the March 2020 and June 2020 quarters.
+Added: • QCT results in fiscal 2020 benefited from an increase in demand for 5G and IoT products, partially offset by the negative impact of COVID-19.
+Added: Additionally, in the second half of fiscal 2020, QCT began shipments under the multi-year chipset supply agreement with Apple to support 2020 iPhone product launches.
+Added: • QTL results in fiscal 2020 benefited from the inclusion of a full year of royalties from Apple (as a result of the settlement with Apple and its contract manufacturers in April 2019) and an estimate of royalties due from Huawei for sales made in the September 2020 quarter, partially offset by the negative impact of COVID-19.
+Added: • We entered into new long-term, world-wide patent license agreements with Guangdong OPPO Mobile Telecommunications Corp., Ltd.
+Added: (Oppo) and BBK Communication Technology Co., Ltd.
+Added: (vivo) (who were previously disclosed as two key Chinese licensees), effective as of April 1, 2020.
+Added: We also reached agreements with these licensees to provide for scheduled payments of amounts due under the license agreements that expired on March 31, 2020 and for which certain of such amounts for prior periods were withheld while good faith negotiations occurred.
+Added: Oppo and vivo paid all such amounts due under the settlement agreements by the end of September 2020.
• In May 2019, in United States Federal Trade Commission (FTC) v.
−Removed: QUALCOMM Incorporated , the court issued an Order ruling against us and imposing certain injunctive relief.
−Removed: We disagree with the court’s conclusions, interpretation of the facts and application of the law.
−Removed: Accordingly, we filed a motion to stay certain of the remedies with, and have appealed the decision to, the Ninth Circuit Court of Appeals (Ninth Circuit).
−Removed: In August 2019, our partial motion to stay was granted in its entirety by the Ninth Circuit.
−Removed: The impact of the Order and the Ninth Circuit granting our motion for partial stay did not have a material impact to QTL licensing revenues recognized in fiscal 2019 based on facts and factors currently known by us.
−Removed: In July 2019, the European Commission (EC) issued a decision ruling that between 2009 and 2011 we engaged in predatory pricing with respect to two customers and imposed a fine (2019 EC fine) of approximately 242 million Euros, which resulted in a $275 million charge to other expenses in the third quarter of fiscal 2019.
−Removed: In October 2019, we filed an appeal of the EC’s decision, and we provided a financial guarantee to satisfy the obligation in lieu of a cash payment while we appeal the EC’s decision.
−Removed: In the second quarter of fiscal 2018, we announced a Cost Plan designed to align our cost structure to our long-term margin targets.
−Removed: As part of this plan, we initiated a series of targeted actions across our businesses with the objective to reduce annual costs by $1 billion, excluding incremental costs resulting from any future acquisition of a business.
−Removed: Actions taken under this plan have been completed and resulted in us achieving substantially all of this target in fiscal
−Removed: 2019 based on our run rate exiting the second quarter of fiscal 2019, excluding litigation costs that were in excess of the baseline spend.
−Removed: We recorded net restructuring and restructuring-related charges of $213 million in fiscal 2019 related to our Cost Plan.
−Removed: Beginning in fiscal 2019, certain provisions of the 2017 U.S.
−Removed: Tax Cuts and Jobs Act (the Tax Legislation) became effective, including new taxes on certain foreign income.
−Removed: Our estimated annual effective tax rate for fiscal 2019 reflected the effects of these provisions of the Tax Legislation, and it also included the effects of tax elections made by several of our foreign subsidiaries in the first quarter of fiscal 2019 to be treated as U.S.
−Removed: branches for federal income tax purposes effective beginning in fiscal 2018 and 2019, which resulted in an income tax benefit of $570 million recorded discretely in the first quarter of fiscal 2019.
−Removed: During the third quarter of fiscal 2019, the United States Treasury Department issued new temporary regulations that resulted in a change to the deductibility of dividend income received by a U.S.
−Removed: stockholder from a foreign corporation.
−Removed: As a result of this change, pursuant to an agreement with the Internal Revenue Service, we relinquished the federal tax basis step-up of intellectual property that was distributed in fiscal 2018 by one of our foreign subsidiaries to a U.S.
−Removed: Therefore, the related deferred tax asset was derecognized, resulting in a $2.5 billion charge to income tax expense in the third quarter of fiscal 2019.
+Added: QUALCOMM Incorporated , the district court issued an Order ruling against us and imposing certain injunctive relief.
+Added: On August 11, 2020, on appeal, the Ninth Circuit reversed the district court’s judgment, vacated its injunction and vacated its partial grant of summary judgment.
+Added: On September 25, 2020, the FTC filed a Petition for Rehearing En Banc .
+Added: On October 28, 2020, the Ninth Circuit denied the FTC’s petition.
+Added: • In fiscal 2020, we recorded $405 million in non-marketable investment impairments, a portion of which was due in part from the impacts of COVID-19 on certain of our investees.
Our Business and Operating Segments
2 unchanged sentences
We are organized on the basis of products and services and have three reportable segments.
−Removed: We conduct business primarily through our QCT (Qualcomm CDMA Technologies) semiconductor business and our QTL (Qualcomm Technology Licensing) licensing business.
−Removed: QCT develops and supplies integrated circuits and system software based on CDMA, OFDMA and other technologies for use in mobile devices (primarily smartphones), tablets, laptops, data modules, handheld wireless computers and gaming devices, access points and routers, broadband gateway equipment, data cards and infrastructure equipment, IoT devices and applications, other consumer electronics and automotive telematics and infotainment systems.
−Removed: QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, which, among other rights, includes certain patent rights essential to and/or useful in the manufacture, sale and/or use of certain wireless products .
+Added: We conduct business primarily through our QCT (Qualcomm CDMA Technologies) semiconductor business and our QTL (Qualcomm
+Added: Technology Licensing) licensing business.
Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments.
−Removed: We also have nonreportable segments, including Qualcomm Government Technologies or QGOV (formerly Qualcomm Cyber Security Solutions) and other wireless technology and service initiatives.
−Removed: Our reportable segments are operated by QUALCOMM Incorporated and its direct and indirect subsidiaries.
−Removed: Substantially all of our products and services businesses, including QCT, and substantially all of our engineering, research and development functions, are operated by Qualcomm Technologies, Inc.
−Removed: (QTI), a wholly-owned subsidiary of QUALCOMM Incorporated, and QTI’s subsidiaries.
−Removed: QTL is operated by QUALCOMM Incorporated, which owns the vast majority of our patent portfolio.
−Removed: Neither QTI nor any of its subsidiaries has any right, power or authority to grant any licenses or other rights under or to any patents owned by QUALCOMM Incorporated.
+Added: We also have nonreportable segments, including QGOV (Qualcomm Government Technologies), our cloud AI inference processing initiative and other technology and service initiatives.
Further information regarding our business and operating segments is provided in “Part I, Item 1.
Business” of this Annual Report.
−Removed: Many of our products and/or much of our intellectual property are incorporated into consumer wireless devices, which are subject to seasonality and other fluctuations in demand.
+Added: Many of our products and much of our intellectual property are incorporated into consumer wireless devices, which are subject to seasonality and other fluctuations in demand.
Our revenues have historically fluctuated based on consumer demand for devices, as well as on the timing of customer/licensee device launches and/or innovation cycles (such as the transition to the next generation of wireless technologies).
−Removed: This has resulted in fluctuations in QCT revenues in advance of and during device launches incorporating our products and in QTL revenues when the related royalties were recognized, which prior to fiscal 2019 was when licensees reported their sales and beginning in fiscal 2019 was when the licensees’ sales occurred.
+Added: This has resulted in fluctuations in QCT revenues in advance of and during device launches incorporating our products and in QTL revenues when the related royalties were recognized, which prior to fiscal 2019 was when licensees reported their sales and beginning in fiscal 2019 when the licensees’ sales occurred.
Our historical trends were impacted by our prior dispute with Apple and its contract manufacturers (which was settled in April 2019).
−Removed: We expect to begin recording revenues for new chipset models under our recently announced multi-year chipset agreement with Apple in the second half of fiscal 2020.
−Removed: These trends may or may not continue in the future.
−Removed: Further, the trends for QTL have been, and/or may in the future be, impacted by disputes and/or resolutions with licensees and/or governmental investigations or proceedings, including the lawsuit filed against us by the FTC.
+Added: Looking forward, we expect QCT revenues to be impacted by seasonal trends related to product launch timing for sales made to Apple under our multi-year chipset supply agreement.
+Added: These trends may or may not continue in the future and have been impacted by the decline in consumer demand resulting from COVID-19.
+Added: Further, the trends for QTL have been, and may in the future be, impacted by disputes and/or resolutions with licensees and/or governmental investigations or proceedings, including the lawsuit filed against us by the FTC.
Results of Operations
Revenues (in millions)
+Added: 2020 2019 2018 2020 vs.
+Added: 2019 Change 2019 vs.
Equipment and services $ 16,298 $ 14,611 $ 17,400 $ 1,687 $ (2,789)
−Removed: The increase in revenues in fiscal 2019 was primarily due to:
+Added: Licensing 7,233 9,662 5,211 (2,429) 4,451
+Added: $ 23,531 $ 24,273 $ 22,611 $ (742) $ 1,662
+Added: The decrease in revenues in fiscal 2020 was primarily due to:
- $4.7 billion in licensing revenues recorded in the third quarter of fiscal 2019 resulting from the settlement with Apple and its contract manufacturers (which were not allocated to our segment results)
+Added: - $116 million in lower equipment and services revenues from our QSI segment
+Added: + $1.8 billion in licensing revenues from Huawei recorded in the fourth quarter of fiscal 2020 resulting from amounts due under the settlement agreement and royalties for sales made in the March 2020 and June 2020 quarters under the new global patent license agreement (which were not allocated to our segment results)
+Added: + $1.8 billion in higher equipment and services revenues from our QCT segment
+Added: + $437 million in higher licensing revenues from our QTL segment
+Added: The increase in revenues in fiscal 2019 was primarily due to:
+Added: + $4.7 billion in licensing revenues recorded in the third quarter of fiscal 2019 resulting from the settlement with Apple and its contract manufacturers
- $2.7 billion in lower equipment and services revenues from our QCT segment
- $451 million in lower licensing revenues from our QTL segment
−Removed: The increase in revenues in fiscal 2018 was primarily due to:
−Removed: $962 million reduction to licensing revenues recorded in fiscal 2017 related to the BlackBerry arbitration (which was not allocated to our segment results)
−Removed: $745 million in higher equipment and services revenues from our QCT segment
−Removed: $1.4 billion in lower licensing revenues from our QTL segment
−Removed: $100 million reduction to licensing revenues recorded in fiscal 2018 related to a portion of a business arrangement that resolved a legal dispute (which was not allocated to our segment results)
Costs and Expenses (in millions, except percentages)
+Added: 2020 2019 2018 2020 vs.
+Added: 2019 Change 2019 vs.
Cost of revenues $ 9,255 $ 8,599 $ 10,244 $ 656 $ (1,645)
+Added: Gross margin 61 % 65 % 55 %
+Added: The decrease in margin percentage in fiscal 2020 was primarily due to:
+Added: - lower licensing revenues resulting from the settlement with Apple and its contract manufacturers in fiscal 2019
+Added: + higher licensing revenues from Huawei recorded in fiscal 2020 resulting from amounts due under the settlement agreement and royalties for sales made in the March 2020 and June 2020 quarters under the new global patent license agreement
The increase in margin percentage in fiscal 2019 was primarily due to:
+ higher licensing revenues resulting from the settlement with Apple and its contract manufacturers in fiscal 2019
−Removed: The decrease in margin percentage in fiscal 2018 was primarily due to:
−Removed: decrease in higher margin QTL licensing revenues as a proportion of total revenues
−Removed: reduction to licensing revenues recorded in fiscal 2018 related to a portion of a business arrangement that resolved a legal dispute
−Removed: reduction to licensing revenues recorded in fiscal 2017 related to the BlackBerry arbitration
−Removed: Our margin percentage may continue to fluctuate in future periods depending on the mix of segment results as well as products sold, competitive pricing, new product introduction costs and other factors, including disputes and/or resolutions with licensees and/or governmental investigations or proceedings, including the lawsuit filed against us by the FTC.
+Added: 2020 2019 2018 2020 vs.
+Added: 2019 Change 2019 vs.
Research and development $ 5,975 $ 5,398 $ 5,625 $ 577 $ (227)
% of revenues 25 % 22 % 25 %
−Removed: The dollar decrease in research and development expenses in fiscal 2019 was primarily due to:
−Removed: $221 million decrease primarily driven by actions taken under our Cost Plan, partially offset by higher share-based compensation expense and higher employee cash incentive programs
−Removed: The dollar increase in research and development expenses in fiscal 2018 was primarily due to:
−Removed: $168 million, net of cost decreases driven by actions taken under our Cost Plan, in higher costs related to the development of wireless and integrated circuit technologies, including 5G technologies and RFFE technologies from the formation of RF360 Holdings in the second quarter of fiscal 2017
−Removed: $30 million impairment charge on certain intangible assets recorded in fiscal 2017
+Added: The increase in research and development expenses in fiscal 2020 was primarily due to:
+Added: + $426 million increase driven by higher costs related to the development of wireless and integrated circuit technologies, including 5G and application processor technologies, partially offset by lower employee cash incentive program costs
+Added: + $148 million in higher share-based compensation expense
+Added: The decrease in research and development expenses in fiscal 2019 was primarily due to:
+Added: - $221 million decrease primarily driven by actions taken under our Cost Plan that concluded in fiscal 2019, partially offset by higher share-based compensation expense and higher employee cash incentive program costs
In fiscal 2018, all of the costs ($474 million) related to pre-commercial research and development of 5G technologies were included in unallocated corporate research and development expenses.
2 unchanged sentences
The net effect of these changes negatively impacted QTL’s EBT by $489 million in fiscal 2019 and positively impacted QCT’s EBT by $160 million in fiscal 2019.
+Added: 2020 2019 2018 2020 vs.
+Added: 2019 Change 2019 vs.
Selling, general and administrative $ 2,074 $ 2,195 $ 2,986 $ (121) $ (791)
% of revenues 9 % 9 % 13 %
−Removed: The dollar decrease in selling, general and administrative expenses in fiscal 2019 was primarily due to:
+Added: The decrease in selling, general and administrative expenses in fiscal 2020 was primarily due to:
+Added: - $167 million in lower litigation costs, primarily resulting from the settlement of our prior dispute with Apple and its contract manufacturers in April 2019
+Added: + $44 million in higher patent costs, primarily resulting from 5G patent filings
+Added: The decrease in selling, general and administrative expenses in fiscal 2019 was primarily due to:
- $287 million in lower professional fees and costs, primarily driven by Broadcom’s withdrawn takeover proposal in fiscal 2018 and our then proposed acquisition of NXP Semiconductors N.V.
3 unchanged sentences
- $75 million in lower sales and marketing expenses, primarily driven by actions taken under our Cost Plan
−Removed: The dollar increase in selling, general and administrative expenses in fiscal 2018 was primarily due to:
−Removed: $325 million in higher litigation costs, with total litigation costs of $554 million and $229 million in fiscal 2018 and fiscal 2017, respectively
−Removed: $45 million in bad debt expense recorded in fiscal 2018
−Removed: $42 million in higher professional fees and costs related to other legal matters, which was primarily driven by Broadcom’s withdrawn takeover proposal, partially offset by lower third-party acquisition and integration services fees
−Removed: $40 million in lower amortization expense, primarily from the formation of RF360 Holdings
−Removed: $37 million in lower share-based compensation expense, primarily due to actions taken under our Cost Plan
+Added: 2020 2019 2018 2020 vs.
+Added: 2019 Change 2019 vs.
+Added: Other $ (28) $ 414 $ 3,135 $ (442) $ (2,721)
+Added: Other income in fiscal 2020 consisted of $28 million in gains related to a favorable legal settlement.
Other expenses in fiscal 2019 consisted of:
−Removed: + $275 million charge related to the 2019 EC fine
−Removed: $213 million net charges related to our Cost Plan
+Added: + $275 million charge related to a fine imposed by the European Commission (EC) related to the Icera complaint
+Added: + $213 million in net charges related to our Cost Plan
- $43 million gain due to the partial recovery of a fine imposed in fiscal 2009 resulting from our appeal of the Korea Fair Trade Commission (KFTC) decision
1 unchanged sentence
Other expenses in fiscal 2018 consisted of:
−Removed: + $2.0 billion charge related to a fee in connection with the termination of a purchase agreement to acquire NXP
+Added: + $2.0 billion charge related to a fee in connection with the termination of the purchase agreement to acquire NXP
+ $1.2 billion charge related to a fine imposed by the EC
1 unchanged sentence
- $676 million benefit related to the settlement of the Taiwan Fair Trade Commission (TFTC) investigation
−Removed: Other expense in fiscal 2017 consisted of:
−Removed: $927 million charge related to the KFTC fine, including related foreign currency losses
−Removed: + $778 million charge related to the TFTC fine
−Removed: + $37 million in restructuring and restructuring-related charges related to our 2015 Strategic Realignment Plan
Interest Expense and Investment and Other Income, Net (in millions)
+Added: 2020 2019 2018 2020 vs.
+Added: 2019 Change 2019 vs.
Interest expense $ 602 $ 627 $ 768 $ (25) $ (141)
3 unchanged sentences
Net gains on other investments 108 68 83 40 (15)
−Removed: Impairment losses on marketable securities and other investments
−Removed: Net (losses) gains on derivative instruments
+Added: Net gains on deferred compensation plan assets 47 9 34 38 (25)
+Added: Impairment losses on other investments (405) (135) (75) (270) (60)
+Added: Net gains (losses) on derivative instruments 8 (14) (27) 22 13
Equity in net losses of investees (21) (93) (145) 72 52
−Removed: Net gains (losses) on foreign currency transactions
+Added: Net (losses) gains on foreign currency transactions (25) 11 37 (36) (26)
+Added: $ 66 $ 441 $ 539 $ (375) $ (98)
+Added: The increase in impairment losses in fiscal 2020 was due in part to the impact COVID-19 had on certain of our investees.
+Added: A significant portion of the impairment losses related to our investment in OneWeb who filed for bankruptcy in the second quarter of fiscal 2020.
+Added: The decrease in interest and dividend income in fiscal 2020 was primarily driven by lower interest rates earned on interest-bearing securities.
+Added: The decrease in net gains on marketable securities in fiscal 2020 was primarily driven by prior year gains resulting from the initial public offering of certain non-marketable equity investments in fiscal 2019.
In the fourth quarter of fiscal 2018, we implemented a stock repurchase program to repurchase up to $30 billion of our outstanding common stock.
−Removed: Stock repurchases made under this program have significantly reduced the amount of our cash, cash equivalents and marketable securities, resulting in a decrease to interest and dividend income in fiscal 2019.
+Added: Stock repurchases made under this program significantly reduced the amount of our cash, cash equivalents and marketable securities, resulting in a decrease to interest and dividend income in fiscal 2019.
The increase in net gains on marketable securities in fiscal 2019 was primarily driven by gains resulting from the initial public offering of certain non-marketable equity investments.
−Removed: The increase in interest expense in fiscal 2018 was primarily due to the issuance of an aggregate principal amount of $11.0 billion of unsecured floating- and fixed-rate notes in May 2017, of which $4.0 billion were repaid between May and August 2018.
−Removed: In the first quarter of fiscal 2017, we began divesting a substantial portion of our marketable securities portfolio in order to finance, in part, the then proposed acquisition of NXP.
−Removed: As a result, we recorded net realized gains and impairment losses on such marketable securities that we sold and expected to sell before their anticipated recovery, respectively, in fiscal 2017.
−Removed: Income Tax Expense (in millions.
−Removed: except percentages)
−Removed: Income tax expense
−Removed: Effective tax rate
−Removed: N/M - Not meaningful
−Removed: The following table summarizes the primary factors that caused our annual tax provision to differ from the expected income tax provision at the United States federal statutory rate (in millions):
+Added: Income Tax Expense (in millions, except percentages)
+Added: The following table summarizes the primary factors that caused our annual tax provision to differ from the expected income tax provision at the U.S.
+Added: federal statutory rate:
+Added: 2020 2019 2018
Expected income tax provision at federal statutory tax rate $ 1,201 $ 1,571 $ 97
State income tax provision, net of federal benefit 7 10 2
+Added: Benefit from foreign-derived intangible income (FDII) deduction (381) (419) —
+Added: Benefit related to the research and development tax credit (125) (110) (136)
+Added: Excess tax benefit associated with share-based awards (83) (27) (20)
+Added: Benefit from foreign income taxed at other than U.S.
+Added: rates (11) (54) (834)
Derecognition of deferred tax asset on distributed intellectual property — 2,472 —
−Removed: Benefits from establishing new U.S.
+Added: Benefit from establishing new U.S.
net deferred tax assets — (570) —
−Removed: Benefits from foreign-derived intangible income (FDII) deduction
−Removed: Benefits related to the research and development tax credit
−Removed: Benefits from foreign income taxed at other than U.S.
Nondeductible charges (reversals) related to the EC, KFTC and TFTC investigations — 51 (119)
−Removed: Impact of changes in tax reserves and audit settlements for prior year tax positions
−Removed: Taxes on undistributed foreign earnings
Toll Charge from U.S.
−Removed: Valuation allowance on deferred tax asset related to NXP termination fee
−Removed: Remeasurement of deferred taxes due to changes in statutory rate due to U.S.
+Added: tax reform — — 5,236
+Added: Valuation allowance on deferred tax asset related to the NXP termination fee — — 494
+Added: Remeasurement of deferred taxes due to changes in the statutory rate due to U.S.
+Added: tax reform — — 443
+Added: Other (87) 171 193
Income tax expense $ 521 $ 3,095 $ 5,356
−Removed: The 2017 Tax Cuts and Jobs Act (the Tax Legislation), which was enacted during the first quarter of fiscal 2018, significantly revised the United States corporate income tax by, among other things, lowering the corporate income tax rate to 21% and imposing a one-time repatriation tax on deemed repatriated earnings and profits of U.S.-owned foreign subsidiaries (the Toll Charge).
−Removed: The Tax Legislation fundamentally changed the taxation of multinational entities, including a shift from a system of worldwide taxation with deferral to a hybrid territorial system, featuring a participation exemption regime with current taxation of certain foreign income, a minimum tax on low-taxed foreign earnings and new measures to deter base erosion and promote U.S.
−Removed: As a fiscal-year taxpayer, certain provisions of the Tax Legislation became effective starting at the beginning of fiscal 2019, including GILTI (global intangible low-taxed income), a new tax on income of foreign corporations, BEAT (base-erosion and anti-abuse tax) and FDII (foreign-derived intangible income).
+Added: Effective tax rate 9 % 41 % N/M
+Added: N/M - Not meaningful
+Added: The 2017 Tax Cuts and Jobs Act (the Tax Legislation) was enacted in fiscal 2018, which, among other things, lowered the corporate income tax rate to 21%, and as a fiscal-year taxpayer, certain provisions of the Tax Legislation became effective for us at the beginning of fiscal 2019, including FDII (foreign-derived intangible income).
In response to the Tax Legislation and to better align our profits with our activities, we implemented certain tax restructuring in fiscal 2018 and 2019.
As a result, beginning in fiscal 2019, substantially all of our income is in the U.S., of which a significant portion qualifies for preferential treatment as FDII at a 13% effective tax rate.
−Removed: The impact of GILTI and BEAT is negligible.
−Removed: Accordingly, our annual effective tax rate for fiscal 2019 reflected the effects of these provisions of the Tax Legislation.
Our annual effective tax rate for fiscal 2018 reflected a blended federal statutory rate of approximately 25%.
+Added: In the fourth quarter of fiscal 2020, the United States Treasury Department issued final regulations on deductions for FDII, which are retroactive to fiscal 2019.
+Added: As a result of these regulations, our fiscal 2020 annual effective tax rate increased by approximately 1%.
+Added: In the first quarter of fiscal 2021, the United States Treasury Department issued final regulations on the foreign tax credit, which we anticipate will adversely affect our effective tax rate.
+Added: The impact of these regulations, which are retroactive to fiscal 2019, has not been included in our fiscal 2020 effective tax rate.
+Added: While we continue to evaluate these new regulations, we currently do not expect the adverse impact to fiscal 2019 and 2020 to be significant.
As a result of the Tax Legislation, in fiscal 2019, several of our foreign subsidiaries made tax elections to be treated as U.S.
5 unchanged sentences
Therefore, the related deferred tax asset was derecognized, resulting in a $2.5 billion charge to income tax expense in fiscal 2019.
−Removed: Income tax expense for fiscal 2019 also reflected benefits from our FDII deduction (including the impact of the Apple settlement) and research and development credits, as well as the impact of the 2019 EC fine, which is not deductible for tax purposes.
−Removed: In fiscal 2018 , as a result of the Tax Legislation, we recorded a charge of $5.7 billion to income tax expense, comprised of $5.2 billion related to the estimated Toll Charge and $438 million resulting from the remeasurement of U.S.
+Added: In fiscal 2018, as a result of the Tax Legislation, we recorded a charge of $5.7 billion to income tax expense, comprised of $5.2 billion related to the estimated one-time repatriation tax on deemed repatriated earnings and profits of U.S.-owned foreign subsidiaries (the Toll Charge) and $438 million resulting from the remeasurement of U.S.
deferred tax assets and liabilities that existed at the end of fiscal 2017 at a lower enacted corporate income tax rate, which included a $135 million tax benefit in fiscal 2018 related to the remeasurement of a U.S.
deferred tax liability that was established as a result of a change in one of our positions due to the Tax Legislation.
−Removed: Income tax expense for fiscal 2018 was also impacted by the charge recorded in the fourth quarter of fiscal 2018 related to the termination fee paid to NXP, which did not result in a tax benefit after the consideration of realizability of such loss.
−Removed: Fiscal 2018 and 2017 income tax expense was impacted by the EC, KFTC and TFTC fines, and settlement with the TFTC, which were not deductible for tax purposes (or taxable in the case of the settlement) and portions of which were attributable to foreign jurisdictions and to the United States.
−Removed: These impacts were partially offset in fiscal 2018 and 2017 by lower U.S.
−Removed: revenues primarily related to decreased royalty revenues from Apple’s contract manufacturers and, for fiscal 2017, a payment to BlackBerry in connection with an arbitration decision.
−Removed: Income tax expense for fiscal 2017 also reflected the increase in our Singapore tax rate as a result of the expiration of certain of our tax incentives in March 2017, which was substantially offset by tax benefits resulting from the increase in our Singapore tax rate in effect when certain deferred tax assets reversed.
−Removed: During the third quarter of fiscal 2018, we entered into a new tax incentive agreement in Singapore that results in a reduced tax rate from March 2017 through March 2022, provided that we meet specified employment and investment criteria in Singapore.
−Removed: Our Singapore tax rate will increase in March 2022 as a result of expiration of these incentives and again in March 2027 upon the expiration of tax incentives under a prior agreement.
−Removed: Without these tax incentives, our fiscal 2018 income tax expense would have been higher.
−Removed: During fiscal 2018, one of our Singapore subsidiaries distributed certain intellectual property to a U.S.
−Removed: subsidiary, substantially reducing the benefit of these tax incentives going forward.
−Removed: Unrecognized tax benefits were $1.7 billion and $217 million at September 29, 2019 and September 30, 2018 , respectively.
−Removed: The increase in unrecognized tax benefits in fiscal 2019 was primarily due to our plan to apply for a refund of Korean withholding tax (which had an insignificant impact to our income tax provision) as a result of recent court rulings in Korea, among other factors.
+Added: Unrecognized tax benefits were $1.9 billion and $1.7 billion at September 27, 2020 and September 29, 2019, respectively.
+Added: The increase in unrecognized tax benefits in fiscal 2020 was primarily due to our decision in fiscal 2019 to request a refund of Korean withholding taxes as licensees in Korea continue to withhold taxes on payments due under their licensing agreements at a rate higher than we believe is owed (which had an insignificant impact to our income tax provision).
If successful, the refund will result in a corresponding reduction in U.S.
foreign tax credits.
−Removed: We are subject to income taxes in the United States and numerous foreign jurisdictions and are currently under examination by various tax authorities worldwide, primarily related to transfer pricing.
+Added: We are subject to
+Added: income taxes in the United States and numerous foreign jurisdictions and are currently under examination by various tax authorities worldwide, primarily related to transfer pricing.
These examinations are at various stages with respect to assessments, claims, deficiencies and refunds.
6 unchanged sentences
QCT Segment (in millions, except percentages)
+Added: 2020 2019 2018 2020 vs.
+Added: 2019 Change 2019 vs.
Equipment and services $ 16,143 $ 14,318 $ 17,060 $ 1,825 $ (2,742)
+Added: Licensing 350 321 222 29 99
Total revenues $ 16,493 $ 14,639 $ 17,282 $ 1,854 $ (2,643)
+Added: EBT (1) $ 2,763 $ 2,143 $ 2,966 $ 620 $ (823)
EBT as a % of revenues 17 % 15 % 17 % 2 % (2 %)
(1) Earnings (loss) before taxes.
−Removed: Beginning in fiscal 2019, we combined our Small Cells business, which sells products designed for the implementation of small cells to address the challenge of meeting the increased demand for mobile data, into our QCT segment.
−Removed: Revenues and operating results related to the Small Cells business were included in nonreportable segments through the end of fiscal 2018.
−Removed: Prior period segment information has not been adjusted to conform to the new segment presentation as such adjustments are insignificant.
−Removed: Equipment and services revenues mostly relate to sales of Mobile Station Modem (MSM™), Radio Frequency (RF), Power Management (PM) and wireless connectivity integrated circuits.
−Removed: MSM integrated circuits include our stand-alone Mobile Data Modems and Snapdragon platforms, including processors and modems.
+Added: Equipment and services revenues are predominantly related to sales of products used in mobile devices and mostly relate to sales of Mobile Station Modem (MSM™), radio frequency (RF), power management (PM) and wireless connectivity integrated chipsets.
+Added: MSM integrated circuits include our stand-alone Mobile Data Modems and Snapdragon platforms, which include processors and modems.
Approximately 575 million, 650 million and 855 million MSM integrated circuits were sold during fiscal 2020, 2019 and 2018, respectively.
+Added: Through fiscal 2020, we provided the volume of MSM integrated circuit shipments to allow management and investors to, in part, evaluate, assess and benchmark our QCT segment’s performance.
+Added: Beginning in fiscal 2021, we will no longer provide MSM integrated circuit shipments since such measure is becoming increasingly less meaningful in understanding and evaluating the performance of our QCT segment, which can be impacted by other factors including changes in mix and average selling price of our MSM integrated circuits and revenues generated from products other than MSM integrated circuits, such as RFFE products, among others.
+Added: The increase in QCT equipment and services revenues was primarily due to:
+Added: + $1.6 billion in higher revenues per MSM and accompanying RF, PM and wireless connectivity chipset shipments, primarily driven by a favorable mix due to an increase in demand for 5G products
+Added: + $864 million in higher RFFE product revenues, primarily driven by an increase in demand for 5G products
+Added: - $764 million in lower MSM and accompanying chipset shipments, primarily driven by a decrease in demand due to COVID-19, lower legacy MDM sales to Apple and lower sales to Huawei, partially offset by an increase in shipments to Apple under the multi-year chipset supply agreement and an increase in demand for IoT products
+Added: QCT EBT as a percentage of revenues increased in fiscal 2020 primarily due to:
+Added: + higher revenues and gross margin, primarily driven by a favorable shift in product mix due to an increase in demand for 5G products
+Added: - higher operating expenses, primarily driven by higher research and development costs
+Added: QCT accounts receivable increased by 53% in fiscal 2020 from $908 million to $1.39 billion, primarily driven by an increase in revenues.
+Added: QCT inventories increased by 86% in fiscal 2020 from $1.40 billion to $2.60 billion, primarily driven by the ramp in 5G demand.
The decrease in QCT equipment and services revenues was primarily due to:
5 unchanged sentences
+ decrease in operating expenses, primarily driven by a decrease in the amount of research and development expense allocated to QCT in fiscal 2019 and actions under our Cost Plan
−Removed: QCT accounts receivable decreased by 33% in fiscal 2019 from $1.36 billion to $908 million , primarily due to the decrease in revenues, as well as the impact of settling certain receivables in connection with the settlement agreements with Apple and its contract manufacturers.
−Removed: QCT inventories decreased by 17% in fiscal 2019 from $1.68 billion to $1.40 billion , primarily due to a decrease in the overall quantity of units on hand.
−Removed: The increase in QCT equipment and services revenues in fiscal 2018 was primarily due to:
−Removed: $825 million in higher RFFE product revenues primarily related to revenues from RF360 Holdings, which was formed in the second quarter of fiscal 2017, and reflected the impact of eliminating a one-month reporting lag in fiscal 2018
−Removed: $737 million in higher MSM and accompanying unit shipments primarily driven by higher demand from OEMs in China, partially offset by a decline in share at Apple
−Removed: $719 million decrease due to lower average selling prices and unfavorable product mix
−Removed: $83 million in lower connectivity product revenues
−Removed: QCT EBT as a percentage of revenues remained flat in fiscal 2018 primarily due to an unchanged gross margin percentage, driven by the net effect of lower average selling prices and lower-margin product mix, offset by lower average unit costs.
QTL Segment (in millions, except percentages)
+Added: 2020 2019 2018 2020 vs.
+Added: 2019 Change 2019 vs.
Licensing revenues $ 5,028 $ 4,591 $ 5,042 $ 437 $ (451)
+Added: EBT $ 3,442 $ 2,954 $ 3,404 $ 488 $ (450)
EBT as a % of revenues 68 % 64 % 68 % 4 % (4 %)
−Removed: QTL results in fiscal 2019 reflected the adoption of new revenue recognition guidance that requires us to estimate and recognize QTL royalties in the period in which the associated sales occur, resulting in an acceleration of royalty revenues by one quarter as compared to prior periods.
−Removed: Prior period results have not been adjusted for the adoption of the new accounting guidance.
−Removed: As a result of the settlement with Apple and its contract manufacturers, QTL results for fiscal 2019 included royalties from Apple and its contract manufactures for sales made in the June 2019 and September 2019 quarters.
−Removed: Revenues in the first six months of fiscal 2019 and all of fiscal 2018 did not include royalties due on sales of Apple or other products by Apple’s contract manufacturers.
−Removed: QTL revenues in fiscal 2019 included $450 million of royalties due under a second interim agreement with Huawei that concluded in the third quarter of fiscal 2019, and although negotiations continue, we have not reached a final agreement with Huawei.
−Removed: We did not record any revenues in the fourth quarter of fiscal 2019 for royalties due on the sales of Huawei’s products.
−Removed: QTL revenues in fiscal 2018 included $600 million paid under an interim agreement with Huawei for royalties due after the second quarter of fiscal 2017.
−Removed: These payments represent minimum, non-refundable amounts for royalties due and do not reflect the full amount of royalties due under the underlying license agreement.
−Removed: We did not record any revenues in the third or fourth quarter of fiscal 2017 for royalties due on the sales of Apple or other products by Apple’s contract manufacturers and Huawei’s products, and Huawei underpaid royalties due in the second quarter of fiscal 2017, which negatively impacted QTL revenues.
−Removed: Royalty revenues related to the products of Apple’s contract manufacturers and Huawei were approximately $1.7 billion in fiscal 2017.
+Added: QTL results in fiscal 2020 and fiscal 2019 reflected the adoption of new revenue recognition guidance that requires us to estimate and recognize QTL royalties in the period in which the associated sales occur, resulting in an acceleration of royalty revenues by one quarter as compared to fiscal 2018.
+Added: QTL results in fiscal 2018 have not been adjusted for the adoption of the new accounting guidance.
+Added: As a result of the settlement with Apple and its contract manufacturers in April 2019, QTL results for fiscal 2020 and the second half of fiscal 2019 included royalties from Apple and its contract manufactures.
+Added: Revenues in the first six months of fiscal 2019 and all of fiscal 2018 did not include royalties from sales of Apple or other products by Apple’s contract manufacturers due to our prior dispute.
+Added: Revenues of $4.7 billion recorded in the third quarter of fiscal 2019 resulting from the settlement with Apple and its contract manufacturers were not allocated to our segment results.
+Added: QTL revenues for fiscal 2020 included royalties from Huawei for sales made in the September 2020 quarter under the new long-term, global patent license agreement.
+Added: QTL revenues in fiscal 2019 included $450 million of royalties due under a second interim agreement with Huawei that concluded in the third quarter of fiscal 2019.
+Added: Due to our prior dispute that was resolved in July 2020, we did not record any revenues in the first three quarters of fiscal 2020 or the fourth quarter of fiscal 2019 for royalties due on the sales of Huawei’s consumer wireless products.
+Added: QTL revenues in fiscal 2018 included $600 million paid under an interim agreement with Huawei.
+Added: Revenues of $1.8 billion recorded in the fourth quarter of fiscal 2020 resulting from the settlement agreement with Huawei and royalties for sales made in the March 2020 and June 2020 quarters under the new global patent license agreement with Huawei were not allocated to our segment results.
+Added: The increase in QTL licensing revenues in fiscal 2020 was primarily due to:
+Added: + $906 million increase in estimated sales of 3G/4G/5G-based multimode products, primarily due to new license agreements with Apple and Huawei signed in April 2019 and July 2020, respectively, partially offset by the negative impact of COVID-19 on demand for licensees’ products that incorporate our intellectual property
+Added: + $110 million increase in royalty revenues recognized related to devices sold in prior periods
+Added: - $450 million in licensing revenues recorded in fiscal 2019 resulting from the second interim agreement with Huawei
+Added: - $129 million in lower estimated revenues per unit, in part reflecting licensees entering into new 5G multimode license agreements with rights to our cellular standard-essential patents only (compared to previous licenses that also included rights to certain other non-cellular essential patents) and decreases in our per unit royalty caps
+Added: QTL EBT as a percentage of revenues increased in fiscal 2020 primarily due to:
+Added: + higher QTL revenues
+Added: + lower selling, general and administrative expenses, primarily from lower litigation costs
+Added: - higher research and development expenses
+Added: QTL accounts receivable increased by 4% in fiscal 2020 from $1.54 billion to $1.60 billion, primarily driven by an increase in estimated royalties for the September 2020 quarter (in part due to the new license agreement with Huawei), partially offset by scheduled payments received from Oppo and vivo for amounts due under agreements reached in fiscal 2020 related to license agreements that expired on March 31, 2020 (for which payments were withheld while good faith negotiations occurred).
QTL licensing revenues in fiscal 2019, which primarily related to royalties due on sales made by our licensees in the December 2018, March 2019, June 2019 and September 2019 quarters, decreased compared to licensing revenues in fiscal 2018, which primarily related to royalties due on sales made by our licensees in the September 2017, December 2017, March 2018 and June 2018 quarters, primarily due to:
−Removed: $757 million in lower estimated revenues per unit compared to revenues per reported unit, in part reflecting licensees entering into new 5G multimode license agreements with rights to our cellular standard-essential patents only (compared to previous licenses which also included rights to certain other non-cellular essential patents), and decreases in our per unit royalty caps
+Added: - $757 million in lower estimated revenues per unit compared to revenues per reported unit, in part reflecting licensees entering into new 5G multimode license agreements with rights to our cellular standard-essential patents only (compared to previous licenses that also included rights to certain other non-cellular essential patents), and decreases in our per unit royalty caps
- $150 million in lower royalty revenues from Huawei under the interim agreements
−Removed: $484 million increase in estimated sales of 3G/4G/5G-based products (including multimode products) compared to reported sales of 3G/4G-based products, primarily due to the new license agreement with Apple, partially offset by a decline in unit demand and a shift in OEM share towards Huawei
+Added: + $484 million increase in estimated sales of 3G/4G/5G-based multimode products compared to reported sales of 3G/4G-based products, primarily due to the April 2019 license agreement with Apple, partially offset by a decline in unit demand and a shift in OEM share towards Huawei
QTL EBT as a percentage of revenues decreased in fiscal 2019 primarily due to:
2 unchanged sentences
+ lower selling, general and administrative expenses, primarily from lower litigation costs and lower bad debt expense
−Removed: QTL accounts receivable increased by 5% in fiscal 2019 from $1.47 billion to $1.54 billion , primarily due to the adoption of the new revenue recognition guidance, partially offset by the impact of settling approximately $960 million of receivables that were related to the short payment in the second quarter of fiscal 2017 of royalties due from Apple’s contract manufacturers in connection with the settlement agreements with Apple and its contract manufacturers.
−Removed: Excluding the impact of the prior dispute with Apple and its contract manufacturers, as well as the dispute with Huawei, QTL licensing revenues in fiscal 2018 further decreased primarily due to:
−Removed: $177 million in lower royalty revenues recognized related to devices sold in prior periods from certain other licensees
−Removed: QTL EBT as a percentage of revenue decreased in fiscal 2018 primarily due to:
−Removed: higher selling, general and administrative expenses resulting primarily from higher litigation costs
−Removed: lower QTL revenues
QSI Segment (in millions)
+Added: 2020 2019 2018 2020 vs.
+Added: 2019 Change 2019 vs.
Equipment and services revenues $ 36 $ 152 $ 100 $ (116) $ 52
+Added: EBT $ (11) $ 344 $ 24 $ (355) $ 320
+Added: The decrease in QSI EBT in of fiscal 2020 was primarily due to:
+Added: - $248 million increase in impairment losses on other investments, of which a significant portion related to our investment in OneWeb
+Added: - $116 million decrease in revenues associated with certain development contracts with OneWeb
+Added: - $60 million decrease in net gains on investments, primarily driven by a gain in fiscal 2019 resulting from the initial public offering of certain of our non-marketable equity investments
+Added: + $50 million decrease in our share of equity method investee losses
+Added: QSI segment assets, which primarily consist of marketable and non-marketable equity investments, decreased by 20% in fiscal 2020 from $1.71 billion to $1.37 billion, primarily due to impairments of certain non-marketable investments and sale of marketable securities.
The increase in QSI EBT in fiscal 2019 was primarily due to:
+ $270 million increase in net gains on investments, primarily driven by gains resulting from the initial public offering of certain non-marketable equity investments
−Removed: $91 million increase resulting from higher revenues and lower costs associated with certain development contracts with an equity method investee
−Removed: $41 million increase in impairment losses on investments, primarily related to an equity method investee
−Removed: QSI segment assets, which primarily consist of marketable and non-marketable equity investments, increased by 34% in fiscal 2019 from $1.28 billion to $1.71 billion , primarily due to recording certain non-marketable equity investments at fair value upon becoming publicly traded and acquiring non-marketable equity investments.
−Removed: The decrease in QSI EBT in fiscal 2018 was primarily due to:
−Removed: $14 million decrease in net gains on investments
−Removed: $14 million increase in our share of losses in equity method investments
−Removed: $13 million decrease resulting from lower revenues from certain development contracts with one of our equity method investees
+Added: + $91 million increase resulting from higher revenues and lower costs associated with certain development contracts with OneWeb
+Added: - $41 million increase in impairment losses on investments, primarily related to our investment in OneWeb
Looking Forward
−Removed: In the coming years, we expect consumer demand for 3G/4G multimode and 4G products and services to decline as new consumer demand for 3G/4G/5G multimode and 5G products and services ramp around the world.
−Removed: We expect growth in new
−Removed: device categories and industries, resulting from the expanding adoption of certain technologies that are already commonly used in smartphones by industry segments outside traditional cellular industries, such as automotive, computing, IoT and networking .
+Added: In the coming years, we expect new consumer demand for 3G/4G/5G multimode and 5G products and services to ramp around the world as we transition from 3G/4G multimode and 4G products and services.
+Added: We believe that 5G will drive growth and transformation in emerging device categories and industries that will create new business models and new services, resulting from the expanding adoption of certain technologies that are already commonly used in smartphones by industry segments or applications beyond mobile, such as automotive and IoT.
+Added: We believe it is important that we remain a leader in 5G technology development, standardization, intellectual property creation and licensing of 5G technologies, and to be a leading developer and supplier of 5G integrated circuit products in order to sustain and grow our business long term.
As we look forward to the next several months and beyond, we expect our business to be impacted by the following key items:
+Added: • The COVID-19 pandemic has resulted in significant economic uncertainty and has led to a global recession.
+Added: We expect the pandemic will continue to have a negative impact on QTL and QCT revenues in the near term based on a reduction in consumer demand for smartphones and other products.
+Added: We have not experienced, and we currently do not anticipate a material adverse impact on our ability, or our suppliers’ ability, to manufacture and test our products or on our ability to provide our products to our customers.
+Added: Workforce changes that we implemented in the second quarter of fiscal 2020 are expected to remain in effect in the near term.
+Added: The degree to which the COVID-19 pandemic impacts our business, financial condition and results of operations will depend on future developments, which are highly uncertain.
+Added: See “Risk Factors” in this Annual Report, specifically the Risk Factor entitled “ The recent coronavirus (COVID-19) pandemic has had an adverse effect on our business and results of operations, and we expect its impact will continue, at least in the near term.
• In May 2019, in United States Federal Trade Commission (FTC) v.
−Removed: QUALCOMM Incorporated , the court issued an Order ruling against us and imposing certain injunctive relief.
−Removed: We disagree with the court’s conclusions, interpretation of the facts and application of the law.
−Removed: Accordingly, we filed a motion to stay certain of the remedies with, and have appealed the decision to, the Ninth Circuit Court of Appeals (Ninth Circuit).
−Removed: In August 2019, our partial motion to stay was granted in its entirety by the Ninth Circuit.
−Removed: Regulatory authorities in certain jurisdictions have investigated our business practices and instituted proceedings against us, and they or other regulatory authorities may do so in the future.
−Removed: Additionally, certain of our direct and indirect customers and licensees have pursued, and others may in the future pursue, litigation or arbitration against us related to our business.
+Added: QUALCOMM Incorporated , the district court issued an Order ruling against us and imposing certain injunctive relief.
+Added: On August 11, 2020, on appeal, the Ninth Circuit reversed the district court’s judgment, vacated its injunction and vacated its partial grant of summary judgment.
+Added: On September 25, 2020, the FTC filed a Petition for Rehearing En Banc .
+Added: On October 28, 2020, the Ninth Circuit denied the FTC’s petition.
+Added: Regulatory authorities in certain other jurisdictions are investigating and/or have investigated our business practices and instituted proceedings against us, and they or other regulatory authorities may do so in the future.
Unfavorable resolutions of one or more of these matters have had and could in the future have a material adverse effect on our business, revenues, results of operations, financial condition and cash flows.
−Removed: Depending on the matter, various remedies that could result from an unfavorable resolution include, among others, the loss of our ability to enforce one or more of our patents;
−Removed: monetary damages or fines or other orders to pay money;
−Removed: the issuance of orders to cease certain conduct or modify our business practices, such as requiring us to reduce our royalty rates, reduce the base on which our royalties are calculated, grant patent licenses to chipset manufacturers, sell chipsets to unlicensed OEMs or modify or renegotiate some or all of our existing license agreements;
−Removed: and determinations that some or all of our license agreements are invalid or unenforceable.
−Removed: These activities have required, and we expect that they will continue to require, the investment of significant management time and attention and have resulted, and we expect that they will continue to result, in increased legal costs until the respective matters are resolved.
See “Notes to Consolidated Financial Statements, Note 7.
−Removed: Commitments and Contingencies” and “Part I, Item 1A.
−Removed: Risk Factors” included in this Annual Report, including the Risk Factors entitled “ Efforts by some communications equipment manufacturers or their customers to avoid paying fair and reasonable royalties for the use of our intellectual property may require the investment of substantial management time and financial resources and may result in legal decisions or actions by governments, courts, regulators or agencies, Standards Development Organizations (SDOs) or other industry organizations that harm our business ,” “ Our business, particularly our licensing business, may suffer as a result of adverse rulings in government investigations or proceedings ” and “ Changes in our patent licensing practices, whether due to governmental investigations or private legal proceedings challenging those practices, or otherwise, could adversely impact our business and results of operations .”
−Removed: In fiscal 2019, we entered into a second interim agreement with Huawei under which we recognized $450 million of royalty revenues in fiscal 2019.
−Removed: These payments do not reflect the full amount of royalties due under the underlying license agreement.
−Removed: The second interim agreement concluded in the third quarter of fiscal 2019, and although negotiations continue, we have not reached a final agreement with Huawei.
−Removed: We did not record any revenues in the fourth quarter of fiscal 2019 for royalties due on the sales of Huawei’s products.
−Removed: If no agreement is reached, Huawei may not make any other payments or may not make full payments due under the underlying license agreement, which may result in significant legal costs and will negatively impact our future revenues, as well as our financial condition, results of operations and cash flows, until the dispute is resolved.
−Removed: We expect our business, particularly QCT, to continue to be impacted by industry dynamics, including:
−Removed: Increased concentration of device share among a few companies, particularly within the premium tier, resulting in significant supply chain leverage for those companies, and exacerbating the negative impact to our business and financial results to the extent those companies do not utilize our chipsets.
−Removed: For example, Huawei has taken, and we believe will continue to take, share in China from other Chinese OEMs, negatively impacting QCT as we sell a limited number of chipsets to Huawei as compared to many of those other OEMs, and the negative impact to our overall business of Huawei share gains at the expense of other Chinese OEMs may be further exacerbated if Huawei continues to not pay us royalties or does not make full payment due to us under its license agreement;
−Removed: Decisions by companies to utilize their own internally-developed integrated circuit products and/or sell such products to others, including by selling them together with certain of their other products;
−Removed: Decisions by certain companies to utilize our competitors’ integrated circuit products in all or a portion of their devices.
−Removed: For example, we have not been the sole supplier of modems for iPhone products beginning
−Removed: with products that launched in September 2016, as Apple utilizes modems from one of our competitors in a portion of such devices.
−Removed: Apple is solely using one of our competitors’ modems, rather than our modems, in its 2019 iPhone release.
−Removed: For new chipset models, QCT does not expect to begin recording revenues under our recently announced multi-year chipset agreement with Apple until the second half of fiscal 2020;
−Removed: Intense competition, particularly in China, as our competitors expand their product offerings and/or reduce the prices of their products as part of a strategy to attract new and/or retain existing customers;
−Removed: Slow-down in handset demand as the industry transitions from 4G to 5G and continued reduction in demand in developed regions and China;
−Removed: Lengthened handset replacement cycles and consumer demand, which is increasingly driven by new product launches and/or innovation cycles;
−Removed: Continued growth of device share by Chinese OEMs in China and in regions outside of China.
+Added: Commitments and Contingencies” and “Risk Factors” in
+Added: this Annual Report, including the Risk Factor entitled “ Changes in our patent licensing practices, whether due to governmental investigations or private legal proceedings challenging those practices, or otherwise, could adversely impact our business and results of operations.
+Added: • We have not been the sole supplier of modems for iPhone products beginning with products that launched in September 2016, and Apple is not utilizing our modems for iPhone products that launched in September 2019.
+Added: We expect QCT revenues to be favorably impacted in the near-term as we anticipate a ramp in volume of shipments to support Apple’s 2020 iPhone product launches.
+Added: • We expect our research and development costs will increase in the near-term primarily due to increased investment towards advancements in 5G and application processor technologies and certain other long-term initiatives, as well as an increase in share-based compensation expense.
+Added: • We expect increased demand in the December quarter from certain Chinese OEMs as they position to gain device share, particularly in China.
+Added: Since it will take time for us to adapt our supply chain process, we do not expect to realize the full benefit from this increased demand from OEMs.
+Added: • We expect continued intense competition, particularly in China, as our competitors expand their product offerings and/or reduce the prices of their products as part of a strategy to attract new and/or retain existing customers;
• Current U.S./China trade relations and/or national security protection policies may negatively impact our business, growth prospects and results of operations.
−Removed: Initial commercial 5G network deployments and device launches have begun and will continue into fiscal 2020 and beyond.
−Removed: We believe that 5G technologies will empower a new era of smartphones and connected devices.
−Removed: We also believe that 5G will drive transformation across industries beyond traditional cellular communications that will create new business models and new services.
−Removed: We believe it is important that we remain a leader in 5G technology development, standardization, intellectual property creation and licensing of 5G technologies, and to be a leading developer and supplier of 5G integrated circuit products in order to sustain and grow our business long term.
−Removed: We continue to invest significant resources to develop our wireless baseband chipsets, and our converged computing/communications (Snapdragon) chipsets, which incorporate technologies in the following areas, among others:
−Removed: advancements in 4G and 5G, OFDM-based Wi-Fi, RF, connectivity, power management, graphics, audio and video codecs, multimedia, artificial intelligence and virtual/augmented reality, and all of which contribute to the expansion of our intellectual property portfolio.
−Removed: We are also investing in targeted opportunities that leverage our existing technical and business expertise to deploy new business models and enter and/or expand into new industry segments and applications, such as products for automotive, computing, IoT (including the connected home, smart cities, wearables, voice and music and robotics) and networking, among others.
+Added: See “Risk Factors” in this Annual Report, including the Risk Factor entitled “ A significant portion of our business is concentrated in China, and the risks of such concentration are exacerbated by U.S./China trade and national security tensions.
+Added: • Commercial 5G network deployments and device launches will continue into calendar 2021 and beyond.
In addition to the foregoing business and market-based matters, we continue to devote resources to working with and educating participants in the wireless value chain and governments as to the benefits of our licensing program and our extensive technology investments in promoting a highly competitive and innovative wireless industry.
1 unchanged sentence
Accordingly, such companies, and/or governments or regulators, may continue to challenge our business model in various forums throughout the world.
−Removed: Further discussion of risks related to our business is presented in “Part I, Item 1A.
+Added: Further discussion of risks related to our business is provided in “Part I, Item 1A.
Risk Factors” included in this Annual Report.
1 unchanged sentence
Our principal sources of liquidity are our existing cash, cash equivalents and marketable securities, cash generated from operations and cash provided by our debt programs.
−Removed: The following table presents selected financial information related to our liquidity as of and for the years ended September 29, 2019 and September 30, 2018 (in millions, except percentages):
+Added: The following table presents selected financial information related to our liquidity as of and for the years ended September 27, 2020 and September 29, 2019 (in millions):
+Added: September 27,
+Added: 2020 September 29,
Cash, cash equivalents and marketable securities $ 11,249 $ 12,296 $ (1,047)
Accounts receivable, net 4,003 2,471 1,532
+Added: Inventories 2,598 1,400 1,198
Short-term debt 500 2,496 (1,996)
Long-term debt 15,226 13,437 1,789
+Added: Noncurrent income taxes payable 1,872 2,088 (216)
+Added: 2020 2019 Change
Net cash provided by operating activities $ 5,814 $ 7,286 $ (1,472)
−Removed: Net cash (used) provided by investing activities
+Added: Net cash used by investing activities (5,263) (806) (4,457)
Net cash used by financing activities (5,707) (6,386) 679
−Removed: The net increase in cash, cash equivalents and marketable securities was primarily due to net cash provided by operating activities and $414 million in proceeds from issuance of common stock, partially offset by $3.0 billion in cash dividends paid, $1.8 billion in payments to repurchase shares of our common stock, a $1.2 billion payment of purchase consideration related to RF360 Holdings, $887 million in capital expenditures, $503 million in net repayments under our commercial paper program and $266 million in payments of tax withholdings related to the vesting of share-based awards.
−Removed: The net increase in total cash provided by operating activities reflected the settlement with Apple and its contract manufacturers, as well as lower segment revenues and the impact of timing of payments of customer-related liabilities.
−Removed: Our days sales outstanding, on a consolidated basis, increased to 47 days at September 29, 2019 compared to 30 days at September 30, 2018 .
−Removed: The increase in days sales outstanding was primarily due to the adoption of the new revenue recognition guidance in fiscal 2019.
−Removed: The decrease in accounts receivable was primarily due to the settlement with Apple and its contract manufacturers and a decrease in integrated circuit shipments, partially offset by the adoption of the new revenue recognition guidance in fiscal 2019.
−Removed: The decrease in inventories was primarily due to a decrease in the overall quantity of units on hand to align with near-term demand.
−Removed: In May 2017 , we issued an aggregate principal amount of $11.0 billion in nine tranches of unsecured floating- and fixed-rate notes, of which $7.0 billion remains outstanding with maturity dates in 2023 through 2047 .
−Removed: Effective interest rates were between 2.70% and 4.47% at September 29, 2019 .
−Removed: Interest is payable in arrears quarterly for the floating-rate notes and semi-annually for the fixed-rate notes.
−Removed: In May 2015 , we issued an aggregate principal amount of $10.0 billion in eight tranches of unsecured floating- and fixed-rate notes, of which $8.5 billion remains outstanding with maturity dates in 2020 through 2045 .
−Removed: Effective interest rates were between 2.64% and 4.73% at September 29, 2019 .
−Removed: Interest is payable in arrears quarterly for the floating-rate notes and semi-annually for the fixed-rate notes.
−Removed: Our Revolving Credit Facility provides for unsecured revolving facility loans, swing line loans and letters of credit in the aggregate amount of up to $5.0 billion , of which $530 million and $4.47 billion will expire in February 2020 and November 2021 , respectively.
−Removed: At September 29, 2019 , no amounts were outstanding under the revolving credit facility.
+Added: The net decrease in cash, cash equivalents and marketable securities was primarily due to $2.9 billion in cash dividends paid, $2.4 billion to repurchase shares of our common stock, $1.4 billion in capital expenditures and $344 million in payments of tax withholdings related to the vesting of share-based awards, partially offset by net cash provided by operating activities and $329 million in proceeds from issuance of common stock.
+Added: The increase in accounts receivable was primarily due to the remaining amounts due under the settlement agreement with Huawei and increases in QCT and QTL accounts receivable.
+Added: The increase in inventories was primarily driven by the ramp in 5G demand.
+Added: In May 2020, we issued an aggregate principal amount of $2.0 billion of unsecured fixed-rate notes with varying maturities (May 2020 Notes).
+Added: The net proceeds were used to repay the $250 million floating-rate and $1.75 billion fixed-rate notes that matured on May 20, 2020, which were classified as short-term debt at September 29, 2019.
+Added: In August 2020, we completed an exchange of $2.0 billion of our outstanding fixed-rate notes maturing between 2022 and 2025 (Old Notes) for $2.2 billion of fixed-rate notes maturing in 2028 and 2032 (August 2020 Notes).
+Added: We also repurchased $202 million of the Old Notes from holders not eligible to participate in the exchange.
+Added: At September 27, 2020, we had $15.5 billion of principal floating- and fixed-rate notes outstanding, with maturity dates in 2022 through 2050.
We have an unsecured commercial paper program, which provides for the issuance of up to $4.5 billion of commercial paper.
Net proceeds from this program are used for general corporate purposes.
−Removed: At September 29, 2019 , we had $499 million of commercial paper outstanding with a weighted-average net interest rate of 2.17% and weighted-average remaining days to maturity of 41 days .
−Removed: We may issue additional debt in the future.
−Removed: The amount and timing of such additional borrowings will be subject to a number of factors, including acquisitions and strategic investments, acceptable interest rates and changes in corporate income tax law, among other factors.
+Added: At September 27, 2020, we had $500 million of commercial paper outstanding.
+Added: Our Amended and Restated Revolving Credit Facility (Revolving Credit Facility) provides for unsecured revolving facility loans, swing line loans and letters of credit in the aggregate amount of up to $4.5 billion and expires on November 8, 2021.
+Added: At September 27, 2020, no amounts were outstanding under the Revolving Credit Facility.
+Added: We may issue new debt in the future.
+Added: COVID-19 has led to disruption and volatility in the global capital markets, which may adversely impact the cost of and access to capital.
+Added: The amount and timing of such borrowings will be subject to a number of factors, including acquisitions and strategic investments, acceptable interest rates and changes in corporate income tax law, among other factors.
Additional information regarding our outstanding debt at September 27, 2020 is provided in this Annual Report in “Notes to Consolidated Financial Statements, Note 6.
Income Taxes.
−Removed: The Tax Legislation, which was signed into law during the first quarter of fiscal 2018, resulted in a $5.2 billion charge recognized in fiscal 2018 related to the Toll Charge.
−Removed: After application of certain tax credits (including excess tax credits generated in fiscal 2019), the total cash payment is expected to be $2.5 billion .
−Removed: The first payment was made in
−Removed: January 2019.
−Removed: At September 29, 2019 , we estimated future cash payments of $2.3 billion , payable in installments over the next seven years.
−Removed: At September 29, 2019, $209 million was included in other current liabilities, reflecting our next installment due in January 2020.
+Added: At September 27, 2020, we estimated remaining future payments of $2.0 billion for a one-time U.S.
+Added: repatriation tax accrued in fiscal 2018 (Toll Charge), after application of certain tax credits, which is payable in installments over the next six years.
+Added: At September 27, 2020, other current liabilities included $174 million for the next installment due in January 2021.
Additional information regarding our income taxes is provided in this Annual Report in “Notes to Consolidated Financial Statements, Note 3.
2 unchanged sentences
The following table summarizes stock repurchases, before commissions, and dividends paid during fiscal 2020, 2019 and 2018 (in millions, except per-share amounts):
−Removed: Stock Repurchase Program
−Removed: Average Price Paid Per Share (1)
+Added: Stock Repurchase Program Dividends Total
+Added: Shares Average Price Paid Per Share (1) Amount Per Share Amount Amount
+Added: 2020 31 $ 79.32 $ 2,450 $ 2.54 $ 2,882 $ 5,332
+Added: 2019 96 66.18 1,793 2.48 2,968 4,761
+Added: 2018 279 65.41 22,569 2.38 3,466 26,035
(1) Average Price Paid Per Share in fiscal 2018 and 2019 excludes the impact of the three accelerated share repurchase agreements (the ASR Agreements) executed in September 2018 and completed in September 2019.
1 unchanged sentence
In fiscal 2018, we announced a stock repurchase program authorizing us to repurchase up to $30 billion of our common stock.
−Removed: In fiscal 2018, we entered into the ASR Agreements to repurchase an aggregate of $16.0 billion of our common stock, with 178.4 million shares initially delivered to us under the ASR Agreements and retired.
−Removed: The ASR Agreements were completed during the fourth quarter of fiscal 2019, and an additional 68.7 million shares were delivered to us, comprising the final delivery of shares under the ASR Agreements.
−Removed: In total, 247.1 million shares were delivered to us under the ASR Agreements.
−Removed: In fiscal 2019, we repurchased and retired an additional 27.1 million shares of our common stock for $1.8 billion , before commissions.
At September 27, 2020, $4.6 billion remained authorized for repurchase under the stock repurchase program.
−Removed: Since September 29, 2019 , we repurchased and retired 3.9 million shares of common stock for $300 million .
−Removed: Our stock repurchase program has significantly reduced and we expect that it will continue to reduce the amount of cash that we have available to fund our operations including research and development, working capital, capital expenditures, acquisitions, investments, dividends and other corporate purposes;
−Removed: and increases our exposure to adverse economic, market, industry and competitive conditions and developments, and other changes in our business and our industry.
−Removed: This stock repurchase program has no expiration date.
−Removed: However, we periodically evaluate repurchases as a means of returning capital to stockholders to determine when and if repurchases are in the best interests of our stockholders and may accelerate, suspend, delay or discontinue repurchases at any time.
+Added: The stock repurchase program has no expiration date.
+Added: Subsequent to September 27, 2020, we resumed stock repurchases under the stock repurchase program, which we had suspended in the third quarter of fiscal 2020 in light of COVID-19 to maintain our financial liquidity position and flexibility.
+Added: We periodically evaluate repurchases as a means of returning capital to stockholders to determine when and if repurchases are in the best interests of our stockholders and may reinstate, accelerate, suspend, delay or discontinue repurchases at any time.
On October 14, 2020, we announced a cash dividend of $0.65 per share on our common stock, payable on December 17, 2020 to stockholders of record as of the close of business on December 3, 2020.
−Removed: We intend to continue to use cash dividends as a means of returning capital to stockholders, subject to capital availability and our view that cash dividends are in the best interests of our stockholders, among other factors.
+Added: We intend to continue to use cash dividends as a means of returning capital to stockholders, subject to capital availability, which may be impacted by COVID-19, and our view that cash dividends are in the best interests of our stockholders, among other factors.
Additional Capital Requirements .
−Removed: We believe our cash, cash equivalents and marketable securities, our expected cash flow generated from operations and our expected financing activities will satisfy our working and other capital requirements for at least the next 12 months based on our current business plans.
+Added: We believe our cash, cash equivalents and marketable securities, our expected cash flow generated from operations and our expected financing activities will satisfy our working and other capital requirements
+Added: for at least the next 12 months based on our current business plans.
Recent and expected working and other capital requirements, in addition to the above matters, also include the items described below:
• Our purchase obligations at September 27, 2020, some of which relate to research and development activities and capital expenditures, totaled $5.5 billion and $350 million for fiscal 2021 and 2022, respectively, and $242 million thereafter.
−Removed: Our research and development expenditures were $5.4 billion in fiscal 2019 and $5.6 billion in fiscal 2018 , and we expect to continue to invest heavily in research and development for new technologies, applications and services for voice and data communications.
−Removed: Cash outflows for capital expenditures were $887 million in fiscal 2019 and $784 million in fiscal 2018 .
−Removed: We expect to continue to incur capital expenditures in the future to support our business, including research and development activities.
+Added: • Our research and development expenditures were $6.0 billion in fiscal 2020 and $5.4 billion in fiscal 2019, and we expect to increase our investment in research and development in fiscal 2021, including in advancements in existing and new technologies and products.
+Added: • Cash outflows for capital expenditures were $1.4 billion in fiscal 2020 and $887 million in fiscal 2019.
+Added: We expect capital expenditures to increase in the near term to support the increase in our manufacturing and production capacity needs primarily resulting from the ramp in 5G devices.
• At September 27, 2020, $1.5 billion was accrued related to two fines imposed by the EC (based on the exchange rate at September 27, 2020, including related foreign currency gains and accrued interest).
1 unchanged sentence
• 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 or pursue new businesses.
−Removed: Further, regulatory authorities in certain jurisdictions have investigated our business practices and instituted proceedings against us, including the lawsuit filed against us by the FTC, in which a ruling was issued in favor of the FTC in May 2019, and they or other regulatory authorities may do so in the future.
+Added: Further, regulatory authorities in certain jurisdictions have investigated our business practices and instituted proceedings against us and they or other regulatory authorities may do so in the future.
Additionally, certain of our direct and indirect customers and licensees, have pursued, and others may in the future pursue, litigation or arbitration against us related to our business.
7 unchanged sentences
The following table summarizes the payments due by fiscal period for our outstanding contractual obligations at September 27, 2020 (in millions):
+Added: Total 2021 2022-2023 2024-2025 Beyond
Purchase obligations (1) $ 6,060 $ 5,468 $ 539 $ 53 $ — $ —
Operating lease obligations (2) 578 141 196 91 150 —
−Removed: Capital lease obligations (2)
+Added: Finance lease obligations (2) 130 14 20 16 80 —
Equity funding and financing commitments (3) 185 103 1 — — 81
3 unchanged sentences
(1) Purchase obligations primarily relate to integrated circuit product inventory obligations, which represent purchase commitments for raw materials, semiconductor die, finished goods and manufacturing services, such as wafer bump, probe, assembly and final test.
−Removed: Under our manufacturing relationships with our foundry suppliers and assembly and test service providers, cancelation of outstanding purchase commitments is generally allowed but requires payment of costs incurred through the date of cancelation, and in some cases, incremental fees related to capacity underutilization.
−Removed: Amounts represent future minimum lease payments including interest payments.
−Removed: Capital lease obligations were included in other current liabilities and other noncurrent liabilities in the consolidated balance sheet at September 29, 2019 .
+Added: Under our manufacturing relationships with our foundry suppliers and assembly and test service providers, cancellation of outstanding purchase commitments is generally allowed but requires payment of costs incurred through the date of cancellation, and in some cases, incremental fees related to capacity underutilization.
+Added: (2) Amounts represent future lease payments.
+Added: Operating and finance lease obligations include the related current portions.
+Added: Operating and finance lease liabilities were included in other current liabilities and other noncurrent liabilities in the consolidated balance sheet at September 27, 2020.
(3) Certain of these commitments do not have fixed funding dates and are subject to certain conditions and have, therefore, been presented as having no expiration date.
1 unchanged sentence
actual funding may be in lesser amounts or not at all.
−Removed: The amounts noted herein represent contractual payments of principal only.
+Added: (4) Amounts represent contractual payments of principal and interest.
+Added: (5) Amounts represent contractual payments of amounts recorded on our consolidated balance sheet.
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, as applicable.
+Added: These amounts do not include the EC fines recorded as current liabilities on our consolidated balance sheet.
+Added: For further information regarding these fines, refer to “Notes to Consolidated Financial Statements, Note 7.
+Added: Commitments and Contingencies.”
(6) Our consolidated balance sheet at September 27, 2020 included $1.8 billion in other noncurrent liabilities for uncertain tax positions, which primarily relate to a reduction of U.S.
foreign tax credits that will occur if we are successful in our claim for a refund of Korean withholding tax (for which a $1.6 billion receivable was recorded at September 27, 2020).
−Removed: The majority of this liability will be payable when we receive the Korean tax refund, with the remainder payable over periods up to and including the last payment of the Toll Charge in January 2026.
+Added: If we are successful in our claim for a refund, the majority of this liability will be payable when we receive the Korean tax refund, with the remainder payable over periods up to and including the last payment of the Toll Charge in January 2026.
The future payments related to uncertain tax positions recorded as other noncurrent liabilities have not been presented in the table above due to the uncertainty of the amounts and timing of cash settlement with the taxing authorities.
8 unchanged sentences
Although we believe that our estimates and the assumptions supporting our assessments are reasonable, actual results that differ from our estimates could be material to our consolidated financial statements.
−Removed: A summary of our significant accounting policies is included in this Annual Report in “Notes to Consolidated Financial Statements, Note 1.
−Removed: Significant Accounting Policies.” We consider the following accounting estimates to be critical in the preparation of our consolidated financial statements.
+Added: Refer to “Note 1.
+Added: Significant Accounting Policies” and “Note 2.
+Added: Composition of Certain Financial Statement Items” included in this Annual Report in “Notes to Consolidated Financial Statements” for further information on our critical accounting estimates and policies, which are as follows.
+Added: In addition, if the impact of changes in our critical accounting estimates are material or considered necessary to understand our results of operations for the periods presented, then such information is disclosed within this Annual Report in “Item 7.
+Added: Management’s Discussion and Analysis of Financial Condition and Results of Operations, Results of Operations.”
Revenue Recognition.
−Removed: We derive revenues principally from sales of integrated circuit products and licensing of our intellectual property.
We grant licenses or otherwise provide rights to use portions of our intellectual property portfolio, which, among other rights, includes certain patent rights essential to and/or useful in the manufacture, sale or use of certain wireless products.
−Removed: Licensees pay royalties based on their sales of products incorporating or using our licensed intellectual property and may also pay a fixed license fee in one or more installments.
−Removed: Sales-based royalties are generally based upon a percentage of the wholesale (i.e., licensee’s) selling price of complete licensed products, net of certain permissible deductions (including transportation, insurance, packing costs and other items).
−Removed: We broadly provide per unit royalty caps that apply to certain categories of complete wireless devices, namely smartphones, tablets, laptops and smartwatches, and provide for a maximum royalty amount payable per device.
−Removed: We estimate and recognize sales-based royalties on such licensed products in the period in which the associated sales occur, subject to certain constraints on our ability to estimate such royalties.
−Removed: Our estimates of sales-based royalties are based largely on an assessment of the volume of devices supplied into the market that incorporate or use our licensed intellectual property.
−Removed: We estimate sales-based royalties taking into consideration the mix of such sales on a licensee-by-licensee basis, as well as the licensees’ average wholesale prices of such products, and consider all information (historical, current and forecasted, which may include certain estimates from licensees) that is reasonably available to us.
−Removed: We also consider in our estimates of sales-based royalties any changes in pricing we plan or expect to make.
−Removed: Our licensees, however, do not report and pay royalties owed for sales in any given quarter until after the conclusion of that quarter, which is generally the following quarter.
−Removed: As a result of recognizing revenues in the period in which the licensees’ sales occur using estimates, adjustments to revenues are required in subsequent periods to reflect changes in estimates as new information becomes available, primarily resulting from actual amounts reported by our licensees.
−Removed: From time to time, regulatory authorities investigate our business practices, particularly with respect to our licensing business, and institute proceedings against us.
−Removed: Depending on the matter, various remedies that could result from an unfavorable resolution include, among others, the loss of our ability to enforce one or more of our patents;
−Removed: monetary damages or fines or other orders to pay money;
−Removed: the issuance of orders to cease certain conduct or modify our business practices, such as requiring us to reduce our royalty rates, reduce the base on which our royalties are calculated, grant patent licenses to chipset manufacturers, sell chipsets to unlicensed OEMs or modify or renegotiate some or all of our existing license agreements;
−Removed: and determinations that some or all of our license agreements are invalid or unenforceable.
−Removed: Additionally, from time to time, companies initiate various strategies in an attempt to negotiate, renegotiate, reduce and/or eliminate their need to pay royalties to us for the use of our intellectual property, which may include disputing, underreporting, underpaying, not reporting and/or not paying royalties owed to us under their license agreements with us, or reporting to us in a manner that is not in compliance with their contractual obligations.
−Removed: In such cases, we estimate and recognize licensing revenues only when we have a contract, as defined in the revenue recognition guidance, and to the extent it is probable that a significant reversal of cumulative revenues recognized will not occur, both of which may require significant judgment.
−Removed: We analyze the risk of a significant revenue reversal considering both the likelihood and magnitude of the reversal and, if necessary, constrain the amount of estimated revenues recognized in order to mitigate this risk, which may result in recognizing revenues less than amounts contractually owed to us.
−Removed: In May 2019, in United States Federal Trade Commission (FTC) v.
−Removed: QUALCOMM Incorporated , the court issued an Order ruling against us and imposing certain injunctive relief (see “Notes to Consolidated Financial Statements, Note 7.
−Removed: Commitments and Contingencies”).
−Removed: In August 2019, the U.S.
−Removed: Court of Appeals for the Ninth Circuit granted in its entirety Qualcomm’s request for a partial stay of the injunction.
−Removed: While we believe that our business practices do not violate either antitrust law or our FRAND (fair, reasonable and non-discriminatory) licensing commitments, significant evaluation and judgment were required in determining the impact of such ruling on the amount of licensing revenues estimated and
−Removed: recognized in fiscal 2019.
−Removed: This included, among other items:
−Removed: (i) evaluating whether our license agreements remain valid and enforceable, (ii) evaluating licensees’ conduct and whether they remain committed to perform their respective obligations and (iii) determining the expected impact, if any, to revenues of any license agreements that may be renegotiated and/or are newly entered into.
−Removed: Based on this evaluation, the impact of the ruling was not material to QTL licensing revenues in fiscal 2019 based on facts and factors currently known by us.
−Removed: As new information becomes available, we may be required to make adjustments to revenues in subsequent periods to reflect changes in estimates and/or this matter could have a material adverse effect on our ability to recognize future licensing revenues.
−Removed: Impairment of Other Investments.
−Removed: We hold investments in non-marketable equity instruments in privately held companies, including those accounted for under the equity method.
−Removed: Non-marketable equity instruments do not have readily determinable fair values and are accounted for under the equity method or based on initial cost minus impairment, if any, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar securities.
−Removed: Many of these investments are in early-stage companies, which are inherently risky because the markets for the technologies or products of these companies are uncertain and may never develop.
−Removed: We monitor our investments for events or circumstances that could indicate the investments are impaired, such as a deterioration in the investee’s financial condition and business forecasts and lower valuations in recently completed or anticipated financings, and we record impairment losses in earnings when we believe an investment has experienced a decline in value (such decline in value must be considered other-than-temporary for equity method investments).
−Removed: Valuation of Inventories.
−Removed: Inventories are valued at the lower of cost and net realizable value using the first-in, first-out method.
−Removed: Recoverability of inventories is assessed based on review of future customer demand that considers multiple factors, including committed purchase orders from customers as well as purchase commitment projections provided by customers, among other things.
−Removed: This valuation also requires us to make judgments and assumptions based on information currently available about market conditions, including competition, product pricing, product life cycle and development plans.
−Removed: As we move to smaller geometry process technologies, the manufacturing lead-time increases, resulting in an increased reliance on our own forecasts of customer demand, rather than our customers’ forecasts.
−Removed: If we overestimate demand for our products, the amount of our loss will be impacted by our contractual ability to reduce inventory purchases from our suppliers.
−Removed: Our assumptions of future product demand are inherently uncertain, and changes in our estimates and assumptions may cause us to realize material write-downs in the future.
−Removed: Valuation of Goodwill and Other Indefinite-Lived and Long-Lived Assets .
−Removed: Our business combinations typically result in the recording of goodwill, other intangible assets and/or property, plant and equipment, and the recorded values of those assets may become impaired in the future.
−Removed: We also acquire intangible assets and property, plant and equipment in other types of transactions.
−Removed: The determination of the recorded value of intangible assets acquired in a business combination requires management to make estimates and assumptions that affect our consolidated financial statements.
−Removed: For intangible assets acquired in a non-monetary exchange, the estimated fair values of the assets transferred (or the estimated fair values of the assets received, if more clearly evident) are used to establish their recorded values, unless the values of neither the assets received nor the assets transferred are determinable within reasonable limits, in which case the assets received are measured based on the carrying values of the assets transferred.
−Removed: Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value.
−Removed: An estimate of fair value can be affected by many assumptions that require significant judgment.
−Removed: For example, the income approach generally requires us to use assumptions to estimate future cash flows including those related to total addressable market, pricing and share forecasts, competition, technology obsolescence, future tax rates and discount rates.
−Removed: Our estimate of the fair value of certain assets may differ materially from that determined by others who use different assumptions or utilize different business models and from the future cash flows actually realized.
−Removed: Goodwill and other indefinite-lived intangible assets are tested annually for impairment and in interim periods if events or changes in circumstances indicate that the assets may be impaired.
−Removed: Long-lived assets, such as property, plant and equipment and intangible assets subject to amortization, are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.
−Removed: Our judgments regarding the existence of impairment indicators and future cash flows related to goodwill and other indefinite-lived intangible assets and long-lived assets may be based on operational performance of our businesses, market conditions, expected selling price and/or other factors.
−Removed: Although there are inherent uncertainties in this assessment process, the estimates and assumptions we use, including estimates of future cash flows and discount rates, are consistent with our internal planning, when appropriate.
−Removed: If these estimates or their related assumptions change in the future, we may be required to record an impairment charge on a portion or all of our goodwill, other indefinite-lived intangible assets and/or long-lived assets.
−Removed: Furthermore, we cannot predict the occurrence of future impairment-triggering events nor the impact such events might have on our reported asset values.
−Removed: Future events could cause us to conclude that impairment indicators exist, and that goodwill or other long-lived assets associated with our acquired businesses are impaired.
−Removed: Any resulting impairment loss could have an adverse impact on our
−Removed: financial condition and results of operations.
−Removed: During fiscal 2019 , 2018 and 2017 , we recorded $203 million , $273 million and $76 million , respectively, in impairment charges for goodwill, other indefinite-lived intangible assets and long-lived assets.
−Removed: The estimated fair values of our QCT and QTL reporting units were substantially in excess of their respective carrying values at September 29, 2019 .
+Added: Since the adoption of ASC 606 in fiscal 2019, we estimate and recognize sales-based royalties on such licensed products in the period in which the licensees’ sales occur, which is based largely on preliminary royalty estimates provided by our licensees.
+Added: Actual amounts for sales-based royalties have been materially consistent with such estimates, and no significant reversals of revenues have been required as a result of adjustments to prior period royalty estimates.
+Added: Additionally, with respect to our settlement agreement and new global patent license agreement with Huawei, significant evaluation and judgment were required in determining the appropriate accounting.
+Added: Impairment of Non-marketable Equity Investments.
+Added: We monitor our investments for events or circumstances that could indicate impairment and observable price adjustments.
+Added: In fiscal 2020, we recorded impairment losses on other investments of $405 million, an increase of $270 million compared to fiscal 2019, a portion of which was due in part to the impacts of COVID-19 on certain companies in which we hold non-marketable investments.
+Added: For a significant portion of these impairments, the estimated fair values resulted in a full write-off of the carrying values.
+Added: We measure inventory at the lower of cost or net realizable value considering judgments related to future demand and market conditions, such as COVID-19 in fiscal 2020 that negatively impacted consumer demand for devices that incorporate our products.
+Added: For fiscal 2020, 2019 and 2018, the overall net effect on our operating results from changes in this estimate were not material.
+Added: Impairment of Goodwill and Long-Lived Assets .
+Added: We monitor our goodwill and long-lived assets for the existence of impairment indicators and apply judgments in the valuation methods and underlying assumptions utilized in such assessments.
+Added: During fiscal 2020, we did not record any impairment charges for goodwill and long-lived assets.
+Added: Additionally, the estimated fair values of our QCT and QTL reporting units were substantially in excess of their respective carrying values at September 27, 2020.
+Added: In fiscal 2019 and 2018, we recorded $203 million and $273 million, respectively, of impairment charges for goodwill and long-lived assets.
Legal and Regulatory Proceedings.
−Removed: We are currently involved in certain legal and regulatory proceedings, and we intend to continue to vigorously defend ourselves.
−Removed: Litigation and investigations are inherently uncertain, and we face difficulties in evaluating or estimating likely outcomes or ranges of possible loss in antitrust and trade regulation investigations in particular.
−Removed: Investigations by antitrust and trade regulation agencies are not conducted in a consistent manner across jurisdictions.
−Removed: Further, each country and agency has different sets of laws, rules and regulations, both substantive and procedural, as well as different legal principles, theories and potential remedies, and some agencies may seek to use the investigation to advance domestic policy goals.
−Removed: Depending on the jurisdiction, these investigations can involve non-transparent procedures under which we may not receive access to evidence relied upon by the enforcement agency or that may be exculpatory and may not be informed of the specific legal theories or evidence considered or relied upon by the agency.
−Removed: Unlike in civil litigation in the United States, in foreign proceedings, we may not be entitled to discovery or depositions, allowed to cross-examine witnesses or confront our accusers.
−Removed: As a result, we may not be aware of, and may not be entitled to know, all allegations against us, or the information or documents provided to, or discovered or prepared by, the agency.
−Removed: Accordingly, we may have little or no idea what an agency’s intent is with respect to liability, penalties or the timing of a decision.
−Removed: In many cases the agencies are given significant discretion, and any available precedent may have limited, if any, predictive value in their jurisdictions, much less in other jurisdictions.
−Removed: Accordingly, we cannot predict the outcome of these matters.
−Removed: 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.
−Removed: A broad range of remedies with respect to our business practices that are deemed to violate applicable laws are potentially available.
−Removed: 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.
−Removed: If there is at least a reasonable possibility that a material loss may have been incurred associated with pending legal and regulatory proceedings, we disclose such fact, and if reasonably estimable, we provide an estimate of the possible loss or range of possible loss.
We record our best estimate of a loss related to pending legal and regulatory proceedings when the loss is considered probable and the amount can be reasonably estimated.
−Removed: Where a range of loss can be reasonably estimated with no best estimate in the range, we record the minimum estimated liability.
−Removed: As additional information becomes available, we assess the potential liability related to pending legal and regulatory proceedings and revise our estimates and update our disclosures accordingly.
−Removed: Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable.
−Removed: Revisions in our estimates of the potential liability could materially impact our results of operations.
+Added: We face difficulties in evaluating or estimating likely outcomes or the amount of possible loss in certain legal and regulatory proceedings.
Income Taxes.
−Removed: We are subject to income taxes in the United States and numerous foreign jurisdictions, and the assessment of our income tax positions involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions.
−Removed: In addition, the application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.
−Removed: Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings.
−Removed: Significant judgments and estimates are required in determining our provision for income taxes, including those related to special deductions such as FDII (foreign-derived intangible income), tax incentives, intercompany research and development cost-sharing arrangements, transfer pricing, tax credits and the realizability of deferred tax assets.
−Removed: While we believe we have appropriate support for the positions we have taken or that we plan to take on our tax returns, we regularly assess the potential outcomes of examinations by taxing authorities in determining the adequacy of our provision for income taxes.
−Removed: Therefore, the actual liability for U.S.
−Removed: or foreign taxes may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities.
−Removed: We are participating in the Internal Revenue Service (IRS) Compliance Assurance Process program whereby we endeavor to agree with the IRS on the treatment of all issues prior to filing our federal return.
−Removed: A benefit of participation in this program is that post-filing adjustments by the IRS are less likely to occur.
+Added: We make significant judgments and estimates in determining our provision for income taxes, including our assessment of our income tax positions given the uncertainties involved in the interpretation and application of complex tax laws and regulations in various taxing jurisdictions.
Recent Accounting Pronouncements
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.