5 unchanged sentences
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f).
−Removed: Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013)
−Removed: issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on our evaluation under this framework, our management concluded that our internal control over financial reporting was effective as of September 27, 2020.
14 unchanged sentences
The information required by this item regarding directors is incorporated by reference to our 2021 Proxy Statement to be filed with the SEC in connection with our 2021 Annual Meeting of Stockholders (2021 Proxy Statement) in “Proposal 1:
−Removed: Election of Directors” under the heading “Nominees for Election.” Certain information required by this item regarding executive officers is set forth in Item 1 of Part I of this Report under the heading “Executive Officers.” The information required by this item regarding corporate governance is incorporated by reference to our 2020 Proxy Statement in the section titled “Corporate Governance” under the headings “Code of Ethics and Corporate Governance Principles and Practices,” “Board Meetings, Committees and Attendance” and “Director Nominations.”
+Added: Election of Directors” under the subheading “Nominees for Election.” Certain information required by this item regarding executive officers is set forth in Item 1 of Part I of this Report under the heading “Information about our Executive Officers.” The information required by this item regarding corporate governance is incorporated by reference to our 2021 Proxy Statement in the section titled “Corporate Governance” under the headings “Code of Ethics and Corporate Governance Principles and Practices” and “Board Meetings, Committees and Attendance.”
Executive Compensation
−Removed: The information required by this item is incorporated by reference to our 2020 Proxy Statement in the sections titled “HR and Compensation Committee Report,” “Executive Compensation and Related Information” and “Director Compensation,” and in the section titled “Stock Ownership of Certain Beneficial Owners and Management” under the heading “Compensation Committee Interlocks and Insider Participation.”
+Added: The information required by this item is incorporated by reference to our 2021 Proxy Statement in the sections titled “Executive Compensation and Related Information,” “HR and Compensation Committee Report” and “Director Compensation,” and in the section titled “Stock Ownership of Certain Beneficial Owners and Management” under the subheading “Compensation Committee Interlocks and Insider Participation.”
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
−Removed: The information required by this item is incorporated by reference to our 2020 Proxy Statement in the section titled “Stock Ownership of Certain Beneficial Owners and Management,” and in “Proposal 3” under the heading “Equity Compensation Plan Information.”
+Added: The information required by this item is incorporated by reference to our 2021 Proxy Statement in the section titled “Stock Ownership of Certain Beneficial Owners and Management” including under the subheading “Equity Compensation Plan Information.”
Certain Relationships and Related Transactions, and Director Independence
−Removed: The information required by this item is incorporated by reference to our 2020 Proxy Statement in the section titled “Certain Relationships and Related-Person Transactions,” and in the section titled “Corporate Governance” under the heading “Director Independence.”
+Added: The information required by this item is incorporated by reference to our 2021 Proxy Statement in the section titled “Certain Relationships and Related-Person Transactions,” and in the section titled “Corporate Governance” under the subheadings “Director Independence” and “Board Meetings, Committees and Attendance.”
Principal Accounting Fees and Services
4 unchanged sentences
(a) Financial Statements:
−Removed: (1) Report of Independent Registered Public Accounting Firm
−Removed: Consolidated Balance Sheets at September 29, 2019 and September 30, 2018
−Removed: Consolidated Statements of Operations for Fiscal 2019, 2018 and 2017
−Removed: Consolidated Statements of Comprehensive Income (Loss) for Fiscal 2019, 2018 and 2017
−Removed: Consolidated Statements of Cash Flows for Fiscal 2019, 2018 and 2017
−Removed: Consolidated Statements of Stockholders’ Equity for Fiscal 2019, 2018 and 2017
−Removed: Notes to Consolidated Financial Statements
−Removed: (2) Schedule II - Valuation and Qualifying Accounts for Fiscal 2019, 2018 and 2017
+Added: (1) Report of Independent Registered Public Accounting Firm F-1
+Added: Consolidated Balance Sheets at September 27, 2020 and September 29, 2019 F-4
+Added: Consolidated Statements of Operations for Fiscal 2020, 2019 and 2018 F-5
+Added: Consolidated Statements of Comprehensive Income (Loss) for Fiscal 2020, 2019 and 2018 F-6
+Added: Consolidated Statements of Cash Flows for Fiscal 2020, 2019 and 2018 F-7
+Added: Consolidated Statements of Stockholders’ Equity for Fiscal 2020, 2019 and 2018 F-8
+Added: Notes to Consolidated Financial Statements F-9
+Added: (2) Schedule II - Valuation and Qualifying Accounts for Fiscal 2020, 2019 and 2018 S-1
Financial statement schedules other than those listed above have been omitted because they are either not required, not applicable or the information is otherwise included in the notes to the consolidated financial statements.
−Removed: Exhibit Description
−Removed: Date of First Filing
−Removed: Exhibit Number
−Removed: Filed Herewith
−Removed: Master Transaction Agreement, dated January 13, 2016, by and among Qualcomm Global Trading Pte.
−Removed: Ltd., each other Purchaser Group member, TDK Japan, each other Seller Group member, and, solely for purposes of Section 10.9 thereof, QUALCOMM Incorporated.
−Removed: Amendment #1, dated December 20, 2016, to Master Transaction Agreement, dated January 13, 2016, by and among Qualcomm Global Trading Pte.
−Removed: Ltd., each other Purchaser Group member, TDK Japan, each other Seller Group member, and, solely for purposes of Section 10.9 thereof, QUALCOMM Incorporated.
−Removed: Amendment #2, dated January 19, 2017, to Master Transaction Agreement, dated January 13, 2016, by and among Qualcomm Global Trading Pte.
−Removed: Ltd., each other Purchaser Group member, TDK Japan, each other Seller Group member, and, solely for purposes of Section 10.9 thereof, QUALCOMM Incorporated.
−Removed: Amendment #3, dated February 3, 2017, to Master Transaction Agreement, dated January 13, 2016, by and among Qualcomm Global Trading Pte.
−Removed: Ltd., each other Purchaser Group member, TDK Japan, each other Seller Group member, and, solely for purposes of Section 10.9 thereof, QUALCOMM Incorporated.
+Added: Number Exhibit Description Form Date of First Filing Exhibit Number Filed Herewith
3.1 Amended and Restated Certificate of Incorporation .
+Added: 8-K 4/20/2018 3.1
+Added: Number Exhibit Description Form Date of First Filing Exhibit Number Filed Herewith
3.2 Amended and Restated Bylaws .
+Added: 8-K 7/17/2018 3.1
4.1 Indenture, dated May 20, 2015, between the Company and U.S.
Bank National Association, as trustee.
+Added: 8-K 5/21/2015 4.1
4.2 Officers’ Certificate, dated May 20, 2015, for the Floating Rate Notes due 2018, the Floating Rate Notes due 2020, the 1.400% Notes due 2018, the 2.250% Notes due 2020, the 3.000% Notes due 2022, the 3.450% Notes due 2025, the 4.650% Notes due 2035 and the 4.800% Notes due 2045.
−Removed: Form of Floating Rate Notes due 2020.
−Removed: Form of 2.250% Notes due 2020.
+Added: 8-K 5/21/2015 4.2
4.3 Form of 3.000% Notes due 2022.
+Added: 8-K 5/21/2015 4.7
4.4 Form of 3.450% Notes due 2025.
+Added: 8-K 5/21/2015 4.8
4.5 Form of 4.650% Notes due 2035.
+Added: 8-K 5/21/2015 4.9
4.6 Form of 4.800% Notes due 2045.
+Added: 8-K 5/21/2015 4.10
4.7 Officers’ Certificate, dated May 26, 2017, for the Floating Rate Notes due 2019, the Floating Rate Notes due 2020, the Floating Rate Notes due 2023, the 1.850% Notes due 2019, the 2.100% Notes due 2020, the 2.600% Notes due 2023, the 2.900% Notes due 2024, the 3.250% Notes due 2027 and the 4.300% Notes due 2047.
+Added: 8-K 5/31/2017 4.2
4.8 Form of Floating Rate Notes due 2023.
+Added: 8-K 5/31/2017 4.5
4.9 Form of 2.600% Notes due 2023.
+Added: 8-K 5/31/2017 4.8
4.10 Form of 2.900% Notes due 2024.
+Added: 8-K 5/31/2017 4.9
4.11 Form of 3.250% Notes due 2027.
−Removed: Exhibit Description
−Removed: Date of First Filing
−Removed: Exhibit Number
−Removed: Filed Herewith
+Added: 8-K 5/31/2017 4.10
4.12 Form of 4.300% Notes due 2047.
−Removed: Description of the Company’s securities.
+Added: 8-K 5/31/2017 4.11
+Added: 4.13 Officers’ Certificate, dated May 8, 2020, for the 2.150% Notes due 2030 and the 3.250% Notes due 2050.
+Added: 8-K 5/11/2020 4.2
+Added: 4.14 Form of 2.150% Notes due 2030.
+Added: 8-K 5/11/2020 4.3
+Added: 4.15 Form of 3.250% Notes due 2050.
+Added: 8-K 5/11/2020 4.4
+Added: 4.16 Officers’ Certificate, dated August 14, 2020, for the 1.300% Notes due 2028 and the 1.650% Notes due 2032.
+Added: 8-K 8/18/2020 4.2
+Added: 4.17 Form of 1.300% Rule 144A Global Notes due 2028.
+Added: 8-K 8/18/2020 4.3
+Added: 4.18 Form of 1.300% Regulation S Global Notes due 2028.
+Added: 8-K 8/18/2020 4.4
+Added: 4.19 Form of 1.650% Rule 144A Global Notes due 2032.
+Added: 8-K 8/18/2020 4.5
+Added: 4.20 Form of 1.650% Regulation S Global Notes due 2032.
+Added: 8-K 8/18/2020 4.6
+Added: 4.21 Registration Rights Agreement, dated as of August 14, 2020.
+Added: 8-K 8/18/2020 4.7
+Added: 4.22 Description of registrant’s securities.
+Added: 10-K 11/6/2019 4.15
10.1 Form of Indemnity Agreement between the Company and its directors and officers.
−Removed: Form of Grant Notice and Stock Option Agreement under the 2006 Long-Term Incentive Plan.
−Removed: Form of Grant Notices and Global Employee Restricted Stock Unit Agreement under the 2006 Long-Term Incentive Plan.
−Removed: 2006 Long-Term Incentive Plan, as amended and restated.
−Removed: Form of Grant Notices and Non-Employee Director Deferred Stock Unit Agreements under the 2006 Long-Term Incentive Plan for non-employee directors residing in the United States and Spain.
−Removed: Amendment to 2006 Long-Term Incentive Plan, as amended and restated.
−Removed: 2016 Long-Term Incentive Plan.
+Added: 10-K 11/4/2015 10.1
+Added: 10.2 Amended and Restated 2016 Long-Term Incentive Plan.
+Added: 10-Q 4/29/2020 10.7
+Added: Number Exhibit Description Form Date of First Filing Exhibit Number Filed Herewith
10.3 Form of Non-Employee Director Deferred Stock Unit Grant Notices and Non-Employee Director Deferred Stock Unit Agreements under the 2016 Long-Term Incentive Plan for non-employee directors residing in the United States.
−Removed: Form of Non-Employee Director Deferred Stock Unit Grant Notices and Non-Employee Director Deferred Stock Unit Agreements under the 2016 Long-Term Incentive Plan for non-employee directors residing in Spain.
−Removed: Form of Non-Employee Director Deferred Stock Unit Grant Notices and Non-Employee Director Deferred Stock Unit Agreements under the 2016 Long-Term Incentive Plan for non-employee directors residing in Singapore.
−Removed: Form of Executive Restricted Stock Unit Grant Notice and Executive Restricted Stock Unit Agreement under the 2016 Long-Term Incentive Plan.
−Removed: Form of Executive Performance Stock Unit Award Grant Notice and Executive Performance Stock Unit Award Agreement under the 2016 Long-Term Incentive Plan.
+Added: 10-Q 4/20/2016 10.32
+Added: 10.4 Form of Non-Employee Director Deferred Stock Unit Grant Notice and Non-Employee Director Deferred Stock Unit Agreement under the 2016 Long-Term Incentive Plan for non-employee directors residing in Hong Kong.
+Added: 10-Q 7/29/2020 10.9
10.5 Amended and Restated Credit Agreement among QUALCOMM Incorporated, the lenders party thereto and Bank of America, N.A., as Administrative Agent, dated as of November 8, 2016.
+Added: 8-K 11/9/2016 10.2
10.6 Form of Executive Performance Stock Unit Award Grant Notice and Executive Performance Stock Unit Award Agreement under the 2016 Long-Term Incentive Plan, which includes a September 25, 2017 to September 27, 2020 performance period.
−Removed: Amendment to the Qualcomm Incorporated 2006 and 2016 Long-Term Incentive Plans, as amended and restated.
+Added: 10-K 11/1/2017 10.40
10.7 Qualcomm Incorporated Non-Executive Officer Change in Control Severance Plan.
−Removed: Exhibit Description
−Removed: Date of First Filing
−Removed: Exhibit Number
−Removed: Filed Herewith
+Added: 1/31/2018 10.42
10.8 Form of 2016 Long-Term Incentive Plan Non-Employee Director Deferred Stock Unit Grant Notice and Non-Employee Director Deferred Stock Unit Agreement for Non-Employee Directors in Singapore.
−Removed: Form of 2016 Long-Term Incentive Plan Non-Employee Director Deferred Stock Unit Grant Notice and Non-Employee Director Deferred Stock Unit Agreement for Non-Employee Directors in Spain.
+Added: 10-Q 4/25/2018 10.58
10.9 Form of 2016 Long-Term Incentive Plan Non-Employee Director Deferred Stock Unit Grant Notice and Non-Employee Director Deferred Stock Unit Agreement.
+Added: 10-Q 4/25/2018 10.60
10.10 Amended and Restated QUALCOMM Incorporated 2001 Employee Stock Purchase Plan, as amended.
+Added: 10-Q 4/25/2018 10.62
10.11 Qualcomm Incorporated Executive Officer Change in Control Severance Plan.
+Added: 8-K 5/25/2018 10.1
10.12 Qualcomm Incorporated Executive Officer Severance Plan.
−Removed: Qualcomm Incorporated 2019 Director Compensation Plan.
+Added: 8-K 9/21/2018 10.1
10.13 Qualcomm Incorporated 2016 Long-Term Incentive Plan CEO Performance Stock Option Grant Notice and CEO Performance Stock Option Agreement.
+Added: 10-K 11/7/2018 10.59
10.14 Form of Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Performance Stock Unit Award Grant Notice and Executive Performance Stock Unit Award Agreement.
+Added: 10-K 11/7/2018 10.60
10.15 Form of Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Restricted Stock Unit Grant Notice and Executive Restricted Stock Unit Agreement.
−Removed: Form of 2019 Annual Cash Incentive Plan Performance Unit Agreement.
+Added: 10-K 11/7/2018 10.61
10.16 QUALCOMM Incorporated Non-Qualified Deferred Compensation Plan, as amended and restated effective February 13, 2019.
+Added: 10-Q 5/1/2019 10.7
10.17 Form of Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Performance Stock Unit Award RTSR Shares Grant Notice and ROIC Shares Grant Notice, and Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Performance Stock Unit Award Agreement (September 30, 2019 - September 25, 2022 Performance Period).
+Added: 10-K 11/6/2019 10.29
10.18 Qualcomm Incorporated 2020 Director Compensation Plan.
+Added: 10-K 11/6/2019 10.30
+Added: Number Exhibit Description Form Date of First Filing Exhibit Number Filed Herewith
+Added: 10.19 Form of 2020 Annual Cash Incentive Plan Performance Unit Agreement (2)
+Added: 10-Q 2/5/2020 10.31
+Added: 10.20 Form of Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Restricted Stock Unit Grant Notice and Executive Restricted Stock Unit Agreement (2020 Form).
+Added: 10.21 Form of Qualcomm Incorporated 2016 Long-Term Incentive Plan Executive Performance Stock Unit Award Grant Notice and Executive Performance Stock Unit Award Agreement (2020 Form).
+Added: 10.22 Qualcomm Incorporated 2021 Director Compensation Plan.
21 Subsidiaries of the Company.
4 unchanged sentences
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Steve Mollenkopf.
−Removed: Exhibit Description
−Removed: Date of First Filing
−Removed: Exhibit Number
−Removed: Filed Herewith
32.2 Certification pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, for Akash Palkhiwala.
−Removed: Inline XBRL Instance Document.
−Removed: Inline XBRL Taxonomy Extension Schema.
−Removed: Inline XBRL Taxonomy Extension Calculation Linkbase.
−Removed: Inline XBRL Taxonomy Extension Labels Linkbase.
−Removed: Inline XBRL Taxonomy Extension Presentation Linkbase.
−Removed: Inline XBRL Taxonomy Extension Definition Linkbase.
+Added: 101.INS Inline XBRL Instance Document.
+Added: 101.SCH Inline XBRL Taxonomy Extension Schema.
+Added: 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase.
+Added: 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase.
+Added: 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase.
+Added: 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
5 unchanged sentences
QUALCOMM Incorporated
−Removed: /s/ Steve Mollenkopf
+Added: By /s/ Steve Mollenkopf
Steve Mollenkopf
1 unchanged sentence
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
−Removed: /s/ Steve Mollenkopf
−Removed: Chief Executive Officer and Director
−Removed: November 6, 2019
−Removed: Steve Mollenkopf
−Removed: (Principal Executive Officer)
−Removed: /s/ Akash Palkhiwala
−Removed: Executive Vice President and Chief Financial Officer
−Removed: November 6, 2019
−Removed: Akash Palkhiwala
−Removed: (Principal Financial Officer)
−Removed: /s/ Erin Polek
−Removed: Senior Vice President and Chief Accounting Officer
−Removed: November 6, 2019
−Removed: (Principal Accounting Officer)
−Removed: /s/ Barbara T.
−Removed: November 6, 2019
−Removed: /s/ Mark Fields
−Removed: November 6, 2019
+Added: Signature Title Date
+Added: /s/ Steve Mollenkopf Chief Executive Officer and Director November 4, 2020
+Added: Steve Mollenkopf (Principal Executive Officer)
+Added: /s/ Akash Palkhiwala Executive Vice President and Chief Financial Officer November 4, 2020
+Added: Akash Palkhiwala (Principal Financial Officer)
+Added: /s/ Erin Polek Senior Vice President, Corporate Controller and Chief Accounting Officer November 4, 2020
+Added: Erin Polek (Principal Accounting Officer)
+Added: /s/ Mark Fields Director November 4, 2020
/s/ Jeffrey W.
−Removed: November 6, 2019
−Removed: November 6, 2019
−Removed: /s/ Harish Manwani
−Removed: November 6, 2019
+Added: Henderson Director November 4, 2020
+Added: Livermore Director November 4, 2020
+Added: /s/ Harish Manwani Director November 4, 2020
Harish Manwani
−Removed: November 6, 2019
−Removed: November 6, 2019
−Removed: /s/ Francisco Ros
−Removed: November 6, 2019
−Removed: Francisco Ros
−Removed: November 6, 2019
−Removed: /s/ Neil Smit
−Removed: November 6, 2019
+Added: McLaughlin Chair of the Board November 4, 2020
+Added: Miller Director November 4, 2020
+Added: Director November 4, 2020
+Added: Rosenfeld Director November 4, 2020
+Added: /s/ Neil Smit Director November 4, 2020
+Added: /s/ Jean-Pascal Tricoire Director November 4, 2020
+Added: Jean-Pascal Tricoire
/s/ Anthony J.
−Removed: November 6, 2019
+Added: Vinciquerra Director November 4, 2020
Report of Independent Registered Public Accounting Firm
3 unchanged sentences
We also have audited the Company's internal control over financial reporting as of September 27, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
−Removed: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 29, 2019 and September 30, 2018 and the results of their operations and their cash flows for each of the three years in the period ended September 29, 2019 in conformity with accounting principles generally accepted in the United States of America.
+Added: In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 27, 2020 and September 29, 2019, and the results of its operations and its cash flows for each of the three years in the period ended September 27, 2020 in conformity with accounting principles generally accepted in the United States of America.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 27, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
−Removed: Change in Accounting Principle
−Removed: As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for revenues from contracts with customers in fiscal 2019.
−Removed: As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for income tax effects of intra-entity transfers of assets other than inventory in fiscal 2019.
+Added: Changes in Accounting Principles
+Added: As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in fiscal 2020 and the manner in which it accounts for revenues from contracts with customers and income tax effects of intra-entity transfers of assets other than inventory in fiscal 2019.
Basis for Opinions
−Removed: The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.
+Added: The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.
19 unchanged sentences
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
−Removed: As described in Notes 1 and 3 to the consolidated financial statements, the Company is subject to income taxes in the United States and numerous foreign jurisdictions, and the assessment of tax positions involves dealing with uncertainties in the application of complex tax laws and regulations which are subject to legal and factual interpretation, judgment and uncertainty.
−Removed: The Company recorded a provision for income taxes of $3.1 billion for the year ended September 29, 2019 and net deferred tax assets of $1.1 billion , including a valuation allowance of $1.7 billion , a noncurrent income taxes receivable of $1.4 billion , and unrecognized tax benefits of $1.7 billion as of September 29, 2019.
−Removed: Significant judgments and estimates are required when determining the provision for income taxes and other tax positions, which includes the application of complex tax laws and regulations (including new temporary regulations and evolution of court rulings), 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: The principal considerations for our determination that performing procedures relating to income taxes is a critical audit matter are the matter involved significant judgment by management when assessing complex tax laws and regulations (including new temporary regulations and recent court rulings) and special deductions such as FDII, transfer pricing and tax credits as it relates to determining the provision for income taxes and other tax positions.
−Removed: This led to a high degree of auditor judgment and significant audit effort in performing our procedures over income taxes, including the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures.
−Removed: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: The procedures included testing the effectiveness of controls relating to the provision of income taxes and other tax positions.
−Removed: The procedures also included, among others, testing the provision for income taxes, including the effective tax rate reconciliation, permanent and temporary differences, inspecting correspondence with tax regulators and external tax advisors, and testing the underlying data and evaluating the significant assumptions used in establishing and measuring tax-related assets and liabilities, including the application of new temporary regulations and recent court rulings.
−Removed: Professionals with specialized skill and knowledge were used to assist in evaluating the application of relevant tax laws, the provision for income taxes and the reasonableness of management’s assessments of whether certain tax positions are more-likely-than-not of being sustained.
Legal and Regulatory Proceedings
As described in Notes 1 and 7 to the consolidated financial statements, the Company is currently involved in certain legal and regulatory proceedings.
−Removed: If there is at least a reasonable possibility that a material loss may have been incurred associated with
−Removed: a pending legal and regulatory proceeding, management discloses such fact, and if reasonably estimable, management provides an estimate of the possible loss or range of possible loss.
+Added: If there is at least a reasonable possibility that a material loss may have been incurred associated with a pending legal and regulatory proceeding, management discloses such fact, and if reasonably estimable, management provides an estimate of the possible loss or range of possible loss.
Management records the 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.
2 unchanged sentences
Significant judgment is required by management in both the determination of probability of loss and the determination as to whether a loss is reasonably estimable.
−Removed: The principal considerations for our determination that performing procedures relating to legal and regulatory proceedings is a critical audit matter are the matter involved significant judgment by management when assessing the likelihood of a loss being incurred and when determining whether a reasonable estimate of the loss or range of loss can be made.
+Added: The principal considerations for our determination that performing procedures relating to legal and regulatory proceedings is a critical audit matter are the significant judgment by management when assessing the likelihood of a loss being incurred and when determining whether a reasonable estimate of the loss or range of loss can be made;
this led to a high degree of auditor judgment, subjectivity and significant audit effort in evaluating management’s assessment of the loss contingencies associated with the legal and regulatory proceedings.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to management’s evaluation of legal and regulatory proceedings, including controls over determining whether a loss is probable and whether the amount of loss can be reasonably estimated, including related financial statement disclosures.
+Added: These procedures included testing the effectiveness of controls relating to management’s evaluation of legal and regulatory proceedings, including controls over determining whether a loss is probable and whether the amount of loss can be reasonably estimated, as well as financial statement disclosures.
These procedures also included, among others:
−Removed: obtaining and evaluating the letters of audit inquiry with external and internal legal counsel, reading certain correspondence the Company received from regulators, reading certain documents the Company has filed with the courts and related counterparty filings, evaluating the reasonableness of management’s process for identifying and assessing loss contingencies regarding whether an unfavorable outcome is probable and reasonably estimable, and evaluating the sufficiency of the Company’s legal and regulatory proceedings disclosures in the consolidated financial statements.
−Removed: Revenue Recognition - Estimation of Sales-based Royalty Revenues
−Removed: As described in Note 1 to the consolidated financial statements, a vast majority of the $4.6 billion of the Qualcomm Technology Licensing (QTL) segment’s revenues for the year ended September 29, 2019 related to sales-based royalty arrangements and is recognized as revenues when a contract exists and to the extent it is probable that a significant reversal of cumulative revenues will not occur.
−Removed: As disclosed in the financial statements, the Company grants licenses or otherwise provides rights to use portions of its 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 the licensed intellectual property, which are generally based upon a percentage of the licensee’s selling price of complete licensed products, net of certain permissible deductions (including transportation, insurance, packing costs and other items).
−Removed: If a contract is determined to exist, management estimates and recognizes sales-based royalties on such licensed products in the period in which the associated sales by the licensee occur, subject to certain constraints on management’s ability to estimate such royalties.
−Removed: As certain licensees have disputed, underreported, underpaid, not reported and/or not paid royalties owed to the Company under their license agreements, management applied significant judgment to determine whether a contract exists and, if so, the extent to which those revenues are constrained.
−Removed: Management analyzes the risk of a significant revenue reversal considering both the likelihood and magnitude of the reversal and, if necessary, constrains the amount of estimated revenues recognized, which may result in recognizing revenues less than amounts contractually owed to the Company.
−Removed: The principal considerations for our determination that performing procedures relating to the estimation of sales-based royalty revenues for revenue recognition is a critical audit matter are there was significant judgment by management when determining whether a contract exists and in developing the estimate of sales-based royalties.
−Removed: This in turn led to significant auditor judgment, subjectivity and significant audit effort in performing procedures to evaluate the estimate of sales-based royalties, including management’s assessment of the existence of a contract and significant assumptions related to the extent of any constraint.
+Added: (i) obtaining and evaluating the letters of audit inquiry with external and internal legal counsel;
+Added: (ii) reading certain correspondence the Company received from regulators;
+Added: (iii) reading certain documents the Company has filed with the courts and related counterparty filings;
+Added: (iv) reading certain documents issued by the courts;
+Added: (v) evaluating the reasonableness of management’s process for identifying and assessing loss contingencies regarding whether an unfavorable outcome is probable and reasonably estimable;
+Added: and (vi) evaluating the sufficiency of the Company’s legal and regulatory proceedings disclosures in the consolidated financial statements.
+Added: Revenue Recognition - Huawei Agreements
+Added: As described in Note 2 to the consolidated financial statements, in July 2020, the Company entered into a settlement agreement with Huawei to resolve their prior dispute related to their license agreement that expired on December 31, 2019 and also entered into a new long term, global patent license agreement that applies to sales of certain wireless products by Huawei beginning on January 1, 2020 (collectively “Huawei Agreements”).
+Added: Amounts due under the settlement agreement are to be paid in installments by the end of June 2021 in accordance with an agreed upon payment schedule.
+Added: Significant evaluation and judgment were required by management in determining the appropriate accounting for the Huawei Agreements.
+Added: Management considered, among other items, (i) Huawei’s commitment to perform under the Huawei Agreements (including Huawei’s intent and ability to pay amounts due);
+Added: (ii) Huawei’s performance to date under the Huawei Agreements (including timely payments made);
+Added: (iii) Huawei’s current and projected financial condition (including the impact of enacted national security protection policies by the U.S.
+Added: government on Huawei’s business);
+Added: and (iv) certain contractual protections obtained under the Huawei Agreements.
+Added: Based on this evaluation, management concluded the revenue recognition criteria were met, and recorded revenues of $1.8 billion in the fourth quarter of fiscal 2020 related to the full amount due from Huawei under the settlement agreement and amounts for the March 2020 and June 2020 quarters under the new global patent license agreement.
+Added: In addition, revenues recorded for the fourth quarter of fiscal 2020 included estimated royalties due from Huawei for sales made in the September 2020 quarter under the new global patent license agreement.
+Added: The principal considerations for our determination that performing procedures relating to revenue recognition for the Huawei Agreements is a critical audit matter are the significant judgment by management in determining the appropriate accounting for the Huawei Agreements, including evaluating the significant judgments related to determining Huawei's commitment to perform its contractual obligations and probability of collection under the Huawei Agreements;
+Added: this led to a high degree of auditor judgment, subjectivity and significant audit effort in performing procedures to evaluate the appropriateness of revenue recognized for the Huawei Agreements.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: The procedures included testing the effectiveness of controls relating to the revenue recognition process, including the estimation of sales-based royalty revenues.
−Removed: The procedures also included, among others, testing management’s process for determining the existence of a contract and management’s estimate of sales-based royalties including evaluating the reasonableness of significant assumptions related to whether any further constraints are
−Removed: required and testing the underlying data used in management’s estimate for a sample of contracts.
−Removed: Evaluating management’s assumptions related to the constraints involved evaluating whether the constraints assumptions used by management were reasonable considering disputes with certain licensees and the impact of any existing litigation on the estimate of sales-based royalties.
−Removed: Evaluating the reasonableness of the estimate of sales-based royalties also involved assessing management’s ability to reasonably estimate those revenues by performing a comparison of the estimate for the prior reporting period to the actual royalties reported by licensees in the subsequent period for a sample of contracts.
+Added: These procedures included testing the effectiveness of controls relating to the revenue recognition process, including the assessment and evaluation of the Huawei Agreements.
+Added: These procedures also included, among others, evaluating the revenue recognized for the Huawei Agreements and the reasonableness of significant judgments related to determining Huawei’s commitment to perform its contractual obligations and probability of collection
+Added: under the Huawei Agreements.
+Added: Evaluating the reasonableness of management’s judgments included (i) reading the Huawei Agreements;
+Added: (ii) performing inquiries with key members of management who were involved in the negotiation and execution of the Huawei Agreements;
+Added: (iii) evaluating Huawei’s compliance with initial payment and reporting obligations under the Huawei Agreements;
+Added: (iv) evaluating management’s assessment of collectability, including the analysis of the impact of enacted national security protection policies by the U.S.
+Added: government on Huawei’s business;
+Added: and (v) confirming the outstanding receivable balance from the settlement agreement as of September 27, 2020 with Huawei.
/s/ PricewaterhouseCoopers LLP
4 unchanged sentences
CONSOLIDATED BALANCE SHEETS
−Removed: (In millions, except per share data)
+Added: (In millions, except par value amounts)
September 27,
4 unchanged sentences
Accounts receivable, net 4,003 2,471
+Added: Inventories 2,598 1,400
Other current assets 704 634
2 unchanged sentences
Property, plant and equipment, net 3,711 3,081
+Added: Goodwill 6,323 6,282
Other intangible assets, net 1,653 2,172
+Added: Other assets 4,037 3,461
+Added: Total assets $ 35,594 $ 32,957
LIABILITIES AND STOCKHOLDERS’ EQUITY
15 unchanged sentences
8 shares authorized;
−Removed: none outstanding
+Added: no ne outstanding
Common stock and paid-in capital, $ 0.0001 par value;
13 unchanged sentences
Equipment and services $ 16,298 $ 14,611 $ 17,400
+Added: Licensing 7,233 9,662 5,211
Total revenues 23,531 24,273 22,611
3 unchanged sentences
Selling, general and administrative 2,074 2,195 2,986
+Added: Other ( 28 ) 414 3,135
Total costs and expenses 17,276 16,606 21,990
5 unchanged sentences
Net income (loss) $ 5,198 $ 4,386 $ ( 4,964 )
−Removed: Net loss attributable to noncontrolling interests
−Removed: Net income (loss) attributable to Qualcomm
−Removed: Basic earnings (loss) per share attributable to Qualcomm
−Removed: Diluted earnings (loss) per share attributable to Qualcomm
+Added: Basic earnings (loss) per share $ 4.58 $ 3.63 $ ( 3.39 )
+Added: Diluted earnings (loss) per share $ 4.52 $ 3.59 $ ( 3.39 )
Shares used in per share calculations:
+Added: Basic 1,135 1,210 1,463
+Added: Diluted 1,149 1,220 1,463
See accompanying notes.
6 unchanged sentences
Net income (loss) $ 5,198 $ 4,386 $ ( 4,964 )
−Removed: Other comprehensive loss, net of income taxes:
−Removed: Foreign currency translation (losses) gains
−Removed: Net unrealized (losses) gains on certain available-for-sale securities, net of tax benefit (expense) of $0, ($8) and $59, respectively
−Removed: Reclassification of net realized gains on available-for-sale securities included in net income (loss), net of tax expense of $0, $3 and $156, respectively
+Added: Other comprehensive income (loss), net of income taxes:
+Added: Foreign currency translation gains (losses) 60 ( 110 ) ( 136 )
+Added: Net unrealized gains (losses) on certain available-for-sale securities, net of tax (expense) benefit of ($ 1 ), $ 0 and ($ 8 ), respectively
Net unrealized gains (losses) on derivative instruments, net of tax (expense) benefit of ($ 8 ), ($ 7 ) and $ 6 , respectively
−Removed: Other (losses) gains, net of tax expense of $0, $0 and $3, respectively
−Removed: Other reclassifications included in net income (loss), net of tax expense (benefit) of $1, ($6) and ($42), respectively
−Removed: Total other comprehensive loss
−Removed: Total comprehensive income (loss)
−Removed: Comprehensive loss attributable to noncontrolling interests
−Removed: Comprehensive income (loss) attributable to Qualcomm
+Added: Other gains (losses) 7 ( 19 ) ( 3 )
+Added: Other reclassifications included in net income (loss), net of tax benefit (expense) of $ 5 , $ 1 and ($ 3 ), respectively
+Added: ( 11 ) ( 5 ) 8
+Added: Total other comprehensive income (loss) 107 ( 114 ) ( 119 )
+Added: Comprehensive income (loss) $ 5,305 $ 4,272 $ ( 5,083 )
See accompanying notes.
9 unchanged sentences
Depreciation and amortization expense 1,393 1,401 1,561
−Removed: Income tax provision in excess of (less than) income tax payments
−Removed: Non-cash portion of share-based compensation expense
+Added: Income tax provision (less than) in excess of income tax payments ( 309 ) 1,976 4,481
+Added: Share-based compensation expense 1,212 1,037 883
Net gains on marketable securities and other investments ( 336 ) ( 356 ) ( 124 )
4 unchanged sentences
Accounts receivable, net ( 1,529 ) 1,373 734
+Added: Inventories ( 1,157 ) 273 337
+Added: Other assets ( 110 ) 78 24
Trade accounts payable 907 ( 443 ) ( 94 )
6 unchanged sentences
Proceeds from sales and maturities of debt and equity marketable securities 2,399 198 9,188
−Removed: Purchases of other marketable securities
−Removed: Proceeds from sales and maturities of other marketable securities
Acquisitions and other investments, net of cash acquired ( 185 ) ( 252 ) ( 326 )
13 unchanged sentences
Other items, net ( 76 ) ( 107 ) ( 111 )
−Removed: Net cash (used) provided by financing activities
+Added: Net cash used by financing activities ( 5,707 ) ( 6,386 ) ( 31,500 )
Effect of exchange rate changes on cash and cash equivalents 24 ( 32 ) ( 41 )
−Removed: Net increase (decrease) in total cash and cash equivalents
+Added: Net (decrease) increase in total cash and cash equivalents ( 5,132 ) 62 ( 25,252 )
Total cash and cash equivalents at beginning of period 11,839 11,777 37,029
Total cash and cash equivalents at end of period $ 6,707 $ 11,839 $ 11,777
−Removed: Reconciliation to the consolidated balance sheets
−Removed: Cash and cash equivalents
−Removed: Restricted cash and restricted cash equivalents included in other assets
−Removed: Total cash and cash equivalents at end of period
See accompanying notes.
1 unchanged sentence
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
−Removed: (In millions)
+Added: (In millions, except per share data)
September 27,
2 unchanged sentences
Total stockholders’ equity, beginning balance
+Added: $ 4,909 $ 807 $ 30,725
Common stock and paid-in capital:
2 unchanged sentences
Repurchases and retirements of common stock
+Added: ( 1,042 ) ( 910 ) ( 1,536 )
Share-based compensation
+Added: 1,301 1,104 930
Tax withholdings related to vesting of share-based payments
+Added: ( 344 ) ( 266 ) ( 280 )
Balance at end of period
1 unchanged sentence
Balance at beginning of period
−Removed: Cumulative effect of accounting changes (Note 1)
−Removed: Net income (loss) attributable to Qualcomm
+Added: 4,466 542 30,067
+Added: Cumulative effect of accounting changes — 3,455 —
+Added: Net income (loss) 5,198 4,386 ( 4,964 )
Repurchases and retirements of common stock
+Added: ( 1,408 ) ( 883 ) ( 21,044 )
+Added: ( 2,972 ) ( 3,034 ) ( 3,517 )
Balance at end of period
+Added: 5,284 4,466 542
Accumulated other comprehensive income:
Balance at beginning of period
−Removed: Cumulative effect of accounting changes (Note 1)
−Removed: Other comprehensive loss
−Removed: Balance at end of period
−Removed: Total Qualcomm stockholders’ equity
−Removed: Noncontrolling Interests
−Removed: Balance at beginning of period
−Removed: Other comprehensive loss
+Added: Cumulative effect of accounting changes — ( 51 ) —
+Added: Other comprehensive income (loss) 107 ( 114 ) ( 119 )
Balance at end of period
Total stockholders’ equity, ending balance
+Added: $ 6,077 $ 4,909 $ 807
Dividends per share announced
+Added: $ 2.54 $ 2.48 $ 2.38
See accompanying notes.
2 unchanged sentences
Significant Accounting Policies
−Removed: We develop, design, manufacture, have manufactured on our behalf and market digital communications products, which principally consist of integrated circuits and system software based on CDMA (Code Division Multiple Access), OFDMA (Orthogonal Frequency Division Multiple Access) and other technologies for use in mobile devices, wireless networks, broadband gateway equipment, consumer electronic devices, devices used in IoT and automotive telematics and infotainment systems.
−Removed: We also grant licenses to use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture and sale of certain wireless products , and receive ongoing royalties based on sales by licensees of wireless products incorporating our patented technologies and may also receive fixed license fees (payable in one or more installments).
+Added: We are a global leader in the development and commercialization of foundational technologies for the wireless industry.
+Added: Our technologies and products are used in mobile devices and other wireless products, including network equipment, broadband gateway equipment, consumer electronic devices and other connected devices, including those used in the internet of things (IoT) and automotive systems for telematics and infotainment.
+Added: We derive revenues principally from sales of integrated circuit products and through the licensing of our intellectual property, including patents and other rights.
Principles of Consolidation.
−Removed: The consolidated financial statements include the assets, liabilities and operating results of Qualcomm and its subsidiaries, including our subsidiary RF360 Holdings Singapore Pte.
−Removed: Ltd (RF360 Holdings) since its formation in fiscal 2017 (Note 9).
−Removed: During the third quarter of fiscal 2018, we eliminated the one-month reporting lag previously used to consolidate RF360 Holdings to provide contemporaneous reporting within our consolidated financial statements.
+Added: The consolidated financial statements include the assets, liabilities and operating results of Qualcomm and its subsidiaries.
+Added: During the third quarter of fiscal 2018, we eliminated the one-month reporting lag that was used to consolidate RF360 Holdings Singapore Pte., Ltd.
+Added: (since its formation in fiscal 2017) to provide contemporaneous reporting within our consolidated financial statements.
The effect of this change was not material to the consolidated financial statements, and therefore, the impact of eliminating the one-month reporting lag was included in our results of operations for fiscal 2018.
2 unchanged sentences
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes.
−Removed: Examples of our significant accounting estimates that may involve a higher degree of judgment and complexity than others include:
+Added: Examples of our significant accounting estimates and policies that may involve a higher degree of judgment and complexity than others include:
the estimation of sales-based royalty revenues;
−Removed: the impairment of other investments;
+Added: determining the appropriate accounting for the settlement agreement and new global patent license agreement with Huawei;
+Added: the impairment of non-marketable investments;
the valuation of inventories;
−Removed: the valuation of the recoverability of goodwill and other indefinite-lived and long-lived assets;
+Added: the impairment of goodwill and long-lived assets;
the recognition, measurement and disclosure of loss contingencies related to legal and regulatory proceedings;
2 unchanged sentences
Certain prior year amounts have been reclassified to conform to the current year presentation.
−Removed: Revision of Prior Period Financial Statements.
−Removed: In connection with the preparation of our consolidated financial statements, we identified an immaterial error related to the recognition of certain royalty revenues of our QTL (Qualcomm Technology Licensing) segment in the quarterly and annual periods in fiscal 2018 and third and fourth quarters and annual period in fiscal 2017.
−Removed: In accordance with SAB No.
−Removed: 99, “Materiality,” and SAB No.
−Removed: 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” we evaluated the error and determined that the related impact was not material to our financial statements for any prior annual or interim period, but that correcting the cumulative impact of the error would be significant to our results of operations for the three months ended December 30, 2018.
−Removed: Accordingly, we have revised previously reported financial information for such immaterial error, as previously disclosed in our Quarterly Report on Form 10-Q for the first, second and third quarters of fiscal 2019.
−Removed: A summary of revisions to certain previously reported financial information presented herein for comparative purposes is included in Note 12.
We operate and report using a 52-53 week fiscal year ending on the last Sunday in September.
2 unchanged sentences
Recently Adopted Accounting Pronouncements.
+Added: In February 2016, the Financial Accounting Standards Board (FASB) issued new accounting guidance related to leases (ASC 842) that outlines a new comprehensive lease accounting model and requires expanded disclosures.
+Added: Under the new accounting guidance, we are required to recognize right-of-use assets and corresponding lease liabilities on the consolidated balance sheet.
+Added: We adopted ASC 842 in the first quarter of fiscal 2020 using the modified retrospective approach, with the cumulative effect of initial adoption recorded as an adjustment to our opening consolidated balance sheet at September 30, 2019.
+Added: We elected to not record leases with a term of 12 months or less on our consolidated balance sheet.
+Added: In addition, we applied the package of practical expedients permitted under the transition guidance, which among other things, does not require reassessment of lease classification upon adoption.
+Added: Prior period results have not been restated and continue to be reported in accordance with the accounting guidance in effect for those periods (ASC 840).
+Added: Upon adoption, we recorded $ 449 million of operating lease assets in other assets and $ 500 million of corresponding lease liabilities ($ 127 million recorded in other current liabilities and $ 373 million recorded in other liabilities).
+Added: The difference between the operating lease assets and liabilities of $ 51 million primarily related to deferred rent liabilities that existed as of the date of adoption.
+Added: Finance leases were not material for all periods presented.
+Added: Adoption of the new accounting guidance did not have a material impact on our consolidated statements of operations or cash flows.
Revenue Recognition:
−Removed: In May 2014, the Financial Accounting Standards Board (FASB) issued new accounting guidance related to revenue recognition (ASC 606), which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition accounting guidance and requires increased disclosures.
−Removed: The new accounting guidance defines a five-step approach that requires a company to recognize revenue as control of goods or services transfers to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services.
+Added: In May 2014, the FASB issued new accounting guidance related to revenue recognition (ASC 606).
We adopted ASC 606 in the first quarter of fiscal 2019 using the modified retrospective transition method only to those contracts that were not completed as of October 1, 2018.
1 unchanged sentence
Prior period results have not been restated and continue to be reported in accordance with the accounting guidance in effect for those periods (ASC 605).
−Removed: We have implemented new accounting policies, systems, processes and internal controls necessary to support the requirements of ASC 606.
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Adoption of this new accounting guidance most significantly impacts the timing of sales-based royalty revenues, which are the vast majority of our QTL segment’s revenues.
−Removed: Prior to adoption, we recognized sales-based royalties as revenues in the period in which such royalties were reported by licensees, which was after the conclusion of the quarter in which the licensees’ sales occurred and when all other revenue recognition criteria had been met.
−Removed: Under the new accounting guidance, we estimate and recognize sales-based royalties in the period in which the associated sales occur, subject to certain constraints on our ability to estimate such amounts, resulting in an acceleration of revenue recognition compared to the historical method under ASC 605.
−Removed: Since we do not invoice for sales-based royalties estimated and recognized in any given quarter until after the conclusion of that quarter (which is generally the following quarter when such royalties are reported by licensees), revenues recognized from sales-based royalties results in unbilled receivables (included in accounts receivable, net on the consolidated balance sheet).
−Removed: The adoption of ASC 606 did not otherwise have a material impact.
−Removed: The new accounting guidance also impacts the timing of recognizing certain customer incentives, which are recorded as a reduction to revenues in the period that the related revenues are earned.
−Removed: Prior to adoption, we accounted for certain customer incentive arrangements, including volume-related and other pricing rebates or cost reimbursements for marketing and other activities involving certain of our products and technologies, in part based on the maximum potential liability.
−Removed: Under the new accounting guidance, we estimate the amount of all customer incentives.
−Removed: The following table summarizes the cumulative effects of adopting the new revenue accounting guidance (substantially all of which related to the impact to QTL’s sales-based royalties) on our consolidated balance sheet at October 1, 2018 (in millions):
−Removed: Balance at September 30,
−Removed: Opening Balance at October 1,
−Removed: Accounts receivable, net
−Removed: Other current assets
−Removed: Deferred tax assets
−Removed: Unearned revenues, current
−Removed: Other current liabilities
−Removed: Unearned revenues
−Removed: Stockholders’ equity
−Removed: Retained earnings
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: The following tables summarize the impacts of adopting the new revenue accounting guidance on our consolidated balance sheet and statement of operations (in millions):
−Removed: Balance at September 29, 2019
−Removed: Balance Sheet
−Removed: Accounts receivable, net
−Removed: Other current assets
−Removed: Deferred tax assets
−Removed: Unearned revenues, current
−Removed: Other current liabilities
−Removed: Unearned revenues
−Removed: Other liabilities
−Removed: Stockholders’ equity
−Removed: Retained earnings
−Removed: Year Ended September 29, 2019
−Removed: Statement of Operations
−Removed: Equipment and services
−Removed: Income tax expense
−Removed: Adoption of the new accounting guidance had no impact to net cash provided (used) by operating, financing or investing activities on our consolidated statement of cash flows for fiscal 2019 .
−Removed: Financial Assets:
−Removed: In January 2016, the FASB issued new accounting guidance on classifying and measuring financial instruments, which requires that all equity investments, other than equity-method investments, in unconsolidated entities generally be measured at fair value through earnings in the statement of operations.
−Removed: Additionally, it changes the disclosure requirements for financial instruments.
−Removed: We adopted the new accounting guidance in the first quarter of fiscal 2019 using the modified retrospective transition method for investments in marketable securities, which have readily determinable fair values, with the cumulative effect of applying the new accounting guidance recognized as an adjustment to opening retained earnings.
−Removed: Upon adoption, we reclassified $ 50 million of unrealized gains, net of the associated tax effects, related to our investments in marketable securities from accumulated other comprehensive income to opening retained earnings.
−Removed: We have applied the prospective transition method for investments in non-marketable securities, which are investments in privately held companies that do not have readily determinable fair values and will recognize, through earnings, any unrealized gains that have accumulated in the period in which there is an observable transaction, if any.
−Removed: Prior to the adoption of the new accounting guidance in the first quarter of fiscal 2019, investments in marketable equity securities were generally classified as available-for-sale equity investments, with net unrealized gains or losses recorded as a component of accumulated other comprehensive income, net of income taxes.
−Removed: Beginning in fiscal 2019, all gains and losses on investments in marketable equity securities, realized and unrealized, are recognized in investment and other income, net.
−Removed: Prior to the adoption of the new accounting guidance in the first quarter of fiscal 2019, investments in non-marketable equity securities were recorded at cost less impairment, if any, with any losses resulting from an impairment recognized in investment and other income, net.
−Removed: Beginning in fiscal 2019, investments in non-marketable equity securities are recorded at
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: cost, less impairments, adjusted for observable price changes in orderly transactions for identical or similar securities.
−Removed: All gains and losses on investments in non-marketable equity securities, realized and unrealized, are recognized in investment and other income, net.
−Removed: In addition, prior to adoption, we recorded impairment losses in earnings on investments in non-marketable equity securities when an impairment was considered other than temporary.
−Removed: Beginning in fiscal 2019, we record impairment losses in earnings when we believe an investment has experienced a decline in value.
−Removed: Hedge Instruments:
−Removed: In August 2017, the FASB issued new accounting guidance that expands and refines hedge accounting for both financial and non-financial risks, aligns the recognition and presentation of the effects of hedging instruments and hedged items in the financial statements, and includes targeted improvements related to the assessment of hedge effectiveness.
−Removed: The new accounting guidance also modifies disclosure requirements for hedging activities.
−Removed: We adopted the new accounting guidance in the first quarter of 2019 using the modified retrospective transition method and recorded a negligible adjustment to opening retained earnings.
−Removed: The new accounting guidance did no t have a material impact on our consolidated financial statements.
−Removed: Statement of Cash Flows:
−Removed: In August 2016, the FASB issued new accounting guidance related to the classification of certain cash receipts and cash payments in the statement of cash flows.
−Removed: We adopted the new accounting guidance in the first quarter of fiscal 2019 using the retrospective transition method for each period presented, which did no t have a material impact on our consolidated statements of cash flows.
−Removed: In November 2016, the FASB issued new accounting guidance that requires companies to include restricted cash and cash equivalents as a component in total cash and cash equivalents on the statement of cash flows.
−Removed: As a result, the consolidated statement of cash flows no longer reflects transfers between cash and cash equivalents and restricted cash and cash equivalents.
−Removed: We adopted the new accounting guidance in the first quarter of fiscal 2019 using the retrospective transition method, which resulted in certain amounts in fiscal 2017 and 2018 being adjusted to conform to the new accounting guidance.
−Removed: In fiscal 2017, $ 2.0 billion was designated as collateral for outstanding letters of credit in connection with the then proposed acquisition of NXP Semiconductors N.V.
−Removed: During fiscal 2017, $ 1.3 billion of the amount held as collateral was invested in time deposits that were not considered cash equivalents, which subsequently matured.
−Removed: This resulted in an adjustment to investing activities for fiscal 2017 to reflect the $ 1.3 billion purchase and subsequent maturity of time deposits and a $ 2.0 billion reduction in investing activities to reflect removal of the activity of restricted cash and cash equivalents.
−Removed: In fiscal 2018, such restricted cash and cash equivalents were released from restriction, which resulted in a decrease in investing activities by such amount.
Income Taxes:
In October 2016, the FASB issued new accounting guidance that changes the accounting for the income tax effects of intra-entity transfers of assets other than inventory.
−Removed: Under the new accounting guidance, the selling (transferring) entity is required to recognize a current tax expense or benefit upon transfer of the asset.
−Removed: Similarly, the purchasing (receiving) entity is required to recognize a deferred tax asset or deferred tax liability, as well as the related deferred tax benefit or expense, upon receipt of the asset.
We adopted the new accounting guidance in the first quarter of fiscal 2019 using the modified retrospective transition method, with the cumulative effect of applying the new accounting guidance recognized as an adjustment to opening retained earnings of $ 2.6 billion, primarily as the result of establishing a deferred tax asset on the basis difference of certain intellectual property distributed from one of our foreign subsidiaries to a subsidiary in the United States in fiscal 2018.
−Removed: During 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 in such distributed intellectual property.
−Removed: Therefore, the related deferred tax asset was derecognized, resulting in a $ 2.5 billion charge to income tax expense in fiscal 2019 (Note 3).
−Removed: The ongoing impact of this accounting guidance will be dependent on the facts and circumstances of any transactions within its scope.
Cash Equivalents.
3 unchanged sentences
Marketable Securities.
−Removed: Marketable securities include marketable equity securities and available-for-sale debt securities for which classification is determined at the time of purchase and reevaluated at each balance sheet date.
−Removed: We classify marketable securities as current or noncurrent based on the nature of the securities and their availability for use in current operations.
−Removed: Marketable securities are stated at fair value with all realized and unrealized gains and losses on investments in marketable equity securities and realized gains and losses on available-for-sale debt securities recognized in investment and
+Added: Marketable securities include marketable equity securities, available-for-sale debt securities and, from time-to-time, certain time deposits.
+Added: We classify marketable securities as current or noncurrent based on the nature of the
QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: other income, net.
+Added: securities and their availability for use in current operations.
+Added: Marketable securities are stated at fair value with all realized and unrealized gains and losses on investments in marketable equity securities and realized gains and losses on available-for-sale debt securities recognized in investment and other income, net.
Net unrealized gains or losses on available-for-sale debt securities are recorded as a component of accumulated other comprehensive income, net of income taxes.
The realized gains and losses on marketable securities are determined using the specific identification method.
+Added: Debt securities are classified as available for sale or held to maturity at the time of purchase and reevaluated at each balance sheet date.
At each balance sheet date, we assess available-for-sale debt securities in an unrealized loss position to determine whether the unrealized loss is other than temporary.
13 unchanged sentences
Our share of gains and losses in equity method investments are recorded in investment and other income, net.
+Added: We eliminate unrealized profit or loss related to transactions with equity method investees in relation to our ownership interest in the investee, which is recorded as a component of equity in net losses in investees in investment and other income, net.
Non-marketable equity investments (for which we do not have significant influence or control) are investments without readily determinable fair values that are recorded 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.
2 unchanged sentences
For equity method investments, we record impairment losses in earnings only when impairments are considered other-than-temporary.
−Removed: Our primary objectives for holding derivative instruments are to manage interest rate risk on our long-term debt and to manage foreign exchange risk for certain foreign currency revenues, operating expenses, receivables and payables.
+Added: Our primary objectives for holding derivative instruments are to manage foreign exchange risk for certain foreign currency revenues, operating expenses, receivables and payables and to manage interest rate risk on our long-term debt.
Derivative instruments are recorded at fair value and included in other current or noncurrent assets or other current or noncurrent liabilities based on their maturity dates.
Counterparties to our derivative instruments are all major banking institutions.
−Removed: Interest Rate Swaps:
−Removed: We manage our exposure to certain interest rate risks related to our long-term debt through the use of interest rate swaps.
−Removed: Such swaps allow us to effectively convert fixed-rate payments into floating-rate payments based on LIBOR.
−Removed: These transactions are designated as fair value hedges, and the gains and losses related to changes in the fair value of the interest rate swaps substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to changes in the market interest rates.
−Removed: The net gains and losses on the interest rate swaps, as well as the offsetting gains or losses on the related fixed-rate debt attributable to the hedged risks, are recognized in earnings as interest expense in the current period.
−Removed: The interest settlement payments associated with the interest rate swap agreements are classified as cash flows from operating activities in the consolidated statements of cash flows.
−Removed: At September 29, 2019 and September 30, 2018 , the aggregate fair value of our interest rate swaps related to our long-term debt issued in May 2015 was negligible and $ 50 million , respectively.
−Removed: The fair values of the swaps were recorded in other current liabilities and other noncurrent assets at September 29, 2019 and in other noncurrent liabilities at September 30, 2018 .
−Removed: At September 29, 2019 and September 30, 2018 , the swaps had an aggregate notional amount of $ 1.8 billion , which effectively converted approximately 43 % and 50 % of the fixed-rate debt due in 2020 and 2022, respectively, into floating-rate debt, with maturities matching our fixed-rate debt due in 2020 and 2022.
Foreign Currency Hedges:
We manage our exposure to foreign exchange market risks, when deemed appropriate, through the use of derivative instruments, including foreign currency forward and option contracts with financial counterparties, that may or may not be designated as hedging instruments.
−Removed: These derivative instruments have maturity dates of less than twelve months .
−Removed: Gains and losses arising from such contracts that are designated as cash flow hedging instruments
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: are recorded as a component of accumulated other comprehensive income as gains and losses on derivative instruments, net of income taxes.
+Added: At September 27, 2020, these derivative instruments have maturity dates of less than twelve months.
+Added: Gains and losses arising from such contracts that are designated as cash flow hedging instruments are recorded as a component of accumulated other comprehensive income as gains and losses on derivative instruments, net of income taxes.
The hedging gains and losses in accumulated other comprehensive income are subsequently reclassified to revenues or costs and expenses, as applicable, in the consolidated statements of operations in the same period in which the underlying transactions affect our earnings.
The cash flows associated with derivative instruments designated as cash flow hedging instruments are classified as cash flows from operating activities in the consolidated statements of cash flows, which is the same category as the hedged transaction.
+Added: The fair values of our foreign currency forward and option contracts used to hedge foreign currency risk designated as cash flow hedges recorded in total assets and in total liabilities were $ 51 million and negligible, respectively, at September 27, 2020.
The fair values of our foreign currency forward and option contracts used to hedge foreign currency risk designated as cash flow hedges recorded in total assets were negligible at September 29, 2019.
−Removed: The fair values of our foreign currency forward and option contracts used to hedge foreign currency risk designated as cash flow hedges recorded in total assets and in total liabilities were negligible and $ 19 million , respectively, at September 30, 2018 .
For foreign currency forward and option contracts not designated as hedging instruments, the changes in fair value are recorded in investment and other income, net in the period of change.
1 unchanged sentence
The fair values of our foreign currency forward and option contracts not designated as hedging instruments were negligible at September 27, 2020 and September 29, 2019.
+Added: Interest Rate Swaps:
+Added: From time to time, we manage our exposure to certain interest rate risks related to our long-term debt through the use of interest rate swaps.
+Added: Such swaps allow us to effectively convert fixed-rate payments into floating-rate payments based on LIBOR.
+Added: These transactions are designated as fair value hedges, and the gains and losses related to
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: changes in the fair value of the interest rate swaps substantially offset changes in the fair value of the hedged portion of the underlying debt that are attributable to changes in the market interest rates.
+Added: The net gains and losses on the interest rate swaps, as well as the offsetting gains or losses on the related fixed-rate debt attributable to the hedged risks, are recognized in earnings as interest expense in the current period.
+Added: The interest settlement payments associated with the interest rate swap agreements are classified as cash flows from operating activities in the consolidated statements of cash flows.
+Added: During fiscal 2020, our remaining interest rate swaps related to certain of our May 2015 Notes were terminated.
+Added: The aggregate fair value of our interest rate swaps related to long-term debt was negligible at September 29, 2019.
Gross Notional Amounts:
−Removed: The gross notional amounts of our interest rate and foreign currency derivatives by instrument type were as follows (in millions):
+Added: The gross notional amounts of our foreign currency and interest rate derivatives by instrument type were as follows (in millions):
September 27,
2020 September 29,
+Added: Forwards $ 1,096 $ 878
+Added: Options 789 176
+Added: Swaps — 1,750
+Added: $ 1,885 $ 2,804
The gross notional amounts of our derivatives by currency were as follows (in millions):
2 unchanged sentences
Chinese renminbi $ 1,058 $ 463
+Added: Indian rupee 595 440
+Added: Japanese yen 33 12
United States dollar 199 1,889
+Added: $ 1,885 $ 2,804
Other Hedging Activities.
−Removed: We have designated $ 1.4 billion of foreign currency-denominated liabilities related to the fines imposed by the European Commission (Note 7) as hedges of our net investment in certain foreign subsidiaries as of September 29, 2019 .
+Added: We have designated $ 1.4 billion of foreign currency-denominated liabilities, excluding accrued interest, related to the fines imposed by the European Commission (Note 7) as hedges of our net investment in certain foreign subsidiaries as of September 27, 2020 and September 29, 2019.
Gains and losses arising from the portion of these balances that are designated as net investment hedges are recorded in accumulated other comprehensive income as a component of the foreign currency translation adjustment.
7 unchanged sentences
• Level 2 includes financial instruments for which there are inputs other than quoted prices included within Level 1 that are observable for the instrument.
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
• Level 3 includes financial instruments for which fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including our own assumptions.
5 unchanged sentences
With the exception of auction rate securities, we obtain pricing information from quoted market prices, pricing vendors or quotes from brokers/dealers.
−Removed: We conduct reviews of our primary pricing vendors to determine whether the inputs used in the vendor’s pricing processes are deemed to be observable.
+Added: We conduct reviews of our primary pricing
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: vendors to determine whether the inputs used in the vendor’s pricing processes are deemed to be observable.
The fair value for interest-bearing securities includes accrued interest.
−Removed: The fair value of corporate bonds and notes and common and preferred stock is generally determined using standard observable inputs, including reported trades, quoted market prices, matrix pricing, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets and/or benchmark securities.
+Added: The fair value of U.S.
+Added: Treasury securities and government-related securities, corporate bonds and notes and common stock is generally determined using standard observable inputs, including reported trades, quoted market prices, matrix pricing, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets and/or benchmark securities.
+Added: The fair value of mortgage- and asset-backed securities is derived from the use of matrix pricing (prices for similar securities) or, in some cases, cash flow pricing models with observable inputs, such as contractual terms, maturity, credit rating and/or securitization structure to determine the timing and amount of future cash flows.
The fair value of auction rate securities is estimated using a discounted cash flow model that incorporates transaction details, such as contractual terms, maturity and timing and amount of future cash flows, as well as assumptions related to liquidity, default likelihood and recovery, the future state of the auction rate market and credit valuation adjustments of market participants.
−Removed: Though most of the securities we hold are pools of student loans guaranteed by the United States government, prepayment speeds and illiquidity discounts are considered significant unobservable inputs.
−Removed: These additional inputs are generally unobservable, and therefore, auction rate securities are included in Level 3.
+Added: Though most of the securities we hold are pools of student loans guaranteed by the United States government, prepayment speeds and illiquidity discounts are considered significant unobservable inputs, and therefore, auction rate securities are included in Level 3.
Derivative Instruments:
3 unchanged sentences
Other investments and other liabilities included in Level 1 are comprised of our deferred compensation plan liabilities and related assets, which consist of mutual funds and are included in other assets.
−Removed: Other investments and other liabilities included in Level 3 are comprised of convertible debt instruments issued by private companies and contingent consideration related to business combinations, respectively.
+Added: Gains and losses on the revaluation of our deferred compensation plan assets are recorded in investment and other income, net (Note 2) and are not allocated to our segments.
+Added: Corresponding offsetting amounts related to the revaluation of our deferred compensation plan liabilities are included in unallocated operating expenses (Note 8).
+Added: Other investments and other liabilities included in Level 3 are primarily comprised of convertible debt instruments issued by private companies.
The fair value of convertible debt instruments is estimated based on the estimated timing and amount of future cash flows, as well as assumptions related to liquidity, default likelihood and recovery.
−Removed: The fair value of contingent consideration related to business combinations is primarily estimated using either a real options or discounted cash flow model, which includes inputs, such as projected financial information, market volatility, discount rates and timing of contractual payments.
−Removed: The inputs we use to estimate the fair values of the convertible debt instruments and contingent consideration are generally unobservable, and therefore, they are included in Level 3.
−Removed: Allowances for Doubtful Accounts.
−Removed: We maintain allowances for doubtful accounts for estimated losses resulting from receivables that will not be collected.
−Removed: We determine the allowance based on customer credit-worthiness, historical payment experience, the age of outstanding receivables and collateral, to the extent applicable.
+Added: The inputs we use to estimate the fair values of the convertible debt instruments are generally unobservable, and therefore, they are included in Level 3.
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 and our own forecast of customer demand, among other things.
+Added: 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 and our own forecasts of customer demand, among other factors.
+Added: 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, development plans and other broader market conditions that may impact customer demand, such as the coronavirus (COVID-19) pandemic in fiscal 2020 that negatively impacted consumer demand for certain devices that incorporate our products.
+Added: 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.
+Added: 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.
+Added: Our assumptions of future product demand are inherently uncertain, and changes in our estimates and assumptions may cause us to record additional write-downs in the future if demand forecasted for specific products is greater than actual demand.
Property, Plant and Equipment.
4 unchanged sentences
Other property, plant and equipment have useful lives ranging from 2 to 25 years.
−Removed: Leased property meeting certain capital lease criteria is capitalized, and the net present value of the related lease payments is recorded as a liability.
−Removed: Amortization of assets under capital leases is recorded using the straight-line method over the shorter of the estimated useful lives or the lease terms.
Maintenance, repairs and minor renewals or betterments are charged to expense as incurred.
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Operating Leases.
+Added: As a result of the adoption of ASC 842, we revised our operating lease accounting policy beginning in fiscal 2020 as follows.
+Added: Operating lease assets and liabilities are recognized for leases with lease terms greater than 12 months based on the present value of the future lease payments over the lease term at the commencement date.
+Added: Operating leases are included in other assets, other current liabilities and other liabilities on our consolidated balance sheet.
+Added: Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such option.
+Added: We account for substantially all lease and related non-lease components together as a single lease component.
+Added: Operating lease expense is recognized on a straight-line basis over the lease term.
Goodwill and Other Intangible Assets.
1 unchanged sentence
Acquired intangible assets other than goodwill are amortized over their useful lives unless the lives are determined to be indefinite.
−Removed: For intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded values.
−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.
+Added: For intangible assets purchased in a business
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: combination, the estimated fair values of the assets received are used to establish their recorded values.
+Added: For intangible assets acquired in a nonmonetary 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.
Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value.
+Added: An estimate of fair value can be affected by many assumptions that require significant judgment.
+Added: 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.
+Added: 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.
Impairment of Goodwill, Other Indefinite-Lived Assets and Long-Lived Assets.
4 unchanged sentences
If the carrying value exceeds the fair value, the difference is recorded as an impairment.
+Added: Our judgments regarding the existence of impairment indicators and future cash flows related to goodwill and long-lived assets may be based on operational performance of our businesses, market conditions, expected selling price and/or other factors.
+Added: 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.
+Added: 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 and/or long-lived assets.
+Added: Furthermore, we cannot predict the occurrence of future impairment-triggering events nor the impact such events might have on our reported asset values.
+Added: Future events could cause us to conclude that impairment indicators exist, and that goodwill associated with our acquired businesses are impaired.
Long-lived assets, such as property, plant and equipment and intangible assets subject to amortization, are reviewed for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.
3 unchanged sentences
Revenue Recognition.
−Removed: As a result of the adoption of ASC 606, we revised our revenue recognition policy beginning in fiscal 2019 as follows.
We derive revenues principally from sales of integrated circuit products and licensing of our intellectual property.
8 unchanged sentences
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
+Added: We estimate and recognize sales-based royalties on such licensed products in the period in which the associated sales occur, considering all relevant information (historical, current and forecasted) that is reasonably available to us.
+Added: Our estimates of sales-based royalties are based largely on preliminary royalty estimates provided by our licensees and, to a lesser extent, an assessment of the volume of devices supplied into the market that incorporate or use our licensed intellectual property, combined with an estimate of the mix of such sales on a licensee-by-licensee basis, as well as the licensees’ average wholesale prices of such products.
+Added: We have recognized immaterial differences between preliminary royalty estimates provided to us by licensees and actual amounts reported and paid by licensees, which are generally received the following quarter, as licensees have not completed their royalty reporting process at the time estimates are provided to us, and in certain cases, they do not provide all necessary information in order for us to calculate an estimate of royalties due, which requires us to independently estimate certain information.
+Added: We also consider in our estimates of sales-based royalties any changes in pricing we plan or expect to make and certain constraints on our ability to estimate such royalties.
QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: 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.
+Added: 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.
License agreements that require payment of license fees contain a single performance obligation that represents ongoing access to a portfolio of intellectual property over the license term since such agreements provide the licensee the right to access a portfolio of intellectual property that exists at inception of the license agreement and to updates and new intellectual property that is added to the licensed portfolio during the term of the agreement that are highly interdependent or interrelated.
9 unchanged sentences
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.
+Added: In such cases, we estimate and recognize licensing revenues only when we have a contract, as defined in the revenue recognition guidance, which includes, among other items, evaluating whether our license agreements remain valid and enforceable and evaluating licensees’ conduct and whether they remain committed to perform their respective obligations.
+Added: We also estimate and recognize licensing revenues only to the extent it is probable that a significant reversal of cumulative revenues recognized will not occur, which includes, among other items, determining the expected impact, if any, to revenues of any license agreements that may be renegotiated and/or are newly entered into.
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 (Note 7).
−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 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.
+Added: These aforementioned estimates may require significant judgment.
We measure revenues (including our estimates of sales-based royalties) based on the amount of consideration we expect to receive in exchange for products or services.
3 unchanged sentences
Revenues recognized from sales of our products and sales-based royalties are generally included in accounts receivable, net (including unbilled receivables) based on our unconditional right to payment for satisfied or partially satisfied performance obligations.
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: We disaggregate our revenues by segment (Note 8) and type of product and services (as presented on our consolidated statement of operations), as we believe this best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors.
−Removed: Substantially all of QCT’s revenues consist of equipment revenues that are recognized at a point in time, and substantially all of QTL’s revenues represent licensing revenues that are recognized over time.
−Removed: Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were $ 4.1 billion for fiscal 2019 , and primarily related to licensing revenues of $ 4.7 billion recognized in the third quarter of fiscal 2019 (a portion of which was attributable to fiscal 2019) resulting from the settlement with Apple and its contract manufacturers, consisting of a payment from Apple and the release of certain of our obligations to pay Apple and the contract manufacturers customer-related liabilities.
−Removed: Unearned revenues (which are considered contract liabilities) consist primarily of license fees for intellectual property with continuing performance obligations.
−Removed: In fiscal 2019 , we recognized revenues of $ 481 million that were recorded as unearned revenues at October 1, 2018.
−Removed: Remaining performance obligations, substantially all of which are included in unearned revenues, represent the aggregate amount of the transaction price of certain customer contracts yet to be recognized as revenues as of the end of the reporting period and exclude revenues related to (a) contracts that have an original expected duration of one year or less and (b) sales-based royalties (i.e., future royalty revenues) pursuant to our license agreements.
−Removed: Our remaining performance obligations are primarily comprised of certain customer contracts for which QTL received license fees upfront.
−Removed: At September 29, 2019 , we had $ 1.7 billion of remaining performance obligations, of which $ 544 million , $ 453 million , $ 440 million , $ 196 million and $ 50 million is expected to be recognized as revenues for each of the subsequent five years from fiscal 2020 through 2024, respectively, and $ 27 million thereafter.
Concentrations.
A significant portion of our revenues are concentrated with a small number of customers/licensees of our QCT and QTL segments.
+Added: Revenues from four customers/licensees comprised 19 %, 12 %, 10 % and 10 % of total consolidated revenues in fiscal 2020.
Revenues from three customers/licensees comprised 15 %, 10 % and 24 % of total consolidated revenues in fiscal 2019 and 16 %, 11 % and 11 % in fiscal 2018.
−Removed: Revenues from two customers/licensees comprised 18 % and 17 % in fiscal 2017 .
−Removed: Revenues in 2018 and 2017 were negatively impacted by our prior dispute with Apple Inc.
−Removed: and its contract manufacturers (Hon Hai Precision Industry Co., Ltd./Foxconn, its affiliates and other suppliers to Apple).
−Removed: Revenues in fiscal 2019 were positively impacted by our settlement of such dispute in the third quarter of fiscal 2019.
+Added: Revenues in fiscal 2020 were positively impacted by the settlement of our prior dispute with Huawei (Note 8).
+Added: Revenues in fiscal 2018 were negatively impacted by our prior dispute with Apple and its contract manufacturers.
We rely on sole- or limited-source suppliers for some products, particularly products in the QCT segment, subjecting us to possible shortages of raw materials or manufacturing capacity.
−Removed: While we have established alternate suppliers for certain technologies that we consider critical, the loss of a supplier or the inability of a supplier to meet performance or quality specifications or delivery schedules could harm our ability to meet our delivery obligations and/or negatively impact our revenues, business operations and ability to compete for future business.
+Added: The loss of a supplier or the inability of a supplier to meet performance or quality specifications or delivery schedules could harm our ability to meet our delivery obligations and/or negatively impact our revenues, business operations and ability to compete for future business.
Shipping and Handling Costs.
3 unchanged sentences
Share-based compensation expense for equity-classified awards, principally related to restricted stock units (RSUs), is measured at the grant date, or at the acquisition date for awards assumed in business combinations, based on the estimated fair value of the award and is recognized over the employee’s requisite service period.
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The fair values of RSUs are estimated based on the fair market values of the underlying stock on the dates of grant or dates the RSUs are assumed.
−Removed: If RSUs do not have the right to participate in dividends, the fair values are discounted by the dividend yield.
Share-based compensation expense is adjusted to exclude amounts related to share-based awards that are expected to be forfeited.
6 unchanged sentences
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
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: 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.
+Added: 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.
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.
1 unchanged sentence
Accordingly, we cannot predict the outcome of these matters.
+Added: A broad range of remedies with respect to our business practices that are deemed to violate applicable laws are potentially available.
+Added: 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.
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.
2 unchanged sentences
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.
+Added: Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable.
Our legal costs associated with defending ourself are recorded to expense as incurred.
9 unchanged sentences
We classify all deferred tax assets and liabilities as noncurrent in the consolidated balance sheets.
−Removed: Our income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities.
+Added: Our income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service (IRS) and other tax authorities.
In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations.
5 unchanged sentences
We recognize excess tax benefits and shortfall tax detriments associated with share-based awards in the consolidated statements of operations, as a component of income tax expense, when realized.
+Added: 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.
+Added: In addition, the application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty.
+Added: 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.
+Added: 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.
+Added: 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
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: authorities in determining the adequacy of our provision for income taxes.
+Added: Therefore, the actual liability for U.S.
+Added: 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.
+Added: 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.
+Added: A benefit of participation in this program is that post-filing adjustments by the IRS are less likely to occur.
Earnings (Loss) Per Common Share.
−Removed: Basic earnings (loss) per common share is computed by dividing net income (loss) attributable to Qualcomm by the weighted-average number of common shares outstanding during the reporting period.
−Removed: Diluted earnings per common share is computed by dividing net income attributable to Qualcomm by the combination of dilutive common share equivalents, comprised of shares issuable under our share-based compensation plans and shares subject to accelerated share repurchase agreements, if any, and the weighted-average number of common shares outstanding during the reporting period.
−Removed: The accelerated share repurchase agreements were entered into in fiscal 2018 (Note 4) and, due to the net loss in fiscal 2018, all of the common share equivalents issuable under share-based compensation plans had an anti-dilutive effect and were therefore excluded from the computation of diluted loss per share.
+Added: Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the reporting period.
+Added: Diluted earnings per common share is computed by dividing net income by the combination of the weighted-average number of dilutive common share equivalents, comprised of shares issuable under our share-based compensation plans and shares subject to accelerated share repurchase agreements, if any, and the weighted-average number of common shares outstanding during the reporting period.
+Added: Due to the net loss in fiscal 2018, all of the common share equivalents issuable under share-based compensation plans and the accelerated share repurchase agreements we entered into in fiscal 2018 had an anti-dilutive effect and were therefore excluded from the computation of diluted loss per share.
The following table provides information about the diluted earnings per share calculation (in millions):
+Added: 2020 2019 2018
Dilutive common share equivalents included in diluted shares 14 10 —
Shares of common stock equivalents not included because the effect would be anti-dilutive or certain performance conditions were not satisfied at the end of the period 1 8 51
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Recent Accounting Pronouncements Not Yet Adopted.
−Removed: In February 2016, the FASB issued new accounting guidance related to leases that outlines a comprehensive lease accounting model and supersedes the current lease accounting guidance.
−Removed: The new accounting guidance requires lessees to recognize right-of-use assets and corresponding lease liabilities on the balance sheet for leases with a lease term of greater than 12 months.
−Removed: It also changes the definition of a lease and expands the disclosure requirements of lease arrangements.
−Removed: We will adopt the new accounting guidance in the first quarter of fiscal 2020 using the modified retrospective approach and will not restate comparative periods.
−Removed: In addition, we will elect certain practical expedients.
−Removed: We do not expect finance leases to be material at the time of adoption.
−Removed: We currently expect to record lease assets and liabilities of approximately $ 400 million to $ 500 million on our consolidated balance sheet upon adoption.
−Removed: We do no t expect the adoption of the new accounting guidance will have a material impact on our consolidated statements of operations or consolidated statements of cash flows.
Financial Assets:
In June 2016, the FASB issued new accounting guidance that changes the accounting for recognizing impairments of financial assets.
−Removed: Under the new accounting guidance, credit losses for financial assets held at amortized cost will be estimated based on expected losses rather than the current incurred loss impairment model.
−Removed: The new accounting guidance also modifies the impairment model for available-for-sale debt securities.
+Added: Under the new accounting guidance, credit losses for financial assets held at amortized cost (such as accounts receivable) will be estimated based on expected losses rather than the current incurred loss impairment model.
+Added: Our historical credit losses for accounts receivable have been immaterial.
+Added: The new accounting guidance also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities.
+Added: These changes will result in earlier recognition of credit losses, if any.
The new accounting guidance generally requires the modified retrospective transition method, with the cumulative effect of applying the new accounting guidance recognized as an adjustment to opening retained earnings in the year of adoption, except for certain financial assets where the prospective transition method is required, such as available-for-sale debt securities for which an other-than-temporary impairment has been recorded.
−Removed: We will adopt the new accounting guidance in the first quarter of fiscal 2021, and the impact of this new accounting guidance will largely depend on the composition and credit quality of our investment portfolio, as well as economic conditions at the time of adoption.
+Added: We will adopt the new accounting guidance in the first quarter of fiscal 2021.
+Added: We do not expect this new accounting guidance will have a material impact to our consolidated financial statements at adoption.
+Added: The future impact of such accounting guidance will largely depend on the future composition and credit quality of our investment portfolio and accounts receivable, as well as future economic conditions.
Composition of Certain Financial Statement Items
2 unchanged sentences
2020 September 29,
−Removed: Trade, net of allowances for doubtful accounts of $47 and $56, respectively
−Removed: Unbilled receivables
−Removed: The increase in unbilled receivables was primarily due to the adoption of new revenue recognition guidance in fiscal 2019 (Note 1).
−Removed: Accounts receivable, trade at September 30, 2018 included approximately $ 960 million related to the short payment in the second quarter of fiscal 2017 of royalties reported by and deemed collectible from Apple’s contract manufacturers.
−Removed: This same amount was recorded in customer-related liabilities (in other current liabilities) for Apple, since we did not have the contractual right to offset these amounts.
−Removed: In the third quarter of fiscal 2019, we entered into settlement agreements with Apple and its contract manufacturers to dismiss all outstanding litigation between the parties, and as a result, these amounts, as well as others, were settled.
+Added: Trade, net of allowances for doubtful accounts $ 2,687 $ 1,046
+Added: Unbilled 1,305 1,411
+Added: $ 4,003 $ 2,471
+Added: Accounts receivable at September 27, 2020 included $ 1.3 billion, excluding the impact of foreign withholding taxes, from Huawei related to the remaining amounts due under the settlement agreement and estimated royalties for sales made in the September 2020 quarter.
+Added: In July 2020, we entered into a settlement agreement with Huawei to resolve our prior dispute related to the license agreement that expired on December 31, 2019.
+Added: We also entered into a new long-term, global patent license agreement that applies to sales of certain wireless products by Huawei beginning on January 1, 2020.
+Added: Amounts due under the settlement agreement are to be paid in installments by the end of June 2021 in accordance with an agreed upon payment schedule.
+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 under the new global patent license agreement.
+Added: Significant evaluation and judgment were required in determining the appropriate accounting for the settlement agreement and new global patent license agreement with Huawei.
+Added: We considered, among other items, Huawei’s commitment to perform under such agreements (including Huawei’s intent and ability to pay amounts due), Huawei’s performance to date under the agreements (including timely payments made), Huawei’s current and projected financial condition (including the
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: impact of enacted national security protection policies by the U.S.
+Added: government on Huawei’s business) and certain contractual protections that we obtained under these agreements.
+Added: Based on this evaluation, we concluded that the revenue recognition criteria were met, and we recorded revenues of $ 1.8 billion in the fourth quarter of fiscal 2020 related to the full amount due from Huawei under the settlement agreement and amounts paid for the March 2020 and June 2020 quarters under the new global patent license agreement.
+Added: In addition, QTL results for the fourth quarter of fiscal 2020 included estimated royalties due from Huawei for sales made in the September 2020 quarter under the new global patent license agreement.
+Added: Although we believe that the judgments supporting our assessment are reasonable based on facts and factors currently known, our judgments, including those discussed in the preceding paragraph, as it relates to future events are inherently uncertain and actual results and outcomes may differ from the results and outcomes currently anticipated.
Inventories (in millions)
4 unchanged sentences
Finished goods 1,349 656
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: $ 2,598 $ 1,400
Property, Plant and Equipment (in millions)
1 unchanged sentence
2020 September 29,
+Added: Land $ 173 $ 170
Buildings and improvements 1,606 1,546
5 unchanged sentences
Less accumulated depreciation and amortization ( 5,134 ) ( 4,567 )
+Added: $ 3,711 $ 3,081
Depreciation and amortization expense related to property, plant and equipment for fiscal 2020, 2019 and 2018 was $ 772 million, $ 674 million and $ 776 million, respectively.
Goodwill and Other Intangible Assets.
−Removed: We allocate goodwill to our reporting units for annual impairment testing purposes.
+Added: We allocate goodwill to our reporting units for impairment testing purposes.
The following table presents the goodwill allocated to our reportable and nonreportable segments, as described in Note 8, as well as the changes in the carrying amounts of goodwill during fiscal 2020 and 2019 (in millions):
−Removed: Nonreportable Segments
+Added: QCT QTL Nonreportable Segments Total
Balance at September 30, 2018 $ 5,587 $ 718 $ 193 $ 6,498
+Added: Acquisitions 18 — — 18
Impairments (Note 9) — — ( 146 ) ( 146 )
+Added: Other (1) ( 40 ) ( 1 ) ( 47 ) ( 88 )
Balance at September 29, 2019 (2) 5,565 717 — 6,282
−Removed: Impairments (Note 10)
+Added: Other (1) 40 1 — 41
Balance at September 27, 2020 (2) $ 5,605 $ 718 $ — $ 6,323
−Removed: Includes changes in goodwill amounts resulting from the sale of our mobile health nonreportable segment in fiscal 2019, foreign currency translation and purchase accounting adjustments.
−Removed: Cumulative goodwill impairments were $ 812 million and $ 666 million at September 29, 2019 and September 30, 2018 , respectively.
+Added: (1) In fiscal 2020, changes in goodwill resulted from certain foreign currency translation adjustments.
+Added: In fiscal 2019, changes in goodwill amounts resulted from the sale of our mobile health nonreportable segment, foreign currency translation and purchase accounting adjustments.
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: (2) Cumulative goodwill impairments were $ 812 million at both September 27, 2020 and September 29, 2019.
The components of other intangible assets, net were as follows (in millions):
−Removed: September 29, 2019
−Removed: September 30, 2018
−Removed: Gross Carrying
−Removed: Weighted-average amortization period
+Added: September 27, 2020 September 29, 2019
Gross Carrying
−Removed: Weighted-average amortization period
+Added: Amount Accumulated
+Added: Amortization Weighted-average amortization period
+Added: (years) Gross Carrying
+Added: Amount Accumulated
+Added: Amortization Weighted-average amortization period
Technology-based $ 5,556 $ ( 3,958 ) 11 $ 5,958 $ ( 3,851 ) 10
+Added: Other 105 ( 50 ) 9 134 ( 69 ) 9
+Added: $ 5,661 $ ( 4,008 ) 11 $ 6,092 $ ( 3,920 ) 10
All of these intangible assets are subject to amortization and the amortization expense related to these intangible assets was $ 621 million, $ 727 million and $ 785 million for fiscal 2020, 2019 and 2018, respectively.
Amortization expense related to these intangible assets is expected to be $ 519 million, $ 422 million, $ 295 million, $ 136 million and $ 111 million for each of the five years from fiscal 2021 through 2025, respectively, and $ 170 million thereafter.
−Removed: At September 29, 2019 and September 30, 2018 , all acquired in-process research and development projects were completed and are being amortized over
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: their useful lives.
+Added: At September 27, 2020 and September 29, 2019, all acquired in-process research and development projects were completed and are being amortized over their useful lives.
Equity Method and Non-marketable Equity Investments.
4 unchanged sentences
Non-marketable equity investments 821 787
−Removed: Transactions with equity method investees are considered related party transactions.
−Removed: Revenues from certain services contracts were $ 152 million and $ 100 million with one of our equity method investees in fiscal 2019 and 2018, respectively, and revenues from certain license and services contracts were $ 165 million with two of our equity method investees in fiscal 2017.
−Removed: We eliminate unrealized profit or loss related to such transactions in relation to our ownership interest in the investee, which is recorded as a component of equity in net losses in investees in investment and other income, net.
−Removed: At September 29, 2019 and September 30, 2018, we had no accounts receivable from these equity method investees.
−Removed: During fiscal 2019, non-marketable debt and equity securities (non-cash consideration) with an aggregate estimated fair value of $ 98 million were received related to a development contract with one of our equity method investees, which was recognized as revenues in fiscal 2019.
−Removed: In addition, during fiscal 2019, non-marketable equity securities (non-cash consideration) with an estimated fair value of $ 53 million were received in connection with the sale of certain assets as part of the Cost Plan (Note 10).
+Added: $ 982 $ 1,130
+Added: Beginning in the second quarter of fiscal 2020, the rapid, global spread of COVID-19 and associated containment and mitigation measures have negatively impacted the condition of economies and financial markets globally, which has negatively impacted certain companies in which we hold non-marketable equity investments, including those accounted for under the equity method and, to a lesser extent, non-marketable debt securities.
+Added: Since the second quarter of fiscal 2020, significant evaluation and judgments were required in determining if the negative effects of COVID-19 indicated that such investments were impaired, and if so, the extent of such impairment.
+Added: This included, among other items:
+Added: (i) assessing the business impacts that COVID-19 had, and we currently expect to have in the future, on our investees, including taking into consideration the investee’s industry and geographic location and the impact to its customers, suppliers and employees, as applicable, (ii) evaluating the investees’ ability to respond to the impacts of COVID-19, including any significant deterioration in the investee’s financial condition and cash flows, as well as assessing liquidity and/or going concern risks and (iii) considering any appreciation in fair value that has not been recognized in the carrying values of such investments.
+Added: Based on this evaluation, certain of our investments were impaired and written down to their estimated fair values in fiscal 2020 (a significant portion of which related to the full impairment of our investment in OneWeb, who filed for bankruptcy in the second quarter of fiscal 2020).
+Added: Although we believe that our judgments supporting our impairment assessments are reasonable (which rely on information reasonably available to us), the COVID-19 pandemic makes it challenging for us and our investees to estimate the future performance of our investees’ businesses.
+Added: As circumstances change and/or new information becomes available, we may be required to record additional impairments in subsequent periods.
+Added: Revenues from certain services contracts with OneWeb were $ 36 million, $ 152 million and $ 100 million in fiscal 2020, 2019 and 2018, respectively.
+Added: During fiscal 2019, non-marketable debt and equity securities (non-cash consideration) with an aggregate estimated fair value of $ 98 million were received related to a development contract with OneWeb that was recognized as revenues in fiscal 2019.
+Added: In addition, during fiscal 2019, non-marketable equity securities (non-cash consideration) with an estimated fair value of $ 53 million were received in connection with the sale of certain assets as part of the Cost Plan that concluded in fiscal 2019.
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other Current Liabilities (in millions)
4 unchanged sentences
Income taxes payable 549 480
−Removed: RF360 Holdings Put and Call Option (Note 9)
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Other 546 470
+Added: $ 4,303 $ 3,458
Accumulated Other Comprehensive Income.
Changes in the components of accumulated other comprehensive income, net of income taxes, in stockholders’ equity during fiscal 2020 were as follows (in millions):
−Removed: Foreign Currency Translation Adjustment
−Removed: Noncredit Other-than-Temporary Impairment Losses and Subsequent Changes in Fair Value for Certain Available-for-Sale Debt Securities
−Removed: Net Unrealized Gains (Losses) on Other Available-for-Sale Securities
−Removed: Net Unrealized Gain (Loss) on Derivative Instruments
−Removed: Other Gains (Losses)
−Removed: Total Accumulated Other Comprehensive Income
+Added: Foreign Currency Translation Adjustment Noncredit Other-than-Temporary Impairment Losses and Subsequent Changes in Fair Value for Certain Available-for-Sale Debt Securities Net Unrealized Gains (Losses) on Other Available-for-Sale Debt Securities Net Unrealized Gain (Loss) on Derivative Instruments Other Gains (Losses) Total Accumulated Other Comprehensive Income
Balance at September 29, 2019 $ ( 99 ) $ 23 $ 186 $ 8 $ ( 18 ) $ 100
−Removed: Other comprehensive (loss) income before reclassifications
+Added: Other comprehensive income before reclassifications 60 — 22 29 7 118
Reclassifications from accumulated other comprehensive income 7 — ( 2 ) ( 16 ) — ( 11 )
−Removed: Other comprehensive (loss) income
+Added: Other comprehensive income 67 — 20 13 7 107
Balance at September 27, 2020 $ ( 32 ) $ 23 $ 206 $ 21 $ ( 11 ) $ 207
−Removed: Reclassifications from accumulated other comprehensive income included adjustments of $ 51 million to the opening retained earnings balance as a result of the adoption of new accounting guidance in the first quarter of fiscal 2019 related to financial instruments and hedge instruments (Note 1).
−Removed: Reclassifications from accumulated other comprehensive income (excluding adjustments to opening retained earnings) related to available-for-sale securities were negligible during fiscal 2019 and 2018 .
−Removed: Reclassifications from accumulated other comprehensive income related to available-for-sale securities were $ 201 million during fiscal 2017 and were recorded in investment and other income, net.
−Removed: Reclassifications from accumulated other comprehensive income related to foreign currency translation adjustments and derivative instruments were negligible for all periods presented.
+Added: Reclassifications from accumulated other comprehensive income related to derivative instruments were $ 16 million during fiscal 2020 and negligible for all other periods presented, and were recorded in revenues, cost of revenues, research and development expenses and selling, general and administrative expenses.
+Added: Reclassifications from accumulated other comprehensive income in fiscal 2019 included adjustments of $ 51 million to the opening retained earnings balance as a result of the adoption of new accounting guidance in 2019 related to financial instruments and hedge instruments.
+Added: Other reclassifications from accumulated other comprehensive income related to available-for-sale securities and foreign currency translation adjustments were negligible for all periods presented.
+Added: We disaggregate our revenues by segment (Note 8), by type of product and services (as presented on our consolidated statement of operations) and, for our QCT segment by revenue stream, which is based on industry segment or application in which our products are sold (as presented below).
+Added: In certain cases, the determination of QCT revenues by industry segment or application requires the use of certain assumptions.
+Added: Substantially all of QCT’s revenues consist of equipment revenues that are recognized at a point in time, and substantially all of QTL’s revenues represent licensing revenues that are recognized over time and are principally from royalties generated through our licensees’ sales of mobile handsets.
+Added: QCT revenue streams were as follows (in millions):
+Added: Handsets $ 10,461 $ 9,793
+Added: RFFE (1) 2,362 1,478
+Added: Automotive 644 640
+Added: IoT (2) 3,026 2,728
+Added: Total QCT revenues $ 16,493 $ 14,639
+Added: (1) Includes all revenues from sales of RFFE integrated circuit products (substantially all of which are used in handsets).
+Added: (2) Internet of Things (IoT) revenues primarily include products sold for use in cellular and non-cellular connected devices within the following industry segments or applications:
+Added: consumer, computing, industrial, fixed wireless broadband, voice and music and wireless networking.
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were $ 1.5 billion for fiscal 2020, and primarily related to licensing revenues recognized in the fourth quarter of fiscal 2020 (a portion of which was attributable to fiscal 2020) resulting from the settlement with Huawei, and to a lesser extent, QTL royalty revenues recognized related to devices sold in prior periods (including adjustments to prior period royalty estimates, in part based on actual reporting of royalties by our licensees) and certain QCT customer incentives.
+Added: Revenues recognized from performance obligations satisfied (or partially satisfied) in previous periods were $ 4.1 billion for fiscal 2019 and primarily related to licensing revenues recognized in the third quarter of fiscal 2019 (a portion of which was attributable to fiscal 2019) resulting from the settlement with Apple and its contract manufacturers in April 2019.
+Added: Unearned revenues (which are considered contract liabilities) consist primarily of license fees for intellectual property with continuing performance obligations.
+Added: In fiscal 2020 and fiscal 2019, we recognized revenues of $ 540 million and $ 481 million, respectively, that were recorded as unearned revenues at September 29, 2019 and October 1, 2018, respectively.
+Added: Remaining performance obligations, substantially all of which are included in unearned revenues, represent the aggregate amount of the transaction price of certain customer contracts yet to be recognized as revenues as of the end of the reporting period and exclude revenues related to (a) contracts that have an original expected duration of one year or less and (b) sales-based royalties (i.e., future royalty revenues) pursuant to our license agreements.
+Added: Our remaining performance obligations are primarily comprised of certain customer contracts for which QTL received license fees upfront.
+Added: At September 27, 2020, we had $ 1.4 billion of remaining performance obligations, of which $ 581 million, $ 493 million, $ 234 million, $ 64 million and $ 26 million is expected to be recognized as revenues for each of the subsequent five years from fiscal 2021 through 2025, respectively, with no amounts expected thereafter.
Share-based Compensation Expense.
Total share-based compensation expense, related to all of our share-based awards, was comprised as follows (in millions):
+Added: 2020 2019 2018
Cost of revenues $ 34 $ 35 $ 38
3 unchanged sentences
Related income tax benefit ( 238 ) ( 184 ) ( 140 )
+Added: $ 974 $ 853 $ 743
Other Income, Costs and Expenses.
−Removed: Other expenses in fiscal 2019 consisted of a $ 275 million charge for the fine imposed by the European Commission (EC) related to the Icera complaint (2019 EC fine) (Note 7) and $ 213 million in net restructuring and restructuring-related charges related to our Cost Plan (Note 10), partially offset by a $ 43 million gain due to the partial recovery of a fine we previously paid to the Korea Fair Trade Commission (KFTC) and a $ 31 million gain related to a favorable legal settlement.
−Removed: Other expenses in fiscal 2018 consisted of a $ 2.0 billion charge related to a fee paid in connection with the termination of our purchase agreement to acquire NXP, a $ 1.2 billion charge for the fine imposed by the EC related to an investigation (2018 EC fine) (Note 7) and $ 629 million in restructuring and restructuring-related charges related to our Cost Plan, partially offset by a $ 676 million benefit related to the settlement of the Taiwan Fair Trade Commission (TFTC) investigation.
−Removed: Other expenses for fiscal 2017 consisted of a $ 927 million charge related to the a fine imposed by the KFTC (Note 7), including related foreign currency losses, a $ 778 million charge related to the TFTC fine and $ 37 million in restructuring and restructuring-related charges related to our Strategic Realignment Plan that was completed in fiscal 2017.
+Added: Other expenses in fiscal 2020 consisted of $ 28 million in gains related to a favorable legal settlement.
+Added: Other expenses in fiscal 2019 consisted of a $ 275 million charge related to a fine imposed by the European Commission (EC) related to the Icera complaint (2019 EC fine) (Note 7) and $ 213 million in net charges related to our Cost Plan that concluded in fiscal 2019, partially offset by a $ 43 million gain due to the partial recovery of a fine imposed in 2009 resulting from our appeal of the Korea Fair Trade Commission (KFTC) decision and a $ 31 million gain related to a favorable legal settlement.
+Added: Other expenses in fiscal 2018 consisted of a $ 2.0 billion charge related to a fee paid in connection with the termination of our purchase agreement to acquire NXP Semiconductors N.V., a $ 1.2 billion charge for the fine imposed by the EC related to an investigation (2018 EC fine) (Note 7) and $ 629 million in restructuring and restructuring-related charges related to our Cost Plan, partially offset by a $ 676 million benefit related to the settlement of the Taiwan Fair Trade Commission (TFTC) investigation.
+Added: Total restructuring and restructuring-related charges related to the Cost Plan were as follows (in millions):
+Added: 2019 2018 (1) Total
+Added: Restructuring-related charges (2) $ 151 $ 334 $ 485
+Added: Restructuring charges (3) 62 353 415
+Added: $ 213 $ 687 $ 900
+Added: (1) During fiscal 2018, we recorded restructuring and restructuring-related charges of $ 629 million in other expenses and charges of $ 58 million in investment and other income, net.
+Added: (2) Restructuring-related charges primarily related to asset impairment charges in fiscal 2019 and 2018 and also included a $ 52 million net gain in fiscal 2019 from the sale of certain assets related to wireless electric vehicle charging applications and the sale of our mobile health nonreportable segment, as well as a $ 41 million gain in fiscal 2018 resulting from fair value adjustments of certain contingent consideration related to a business combination.
+Added: (3) Restructuring charges primarily consisted of severance and consulting costs in fiscal 2019 and 2018, which were payable in cash .
QUALCOMM Incorporated
1 unchanged sentence
Investment and Other Income, Net (in millions)
+Added: 2020 2019 2018
Interest and dividend income $ 156 $ 300 $ 611
1 unchanged sentence
Net gains on other investments 108 68 83
−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
+Added: Impairment losses on other investments ( 405 ) ( 135 ) ( 75 )
+Added: Net gains (losses) on derivative instruments 8 ( 14 ) ( 27 )
Equity in net losses of investees ( 21 ) ( 93 ) ( 145 )
−Removed: Net gains (losses) on foreign currency transactions
−Removed: Net gains on marketable securities included realized gains and losses of available-for-sale debt securities.
−Removed: During fiscal 2019 and 2018 , gross realized gains or losses on sales of available-for-sale debt securities were negligible.
−Removed: During fiscal 2017 , gross realized gains and losses on sales of available-for-sale debt securities were $ 361 million and $ 98 million , respectively.
+Added: Net (losses) gains on foreign currency transactions ( 25 ) 11 37
+Added: $ 66 $ 441 $ 539
The components of the income tax provision were as follows (in millions):
+Added: 2020 2019 2018
Current provision (benefit):
+Added: Federal $ 210 $ 1,563 $ 2,559
+Added: State 1 2 ( 1 )
+Added: Foreign 526 ( 407 ) 777
+Added: 737 1,158 3,335
Deferred provision (benefit):
+Added: Federal ( 192 ) 2,037 1,846
+Added: Foreign ( 26 ) ( 117 ) 174
+Added: ( 216 ) 1,937 2,021
+Added: $ 521 $ 3,095 $ 5,356
The foreign component of the income tax provision (benefit) included foreign withholding taxes on royalty revenues included in U.S.
1 unchanged sentence
and foreign jurisdictions were as follows (in millions):
+Added: 2020 2019 2018
United States $ 5,004 $ 7,042 $ ( 1,834 )
+Added: Foreign 715 439 2,226
+Added: $ 5,719 $ 7,481 $ 392
+Added: In fiscal 2018, the foreign component of income before income taxes in foreign jurisdictions primarily consisted of income earned in Singapore.
QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: In fiscal 2018 and 2017, the foreign component of income before income taxes in foreign jurisdictions consisted primarily of income earned in Singapore.
−Removed: The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision (in millions):
+Added: The following is a reconciliation of the expected statutory federal income tax provision to our actual income tax provision (in millions, except percentages):
+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 research and development tax credits ( 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 research and development tax credits
−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 assets related to NXP termination fee
−Removed: Remeasurement of deferred taxes due to changes in statutory rate due to U.S.
−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: tax reform — — 5,236
+Added: Valuation allowance on deferred tax assets 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
+Added: $ 521 $ 3,095 $ 5,356
+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 %.
−Removed: As a result of the Tax Legislation, in fiscal 2019, several of our foreign subsidiaries made tax elections to be treated as U.S.
+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.
+Added: As a result of the Tax Legislation, in fiscal 2019, several of our foreign subsidiaries made elections to be treated as U.S.
branches for federal income tax purposes (commonly referred to as “check-the-box” elections) effective beginning in fiscal 2018 and 2019.
−Removed: Although beginning in fiscal 2019 the income of these entities will be included in our consolidated U.S.
+Added: Although beginning in fiscal 2019 the income of these entities is included in our consolidated U.S.
tax return, we believe that by treating these foreign subsidiaries as U.S.
−Removed: branches for federal income taxes, rather than controlled foreign corporations, we will significantly reduce the risk of being subject to GILTI and BEAT taxes.
+Added: branches for federal income taxes, rather than controlled foreign corporations, we will significantly reduce the risk of being subject to GILTI (global intangible low-taxed income) and BEAT (base-erosion and anti-abuse tax) taxes.
As a result of making these check-the-box elections, we recorded a tax benefit of $ 570 million in the first quarter of fiscal 2019 due to establishing new U.S.
4 unchanged sentences
federal tax basis of the distributed intellectual property.
−Removed: Upon adoption of new accounting guidance in the first quarter of fiscal 2019, we recorded a deferred tax asset of approximately $ 2.6 billion primarily related to the distributed intellectual property, with an adjustment to opening retained earnings (Note 1).
−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
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: received by a U.S.
+Added: Upon adoption of new accounting guidance in the first quarter of fiscal 2019, which changed the accounting for the income tax effects of intra-entity transfers of assets other than inventory, we recorded a deferred tax asset of approximately $ 2.6 billion primarily related to the distributed intellectual property, with an adjustment to opening retained earnings.
+Added: 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.
stockholder from a foreign corporation.
1 unchanged sentence
Therefore, the related deferred tax asset was derecognized, resulting in a $ 2.5 billion charge to income tax expense in fiscal 2019.
−Removed: In the fourth quarter of fiscal 2019, as a result of recent court rulings in Korea, among other factors, we decided to apply for a partial refund claim for taxes previously withheld from licensees in Korea on payments due under their license agreements to which we have claimed a foreign tax credit in the United States.
−Removed: As a result, we established a noncurrent income taxes receivable of $ 1.4 billion (recorded in other assets and included as foreign current benefit in the components of the income tax provision) and a noncurrent liability for uncertain tax benefits of $ 1.4 billion (recorded in other liabilities and included as federal current provision in the components of the income tax provision).
−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 2019, as a result of recent court rulings in Korea, among other factors, we decided to apply for a partial refund claim for taxes previously withheld from licensees in Korea on payments due under their license agreements to which we
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: have claimed a foreign tax credit in the United States.
+Added: As a result, $ 1.6 billion and $ 1.4 billion was recorded as a noncurrent income taxes receivable (recorded in other assets) at September 27, 2020 and September 29, 2019, respectively, and $ 1.6 billion and $ 1.4 billion was recorded a noncurrent liability for uncertain tax benefits of (recorded in other liabilities) at September 27, 2020 and September 29, 2019, respectively.
+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 recorded 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 tax positions due to Tax Legislation.
−Removed: After application of certain tax credits, the total cash payment is expected to be $ 2.5 billion .
−Removed: The first payment was made on January 15, 2019.
−Removed: At September 29, 2019, we estimated remaining future payments of $ 2.3 billion for the Toll Charge, after application of certain tax credits (including excess tax credits generated in fiscal 2019), which is payable in installments over the next seven years.
−Removed: At September 29, 2019, $ 209 million was included in other current liabilities, reflecting the next installment due in January 2020.
−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 reflected an 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.
+Added: After application of certain tax credits, the total cash payment is $ 2.5 billion.
+Added: At September 27, 2020, we estimated remaining future payments of $ 2.0 billion for the Toll Charge, after application of certain tax credits (including excess tax credits generated in fiscal 2019), which is payable in installments over the next six years.
+Added: At September 27, 2020, $ 174 million was recorded in other current liabilities, reflecting the next installment due in January 2021.
+Added: Income tax expense for fiscal 2018 was also impacted by the charge recorded in 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.
+Added: Fiscal 2018 income tax expense was impacted by the EC fine and settlement with the TFTC, which were not deductible for tax purposes (or taxable in the case of the settlement) and which were attributable to foreign jurisdictions and to the United States.
+Added: Certain of our tax incentives in Singapore expired in March 2017.
+Added: In 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.
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.
1 unchanged sentence
subsidiary reducing the benefit of these tax incentives almost entirely going forward.
−Removed: Without these tax incentives, our income tax expense would have been higher and impacted earnings (loss) per share attributable to Qualcomm as follows (in millions, except per share amounts):
−Removed: Additional income tax expense
−Removed: Reduction to diluted earnings (loss) per share
−Removed: We continue to assert that substantially all of our foreign earnings are not indefinitely reinvested.
−Removed: We recorded a charge of $ 8 million and $ 87 million to income tax expense in fiscal 2019 and 2018, respectively, related to outside basis differences that are not permanently reinvested.
−Removed: Income tax expense in fiscal 2018 reflected a one-time charge resulting from a change in our assertion as a result of the Tax Legislation, which eliminated certain material tax effects on the repatriation of cash to the United States.
+Added: Without these tax incentives, our income tax expense would have been higher in fiscal 2018 by $ 652 million and impacted earnings per share by $ 0.45 per share.
+Added: The impact in fiscal 2019 and 2020 was not significant.
+Added: We continue to assert that certain of our foreign earnings are not indefinitely reinvested.
At September 27, 2020, we had not recorded a deferred tax liability of approximately $ 66 million related to foreign withholding taxes on approximately $ 635 million of undistributed earnings of certain subsidiaries that we continue to consider to be indefinitely reinvested outside the United States.
−Removed: Should we decide to no longer indefinitely reinvest such
+Added: Should we decide to no longer indefinitely reinvest such earnings outside the United States, we would have to adjust the income tax provision in the period we make such determination.
QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: earnings outside the United States, we would have to adjust the income tax provision in the period we make such determination.
We had deferred tax assets and deferred tax liabilities as follows (in millions):
7 unchanged sentences
Share-based compensation 151 115
+Added: Operating lease liabilities 107 —
+Added: Other 141 144
Total gross deferred tax assets 3,595 3,203
3 unchanged sentences
Property, plant and equipment ( 162 ) ( 102 )
+Added: Operating lease assets ( 100 ) —
Unrealized gains on other investments and marketable securities ( 97 ) ( 99 )
−Removed: Accrued withholding taxes
−Removed: Accrued revenues
+Added: Other ( 32 ) ( 21 )
Total deferred tax liabilities ( 572 ) ( 438 )
2 unchanged sentences
Non-current deferred tax liabilities (1) ( 56 ) ( 103 )
+Added: $ 1,295 $ 1,093
(1) Non-current deferred tax liabilities were included in other liabilities in the consolidated balance sheets.
2 unchanged sentences
We do not expect our federal net operating loss carryforwards to expire unused.
−Removed: At September 29, 2019 , we have provided a valuation allowance on certain state tax credits, foreign deferred tax assets, federal capital losses, state net operating losses and federal foreign tax credits of $ 1.0 billion , $ 536 million , $ 83 million , $ 26 million and $ 20 million , respectively.
−Removed: The valuation allowances reflect the uncertainties surrounding our ability to generate sufficient future taxable income in certain foreign and state tax jurisdictions to utilize our net operating losses and our ability to generate sufficient capital gains to utilize all capital losses.
+Added: At September 27, 2020, we have provided a valuation allowance on certain state tax credits, foreign deferred tax assets, federal capital losses, federal foreign tax credits and state net operating losses of $ 1.1 billion, $ 524 million, $ 29 million, $ 28 million and $ 14 million, respectively.
+Added: The valuation allowance reflects the uncertainties surrounding our ability to generate sufficient future taxable income in certain foreign and state tax jurisdictions to utilize our net operating losses and our ability to generate sufficient capital gains to utilize all capital losses.
We believe, more likely than not, that we will have sufficient taxable income after deductions related to share-based awards to utilize our remaining deferred tax assets.
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A summary of the changes in the amount of unrecognized tax benefits for fiscal 2020, 2019 and 2018 follows (in millions):
+Added: 2020 2019 2018
Beginning balance of unrecognized tax benefits $ 1,705 $ 217 $ 372
4 unchanged sentences
Ending balance of unrecognized tax benefits $ 1,901 $ 1,705 $ 217
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Of the $ 1.9 billion of unrecognized tax benefits, $ 1.8 billion has been recorded to other noncurrent liabilities.
2 unchanged sentences
The unrecognized tax benefits differ from the amount that would affect our effective tax rate primarily because the unrecognized tax benefits were included on a gross basis and did not reflect related receivables or secondary impacts, such as the federal deduction for state taxes, adjustments to deferred tax assets and the valuation allowance that might be required if our tax positions are sustained.
−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) .
+Added: The increase in unrecognized tax benefits in fiscal 2020 and fiscal 2019 was primarily due to our decision in fiscal 2019 to request for a refund of Korean withholding tax (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: The decrease in unrecognized tax benefits in fiscal 2018 was primarily due to an agreement reached with the Internal Revenue Service (IRS) related to tax positions on the classification of income in our fiscal 2016 federal income tax return.
−Removed: The increase in unrecognized tax benefits in fiscal 2017 was primarily due to tax positions related to transfer pricing.
We believe that it is likely that the total amount of unrecognized tax benefits at September 27, 2020 will increase in fiscal 2021 as licensees in Korea continue to withhold taxes on future payments due under their licensing agreements at a rate higher than we believe is owed;
10 unchanged sentences
However, the final determination of tax audits and any related legal proceedings could materially differ from amounts reflected in our income tax provision and the related accruals.
−Removed: Cash amounts paid for income taxes, net of refunds received, were $ 1.1 billion , $ 877 million and $ 1.0 billion for fiscal 2019 , 2018 and 2017 , respectively.
+Added: Cash amounts paid for income taxes, net of refunds received, were $ 830 million, $ 1.1 billion and $ 877 million for fiscal 2020, 2019 and 2018, respectively.
Capital Stock
2 unchanged sentences
The stock repurchase program has no expiration date.
−Removed: In August 2018, we completed a “modified Dutch auction” tender offer and paid an aggregate of $ 5.1 billion , excluding fees and related expenses, to repurchase 76.2 million shares of our common stock, which were retired, at a price of $ 67.50 per share.
+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.
In September 2018, we entered into three accelerated share repurchase agreements (ASR Agreements) with three financial institutions under which we paid an aggregate of $ 16.0 billion upfront to the financial institutions and received from them an initial delivery of 178 million shares of our common stock, which were retired and recorded as a $ 12.8 billion reduction to stockholders’ equity.
The remaining $ 3.2 billion was recorded as a reduction to stockholders’ equity as an unsettled forward contract indexed to our own stock.
−Removed: During September 2019 , the ASR Agreements were completed, and an additional 68.7 million shares were delivered to us, which were retired, and the forward contract was settled with no
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: adjustment to stockholders’ equity.
+Added: During September 2019, the ASR Agreements were completed, and an additional 69 million shares were delivered to us, which were retired, and the forward contract was settled with no adjustment to stockholders’ equity.
In total, we purchased 247 million shares based on the volume-weighted average stock price of our common stock during the terms of the transactions, less a discount.
During fiscal 2020, 2019 and 2018, we repurchased and retired an additional 31 million, 27 million and 24 million shares of common stock, respectively, for $ 2.4 billion, $ 1.8 billion and $ 1.4 billion, respectively, before commissions.
−Removed: To reflect share repurchases in the consolidated balance sheet, we (i) reduce common stock for the par value of the shares, (ii) reduce paid-in capital for the amount in excess of par to zero during the quarter in which the shares are repurchased and (iii) record the residual amount to retained earnings, if any .
+Added: To reflect share repurchases in the consolidated balance sheet, we (i) reduce common stock for the par value of the shares, (ii) reduce paid-in capital for the amount in excess of par to zero during the quarter in which the shares are repurchased and (iii) record the residual amount, if any, to retained earnings.
At September 27, 2020, $ 4.6 billion remained authorized for repurchase under our stock repurchase program.
−Removed: Since September 29, 2019 , we repurchased and retired 3.9 million shares of common stock for $ 300 million .
Shares Outstanding.
3 unchanged sentences
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 .
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Employee Benefit Plans
4 unchanged sentences
Equity Compensation Plans.
−Removed: On March 8, 2016, our stockholders approved the Qualcomm Incorporated 2016 Long-Term Incentive Plan (the 2016 Plan), which replaced the Qualcomm Incorporated 2006 Long-Term Incentive Plan (the Prior Plan).
−Removed: Effective on and after that date, no new awards will be granted under the Prior Plan, although all outstanding awards under the Prior Plan will remain outstanding according to their terms and the terms of the Prior Plan.
+Added: On March 10, 2020, our stockholders approved the amended and restated Qualcomm Incorporated 2016 Long-Term Incentive Plan (the 2016 Plan), including an increase in the share reserve by 75 million shares.
The 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.
−Removed: The share reserve under the 2016 Plan is equal to 90.0 million shares, plus approximately 20.1 million shares that were available for future grant under the Prior Plan on March 8, 2016, for a total of approximately 110.1 million shares initially available for grant under the 2016 Plan.
−Removed: This share reserve is automatically increased as provided in the 2016 Plan by the number of shares subject to stock options that were granted under the Prior Plan and outstanding as of March 8, 2016, which after that date expire or for any reason are forfeited, canceled or terminated, and by two times the number of shares subject to any awards other than stock options that were granted under the Prior Plan and outstanding as of March 8, 2016, which after that date expire, are forfeited, canceled or terminated, fail to vest, are not earned due to any performance goal that is not met, are otherwise reacquired without having become vested, or are paid in cash, exchanged by a participant or withheld by us to satisfy any tax withholding or tax payment obligations related to such award.
The Board of Directors may amend or terminate the 2016 Plan at any time.
1 unchanged sentence
At September 27, 2020, approximately 92 million shares were available for future grant under the 2016 Plan.
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
RSUs are share awards that entitle the holder to receive shares of our common stock upon vesting.
−Removed: The RSUs generally include dividend-equivalent rights and vest over periods of three years from the date of grant.
+Added: The RSUs generally include dividend-equivalent rights and vest over three years from the date of grant.
A summary of RSU transactions that contain only service requirements to vest for all equity compensation plans follows:
−Removed: Number of Shares
−Removed: Weighted-Average
+Added: Number of Shares Weighted-Average
Grant Date Fair
−Removed: Aggregate Intrinsic
−Removed: (In thousands)
−Removed: (In billions)
+Added: Value Aggregate Intrinsic
+Added: (In millions) (In billions)
RSUs outstanding at September 29, 2019 27 $ 62.57
+Added: RSUs granted 20 82.57
RSUs canceled/forfeited ( 1 ) 72.04
+Added: RSUs vested ( 14 ) 62.58
RSUs outstanding at September 27, 2020 32 $ 74.99 $ 3.6
5 unchanged sentences
At September 27, 2020, total unrecognized compensation expense related to such non-vested RSUs granted prior to that date was $ 1.5 billion, which is expected to be recognized over a weighted-average period of 1.8 years.
−Removed: The total vest-date fair value of such RSUs that vested during fiscal 2019 , 2018 and 2017 was $ 977 million , $ 940 million and $ 820 million , respectively.
−Removed: The total shares withheld to satisfy statutory tax withholding requirements related to all share-based awards were approximately 4.2 million , 4.4 million and 4.2 million in fiscal 2019 , 2018 and 2017 , respectively, and were based on the value of the awards on their vesting dates as determined by our closing stock price.
−Removed: The Board of Directors may grant stock options to employees, directors and consultants to purchase shares of our common stock at an exercise price not less than the fair market value of the stock at 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: Total outstanding stock option shares at September 29, 2019 and September 30, 2018 , were 1.1 million and 5.1 million , respectively.
−Removed: The decrease in the number of stock option shares outstanding during fiscal 2019 related primarily to stock options exercised.
+Added: The total vest-date fair value of such RSUs that vested during fiscal 2020, 2019 and 2018 was $ 1.3 billion, $ 977 million and $ 940 million, respectively.
+Added: The total shares withheld to satisfy statutory tax withholding requirements related to all share-based awards were approximately 4 million in fiscal 2020, 2019 and 2018, and were based on the value of the awards on their vesting dates as determined by our closing stock price.
The total tax benefits realized, including the excess tax benefits, related to share-based awards during fiscal 2020, 2019 and 2018 were $ 273 million, $ 237 million and $ 254 million, respectively.
10 unchanged sentences
Long-term Debt.
−Removed: In May 2015, we issued an aggregate principal amount of $ 10.0 billion of unsecured floating- and fixed-rate notes (May 2015 Notes) with varying maturities, of which $ 8.5 billion remained outstanding at September 29, 2019 .
−Removed: The proceeds from the May 2015 Notes of $ 9.9 billion , net of underwriting discounts and offering expenses, were used to fund stock repurchases and other general corporate purposes.
−Removed: In May 2017, we issued an aggregate principal amount of
+Added: In May 2020, we issued unsecured fixed-rate notes, consisting of $ 1.2 billion fixed-rate 2.15 % notes and $ 800 million fixed-rate 3.25 % notes (May 2020 Notes) that mature on May 20, 2030 and May 20, 2050, respectively.
+Added: The proceeds from the May 2020 Notes, net of underwriting discounts and offering expenses, were used to repay the $ 250
QUALCOMM Incorporated
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: $ 11.0 billion of unsecured floating- and fixed-rate notes (May 2017 Notes) with varying maturities, of which $ 7.0 billion remained outstanding at September 29, 2019 .
−Removed: The proceeds from the May 2017 Notes of $ 10.95 billion , net of underwriting discounts and offering expenses, were intended to be used to finance, in part, a then proposed acquisition and other related transactions and for general corporate purposes.
−Removed: The following table provides a summary of our long-term debt and current portion of long-term debt (in millions, except percentages):
−Removed: September 29, 2019
−Removed: September 30, 2018
−Removed: Effective Rate
−Removed: Effective Rate
+Added: 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 $ 1.0 billion fixed-rate 1.30 % notes due May 20, 2028 and $ 1.2 billion fixed-rate 1.65 % notes due May 20, 2032 (August 2020 Notes).
+Added: In connection with this exchange, we also repurchased $ 202 million of the Old Notes from holders not eligible to participate in the exchange, which resulted in a $ 17 million loss on extinguishment recorded in interest expense.
+Added: The following table provides a summary of our long-term debt and current portion of long-term debt:
+Added: September 27, 2020 September 29, 2019
+Added: Maturities Amount
+Added: (in millions) Effective Rate Maturities Amount
+Added: (in millions) Effective Rate
May 2015 Notes 2022 - 2045
−Removed: Floating-rate three-month LIBOR plus 0.55% notes due May 20, 2020
−Removed: Fixed-rate 2.25% notes due May 20, 2020
−Removed: Fixed-rate 3.00% notes due May 20, 2022
−Removed: Fixed-rate 3.45% notes due May 20, 2025
−Removed: Fixed-rate 4.65% notes due May 20, 2035
−Removed: Fixed-rate 4.80% notes due May 20, 2045
+Added: $ 5,405 2.62 % - 4.73 %
+Added: $ 8,500 2.64 % - 4.73 %
May 2017 Notes 2023 - 2047
−Removed: Floating-rate three-month LIBOR plus 0.73% notes due January 30, 2023
−Removed: Fixed-rate 2.60% notes due January 30, 2023
−Removed: Fixed-rate 2.90% notes due May 20, 2024
−Removed: Fixed-rate 3.25% notes due May 20, 2027
−Removed: Fixed-rate 4.30% notes due May 20, 2047
+Added: 5,860 1.06 % - 4.46 %
+Added: 7,000 2.70 % - 4.47 %
+Added: May 2020 Notes 2030 - 2050
+Added: 2,000 2.31 % - 3.30 %
+Added: August 2020 Notes 2028 - 2032
+Added: 2,207 1.96 % - 2.65 %
Total principal 15,472 15,500
4 unchanged sentences
Long-term debt 15,226 13,437
−Removed: At September 29, 2019 , future principal payments were $ 2.0 billion in fiscal 2020, $ 2.0 billion in fiscal 2022, $ 2.0 billion in fiscal 2023, $ 1.5 billion in fiscal 2024 and $ 8.0 billion after fiscal 2024;
+Added: Total $ 15,226 $ 15,434
+Added: At September 27, 2020, future principal payments were $ 1.5 billion in fiscal 2022, $ 1.5 billion in fiscal 2023, $ 914 million in fiscal 2024, $ 1.4 billion in fiscal 2025 and $ 10.2 billion after fiscal 2025;
no principal payments are due in fiscal 2021.
3 unchanged sentences
The obligations under the notes rank equally in right of payment with all of our other senior unsecured indebtedness and will effectively rank junior to all liabilities of our subsidiaries.
−Removed: At September 29, 2019 , we had outstanding interest rate swaps with an aggregate notional amount of $ 1.8 billion , related to the May 2015 Notes, which effectively converted approximately 43 % and 50 % of the fixed-rate notes due in 2020 and 2022, respectively, into floating-rate notes.
−Removed: The net gains and losses on the interest rate swaps, as well as the offsetting gains or losses on the related fixed-rate notes attributable to the hedged risks, are recorded as interest expense in the current period.
−Removed: We did not enter into interest rate swaps in connection with issuance of the May 2017 Notes.
+Added: At September 27, 2020, with the exception of $ 500 million of outstanding unsecured floating-rate notes due January 30, 2023, all of our outstanding long-term debt is comprised of unsecured fixed-rate notes.
The effective interest rates for the notes include the interest on the notes, amortization of the discount, which includes debt issuance costs, and if applicable, adjustments related to hedging.
1 unchanged sentence
Cash interest paid related to our commercial paper program and long-term debt, net of cash received from the related interest rate swaps, was $ 507 million, $ 563 million and $ 662 million during fiscal 2020, 2019 and 2018, respectively.
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Commercial Paper Program .
−Removed: We have an unsecured commercial paper program, which provides for the issuance of up to $ 5.0 billion of commercial paper.
+Added: In fiscal 2020, we reduced the total amount available for issuance under our unsecured commercial paper program from $ 5.0 billion to $ 4.5 billion.
Net proceeds from this program are used for general corporate purposes.
−Removed: Maturities of commercial paper can range from 1 day to up to 397 days .
−Removed: At September 29, 2019 and September 30, 2018 , we had $ 499 million and $ 1.0 billion , respectively, of outstanding commercial paper recorded as short-term debt with a weighted-average interest rate of 2.17 % and 2.35 % , respectively, which included fees paid to the commercial paper dealers, and weighted-average remaining days to maturity of 41 days and 16 days , respectively.
+Added: Maturities of commercial paper can range from 1 to up to 397 days.
+Added: At September 27, 2020 and September 29, 2019, we had $ 500 million and $ 499 million, respectively, of outstanding commercial paper recorded as short-term debt with a weighted-average interest rate of 0.21 % and 2.17 %, respectively, which included fees paid to the commercial paper dealers, and weighted-average remaining days to maturity of 37 days and 41 days, respectively.
The carrying value of the outstanding commercial paper approximated its estimated fair value at September 27, 2020 and September 29, 2019.
Revolving Credit Facility.
−Removed: We have an Amended and Restated Revolving Credit Facility (Revolving Credit Facility) that provides for unsecured revolving facility loans, swing line loans and letters of credit in an 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: Proceeds from the Revolving Credit Facility, if drawn, are expected to be used for general corporate purposes.
−Removed: Loans under the Revolving Credit Facility will bear interest, at our option, at either the reserve-adjusted Eurocurrency Rate or the Base Rate (both of which are determined in accordance with the Revolving Credit Facility), in each case plus an applicable margin based on our long-term unsecured senior, non-credit enhanced debt ratings.
−Removed: The margins over the reserve-adjusted Eurocurrency Rate and the Base Rate will be 0.805 % and 0.00 % , respectively.
−Removed: The Revolving Credit Facility has a facility fee, which accrues at a rate of 0.07 % per annum.
−Removed: At September 29, 2019 and September 30, 2018 , we had no t borrowed any funds under the Revolving Credit Facility .
+Added: We have an Amended and Restated Revolving Credit Facility (Revolving Credit Facility) that provides for unsecured revolving facility loans, swing line loans and letters of credit in an aggregate amount of up to $ 4.5 billion, which expires on November 8, 2021.
+Added: At September 27, 2020 and September 29, 2019, no amounts were outstanding under the Revolving Credit Facility.
Debt Covenants.
The Revolving Credit Facility requires that we comply with certain covenants, including one financial covenant to maintain a ratio of consolidated earnings before interest, taxes, depreciation and amortization to consolidated interest expense, as defined in each of the respective agreements, of not less than three to one at the end of each fiscal quarter.
−Removed: We are not subject to any financial covenants under the notes nor any covenants that would prohibit us from incurring additional indebtedness ranking equal to the notes, paying dividends, issuing securities or repurchasing securities issued by us or our subsidiaries.
+Added: We are not subject to any financial covenants under the notes nor any covenants that would prohibit us from incurring additional indebtedness ranking equal to the notes, paying dividends, issuing securities or repurchasing securities issued by us
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: or our subsidiaries.
At September 27, 2020 and September 29, 2019, we were in compliance with the applicable covenants under the Revolving Credit Facility.
1 unchanged sentence
Legal and Regulatory Proceedings.
−Removed: 3226701 Canada, Inc.
−Removed: QUALCOMM Incorporated et al:
−Removed: On November 30, 2015, a securities class action complaint was filed by purported stockholders of us in the United States District Court for the Southern District of California against us and certain of our current and former officers.
−Removed: On April 29, 2016, the plaintiffs filed an amended complaint.
−Removed: On January 27, 2017, the court dismissed the amended complaint in its entirety, granting leave to amend.
−Removed: On March 17, 2017, the plaintiffs filed a second amended complaint, alleging that we and certain of our current and former officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, by making false and misleading statements regarding our business outlook and product development between November 19, 2014 and July 22, 2015.
−Removed: The second amended complaint sought unspecified damages, interest, attorneys’ fees and other costs.
−Removed: On May 8, 2017, we filed a motion to dismiss the second amended complaint.
−Removed: On October 20, 2017, the court entered an order granting in part our motion to dismiss, and on November 29, 2017, the court entered an order granting the remaining portions of our motion to dismiss.
−Removed: On December 28, 2017, the plaintiffs filed an appeal to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit).
−Removed: A hearing was held on July 11, 2019, and on July 23, 2019, the Ninth Circuit affirmed the District Court’s dismissal of the second amended complaint in its entirety.
−Removed: On August 29, 2019, the Ninth Circuit denied the plaintiffs’ request for en banc review.
−Removed: The plaintiffs have until November 27, 2019 to file a petition for certiorari to request that the United States Supreme Court hear the matter or the dismissal becomes final.
−Removed: We believe the plaintiffs’ claims are without merit.
Consolidated Securities Class Action Lawsuit:
On January 23, 2017 and January 26, 2017, securities class action complaints were filed by purported stockholders of us in the United States District Court for the Southern District of California against us and certain of our current and former officers and directors.
−Removed: The complaints alleged, among other things, that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, by making false and misleading statements and omissions of material fact in connection with certain allegations that we are or were engaged in anticompetitive conduct.
+Added: The complaints alleged, among other things, that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, by making false and misleading statements and omissions of material fact in connection with certain allegations that we are or were engaged in anticompetitive conduct.
The complaints sought unspecified damages, interest, fees and costs.
2 unchanged sentences
On September 1, 2017, we filed a motion to dismiss the consolidated amended complaint.
−Removed: On March 18, 2019, the court denied our motion to dismiss the complaint.
−Removed: Discovery has commenced and is scheduled to be completed by March 3, 2020.
+Added: On March 18, 2019, the court denied our motion to dismiss.
+Added: On January 15, 2020, we filed a motion for judgment on the pleadings.
+Added: The court has not yet ruled on our motion.
We believe the plaintiffs’ claims are without merit.
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: In re Qualcomm/Broadcom Merger Securities Litigation (formerly Camp v.
−Removed: Qualcomm Incorporated et al):
+Added: In re Qualcomm/Broadcom Merger Securities Litigation:
On June 8, 2018 and June 26, 2018, securities class action complaints were filed by purported stockholders of us in the United States District Court for the Southern District of California against us and two of our current officers.
−Removed: The complaints alleged, among other things, that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, by failing to disclose that we had submitted a notice to the Committee on Foreign Investment in the United States (CFIUS) in January 2018.
+Added: The complaints alleged, among other things, that we violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, by failing to disclose that we had submitted a notice to the Committee on Foreign Investment in the United States (CFIUS) in January 2018.
The complaints sought unspecified damages, interest, fees and costs.
−Removed: On January 22, 2019, the Court appointed the lead plaintiff in the action and designated that the case be captioned “In re Qualcomm/Broadcom Merger Securities Litigation.” On March 18, 2019, the plaintiffs filed a consolidated complaint asserting the same basic theories of liability and requesting the same basic relief.
−Removed: On May 10, 2019, we filed a motion to dismiss the consolidated complaint.
−Removed: The court has not yet ruled on our motion.
+Added: On January 22, 2019, the court appointed the lead plaintiff in the action.
+Added: On March 18, 2019, the plaintiffs filed a consolidated complaint asserting the same basic theories of liability and requesting the same basic relief.
+Added: On May 10, 2019, we filed a motion to dismiss the consolidated complaint, and on March 10, 2020, the court granted our motion.
+Added: On May 11, 2020, the plaintiffs filed a second amended complaint, and on June 25, 2020, we filed a motion to dismiss that complaint.
+Added: On October 8, 2020, the court heard oral arguments on our motion to dismiss, following which it granted our motion and dismissed the case with prejudice.
We believe the plaintiffs’ claims are without merit.
1 unchanged sentence
Since January 18, 2017, a number of consumer class action complaints have been filed against us in the United States District Courts for the Southern and Northern Districts of California, each on behalf of a putative class of purchasers of cellular phones and other cellular devices.
−Removed: At September 29, 2019, twenty-two such cases remain outstanding.
In April 2017, the Judicial Panel on Multidistrict Litigation transferred the cases that had been filed in the Southern District of California to the Northern District of California.
7 unchanged sentences
On January 24, 2019, the court stayed the case pending our appeal.
−Removed: A hearing on our appeal of the class certification order is scheduled for December 2, 2019 before the Ninth Circuit.
+Added: On December 2, 2019, a hearing on our appeal of the class certification order was held before the Ninth Circuit.
+Added: The Ninth Circuit has not yet ruled on our appeal.
We believe the plaintiffs’ claims are without merit.
−Removed: Canadian Consumer Class Action Lawsuits:
−Removed: Since November 9, 2017, eight consumer class action complaints have been filed against us in Canada (in the Ontario Superior Court of Justice, the Supreme Court of British Columbia and the Quebec Superior Court), each on behalf of a putative class of purchasers of cellular phones and other cellular devices, alleging various violations of Canadian competition and consumer protection laws.
−Removed: The claims are similar to those in the U.S.
−Removed: consumer class action complaint.
+Added: Since November 2017, several other consumer class action complaints have been filed against us in Canada (in the Ontario Superior Court of Justice, the Supreme Court of British Columbia and the Quebec Superior Court) and Israel (in the Haifa District Court), each on behalf of a putative class of purchasers of cellular phones and other cellular devices, alleging violations of certain of those countries’ competition and consumer protection laws.
+Added: The claims in these complaints are similar to those in the U.S.
+Added: consumer class action complaints.
The complaints seek unspecified damages.
−Removed: One of the complaints in the Supreme Court of British Columbia has since been discontinued by the plaintiffs.
−Removed: We have not yet answered the complaints.
−Removed: We expect the Ontario and British Columbia complaints will be consolidated into one proceeding in British Columbia with a class certification hearing no earlier than late 2020.
−Removed: Once the certification hearing is scheduled, we expect the court to set a timetable for the exchange of evidence and briefing.
−Removed: As to the complaint filed in Quebec, on April 15, 2019, the Quebec Superior Court held a class certification hearing, and on April 30, 2019, the court issued an order certifying a class.
−Removed: Before the end of calendar 2019, we expect the court to set a timetable for pre-trial steps, including discovery as well as the exchange of expert evidence.
−Removed: We do not expect the trial to occur before 2022.
We believe the plaintiffs’ claims are without merit.
+Added: ParkerVision, Inc.
+Added: QUALCOMM Incorporated:
+Added: On May 1, 2014, ParkerVision filed a complaint against us in the United States District Court for the Middle District of Florida alleging that certain of our products infringed seven ParkerVision patents.
+Added: On August 21, 2014, ParkerVision amended the complaint, then captioned ParkerVision, Inc.
+Added: QUALCOMM Incorporated, Qualcomm Atheros, Inc., HTC Corporation, HTC America, Inc., Samsung Electronics Co., LTD., Samsung Electronics America, Inc.
+Added: and Samsung Telecommunications America, LLC, broadening the allegations.
+Added: ParkerVision alleged that we infringed 11 ParkerVision patents and sought damages and injunctive and other relief.
+Added: ParkerVision has subsequently reduced the number of patents asserted to four, granted covenants not to sue on the other patents, and dismissed the Samsung and HTC entities from the case.
+Added: The asserted patents are now expired and injunctive relief is no longer available.
+Added: ParkerVision continues to seek damages related to the sale of many of our radio frequency (RF) products sold between 2008 and 2018.
+Added: Trial is currently scheduled to begin on May 3, 2021, but may be delayed due to the
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: COVID-19 pandemic.
+Added: We have previously prevailed on infringement claims asserted by ParkerVision in related lawsuits and have successfully invalidated a number of their patent claims in patent office proceedings.
+Added: We believe that ParkerVision’s claims are without merit.
Korea Fair Trade Commission (KFTC) Investigation (2015):
6 unchanged sentences
The KFTC’s decision orders us to:
−Removed: (i) upon request by modem chipset companies, engage in good-faith negotiations for patent license agreements, without offering unjustifiable conditions, and if necessary submit to a determination of terms by an independent third party;
−Removed: (ii) not demand that handset companies execute and perform under patent license agreements as a precondition for purchasing modem chipsets;
−Removed: (iii) not demand unjustifiable conditions in our license agreements with handset companies, and upon request renegotiate existing patent license agreements;
−Removed: and (iv) notify modem chipset companies and handset
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: companies of the decision and order imposed on us and report to the KFTC new or amended agreements.
+Added: (a) upon request by modem chipset companies, engage in good-faith negotiations for patent license agreements, without offering unjustifiable conditions, and if necessary submit to a determination of terms by an independent third party;
+Added: (b) not demand that handset companies execute and perform under patent license agreements as a precondition for purchasing modem chipsets;
+Added: (c) not demand unjustifiable conditions in our license agreements with handset companies, and upon request renegotiate existing patent license agreements;
+Added: and (d) notify modem chipset companies and handset companies of the decision and order imposed on us and report to the KFTC new or amended agreements.
According to the KFTC’s decision, the foregoing will apply to transactions between us and the following enterprises:
−Removed: (i) handset manufacturers headquartered in Korea and their affiliate companies;
−Removed: (ii) enterprises that sell handsets in or to Korea and their affiliate companies;
−Removed: (iii) enterprises that supply handsets to companies referred to in (ii) above and the affiliate companies of such enterprises;
−Removed: (iv) modem chipset manufacturers headquartered in Korea and their affiliate companies;
−Removed: and (v) enterprises that supply modem chipsets to companies referred to in (i), (ii) or (iii) above and the affiliate companies of such enterprises.
+Added: (1) handset manufacturers headquartered in Korea and their affiliate companies;
+Added: (2) enterprises that sell handsets in or to Korea and their affiliate companies;
+Added: (3) enterprises that supply handsets to companies referred to in (2) above and the affiliate companies of such enterprises;
+Added: (4) modem chipset manufacturers headquartered in Korea and their affiliate companies;
+Added: and (5) enterprises that supply modem chipsets to companies referred to in (1), (2) or (3) above and the affiliate companies of such enterprises.
The KFTC’s decision also imposed a fine of 1.03 trillion Korean won (approximately $ 927 million), which we paid on March 30, 2017.
−Removed: We believe that our business practices do not violate the MRFTA, and on February 21, 2017, we filed an action in the Seoul High Court to cancel the KFTC’s decision.
−Removed: On the same day, we filed an application with the Seoul High Court to stay the decision’s remedial order pending the Seoul High Court’s final judgment on our action to cancel the KFTC’s decision.
−Removed: On September 4, 2017, the Seoul High Court denied our application to stay the remedial order, and on November 27, 2017, the Korea Supreme Court dismissed our appeal of the Seoul High Court’s decision on the application to stay.
−Removed: Hearings on our action to cancel the KFTC’s decision were held before the Seoul High Court on August 12 and 14, 2019.
−Removed: Under the current procedural plan of the Seoul High Court, we believe these will be the final hearings before that court issues its decision.
+Added: On February 21, 2017, we filed an action in the Seoul High Court to cancel the KFTC’s decision.
+Added: The Seoul High Court held hearings concluding on August 14, 2019 and, on December 4, 2019, announced its judgment affirming certain portions of the KFTC’s decision and finding other portions of the KFTC’s decision unlawful.
+Added: The Seoul High Court cancelled the KFTC’s remedial orders described in (c) above, and solely insofar as they correspond thereto, the Seoul High Court cancelled the KFTC’s remedial orders described in (d) above.
+Added: The Seoul High Court dismissed the remainder of our action to cancel the KFTC’s decision.
+Added: On December 19, 2019, we filed a notice of appeal to the Korea Supreme Court challenging those portions of the Seoul High Court decision that are not in our favor.
+Added: The KFTC filed a notice of appeal to the Korea Supreme Court challenging the portions of the Seoul High Court decision that are not in its favor.
+Added: Both we and the KFTC have filed briefs on the merits.
+Added: The Korea Supreme Court has not yet ruled on our appeal or that of the KFTC.
+Added: We believe that our business practices do not violate the MRFTA.
+Added: Korea Fair Trade Commission (KFTC) Investigation (2020) :
+Added: On June 8, 2020, the KFTC informed us that it was conducting an investigation of us relating to the MRFTA.
+Added: The KFTC has not provided a formal notice on the scope of their investigation, but we believe it concerns our business practices in connection with our sale of radio frequency front end (RFFE) components.
+Added: If a violation is found, a broad range of remedies is potentially available to the KFTC, including imposing a fine (of up to 3% of our sales in the relevant markets during the alleged period of violation) and/or injunctive relief prohibiting or restricting certain business practices.
+Added: It is difficult to predict the outcome of this matter or what remedies, if any, may be imposed by the KFTC.
+Added: We believe that our business practices do not violate the MRFTA.
Icera Complaint to the European Commission (EC):
5 unchanged sentences
The court has not yet ruled on our appeal.
−Removed: We believe that our business practices do not violate the EU competition rules.
−Removed: In the third quarter of fiscal 2019, we recorded a charge of $ 275 million to other expenses related to such EC fine.
+Added: We believe that our business practices do not violate the European Union (EU) competition rules.
+Added: In the third quarter of fiscal 2019, we recorded a charge of $ 275 million to other expenses related to this EC fine.
We provided a financial guarantee in the first quarter of fiscal 2020 to satisfy the obligation in lieu of cash payment while we appeal the EC’s decision.
6 unchanged sentences
On January 24, 2018, the EC issued a decision finding that pursuant to an agreement with Apple Inc.
−Removed: we paid significant amounts to Apple on the condition that it exclusively use our baseband chipsets in its smartphones and tablets, reducing Apple’s incentives to source baseband chipsets from our competitors and harming competition and innovation for certain baseband chipsets, and imposed a fine of 997 million euros.
+Added: we paid significant amounts to Apple on the condition that it
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: exclusively use our baseband chipsets in its smartphones and tablets, reducing Apple’s incentives to source baseband chipsets from our competitors and harming competition and innovation for certain baseband chipsets, and imposed a fine of 997 million euros.
On April 6, 2018, we filed an appeal of the EC’s decision with the General Court of the European Union.
1 unchanged sentence
We believe that our business practices do not violate the EU competition rules.
−Removed: In the first quarter of fiscal 2018, we recorded a charge of $ 1.2 billion to other expenses related to such EC fine.
+Added: In the first quarter of fiscal 2018, we recorded a charge of $ 1.2 billion to other expenses related to this EC fine.
We provided financial guarantees in the third quarter of fiscal 2018 to satisfy the obligation in lieu of cash payment while we appeal the EC’s decision.
2 unchanged sentences
At September 27, 2020, the liability, including related foreign currency gains and accrued interest (which, to the extent they were not related to the net investment hedge, were recorded in investment and other income, net), was $ 1.2 billion and included in other current liabilities.
+Added: European Commission (EC) Investigation regarding Radio Frequency Front End (RFFE):
+Added: On December 3, 2019, we received a Request for Information from the EC notifying us that it is investigating whether we engaged in anti-competitive behavior in the European Union (EU)/European Economic Area (EEA) by leveraging our market position in 5G baseband processors in the RFFE space.
+Added: We have responded to the Request for Information.
+Added: If a violation is found, a broad range of remedies is potentially available to the EC, including imposing a fine (of up to 10% of our annual revenues) and/or injunctive relief prohibiting or restricting certain business practices.
+Added: It is difficult to predict the outcome of this matter or what remedies, if any, may be imposed by the EC.
+Added: We believe that our business practices do not violate the EU competition rules.
United States Federal Trade Commission (FTC) v.
1 unchanged sentence
On September 17, 2014, the FTC notified us that it was conducting an investigation of us relating to Section 5 of the Federal Trade Commission Act (FTCA).
−Removed: On January 17, 2017, the FTC filed a complaint against us in the United States District Court for the Northern District of California alleging that we were engaged in anticompetitive conduct and unfair methods of competition in violation of Section 5 of the FTCA by conditioning the supply of cellular modem chipsets on the purchaser first agreeing to a license to
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: our cellular standard-essential patents, paying incentives to purchasers of cellular modem chipsets to induce them to accept certain license terms, refusing to license our cellular standard-essential patents to our competitors, and entering into alleged exclusive dealing arrangements with Apple Inc.
+Added: On January 17, 2017, the FTC filed a complaint against us in the United States District Court for the Northern District of California alleging that we were engaged in anticompetitive conduct and unfair methods of competition in violation of Section 5 of the FTCA by conditioning the supply of cellular modem chipsets on the purchaser first agreeing to a license to our cellular standard-essential patents, paying incentives to purchasers of cellular modem chipsets to induce them to accept certain license terms, refusing to license our cellular standard-essential patents to our competitors and entering into alleged exclusive dealing arrangements with Apple Inc.
The complaint sought a permanent injunction against our alleged violations of the FTCA and other unspecified ancillary equitable relief.
3 unchanged sentences
On May 21, 2019, the court issued an Order setting forth its Findings of Fact and Conclusions of Law.
−Removed: The court concluded that we had monopoly power in the CDMA and premium-tier LTE (Long Term Evolution) cellular modem chip markets, and that we had used that power in these two markets to engage in anticompetitive acts, including (1) using threats of lack of access to cellular modem chip supply to coerce OEMs (original equipment manufacturers) to accept license terms that include unreasonably high royalty rates;
+Added: The court concluded that we had monopoly power in the CDMA and premium-tier Long Term Evolution (LTE) cellular modem chip markets, and that we had used that power in these two markets to engage in anticompetitive acts, including (1) using threats of lack of access to cellular modem chip supply to coerce OEMs to accept license terms that include unreasonably high royalty rates;
(2) refusing to license our cellular standard-essential patents to competitors selling cellular modem chips;
12 unchanged sentences
We disagree with the court’s conclusions, interpretation of the facts and application of the law.
−Removed: Accordingly, on May 28, 2019, we filed a Motion to Stay Pending Appeal in the court, which the court denied on July 3, 2019.
On May 31, 2019, we filed with the court a Notice of Appeal to the United States Court of Appeals for the Ninth Circuit (Ninth Circuit).
−Removed: On July 8, 2019, we filed a Motion for Partial Stay of Injunction Pending Appeal and a Consent Motion to Expedite Appeal in the Ninth Circuit.
−Removed: On August 23, 2019, the Ninth Circuit granted our Motion.
−Removed: Thus, pending the resolution of the appeal in the Ninth Circuit or until further order of the Ninth Circuit, the portions of the court’s injunction requiring that we must (i) make exhaustive cellular standard-essential patent licenses available to cellular modem chip suppliers and (ii) not condition the supply of cellular modem chips on a customer’s patent license status and must negotiate or renegotiate license terms with customers are stayed.
−Removed: On July 10, 2019, the Ninth Circuit granted our Motion to Expedite Appeal, and we expect briefing to be completed before the end of the calendar year.
−Removed: We currently expect the Ninth Circuit to schedule oral argument for February 2020.
+Added: On July 8, 2019, we filed a Motion for Partial Stay of Injunction Pending Appeal and a Consent Motion to Expedite Appeal in the Ninth
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: On August 23, 2019, the Ninth Circuit granted our Motion for Partial Stay.
+Added: Thus, pending the resolution of the appeal in the Ninth Circuit or until further order of the Ninth Circuit, the portions of the district court’s injunction requiring that we must (i) make exhaustive cellular standard-essential patent licenses available to cellular modem chip suppliers and (ii) not condition the supply of cellular modem chips on a customer’s patent license status and must negotiate or renegotiate license terms with customers are stayed.
+Added: On July 10, 2019, the Ninth Circuit granted our Motion to Expedite Appeal.
+Added: On February 13, 2020, the Ninth Circuit heard oral argument.
+Added: On August 11, 2020, the Ninth Circuit issued its opinion, which reversed the district court’s judgment, vacated its injunction and vacated its partial grant of summary judgment.
+Added: The Ninth Circuit stated that the district court erred in holding that we are under an antitrust duty to license rival chip manufacturers and noted that our practice of licensing our standard-essential patents exclusively at the OEM level does not violate the antitrust laws.
+Added: The Ninth Circuit also held that the district court’s “anticompetitive surcharge” theory failed to state a cogent theory of anticompetitive harm and that our patent-licensing royalties and “no license, no chips” policy do not impose an anticompetitive surcharge on rivals’ modem chip sales and do not undermine competition in either the CDMA or premium LTE chip markets.
+Added: While agreeing with the district court that our 2011 and 2013 agreements with Apple were structured like exclusive dealing contracts, the Ninth Circuit nonetheless held that neither agreement had the actual or practical effect of substantially foreclosing competition in the CDMA modem chip market, and because Apple terminated these agreements years ago, the district court had improperly issued an injunction.
+Added: The Ninth Circuit noted that neither the Sherman Act nor any other law prohibits companies like us from (1) licensing their standard-essential patents independently from their chip sales and collecting royalties, and/or (2) limiting their chip customer base to licensed OEMs.
+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.
Contingent losses and other considerations:
−Removed: We will continue to vigorously defend ourself in the foregoing matters.
+Added: We will continue to vigorously defend ourselves in the foregoing matters.
However, 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: Other than with respect to the EC fines, we have not recorded any accrual at September 29, 2019 for contingent losses associated with these matters based on our belief that losses, while possible, are not probable.
−Removed: Further, any possible range of loss cannot be reasonably estimated at this time.
+Added: Other than with respect to the EC fines, we have no t recorded any accrual at September 27, 2020 for contingent losses associated with these matters based on our belief that losses, while reasonably possible, are not probable.
+Added: Further, any possible amount or range of loss cannot be reasonably estimated at this time.
The unfavorable resolution of one or more of these matters could have a material adverse effect on our business, results of operations, financial condition or cash flows.
−Removed: We are engaged in numerous other legal actions not described above arising in the ordinary course of our business and, while there can be no assurance, believe that the ultimate outcome of these
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: other legal actions will not have a material adverse effect on our business, results of operations, financial condition or cash flows.
+Added: We are engaged in numerous other legal actions not described above arising in the ordinary course of our business (for example, proceedings relating to employment matters or the initiation or defense of proceedings relating to intellectual property rights) and, while there can be no assurance, believe that the ultimate outcome of these other legal actions will not have a material adverse effect on our business, results of operations, financial condition or cash flows.
Indemnifications .
−Removed: We generally do not indemnify our customers and licensees for losses sustained from infringement of third-party intellectual property rights.
−Removed: However, we are contingently liable under certain product sales, services, license and other agreements to indemnify certain customers, chipset foundries and semiconductor assembly and test service providers against certain types of liability and/or damages arising from qualifying claims of patent, copyright, trademark or trade secret infringement by products or services sold or provided by us, or by intellectual property provided by us to chipset foundries and semiconductor assembly and test service providers.
+Added: We generally do not indemnify our customers, licensees and suppliers for losses sustained from infringement of third-party intellectual property rights.
+Added: However, we are contingently liable under certain agreements to defend and/or indemnify certain customers, licensees and suppliers against certain types of liability and/or damages arising from the infringement of third-party intellectual property rights.
Our obligations under these agreements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments made by us.
−Removed: Through September 29, 2019 , we have received a number of claims from our direct and indirect customers and other third parties for indemnification under such agreements with respect to alleged infringement of third-party intellectual property rights by our products.
−Removed: Reimbursements under indemnification arrangements have not been material to our consolidated financial statements.
−Removed: We have not recorded any accrual for contingent liabilities at September 29, 2019 associated with these indemnification arrangements based on our belief that additional liabilities, while possible, are not probable.
+Added: Claims and reimbursements under indemnification arrangements have not been material to our consolidated financial statements.
+Added: We have not recorded accruals for certain claims under indemnification arrangements based on our belief that additional liabilities, while possible, are not probable.
Further, any possible range of loss cannot be reasonably estimated at this time.
−Removed: Purchase Obligations and Operating Leases .
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: Purchase Obligations .
We have agreements with suppliers and other parties to purchase inventory, other goods and services and long-lived assets.
Integrated circuit product inventory obligations 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: We lease certain of our land, facilities and equipment under noncancelable operating leases, with terms ranging from less than one year to 20 years and with provisions in certain leases for cost-of-living increases.
−Removed: Rental expense for fiscal 2019 , 2018 and 2017 was $ 146 million , $ 160 million and $ 129 million , respectively.
−Removed: Obligations under our purchase agreements, which primarily relate to integrated circuit product inventory obligations, and future minimum lease payments under our operating leases at September 29, 2019 were as follows (in millions):
−Removed: Purchase Obligations
+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: Obligations under our purchase agreements, which primarily relate to integrated circuit product inventory obligations, at September 27, 2020 were as follows (in millions):
+Added: September 27,
+Added: Total $ 6,060
Operating Leases.
+Added: We lease certain of our land, facilities and equipment under operating leases, with terms ranging from less than one year to 20 years, some of which include options to extend for up to 20 years.
+Added: At September 27, 2020, other assets included $ 460 million of operating lease assets, with corresponding lease liabilities of $ 134 million recorded in other current liabilities and $ 371 million recorded in other liabilities.
+Added: Operating lease expense for fiscal 2020, 2019 and 2018 was $ 181 million, $ 146 million and $ 160 million, respectively.
+Added: Cash paid under our operating leases was $ 153 million for fiscal 2020.
+Added: As of September 27, 2020, the weighted-average remaining lease term and weighted-average discount rate for operating leases were 6 years and 4 %, respectively.
+Added: At September 27, 2020, future lease payments under our operating leases were as follows (in millions):
+Added: September 27,
+Added: Thereafter 150
+Added: Total future lease payments 578
+Added: Imputed interest ( 73 )
+Added: Total lease liability balance $ 505
+Added: At September 29, 2019, future minimum lease payments under our noncancelable operating leases under ASC 840 were as follows (in millions):
+Added: September 29,
+Added: Thereafter 35
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other Commitments .
−Removed: At September 29, 2019 , we have committed to fund certain strategic investments up to $ 154 million , most of which do not have fixed funding dates and are subject to certain conditions.
+Added: At September 27, 2020, we have committed to fund certain strategic investments up to $ 185 million, of which $ 103 million is expected to be funded in fiscal 2021.
+Added: The substantial majority of the remaining commitments do not have fixed funding dates and are subject to certain conditions.
Commitments represent the maximum amounts to be funded under these arrangements;
2 unchanged sentences
We are organized on the basis of products and services and have three reportable segments.
+Added: Our operating segments reflect the way our businesses and management/reporting structure are organized internally and the way our Chief Operating Decision Maker (CODM), who is our CEO, reviews financial information, makes operating decisions and assesses business performance.
+Added: We also consider, among other items, the way budgets and forecasts are prepared and reviewed and the basis on which executive compensation is determined, as well as the similarity of business activities within our operating segments, such as the nature of products, the level of shared products, technology and other resources, production processes and customer base.
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, wireless networks, devices used in the Internet of Things (IoT), broadband gateway equipment, consumer electronic devices and automotive telematics and infotainment systems.
−Removed: QTL grants licenses to use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture, sale or use of certain wireless products.
−Removed: Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments and includes revenues and related costs associated with development contracts with an equity method
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−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: We evaluate the performance of our segments based on earnings (loss) before income taxes (EBT).
+Added: QCT develops and supplies integrated circuits and system software based on 3G/4G/5G and other technologies for use in mobile devices, wireless networks, devices used in the internet of things (IoT), broadband gateway equipment, consumer electronic devices and automotive systems for telematics and infotainment.
+Added: QTL grants licenses or otherwise provides rights to use portions of our intellectual property portfolio, which includes certain patent rights essential to and/or useful in the manufacture, sale or use of certain wireless products.
+Added: Our QSI (Qualcomm Strategic Initiatives) reportable segment makes strategic investments and includes revenues and related costs associated with development contracts with an investee.
+Added: We also have nonreportable segments, including QGOV (Qualcomm Government Technologies), our cloud AI inference processing initiative and other technology and service initiatives.
+Added: Our CODM allocates resources to and evaluates the performance of our segments based on revenues and earnings (loss) before income taxes (EBT).
Segment EBT includes the allocation of certain corporate expenses to the segments, including depreciation and amortization expense related to unallocated corporate assets.
Certain income and charges are not allocated to segments in our management reports because they are not considered in evaluating the segments’ operating performance.
−Removed: Unallocated income and charges include certain interest expense;
−Removed: certain net investment income;
−Removed: certain share-based compensation;
−Removed: and certain research and development expenses, selling, general and administrative expenses and other expenses or income that were deemed to be not directly related to the businesses of the segments.
−Removed: Additionally, unallocated charges include recognition of the step-up of inventories and property, plant and equipment to fair value, amortization of certain intangible assets and certain other acquisition-related charges, third-party acquisition and integration services costs and certain other items, which may include major restructuring and restructuring-related costs, goodwill and long-lived asset impairment charges and litigation settlements and/or damages.
−Removed: In fiscal 2018, all of the costs ($474 million) related to pre-commercial research and development of 5G (fifth generation) technologies were included in unallocated corporate research and development expenses, whereas similar costs related to the research and development of other technologies, including 3G (third generation) and 4G (fourth generation) technologies, were recorded in the QCT and QTL segments.
+Added: Unallocated income and charges include certain interest expense, certain net investment income, certain share-based compensation, gains and losses on our deferred compensation plan liabilities and related assets and certain research and development expenses, selling, general and administrative expenses and other expenses or income that were deemed to be not directly related to the businesses of the segments.
+Added: Additionally, unallocated charges include recognition of the step-up of inventories and property, plant and equipment to fair value, amortization of certain intangible assets and certain other acquisition-related charges, third-party acquisition and integration services costs and certain other items, which may include major restructuring and restructuring-related costs, goodwill and long-lived asset impairment charges and awards, settlements and/or damages arising from legal or regulatory matters.
+Added: In fiscal 2018, all of the costs ($ 474 million) related to pre-commercial research and development of 5G technologies were included in unallocated corporate research and development expenses, whereas similar costs related to the research and development of other technologies, including 3G and 4G technologies, were recorded in the QCT and QTL segments.
Beginning in fiscal 2019, all research and development costs associated with 5G technologies were included in segment results.
1 unchanged sentence
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.
−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.
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The table below presents revenues, EBT and total assets for reportable segments (in millions):
+Added: 2020 2019 2018
+Added: QCT $ 16,493 $ 14,639 $ 17,282
+Added: QTL 5,028 4,591 5,042
+Added: QSI 36 152 100
Reconciling items 1,974 4,891 187
+Added: Total $ 23,531 $ 24,273 $ 22,611
+Added: QCT $ 2,763 $ 2,143 $ 2,966
+Added: QTL 3,442 2,954 3,404
+Added: QSI ( 11 ) 344 24
Reconciling items ( 475 ) 2,040 ( 6,002 )
+Added: Total $ 5,719 $ 7,481 $ 392
+Added: QCT $ 3,990 $ 2,307 $ 3,041
+Added: QTL 1,601 1,541 1,472
+Added: QSI 1,371 1,708 1,279
Reconciling items 28,632 27,401 26,926
−Removed: Segment assets are comprised of accounts receivable and inventories for all reportable segments other than QSI.
−Removed: QSI segment assets include certain non-marketable equity instruments, accounts receivable and other investments.
−Removed: QSI assets at
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: September 29, 2019 , September 30, 2018 and September 24, 2017 included $ 230 million , $ 283 million and $ 254 million , respectively, related to investments in equity method investees.
−Removed: Total segment assets differ from total assets on a consolidated basis as a result of unallocated corporate assets primarily comprised of certain cash, cash equivalents, marketable and non-marketable securities, property, plant and equipment, deferred tax assets, goodwill, intangible assets, noncurrent income taxes receivable and assets of nonreportable segments.
−Removed: The net book value of long-lived tangible assets located outside of the United States was $ 1.4 billion at September 29, 2019 , September 30, 2018 and September 24, 2017 .
−Removed: The net book values of long-lived tangible assets located in the United States were $ 1.7 billion , $ 1.6 billion and $ 1.8 billion at September 29, 2019 , September 30, 2018 and September 24, 2017 , respectively.
+Added: Total $ 35,594 $ 32,957 $ 32,718
+Added: Segment assets are comprised of accounts receivable and inventories for QCT and QTL.
+Added: QSI segment assets include certain non-marketable equity instruments, receivables and other investments.
+Added: QSI assets at September 27, 2020, September 29, 2019 and September 30, 2018 included $ 110 million, $ 230 million and $ 283 million, respectively, related to investments in equity method investees.
+Added: Total segment assets differ from total assets on a consolidated basis as a result of unallocated corporate assets primarily comprised of certain cash, cash equivalents, marketable and non-marketable securities, accounts receivable from Huawei related to the remaining amounts due under the settlement agreement (Note 2), property, plant and equipment, deferred tax assets, goodwill, intangible assets, operating lease assets, noncurrent income taxes receivables, deferred compensation plan assets and assets of nonreportable segments.
+Added: The net book value of long-lived tangible assets located outside of the United States was $ 2.3 billion, $ 1.4 billion and $ 1.4 billion at September 27, 2020, September 29, 2019 and September 30, 2018, respectively.
+Added: The net book value of long-lived tangible assets located in the United States was $ 1.9 billion, $ 1.7 billion and $ 1.6 billion at September 27, 2020, September 29, 2019 and September 30, 2018, respectively.
We report revenues from external customers by country based on the location to which our products or services are delivered, which for QCT is generally the country in which our customers manufacture their products, and for licensing revenues, the invoiced addresses of our licensees.
2 unchanged sentences
Revenues by country were as follows (in millions):
+Added: 2020 2019 2018
China (including Hong Kong) $ 14,001 $ 11,610 $ 15,149
+Added: South Korea 2,964 2,400 3,175
United States 1,129 2,774 603
+Added: Ireland 867 2,957 1
Other foreign 4,570 4,532 3,683
+Added: $ 23,531 $ 24,273 $ 22,611
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reconciling items for revenues and EBT in a previous table were as follows (in millions):
+Added: 2020 2019 2018
Nonreportable segments $ 133 $ 168 $ 287
−Removed: Reduction to revenues related to BlackBerry arbitration decision
−Removed: Other unallocated revenues
−Removed: Reduction to revenues related to BlackBerry arbitration decision
−Removed: Other unallocated revenues
+Added: Unallocated revenues 1,841 4,723 ( 100 )
+Added: $ 1,974 $ 4,891 $ 187
+Added: Unallocated revenues $ 1,841 $ 4,723 $ ( 100 )
Unallocated cost of revenues ( 340 ) ( 430 ) ( 486 )
1 unchanged sentence
Unallocated selling, general and administrative expenses ( 401 ) ( 413 ) ( 576 )
−Removed: Unallocated other expenses (Note 2)
+Added: Unallocated other income (expenses) (Note 2) 28 ( 414 ) ( 3,135 )
Unallocated interest expense ( 599 ) ( 619 ) ( 761 )
1 unchanged sentence
Nonreportable segments ( 63 ) ( 61 ) ( 356 )
+Added: $ ( 475 ) $ 2,040 $ ( 6,002 )
Certain revenues (and reduction to revenues) were not allocated to our segments in our management reports because they were not considered in evaluating segment results.
−Removed: Other unallocated revenues in fiscal 2019 were comprised of licensing revenues resulting from the settlement with Apple and its contract manufacturers.
−Removed: Other unallocated revenues in fiscal 2018 and 2017 were comprised of reductions to licensing revenues related to the portions of business arrangements that resolved legal disputes and were not allocated to our QTL segment.
−Removed: In fiscal 2017, we recognized a reduction to revenues related to an arbitration decision and resulting Joint Stipulation Regarding Final Award Agreement entered into with BlackBerry Limited, the substantial impact of which was not allocated to QTL.
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: On February 3, 2017 (the Closing Date), we completed the formation of a joint venture with TDK Corporation (TDK), under the name RF360 Holdings to enable delivery of radio frequency front-end (RFFE) modules and radio frequency (RF) filters into fully integrated products for mobile devices and Internet of Things (IoT) applications, among others.
−Removed: Upon formation, the joint venture was owned 51 % by Qualcomm Global Trading Pte.
−Removed: (Qualcomm Global Trading), a Singapore corporation and wholly-owned subsidiary of ours, and 49 % by EPCOS AG (EPCOS), a German wholly-owned subsidiary of TDK.
−Removed: We had the option to acquire (and EPCOS had an option to sell) EPCOS’s interest in the joint venture for $ 1.15 billion (Settlement Amount), beginning on August 4, 2019, for a period of 60 days (the Put and Call Option).
−Removed: The Put and Call Option was recorded as a liability at fair value as part of the total purchase price of $ 3.1 billion on the Closing Date.
−Removed: The liability was accreted to the Settlement Amount (with the offset recorded as interest expense) and was included in other current liabilities at September 30, 2018 (Note 2).
−Removed: On September 16, 2019, the Put and Call Option was exercised, and we acquired EPCOS’s remaining minority ownership interest in RF360 Holdings for $ 1.15 billion .
−Removed: At the Closing Date, we determined that RF360 Holdings was a variable interest entity, and its results of operations and statement of financial position have been included in our consolidated financial statements since its formation as the governance structure of RF360 Holdings provided us with the power to direct the activities of the joint venture that most significantly impacted its economic performance.
−Removed: Since the Put and Call Option was considered a financing of our purchase of EPCOS’s interest in RF360 Holdings, noncontrolling interest was not recorded in our consolidated financial statements.
−Removed: At the Closing Date, intangible assets acquired subject to amortization totaled $ 833 million , which primarily comprised of $ 738 million of technology-based intangible assets that are being amortized on a straight-line basis over the weighted-average useful lives of seven years .
−Removed: The following table presents the unaudited pro forma results for fiscal 2017 .
−Removed: The unaudited pro forma financial information combines the results of operations of Qualcomm and RF360 Holdings as though the companies had been combined as of the beginning of fiscal 2016 .
−Removed: The pro forma information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at such time.
−Removed: The unaudited pro forma results presented below include adjustments for the step-up of inventories to fair value, amortization and depreciation of identified intangible assets and property, plant and equipment, adjustments for certain acquisition-related charges, interest expense related to the Put and Call Option and related tax effects (in millions):
−Removed: Pro forma revenues
−Removed: Pro forma net income attributable to Qualcomm
−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 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: Total restructuring and restructuring-related charges related to the Cost Plan were as follows (in millions):
−Removed: Restructuring-related charges (2)
−Removed: Restructuring charges (3)
−Removed: During fiscal 2018 , we recorded restructuring and restructuring-related charges of $ 629 million in other expenses and charges of $ 58 million in investment and other income, net.
−Removed: Restructuring-related charges primarily related to asset impairment charges in fiscal 2019 and 2018 and also included a $ 52 million net gain in fiscal 2019 from the sale of certain assets related to wireless electric vehicle charging applications and the sale of our mobile health nonreportable segment, as well as a $ 41 million gain in fiscal 2018 resulting from fair value adjustments of certain
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: contingent consideration related to a business combination.
−Removed: Restructuring charges primarily consisted of severance and consulting costs in fiscal 2019 and 2018, which were payable in cash.
−Removed: The restructuring accrual, a portion of which was included in payroll and other benefits related liabilities with the remainder included in other current liabilities, is expected to be substantially paid within the next 12 months.
−Removed: At September 29, 2019 and September 30, 2018 , the restructuring accrual was $ 17 million and $ 83 million , respectively.
+Added: Unallocated revenues in fiscal 2020 were comprised of licensing revenues from Huawei resulting from the settlement agreement and royalties for sales made in the March 2020 and June 2020 quarters under the new global patent license agreement (Note 2).
+Added: Unallocated revenues in fiscal 2019 were comprised of licensing revenues resulting from the settlement with Apple and its contract manufacturers in April 2019.
+Added: Unallocated revenues in fiscal 2018 were comprised of reductions to licensing revenues related to the portions of business arrangements that resolved legal disputes and were not allocated to our QTL segment.
Fair Value Measurements
The following table presents our fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at September 27, 2020 (in millions):
+Added: Level 1 Level 2 Level 3 Total
Cash equivalents $ 2,283 $ 3,248 $ — $ 5,531
Marketable securities:
+Added: Treasury securities and government-related securities — 10 — 10
Corporate bonds and notes — 4,049 — 4,049
−Removed: Auction rate securities
−Removed: Equity and preferred securities
+Added: Mortgage- and asset-backed and auction rate securities — 66 35 101
+Added: Equity securities 352 — — 352
Total marketable securities 352 4,125 35 4,512
6 unchanged sentences
Activity within Level 3 of the Fair Value Hierarchy.
−Removed: Other investments and other liabilities included in Level 3 at September 29, 2019 and September 30, 2018 were comprised of convertible debt instruments issued by private companies and contingent consideration related to business combinations, respectively.
−Removed: Activity for marketable securities, other investments and other liabilities classified within Level 3 of the valuation hierarchy was insignificant during fiscal 2019, which was primarily related to issuances of convertible debt instruments by private companies and settlements of contingent consideration, and fiscal 2018, which was primarily related to settlements of convertible debt.
+Added: Other investments included in Level 3 at September 27, 2020 and September 29, 2019 were comprised of non-marketable debt instruments, and other liabilities included in Level 3 at September 29, 2019 were comprised of contingent consideration related to business combinations.
+Added: Activity for marketable securities, other investments and other liabilities classified within Level 3 of the valuation hierarchy was insignificant during fiscal 2020 (primarily related to impairment of certain of our non-marketable debt instruments, purchases and settlements of
+Added: QUALCOMM Incorporated
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: non-marketable debt instruments and payments of contingent consideration related to certain business acquisitions) and fiscal 2019 (primarily related to issuances of non-marketable debt instruments and payments of contingent consideration).
Nonrecurring Fair Value Measurements.
1 unchanged sentence
These assets and liabilities include equity method and non-marketable equity investments, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property, plant and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired.
−Removed: During fiscal 2019 and 2018, certain property, plant and equipment, non-marketable equity securities, intangible assets and goodwill were written down to their estimated fair values (Note 10).
−Removed: We also measured certain non-marketable equity securities received as non-cash consideration at fair value on a nonrecurring basis (Note 2).
−Removed: We determined the fair values using cost, market and income approaches.
+Added: During fiscal 2020, certain of our non-marketable equity investments were written down to their estimated fair values, which was recorded as a component of impairment losses on other investments in investment and other income, net (Note 2), and certain other non-marketable equity investments were remeasured to their estimated fair values based on observable price changes in orderly transactions for identical or similar securities, which was recorded as a component of net gains on other investments in investment and other income, net (Note 2).
+Added: For a significant portion of the impairments, the estimated fair values resulted in a full write-off of the carrying values.
+Added: The estimation of fair values was judgmental in nature and involved the use of significant estimates and assumptions.
+Added: We determined these fair value measurements primarily using a market approach and key inputs and assumptions included estimated market value of assets, ability of investees to access additional financing or otherwise continue as a going concern, volatility and liquidation and other rights of the securities we hold.
+Added: During 2019, certain property, plant and equipment, non-marketable equity investments, intangible assets and goodwill were written down to their estimated fair values.
+Added: We also measured certain non-marketable equity investments received as non-cash consideration at fair value on a nonrecurring basis (Note 2).
+Added: We determined these fair value measurements using cost, market and income approaches.
The estimation of fair value used in the fair value measurements required the use of significant unobservable inputs, and as a result, the fair value measurements were classified as Level 3.
We did not have any other significant assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition for all periods presented.
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Revision of Prior Period Financial Statements
−Removed: We revised certain prior period financial statements for an immaterial error related to the recognition of certain royalty revenues of our QTL segment (Note 1).
−Removed: A summary of revisions to our previously reported financial statements presented herein for comparative purposes is included below (in millions, except per share data).
−Removed: Revised Consolidated Balance Sheets.
−Removed: As of September 30, 2018
−Removed: Deferred tax assets (noncurrent)
−Removed: Other current liabilities
−Removed: Total current liabilities
−Removed: Total liabilities
−Removed: Retained earnings
−Removed: Total stockholders’ equity
−Removed: Total liabilities and stockholders’ equity
−Removed: Revised Consolidated Statements of Operations.
+Added: Marketable Securities
+Added: We classify marketable securities as current or noncurrent based on the nature of the securities and their availability for use in current operations.
+Added: Our marketable securities were comprised as follows (in millions):
+Added: Current Noncurrent (1)
September 27,
2020 September 29,
−Removed: Licensing revenues
−Removed: Total revenues
−Removed: Operating income
−Removed: Income before income taxes
−Removed: Income tax expense
−Removed: Net (loss) income
−Removed: Net (loss) income attributable to Qualcomm
−Removed: Basic (loss) earnings per share
−Removed: Diluted (loss) earnings per share
−Removed: Revised Consolidated Statements of Comprehensive Income (Loss).
2019 September 27,
2020 September 29,
−Removed: Net (loss) income
−Removed: Total comprehensive (loss) income
−Removed: Comprehensive (loss) income attributable to Qualcomm
−Removed: QUALCOMM Incorporated
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Revised Consolidated Statements of Cash Flows.
−Removed: We revised our consolidated statements of cash flows for the years ended September 30, 2018 and September 24, 2017 for this correction, which had no impact to net cash provided by operating activities in each such period.
−Removed: Year Ended September 30, 2018
−Removed: Reclassification adjustment (1)
−Removed: Revision adjustment
−Removed: Operating Activities:
−Removed: Income tax provision in excess of (less than) income tax payments
−Removed: Other items, net
−Removed: Payroll, benefits and other liabilities
−Removed: Net cash provided by operating activities
−Removed: Year Ended September 24, 2017
−Removed: Reclassification adjustment (1)
−Removed: Revision adjustment
−Removed: Operating Activities:
−Removed: Income tax provision in excess of (less than) income tax payments
−Removed: Other items, net
−Removed: Payroll, benefits and other liabilities
−Removed: Net cash provided by operating activities
−Removed: (1) Certain previously reported amounts have been reclassified to conform to the current year presentation.
−Removed: Revised Segment Information.
−Removed: QTL segment results were revised for this correction (Note 8), which resulted in a decrease in QTL revenues and EBT (earnings before income taxes) of $ 121 million and $ 33 million for fiscal 2018 and 2017 , respectively.
+Added: Available-for-sale debt securities:
+Added: Treasury securities and government-related securities $ 10 $ — $ — $ —
+Added: Corporate bonds and notes 4,049 4 — —
+Added: Mortgage- and asset-backed and auction rate securities 66 — 35 35
+Added: Total available-for-sale debt securities 4,125 4 35 35
+Added: Equity securities
+Added: Time deposit (2) 30 — — —
+Added: Total marketable securities $ 4,507 $ 421 $ 35 $ 36
+Added: (1) Noncurrent marketable securities were included in other assets.
+Added: (2) At September 27, 2020, marketable securities also included a time deposit with an original maturity of greater than 90 days .
+Added: The contractual maturities of available-for-sale debt securities were as follows (in millions):
+Added: September 27,
+Added: Years to Maturity:
+Added: Less than one year $ 2,868
+Added: One to five years 1,192
+Added: No single maturity date 100
+Added: Total $ 4,160
+Added: Debt securities with no single maturity date included mortgage- and asset-backed securities and auction rate securities.
+Added: At September 27, 2020, unrealized gains and unrealized losses on available-for-sale debt securities were $ 20 million and negligible, respectively.
+Added: At September 29, 2019, unrealized gains and losses on available-for-sale debt securities were negligible.
QUALCOMM Incorporated
3 unchanged sentences
The table below presents quarterly data for fiscal 2020 and 2019 (in millions, except per share data):
+Added: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
+Added: Revenues (2) $ 5,077 $ 5,216 $ 4,893 $ 8,346
Operating income (2) 1,030 991 782 3,452
2 unchanged sentences
Diluted earnings per share (4) 0.80 0.41 0.74 2.58
−Removed: Operating (loss) income (5)
−Removed: Net (loss) income (5)
−Removed: Basic (loss) earnings per share (3):
−Removed: Diluted (loss) earnings per share (3):
+Added: Revenues (3) $ 4,842 $ 4,982 $ 9,635 $ 4,814
+Added: Operating income (3) 710 940 5,317 701
+Added: Net income (3) 1,068 663 2,149 506
+Added: Basic earnings per share (4) $ 0.88 $ 0.55 $ 1.77 $ 0.42
+Added: Diluted earnings per share (4) 0.87 0.55 1.75 0.42
(1) Amounts, other than per share amounts, are rounded to millions each quarter.
Therefore, the sum of the quarterly amounts may not equal the annual amounts reported.
−Removed: Revenues, operating income and net income in the third quarter of fiscal 2019 included licensing revenues recognized of $ 4.7 billion resulting from the settlement with Apple and its contract manufacturers.
+Added: (2) Revenues, operating income and net income in the fourth quarter of fiscal 2020 included $ 1.8 billion resulting from the settlement of our prior dispute with Huawei.
+Added: Net income in the second quarter of fiscal 2020 was impacted by $ 265 million in non-marketable investment impairments due in part from the impact that the COVID-19 pandemic had on certain of our investees.
+Added: (3) Revenues, operating income and net income in the third quarter of fiscal 2019 included $ 4.7 billion resulting from the settlement with Apple and its contract manufacturers.
Operating income and net income in the third quarter of fiscal 2019 were impacted by a $ 275 million charge related to the 2019 EC Fine.
2 unchanged sentences
Net income in the third quarter of 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.
−Removed: Earnings (loss) per share and earnings per share attributable to Qualcomm are computed independently for each quarter and the full year based upon respective average shares outstanding.
−Removed: Therefore, the sum of the quarterly (loss) earnings per share amounts may not equal the annual amounts reported.
−Removed: As previously disclosed in our Quarterly Reports on Form 10-Q for the quarters ended December 30, 2018, March 31, 2019 and June 30, 2019, we revised certain prior period financial information for an immaterial error related to the recognition of certain royalty revenues of our QTL segment (Note 1).
−Removed: Operating loss and net loss in the fourth quarter of fiscal 2018 were impacted by a $ 2.0 billion charge related to the NXP termination fee.
−Removed: Net loss in the first quarter of fiscal 2018 was impacted by a $ 5.9 billion provisional charge to income tax expense due to the effects of the Tax Legislation.
−Removed: Additionally, operating income and net loss in the first quarter of fiscal 2018 were impacted by a $ 1.2 billion charge related to the 2018 EC fine.
+Added: (4) Earnings per share and earnings per share are computed independently for each quarter and the full year based upon respective average shares outstanding.
+Added: Therefore, the sum of the quarterly earnings per share amounts may not equal the annual amounts reported.
QUALCOMM Incorporated
VALUATION AND QUALIFYING ACCOUNTS
−Removed: (In millions)
−Removed: (Credited) to
+Added: The table below details the activity of the valuation allowance on deferred tax assets for fiscal 2020, 2019 and 2018 (in millions):
+Added: Period Charged to
+Added: Expenses Other Balance at
Year ended September 27, 2020 $ 1,672 $ 60 $ ( 4 ) $ 1,728
−Removed: Allowance on trade receivables
−Removed: Valuation allowance on deferred tax assets
Year ended September 29, 2019 1,529 143 — 1,672
−Removed: Allowance on trade receivables
−Removed: Valuation allowance on deferred tax assets
Year ended September 30, 2018 863 666 — 1,529
−Removed: Allowance on trade receivables
−Removed: Valuation allowance on deferred tax assets
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.