Qualcomm Inc 10-K for FY2020

Qualcomm Inc (QCOM)

10-K 2020-11-04 For: 2020-09-27

Added on April 02, 2026

About this 10-K

Qualcomm Inc filed this 10-K on November 4, 2020, covering the fiscal year ended September 27, 2020 (FY2020).

Headline figures

Fiscal year ended September 27, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $23.53B; down 3.1% from $24.27B a year earlier
Net income: $5.2B; up 18.5% from net income of $4.39B a year earlier
Diluted EPS: $4.52; up 25.9% from $3.59 a year earlier

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Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common stock, $0.0001 par value	QCOM	NASDAQ Stock Market


QUALCOMM Incorporated
Form 10-K
For the Fiscal Year Ended September 27, 2020
Index


		Page

PART I

Item 1.	Business	5
Item 1A.	Risk Factors	18
Item 1B.	Unresolved Staff Comments	35
Item 2.	Properties	35
Item 3.	Legal and Regulatory Proceedings	35
Item 4.	Mine Safety Disclosures	35

PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	36
Item 6.	Selected Financial Data	37
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	50
Item 8.	Financial Statements and Supplementary Data	51
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	51
Item 9A.	Controls and Procedures	51
Item 9B.	Other Information	52

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	53
Item 11.	Executive Compensation	53
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	53
Item 13.	Certain Relationships and Related Transactions, and Director Independence	53
Item 14.	Principal Accounting Fees and Services	53

PART IV

Item 15.	Exhibits and Financial Statement Schedules	53
Item 16.	Form 10-K Summary	56


	2020			2019			2018
QCT	$	16,493		$	14,639		$	17,282
As a percent of total	70		%	60		%	76		%
QTL	$	5,028		$	4,591		$	5,042
As a percent of total	21		%	19		%	22		%
QSI	$	36		$	152		$	100
As a percent of total	—		%	1		%	—		%


	United States	Other Countries	Total
Owned facilities	4.4	0.4	4.8
Leased facilities	0.9	6.2	7.1
Total	5.3	6.6	11.9



☒						ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Years Ended (1)
	September 27, 2020		September 29, 2019		September 30, 2018		September 24, 2017		September 25, 2016
	(In millions, except per share data)
Statement of Operations Data:
Revenues (2)	$	23,531	$	24,273	$	22,611	$	22,258	$	23,554
Operating income (2)	6,255		7,667		621		2,581		6,495

Net income (loss) attributable to Qualcomm (2)	5,198		4,386		(4,964)		2,445		5,705

Per Share Data:



Basic earnings (loss) per share attributable to Qualcomm	$	4.58	$	3.63	$	(3.39)	$	1.66	$	3.84



Diluted earnings (loss) per share attributable to Qualcomm	4.52		3.59		(3.39)		1.64		3.81
Dividends per share announced	2.54		2.48		2.38		2.20		2.02

Balance Sheet Data:
Cash, cash equivalents and marketable securities (3)	$	11,249	$	12,296	$	12,123	$	38,578	$	32,350
Total assets (3)	35,594		32,957		32,718		65,498		52,359

Short-term debt (4)	500		2,496		1,005		2,495		1,749
Long-term debt (5)	15,226		13,437		15,365		19,398		10,008
Other long-term liabilities (6)	4,858		4,516		3,537		2,432		895
Total stockholders’ equity (3)	6,077		4,909		807		30,725		31,768


Revenues (in millions)
	2020		2019		2018		2020 vs. 2019 Change		2019 vs. 2018 Change
Equipment and services	$	16,298	$	14,611	$	17,400	$	1,687	$	(2,789)
Licensing	7,233		9,662		5,211		(2,429)		4,451
	$	23,531	$	24,273	$	22,611	$	(742)	$	1,662


Costs and Expenses (in millions, except percentages)
	2020			2019			2018			2020 vs. 2019 Change		2019 vs. 2018 Change
Cost of revenues	$	9,255		$	8,599		$	10,244		$	656	$	(1,645)
Gross margin	61		%	65		%	55		%


Interest Expense and Investment and Other Income, Net (in millions)
	2020		2019		2018		2020 vs. 2019 Change		2019 vs. 2018 Change
Interest expense	$	602	$	627	$	768	$	(25)	$	(141)

Investment and other income, net
Interest and dividend income	$	156	$	300	$	611	$	(144)	$	(311)
Net gains on marketable securities	198		295		21		(97)		274
Net gains on other investments	108		68		83		40		(15)
Net gains on deferred compensation plan assets	47		9		34		38		(25)
Impairment losses on other investments	(405)		(135)		(75)		(270)		(60)
Net gains (losses) on derivative instruments	8		(14)		(27)		22		13
Equity in net losses of investees	(21)		(93)		(145)		72		52
Net (losses) gains on foreign currency transactions	(25)		11		37		(36)		(26)
	$	66	$	441	$	539	$	(375)	$	(98)


	September 27, 2020		September 29, 2019		Change
Cash, cash equivalents and marketable securities	$	11,249	$	12,296	$	(1,047)
Accounts receivable, net	4,003		2,471		1,532
Inventories	2,598		1,400		1,198
Short-term debt	500		2,496		(1,996)
Long-term debt	15,226		13,437		1,789
Noncurrent income taxes payable	1,872		2,088		(216)

	2020		2019		Change
Net cash provided by operating activities	$	5,814	$	7,286	$	(1,472)
Net cash used by investing activities	(5,263)		(806)		(4,457)
Net cash used by financing activities	(5,707)		(6,386)		679


	Stock Repurchase Program					Dividends				Total
	Shares	Average Price Paid Per Share (1)		Amount		Per Share		Amount		Amount
2020	31	$	79.32	$	2,450	$	2.54	$	2,882	$	5,332
2019	96	66.18		1,793		2.48		2,968		4,761
2018	279	65.41		22,569		2.38		3,466		26,035


	Total		2021		2022-2023		2024-2025		Beyond 2025		No Expiration Date
Purchase obligations (1)	$	6,060	$	5,468	$	539	$	53	$	—	$	—

Operating lease obligations (2)	578		141		196		91		150		—
Finance lease obligations (2)	130		14		20		16		80		—
Equity funding and financing commitments (3)	185		103		1		—		—		81
Long-term debt (4)	22,057		476		3,890		3,067		14,624		—
Other long-term liabilities (5) (6)	2,807		220		472		862		631		622
Total contractual obligations	$	31,817	$	6,422	$	5,118	$	4,089	$	15,485	$	703



			QUALCOMM Incorporated

			By			/s/ Steve Mollenkopf
						Steve Mollenkopf
						Chief Executive Officer


	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
Benefit from foreign-derived intangible income (FDII) deduction	(381)			(419)			—
Benefit related to the research and development tax credit	(125)			(110)			(136)
Excess tax benefit associated with share-based awards	(83)			(27)			(20)
Benefit from foreign income taxed at other than U.S. rates	(11)			(54)			(834)
Derecognition of deferred tax asset on distributed intellectual property	—			2,472			—
Benefit from establishing new U.S. net deferred tax assets	—			(570)			—



Nondeductible charges (reversals) related to the EC, KFTC and TFTC investigations	—			51			(119)
Toll Charge from U.S. tax reform	—			—			5,236
Valuation allowance on deferred tax asset related to the NXP termination fee	—			—			494
Remeasurement of deferred taxes due to changes in the statutory rate due to U.S. tax reform	—			—			443
Other	(87)			171			193
Income tax expense	$	521		$	3,095		$	5,356
Effective tax rate	9		%	41		%	N/M


	September 27, 2020		September 29, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	6,707	$	11,839
Marketable securities	4,507		421
Accounts receivable, net	4,003		2,471
Inventories	2,598		1,400
Other current assets	704		634
Total current assets	18,519		16,765

Deferred tax assets	1,351		1,196
Property, plant and equipment, net	3,711		3,081
Goodwill	6,323		6,282
Other intangible assets, net	1,653		2,172
Other assets	4,037		3,461
Total assets	$	35,594	$	32,957

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	2,248	$	1,368
Payroll and other benefits related liabilities	1,053		1,048
Unearned revenues	568		565
Short-term debt	500		2,496

Other current liabilities	4,303		3,458
Total current liabilities	8,672		8,935
Unearned revenues	761		1,160
Income taxes payable	1,872		2,088
Long-term debt	15,226		13,437
Other liabilities	2,986		2,428
Total liabilities	29,517		28,048

Commitments and contingencies (Note 7)

Stockholders’ equity:
Preferred stock, $0.0001 par value; 8 shares authorized; none outstanding	—		—
Common stock and paid-in capital, $0.0001 par value; 6,000 shares authorized; 1,131 and 1,145 shares issued and outstanding, respectively	586		343
Retained earnings	5,284		4,466
Accumulated other comprehensive income	207		100


	Year Ended
	September 27, 2020		September 29, 2019		September 30, 2018
Operating Activities:
Net income (loss)	$	5,198	$	4,386	$	(4,964)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense	1,393		1,401		1,561
Income tax provision (less than) in excess of income tax payments	(309)		1,976		4,481
Share-based compensation expense	1,212		1,037		883
Net gains on marketable securities and other investments	(336)		(356)		(124)
Indefinite and long-lived asset impairment charges	—		203		273
Impairment losses on marketable securities and other investments	405		135		75


Other items, net	(142)		(272)		(49)
Changes in assets and liabilities:
Accounts receivable, net	(1,529)		1,373		734
Inventories	(1,157)		273		337
Other assets	(110)		78		24
Trade accounts payable	907		(443)		(94)
Payroll, benefits and other liabilities	528		(2,376)		1,005
Unearned revenues	(246)		(129)		(234)
Net cash provided by operating activities	5,814		7,286		3,908
Investing Activities:
Capital expenditures	(1,407)		(887)		(784)
Purchases of debt and equity marketable securities	(6,213)		—		(5,936)
Proceeds from sales and maturities of debt and equity marketable securities	2,399		198		9,188




Acquisitions and other investments, net of cash acquired	(185)		(252)		(326)
Proceeds from other investments	100		68		222

Other items, net	43		67		17
Net cash (used) provided by investing activities	(5,263)		(806)		2,381
Financing Activities:
Proceeds from short-term debt	2,848		5,989		11,131
Repayment of short-term debt	(2,846)		(6,492)		(11,127)
Proceeds from long-term debt	1,988		—		—


	Year Ended
	September 27, 2020		September 29, 2019		September 30, 2018
Total stockholders’ equity, beginning balance	$	4,909	$	807	$	30,725

Common stock and paid-in capital:
Balance at beginning of period	343		—		274
Common stock issued under employee benefit plans and the related tax benefits	328		415		612
Repurchases and retirements of common stock	(1,042)		(910)		(1,536)
Share-based compensation	1,301		1,104		930
Tax withholdings related to vesting of share-based payments	(344)		(266)		(280)

Balance at end of period	586		343		—

Retained earnings:
Balance at beginning of period	4,466		542		30,067
Cumulative effect of accounting changes	—		3,455		—
Net income (loss)	5,198		4,386		(4,964)
Repurchases and retirements of common stock	(1,408)		(883)		(21,044)
Dividends	(2,972)		(3,034)		(3,517)
Balance at end of period	5,284		4,466		542

Accumulated other comprehensive income:
Balance at beginning of period	100		265		384
Cumulative effect of accounting changes	—		(51)		—
Other comprehensive income (loss)	107		(114)		(119)
Balance at end of period	207		100		265

Total stockholders’ equity, ending balance	$	6,077	$	4,909	$	807

Dividends per share announced	$	2.54	$	2.48	$	2.38


	September 27, 2020		September 29, 2019
Forwards	$	1,096	$	878

Options	789		176
Swaps	—		1,750

	$	1,885	$	2,804


	September 27, 2020		September 29, 2019

Chinese renminbi	$	1,058	$	463

Indian rupee	595		440
Japanese yen	33		12

United States dollar	199		1,889

	$	1,885	$	2,804


Accounts Receivable (in millions)
	September 27, 2020		September 29, 2019
Trade, net of allowances for doubtful accounts	$	2,687	$	1,046

Unbilled	1,305		1,411
Other	11		14
	$	4,003	$	2,471


Inventories (in millions)
	September 27, 2020		September 29, 2019
Raw materials	$	94	$	77
Work-in-process	1,155		667
Finished goods	1,349		656
	$	2,598	$	1,400


Property, Plant and Equipment (in millions)
	September 27, 2020		September 29, 2019
Land	$	173	$	170
Buildings and improvements	1,606		1,546
Computer equipment and software	1,427		1,356
Machinery and equipment	5,095		4,007
Furniture and office equipment	90		86
Leasehold improvements	320		301
Construction in progress	134		182
	8,845		7,648
Less accumulated depreciation and amortization	(5,134)		(4,567)
	$	3,711	$	3,081


	QCT		QTL		Nonreportable Segments		Total
Balance at September 30, 2018	$	5,587	$	718	$	193	$	6,498
Acquisitions	18		—		—		18
Impairments (Note 9)	—		—		(146)		(146)
Other (1)	(40)		(1)		(47)		(88)
Balance at September 29, 2019 (2)	5,565		717		—		6,282


Other (1)	40		1		—		41
Balance at September 27, 2020 (2)	$	5,605	$	718	$	—	$	6,323


	September 27, 2020					September 29, 2019
	Gross Carrying Amount		Accumulated Amortization		Weighted-average amortization period (years)	Gross Carrying Amount		Accumulated Amortization		Weighted-average amortization period (years)
Technology-based	$	5,556	$	(3,958)	11	$	5,958	$	(3,851)	10
Other	105		(50)		9	134		(69)		9
	$	5,661	$	(4,008)	11	$	6,092	$	(3,920)	10


	September 27, 2020		September 29, 2019
Equity method investments	$	161	$	343
Non-marketable equity investments	821		787
	$	982	$	1,130


Other Current Liabilities (in millions)
	September 27, 2020		September 29, 2019
Customer incentives and other customer-related liabilities	$	1,721	$	1,129
Accrual for EC fines (Note 7)	1,487		1,379
Income taxes payable	549		480

Other	546		470
	$	4,303	$	3,458


	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
Other comprehensive income before reclassifications	60		—		22		29		7		118
Reclassifications from accumulated other comprehensive income	7		—		(2)		(16)		—		(11)
Other comprehensive income	67		—		20		13		7		107
Balance at September 27, 2020	$	(32)	$	23	$	206	$	21	$	(11)	$	207


	2020	2019


Handsets			$	10,461	$	9,793

RFFE (1)			2,362		1,478
Automotive			644		640
IoT (2)			3,026		2,728
Total QCT revenues			$	16,493	$	14,639


	2019		2018 (1)		Total
Restructuring-related charges (2)	$	151	$	334	$	485
Restructuring charges (3)	62		353		415
	$	213	$	687	$	900


Investment and Other Income, Net (in millions)

	2020		2019		2018
Interest and dividend income	$	156	$	300	$	611

Net gains on marketable securities	198		295		21
Net gains on other investments	108		68		83
Net gains on deferred compensation plan assets	47		9		34
Impairment losses on other investments	(405)		(135)		(75)

Net gains (losses) on derivative instruments	8		(14)		(27)
Equity in net losses of investees	(21)		(93)		(145)
Net (losses) gains on foreign currency transactions	(25)		11		37
	$	66	$	441	$	539


	September 27, 2020		September 29, 2019
Unused tax credits	$	1,311	$	1,137
Accrued liabilities and reserves	812		648
Unused net operating losses	576		619
Unearned revenues	262		376
Unrealized losses on other investments and marketable securities	235		164
Share-based compensation	151		115
Operating lease liabilities	107		—
Other	141		144
Total gross deferred tax assets	3,595		3,203
Valuation allowance	(1,728)		(1,672)
Total net deferred tax assets	1,867		1,531
Intangible assets	(181)		(216)
Property, plant and equipment	(162)		(102)
Operating lease assets	(100)		—
Unrealized gains on other investments and marketable securities	(97)		(99)
Other	(32)		(21)
Total deferred tax liabilities	(572)		(438)
Net deferred tax assets	$	1,295	$	1,093
Reported as:

Non-current deferred tax assets	$	1,351	$	1,196

Non-current deferred tax liabilities (1)	(56)		(103)
	$	1,295	$	1,093


			2020
Balance at beginning of period			1,145
Issued			17
Repurchased			(31)
Balance at end of period			1,131


	Number of Shares	Weighted-Average Grant Date Fair Value		Aggregate Intrinsic Value
	(In millions)			(In billions)
RSUs outstanding at September 29, 2019	27	$	62.57
RSUs granted	20	82.57
RSUs canceled/forfeited	(1)	72.04
RSUs vested	(14)	62.58
RSUs outstanding at September 27, 2020	32	$	74.99	$	3.6


	September 27, 2020				September 29, 2019
	Maturities	Amount (in millions)		Effective Rate	Maturities	Amount (in millions)		Effective Rate
May 2015 Notes	2022 - 2045	$	5,405	2.62% - 4.73%	2020 - 2045	$	8,500	2.64% - 4.73%
May 2017 Notes	2023 - 2047	5,860		1.06% - 4.46%	2023 - 2047	7,000		2.70% - 4.47%
May 2020 Notes	2030 - 2050	2,000		2.31% - 3.30%		—
August 2020 Notes	2028 - 2032	2,207		1.96% - 2.65%		—
Total principal		15,472				15,500
Unamortized discount, including debt issuance costs		(260)				(75)
Hedge accounting fair value adjustments		14				9
Total long-term debt		$	15,226			$	15,434
Reported as:
Short-term debt		$	—			$	1,997
Long-term debt		15,226				13,437
Total		$	15,226			$	15,434


	September 27, 2020
2021	$	141
2022	121
2023	75
2024	53
2025	38
Thereafter	150
Total future lease payments	578
Imputed interest	(73)
Total lease liability balance	$	505


	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents	$	2,283	$	3,248	$	—	$	5,531
Marketable securities:
U.S. Treasury securities and government-related securities	—		10		—		10
Corporate bonds and notes	—		4,049		—		4,049
Mortgage- and asset-backed and auction rate securities	—		66		35		101

Equity securities	352		—		—		352
Total marketable securities	352		4,125		35		4,512
Derivative instruments	—		51		—		51
Other investments	501		—		13		514
Total assets measured at fair value	$	3,136	$	7,424	$	48	$	10,608
Liabilities
Derivative instruments	$	—	$	7	$	—	$	7
Other liabilities	501		—		—		501
Total liabilities measured at fair value	$	501	$	7	$	—	$	508


	Current				Noncurrent (1)
	September 27, 2020		September 29, 2019		September 27, 2020		September 29, 2019





Available-for-sale debt securities:
U.S. Treasury securities and government-related securities	$	10	$	—	$	—	$	—
Corporate bonds and notes	4,049		4		—		—

Mortgage- and asset-backed and auction rate securities	66		—		35		35



Total available-for-sale debt securities	4,125		4		35		35


Equity securities	352		417		—		1
Time deposit (2)	30		—		—		—
Total marketable securities	$	4,507	$	421	$	35	$	36