Freddie Mac 2010 Annual Report Download - page 251

During 2010, each of our two REIT subsidiaries was eliminated via a merger transaction, which resulted in no gain or
loss recognized on our consolidated statements of operations. This resulted in the elimination of the noncontrolling interest
from our consolidated balance sheets.
NOTE 17: SEGMENT REPORTING
We evaluate segment performance and allocate resources based on a Segment Earnings approach, subject to the conduct
of our business under the direction of the Conservator. See “NOTE 3: CONSERVATORSHIP AND RELATED MATTERS”
for additional information about the conservatorship. Beginning January 1, 2010, we revised our method for presenting
Segment Earnings to reflect changes in how management measures and assesses the financial performance of each segment
and the company as a whole. Under the revised method, the financial performance of our segments is measured based on
each segment’s contribution to GAAP net income (loss). This change in method, in conjunction with our implementation of
changes in accounting standards relating to transfers of financial assets and the consolidation of VIEs, resulted in significant
changes to our presentation of Segment Earnings.
We present Segment Earnings by: (a) reclassifying certain investment-related activities and credit guarantee-related
activities between various line items on our GAAP consolidated statements of operations; and (b) allocating certain revenues
and expenses, including certain returns on assets and funding costs, and all administrative expenses to our three reportable
segments. These reclassifications and allocations are described below in “Segment Earnings.”
We do not consider our assets by segment when evaluating segment performance or allocating resources. We conduct
our operations solely in the U.S. and its territories. Therefore, we do not generate any revenue from geographic locations
outside of the U.S. and its territories.
Segments
Our operations consist of three reportable segments, which are based on the type of business activities each performs —
Investments, Single-family Guarantee, and Multifamily. The chart below provides a summary of our three reportable
segments and the All Other category. As reflected in the chart, certain activities that are not part of a reportable segment are
included in the All Other category. Under our revised method for presenting Segment Earnings, the All Other category
consists of material corporate level expenses that are: (a) non-recurring in nature; and (b) based on management decisions
outside the control of the management of our reportable segments. By recording these types of activities to the All Other
category, we believe the financial results of our three reportable segments represent the decisions and strategies that are
executed within the reportable segments and provide greater comparability across time periods. Items included in the All
Other category consist of: (a) the deferred tax asset valuation allowance associated with previously recognized income tax
credits carried forward; and (b) in 2009, the write-down of our LIHTC investments. Other items previously recorded in the
All Other category prior to the revision to our method for presenting Segment Earnings have been allocated to our three
reportable segments.
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