Intel 2006 Annual Report Download - page 99

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In October 2006, Transmeta Corporation filed a lawsuit in the United States District Court for the District of Delaware.
Transmeta alleges that Intel’
s P6, Pentium 4, Pentium M, Intel Core, and Intel Core 2 processors infringe 10 Transmeta patents
alleged to cover computer architecture and power-efficiency technologies. In December 2006, Transmeta filed an amended
complaint alleging that Intel’s processors infringe an eleventh Transmeta patent. Intel filed counterclaims against Transmeta
alleging that Transmeta’
s Crusoe, Efficeon, and Efficeon 2 families of microprocessors infringe seven Intel patents. Transmeta
seeks damages, treble damages, an injunction, and attorneys’ fees. Intel disputes Transmeta’s allegations of infringement and
intends to defend the lawsuits vigorously.
Note 20: Operating Segment and Geographic Information
The company’s operating segments included the Digital Enterprise Group, Mobility Group, Flash Memory Group, Digital
Home Group, Digital Health Group, and Channel Platforms Group as of December 30, 2006. Prior-period amounts have been
adjusted retrospectively to reflect reorganizations.
The Chief Operating Decision Maker (CODM), as defined by SFAS No. 131, “Disclosures about Segments of an Enterprise
and Related Information” (SFAS No. 131), is the company’s President and Chief Executive Officer (CEO). The CODM
allocates resources to and assesses the performance of each operating segment using information about its revenue and
operating income (loss) before interest and taxes.
The company reports the financial results of the following operating segments:
The Flash Memory Group, Digital Home Group, Digital Health Group, and Channel Platforms Group operating segments do
not meet the quantitative thresholds for reportable segments as defined by SFAS No. 131. However, the Flash Memory Group
is reported separately, as management believes that this information is useful to the reader. The Digital Home Group, Digital
Health Group, and Channel Platforms Group operating segments are included within the “all other” category.
The company has sales and marketing, manufacturing, finance, and administration groups. Expenses of these groups are
generally allocated to the operating segments and are included in the operating results reported below. Revenue for the “all
other” category primarily relates to microprocessors and related chipsets sold by the Digital Home Group. In addition to the
operating results for the Digital Home Group, Digital Health Group, and Channel Platforms Group operating segments, the
“all other” category includes certain corporate-level operating expenses, including a portion of profit-dependent bonus and
other expenses not allocated to the operating segments; results of operations of seed businesses that support the company’s
initiatives; acquisition-related costs, including amortization and impairment of acquisition-related intangibles and goodwill;
charges for purchased in-process research and development; share-based compensation charges; and amounts included within
restructuring and asset impairment charges on the consolidated statements of income.
With the exception of goodwill, the company does not identify or allocate assets by operating segment, nor does the CODM
evaluate operating segments using discrete asset information. Operating segments do not record inter-segment revenue, and,
accordingly, there is none to be reported. The company does not allocate interest and other income, interest expense, or taxes
to operating segments. Although the CODM uses operating income to evaluate the segments, operating costs included in one
segment may benefit other segments. Except as discussed above, the accounting policies for segment reporting are the same as
for the company as a whole.
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Digital Enterprise Group.
Includes microprocessors and related chipsets and motherboards designed for the desktop
and enterprise computing market segments; communications infrastructure components such as network processors,
communications boards, and embedded processors; wired connectivity devices; and products for network and server
storage.
•
Mobility Group.
Includes microprocessors and related chipsets designed for the notebook computing market segment;
and wireless connectivity products. The operating results associated with the divested assets of the communications
and application processor business were included in the Mobility Group operating segment through the date of the
divestiture.
•
Flash Memory Group.
Includes NOR flash memory products designed for cellular phones and embedded form factors;
and NAND flash memory products manufactured by IMFT that are designed for memory cards, digital audio players,
and cellular phones.