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ANNUAL
REPORT
TEXAS INSTRUMENTS 2012 ANNUAL REPORT • 23
The following table summarizes the change in the fair values for Level 3 assets and liabilities for the years ended December 31, 2012
and 2011.
Level 3
Auction-rate
Securities Contingent
Consideration
Balance, December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 257 $ 8
Change in fair value of contingent consideration – included in operating profit . . . . . . . . . . . . . . . . — (8)
Change in unrealized loss – included in AOCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) —
Redemptions and sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (122) —
Balance, December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 —
Change in unrealized loss – included in AOCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 —
Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84) —
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (63) —
Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ —
10. Goodwill and acquisition-related intangibles
The following table summarizes the changes in goodwill by segment for the years ended December 31, 2012 and 2011.
Analog Embedded
Processing Wireless Other Total
Goodwill, December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . $ 630 $172 $ 90 $ 32 $ 924
Additions from acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . 3,528 — — — 3,528
Goodwill, December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . 4,158 172 90 32 4,452
Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (90) — (90)
Goodwill, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . $4,158 $172 $ — $ 32 $4,362
We performed our annual goodwill impairment test as of October 1, 2012, and determined the fair value of each of our reporting
units was in excess of its carrying value. Determination of fair value was based upon management estimates and judgment, using
unobservable inputs in discounted cash flow models to calculate the fair value of each reporting unit. These unobservable inputs are
considered Level 3 measurements.
In November 2012, as a result of unsuccessful efforts to divest certain product lines in the Wireless business and the subsequent
decision to restructure and wind down those product lines, we reassessed the recoverability of the goodwill associated with the Wireless
segment. We determined its fair value, using a discounted cash flow analysis, was less than the carrying amount and, therefore,
performed the required second step of the impairment analysis to determine the amount of the impairment charge. We deducted the
fair value of the Wireless segment from the total of the estimated fair values of the segment’s identifiable assets and liabilities, including
intangible assets with no carrying value. This calculation resulted in an implied negative fair value of goodwill. As a result, we recognized
a non-cash, non-tax deductible impairment charge of $90 million for all the associated goodwill of this segment. We recognized this
impairment in Restructuring charges/other in the Consolidated statements of income, as discussed in Note 3. There was no impairment
of goodwill during 2011 or 2010.