Freddie Mac 2011 Annual Report Download - page 278

NOTE 14: 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 2: CONSERVATORSHIP AND RELATED
MATTERS” for additional information about the conservatorship.
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 income and comprehensive income; 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 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. The All Other category consists of material corporate level expenses that
are: (a) infrequent 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 reflect 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 on January 1, 2010, as discussed below, have been allocated to our three
reportable segments.
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