Texas Instruments 2012 Annual Report Download - page 36

ANNUAL
REPORT
TEXAS INSTRUMENTS34 • 2012 ANNUAL REPORT
16. Segment and geographic area data
Reportable segments
The information presented in our Notes to financial statements is based on our segment structure existing as of December 31, 2012.
This structure is comprised of three reportable segments: Analog, Embedded Processing and Wireless. These reportable segments
represent groups of similar products that are combined on the basis of similar design and development requirements, product
characteristics, manufacturing processes and distribution channels. A summary of each reportable segment follows:
•฀ Analog – Analog semiconductors change real-world signals – such as sound, temperature, pressure or images – by conditioning
them, amplifying them and often converting them to a stream of digital data that can be processed by other semiconductors,
such as digital signal processors (DSPs). Analog semiconductors are also used to manage power in every electronic device,
whether plugged into a wall or running off of a battery. Analog includes the following major product lines: HVAL, Power, HPA
and SVA.
•฀ Embedded Processing – Our Embedded Processing products include our DSPs and microcontrollers. DSPs perform mathematical
computations almost instantaneously to process or improve digital data. Microcontrollers are designed to control a set of specific
tasks for electronic equipment. We make and sell catalog Embedded Processing products used in many different applications
and application-specific Embedded Processing products used in specific applications, such as communications infrastructure
equipment and automotive.
•฀ Wireless – Our Wireless products consist of OMAP applications processors, connectivity products and baseband products. We
concentrated our Wireless investments on OMAP applications processors and connectivity products for the smartphone and
consumer tablet markets.
As previously announced, the Wireless segment will be eliminated due to the decision to wind down certain of its product lines. As
a result, we will restructure our reportable segments beginning January 1, 2013, and we will report our first quarter of 2013 financial
results accordingly. Financial results for Wireless products for the smartphone and consumer tablet markets will be included in Other.
Financial results for Wireless products that address embedded applications, a strategic focus for the company, will be reported in the
Embedded Processing segment.
Other
Other includes other operating segments that neither meet the quantitative thresholds for individually reportable segments nor are they
aggregated with other operating segments. These operating segments primarily include our smaller semiconductor product lines such
as DLP® products (primarily used in projectors to create high-definition images), custom semiconductors known as application-specific
integrated circuits (ASICs) and calculators.
Other also includes royalties received for our patented technology that we license to other electronics companies and revenue from
transitional supply agreements related to acquisitions and divestitures. Other may also include certain unallocated income and expenses
such as gains and losses on sales of assets; sales tax refunds; and certain litigation costs, settlements or reserves. Except for these
few unallocated items, we allocate all of our expenses associated with corporate activities to our operating segments based on specific
methodologies, such as percentage of operating expenses or headcount.
Acquisition-related charges related to National are also recorded in Other in 2012 and 2011, as detailed in Note 2.
Restructuring charges related to the 2011 announced action in Hiji, Japan, and Houston, Texas; losses and insurance proceeds
associated with the 2011 earthquake in Japan; and the 2012 gain on the transfer of the Japan substitutional pension are also included
in Other. In 2010, the gain related to a divestiture of a product line is included in Other. See Notes 3 and 4 for additional information.
We use centralized manufacturing and facilities organizations to provide products and support to our operating segments. Costs
incurred by these organizations, including depreciation, are charged to the segments on a per-unit basis. Consequently, depreciation
expense is not an independently identifiable component within the segments’ results and therefore is not provided.
With the exception of goodwill, we do not identify or allocate assets by operating segment, nor does the chief operating decision
maker evaluate operating segments using discrete asset information. There was no significant intersegment revenue. The accounting
policies of the segments are the same as those described in the summary of significant accounting policies.