Texas Instruments 2013 Annual Report Download - page 35

TEXAS INSTRUMENTS 2013 ANNUAL REPORT • 33
ANNUAL
REPORT
16. Segment and geographic area data
Reportable segments
Our financial reporting structure is comprised of two reportable segments: Analog and Embedded Processing. 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 embedded processors. Analog semiconductors are also used to manage power in every electronic device, whether
plugged into a wall or running off a battery. Analog includes the following major product lines: HVAL, Power, HPA and SVA.
•฀ Embedded Processing – Embedded Processing products are the “brains” of many electronic devices. Compared with general
purpose microprocessors that perform many different tasks, embedded processors are designed to handle specific tasks and
can be optimized for various combinations of performance, power and cost, depending on the application. The devices vary from
simple, low-cost products used in electric toothbrushes to highly specialized, complex devices used in wireless basestation
communications infrastructure equipment. Embedded Processing includes the following major product lines: Processors,
Microcontrollers and Connectivity.
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 product lines, such as DLP®
products, primarily used in projectors to create high-definition images; certain custom semiconductors known as application-specific
integrated circuits (ASICs); and calculators. Additionally, Other 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. We also
include revenue and associated costs from our legacy wireless products, which were part of our former Wireless segment. The Wireless
segment was eliminated effective January 1, 2013. To conform to this revised reporting structure, we filed a Form 8-K on May 3, 2013,
to recast prior period segment information presented in our Form 10-K for the year ended December 31, 2012.
We also include in Other restructuring charges and certain acquisition-related charges, as these charges are not used in evaluating
the results of or in allocating resources to our segments. Acquisition-related charges include certain fair-value adjustments, restructuring
charges, transaction expenses, acquisition-related retention bonuses and amortization of intangible assets. Other also includes certain
corporate-level items, such as litigation expenses, environmental costs and insurance proceeds. Except for these 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.
We use centralized manufacturing and support organizations, such as facilities, procurement and logistics, 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. The assets and liabilities associated with our centralized operations are carried in Other.
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.
Segment information
Analog Embedded Processing Other Total
Revenue
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7,194 $2,450 $2,561 $12,205
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,998 2,257 3,570 12,825
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,375 2,381 4,979 13,735
Operating profit
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,859 $ 185 $ 788 $ 2,832
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,650 158 165 1,973
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,693 387 912 2,992