Note 27: Operating Segments and Geographic Information
Our operating segments in effect as of December 28, 2013, include:
|
| | |
• PC Client Group | | • Software and services operating segments: |
• Data Center Group | | • McAfee |
• Other Intel architecture operating segments: | | • Wind River Software Group |
• Intelligent Systems Group | | • Software and Services Group |
• Multi-Comm | | • All other: |
• Phone Group | | • Non-Volatile Memory Solutions Group |
• Service Provider Group | | |
• Tablet Group | | |
• Netbook Group | | |
• New Devices Group | | |
In 2013, we completed a reorganization that transferred a portion of our wired connectivity business formerly included within DCG to PCCG, as the technology from that portion of the business is primarily used for client connectivity. Prior period amounts have been adjusted retrospectively to reflect this new organization structure.
We reorganized our IMC businesses within the "other Intel architecture" operating segments to segment our focus on the phone business. As part of this reorganization, we separated the feature and entry phone component business into the existing Phone Group operating segment and renamed the remaining business, primarily discrete modems, as the Multi-Comm operating segment.
In May 2013, Brian Krzanich became our CEO and a member of Intel's Board of Directors, succeeding Paul S. Otellini, who retired from the Board and as CEO. Since his appointment as CEO, Mr. Krzanich made management organizational changes which did not result in a change to the businesses comprising our operating segments or to the conclusion that the Chief Operating Decision Maker (CODM) is the CEO. The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss).
PCCG and DCG are our reportable operating segments. We also aggregate and disclose the financial results of our non-reportable operating segments within “other Intel architecture operating segments” and “software and services operating segments” as shown in the above operating segments list. Each of these aggregated operating segments does not meet the quantitative thresholds to qualify as a reportable operating segment; however, we have elected to disclose the aggregation of these non-reportable operating segments. Revenue for our reportable and aggregated non-reportable operating segments is primarily related to the following product lines:
| |
• | PC Client Group. Includes platforms designed for the notebook (including Ultrabook™ devices and 2 in 1 systems), desktop (including all-in-ones and high-end enthusiast PCs), and certain tablet market segments; and wireless and wired connectivity products. |
| |
• | Data Center Group. Includes platforms designed for the server, workstation, and storage computing market segments; and wired network connectivity products. |
| |
• | Other Intel architecture operating segments. Includes platforms designed for embedded applications for communications, medical, automotive, industrial, retail, and other market segments; mobile components such as baseband processors, radio frequency transceivers, WiFi, Bluetooth®, global navigation satellite system, and power management chips; platforms designed for the tablet market segment; platforms designed for the smartphone market segment; gateway and set-top box components; and platforms designed for the netbook market segment; delivering reference devices and technology platforms ready to be used by customers as well as System-on-Chip architecture specifically designed for wearable and other emerging compute opportunities. |
| |
• | Software and services operating segments. Includes software products for endpoint security, network and content security, risk and compliance, and consumer and mobile security from our McAfee business; software optimized products for the embedded and mobile market segments; and software products and services that promote Intel architecture as the platform of choice for software development. |
We have sales and marketing, manufacturing, finance, and administration groups. Expenses for these groups are generally allocated to the operating segments, and the expenses are included in the operating results reported below.
The “all other” category includes revenue, expenses, and charges such as:
| |
• | results of operations from our Non-Volatile Memory Solutions Group that includes NAND flash memory products for use in a variety of devices; |
| |
• | amounts included within restructuring and asset impairment charges; |
| |
• | a portion of profit-dependent compensation and other expenses not allocated to the operating segments; |
| |
• | divested businesses for which discrete operating results are not reviewed by our CODM; |
| |
• | results of operations of start-up businesses that support our initiatives, including our foundry business; and |
| |
• | acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill. |
The CODM does not evaluate operating segments using discrete asset information. Based on the interchangeable nature of our manufacturing and assembly and test assets, most of the related depreciation expense is not directly identifiable within our operating segments as it is included in overhead cost pools and subsequently absorbed into inventory as each product passes through our manufacturing process. As our products are then sold across multiple operating segments, it is impracticable to determine the total depreciation expense included as a component of each operating segment’s operating income (loss) results. Operating segments do not record inter-segment revenue. We do not allocate gains and losses from equity investments, interest and other income, 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 for these differences, the accounting policies for segment reporting are the same as for Intel as a whole.
Net revenue and operating income (loss) for each period were as follows:
|
| | | | | | | | | | | | |
(In Millions) | | 2013 | | 2012 | | 2011 |
Net revenue: | | | | | | |
PC Client Group | | $ | 33,039 |
| | $ | 34,504 |
| | $ | 35,624 |
|
Data Center Group | | 11,238 |
| | 10,511 |
| | 9,911 |
|
Other Intel architecture operating segments | | 4,092 |
| | 4,378 |
| | 5,005 |
|
Software and services operating segments | | 2,502 |
| | 2,381 |
| | 1,870 |
|
All other | | 1,837 |
| | 1,567 |
| | 1,589 |
|
Total net revenue | | $ | 52,708 |
| | $ | 53,341 |
| | $ | 53,999 |
|
| | | | | | |
Operating income (loss): | | | | | | |
PC Client Group | | $ | 11,827 |
| | $ | 13,106 |
| | $ | 14,840 |
|
Data Center Group | | 5,164 |
| | 5,020 |
| | 5,053 |
|
Other Intel architecture operating segments | | (2,445 | ) | | (1,377 | ) | | (577 | ) |
Software and services operating segments | | 1 |
| | (11 | ) | | (32 | ) |
All other | | (2,256 | ) | | (2,100 | ) | | (1,807 | ) |
Total operating income | | $ | 12,291 |
| | $ | 14,638 |
| | $ | 17,477 |
|
In 2013, Hewlett-Packard Company accounted for 17% of our net revenue (18% in 2012 and 19% in 2011), Dell Inc. accounted for 15% of our net revenue (14% in 2012 and 15% in 2011), and Lenovo Group Limited accounted for 12% of our net revenue (11% in 2012 and 9% in 2011). The majority of the revenue from these customers was from the sale of platforms and other components by the PCCG and the DCG operating segments.
Most of our revenue in the PCCG and DCG operating segments is generated from the sale of platforms.
Net revenue by country for the three years ended December 28, 2013, is based on the billing location of the customer. Certain prior-period amounts have been reclassified to conform to the current year’s presentation. Revenue from unaffiliated customers for each period were as follows:
|
| | | | | | | | | | | | |
(In Millions) | | 2013 | | 2012 | | 2011 |
Singapore | | $ | 10,997 |
| | $ | 12,622 |
| | $ | 13,626 |
|
China (including Hong Kong) | | 9,890 |
| | 8,299 |
| | 7,133 |
|
United States | | 9,091 |
| | 8,348 |
| | 9,005 |
|
Taiwan | | 8,888 |
| | 9,327 |
| | 8,534 |
|
Japan | | 3,725 |
| | 4,303 |
| | 4,538 |
|
Other countries | | 10,117 |
| | 10,442 |
| | 11,163 |
|
Total net revenue | | $ | 52,708 |
| | $ | 53,341 |
| | $ | 53,999 |
|
Revenue from unaffiliated customers outside the U.S. totaled $43.6 billion in 2013 ($45.0 billion in 2012 and $45.0 billion in 2011).
Net property, plant and equipment by country at the end of each period was as follows:
|
| | | | | | | | | | | | |
(In Millions) | | Dec 28,
2013 | | Dec 29,
2012 | | Dec 31,
2011 |
United States | | $ | 23,624 |
| | $ | 20,542 |
| | $ | 16,448 |
|
Ireland | | 2,986 |
| | 1,523 |
| | 1,198 |
|
Israel | | 2,667 |
| | 3,389 |
| | 3,356 |
|
Other countries | | 2,151 |
| | 2,529 |
| | 2,625 |
|
Total property, plant and equipment, net | | $ | 31,428 |
| | $ | 27,983 |
| | $ | 23,627 |
|
Net property, plant and equipment outside the U.S. totaled $7.8 billion as of December 28, 2013 ($7.4 billion as of December 29, 2012 and $7.2 billion as of December 31, 2011).
