Intel 2014 Annual Report Download - page 112

INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The CODM is our CEO. The CODM allocates resources to and assesses the performance of each operating segment using
information about its revenue and operating income (loss).
We manage our business activities primarily based on a product segmentation basis. PCCG, DCG, and MCG are our reportable
operating segments. IOTG and the aggregated “software and services operating segments,” as shown in the preceding operating
segment list, do not meet the quantitative thresholds to qualify as reportable operating segments; however, we have elected to
disclose the results of these non-reportable operating segments. Our Non-Volatile Memory Solutions Group, Netbook Group, and
New Devices Group operating segments do not meet the quantitative thresholds to qualify as reportable segments and their
combined results are included within the “all other” category.
In November 2014, we announced the implementation of a new operating structure. Our new structure reflects our strategy to
address all aspects of the client computing market segment and utilize our intellectual property to offer compelling solutions. The
new operating structure ensures that we are able to respond to market demand, while reducing costs through efficiencies and
products targeted for the client computing market segment. As a result of the implementation of our new operating structure, all
prior-period amounts will be adjusted retrospectively to reflect the new organizational structure expected to become effective in
the first quarter of 2015.
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), 2 in 1 systems, the desktop
(including all-in-ones and high-end enthusiast PCs), and tablets; wireless and wired connectivity products; as well as home
gateway and set-top box components.
•Data Center Group. Includes server, network, and storage platforms designed for the enterprise, cloud, communications
infrastructure, and technical computing segments.
•Internet of Things Group. Includes platforms designed for embedded market segments, including retail, transportation,
industrial, and buildings and home, along with a broad range of other market segments.
•Mobile and Communications Group. Includes platforms designed for the tablet and smartphone market segments; and
mobile communications components such as baseband processors, radio frequency transceivers, Wi-Fi, Bluetooth
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technology, global navigation satellite systems, and power management chips.
•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, and software products and services that
promote Intel architecture as the platform of choice for software development.
We have sales and marketing, manufacturing, engineering, finance, and administration groups. Expenses for these groups are
generally allocated to the operating segments, and the expenses are included in the following operating results.
The “all other” category includes revenue, expenses, and charges such as:
•results of operations from our Non-Volatile Memory Solutions Group, Netbook Group, and New Devices Group;
•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 regularly 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.
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