Intel 2005 Annual Report Download - page 83

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 19: Operating Segment and Geographic Information
During the first quarter of 2005, the company reorganized its operating segments to bring all major product groups in line with the company’s strategy
to design and deliver technology platforms. The operating segments after the first-quarter reorganization included the Digital Enterprise Group, the
Mobility Group, the Digital Home Group, the Digital Health Group and the Channel Platforms Group. In the fourth quarter of 2005, the company
added the Flash Memory Group. The Digital Enterprise Group and the Mobility Group are reportable operating segments. The Flash Memory Group,
Digital Home Group, Digital Health Group and Channel Platforms Group operating segments do not meet the quantitative thresholds for reportable
segments as defined by SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.”
However, the Flash Memory Group is
reported separately, as management believes that this information is useful to the reader. The Digital Home Group, Digital Health Group and Channel
Platforms Group operating segments are included within the “all other” category. All prior-period amounts have been adjusted retrospectively to
reflect the new organizational structure and certain minor reorganizations effected through the fourth quarter of 2005.
The Chief Operating Decision Maker (CODM), as defined by SFAS No. 131, is the company’s President and Chief Executive Officer (CEO), Paul S.
Otellini. The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating
income (loss) before interest and taxes.
The Digital Enterprise Group operating segment’s products include microprocessors and related chipsets and motherboards designed for the desktop
(including consumer desktop) and enterprise computing market segments, communications infrastructure components such as network processors and
embedded microprocessors, wired connectivity devices, and products for network and server storage. The Mobility Group operating segment’s
products include microprocessors and related chipsets designed for the notebook computing market segment, wireless connectivity products, and
application and cellular baseband processors used in cellular handsets and handheld computing devices. The Flash Memory Group operating segment’
s
products include NOR flash memory products designed for cellular phones and embedded form factors such as set-top boxes, networking products,
and other devices including DVD players and DSL and cable modems. Beginning in 2006, the Flash Memory Group’s products will also include
NAND flash memory products manufactured by IMFT. Revenue for the
“all other”
category primarily consists of microprocessors and related chipsets
sold by the Digital Home Group.
In addition to these operating segments, the company has sales and marketing, manufacturing, finance and administration groups. Expenses of these
groups are generally allocated to the operating segments and are included in the operating results reported below. In addition to the operating results
for the Digital Home Group, Digital Health Group and Channel Platforms Group operating segments, the “all other” category includes certain
corporate-level operating expenses, including a portion of profit-dependent bonus and other expenses not allocated to the operating segments. “All
other” also includes the results of operations of seed businesses that support the company’s initiatives. Finally, “all other” includes acquisition-related
costs, including amortization and any impairments of acquisition-related intangibles and goodwill, and charges for purchased in-process research and
development. In 2003, acquisition-related costs included a goodwill impairment charge of $611 million for the remaining goodwill balance related to
the former Wireless Communications and Computing Group operating segment.
The company does not identify or allocate assets by operating segment, nor does the CODM evaluate operating segments using discrete asset
information. Operating segments do not record intersegment revenue, and, accordingly, there is none to be reported. The company does not allocate
interest and other income, interest expense 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 as discussed above, the accounting policies for segment reporting are the
same as for the company as a whole.
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