Annual report pursuant to Section 13 and 15(d)

Operating Segments and Geographic Information

v3.3.1.900
Operating Segments and Geographic Information
 12 Months Ended
Dec. 26, 2015
Segment Reporting [Abstract]  
Operating Segments and Geographic Information [Text Block]
Note 26: Operating Segments and Geographic Information
Our operating segments in effect as of December 26, 2015 included:
•    Client Computing Group
  
•    All other
•    Data Center Group
  
•    Non-Volatile Memory Solutions Group
•    Internet of Things Group
  
•    New Devices Group
•    Software and services operating segments
  
 
•    Intel Security Group
  
 
•    Software and Services Group
  
 
During the first quarter of 2015, we combined the PC Client Group and Mobile and Communications Group to create the Client Computing Group (CCG). This change in our organizational structure reflects our strategy to address all aspects of the client computing market segment and utilize our intellectual property to offer compelling customer solutions for a wide range of end-user devices. All prior-period amounts have been retrospectively adjusted to reflect the way we internally manage and monitor segment performance starting in fiscal year 2015, and include other minor reorganizations. Additionally, in the fourth quarter of 2015 we renamed the McAfee operating segment as the Intel Security Group.
The Chief Operating Decision Maker (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. CCG and the Data Center Group (DCG) are our reportable operating segments. The Internet of Things Group 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 (NSG) 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.
Revenue for our reportable and aggregated non-reportable operating segments is primarily related to the following product lines:
•
Client Computing Group. Includes platforms designed for notebooks (including Ultrabook devices), 2 in 1 systems, desktops (including all-in-ones and high-end enthusiast PCs), tablets, phones, wireless and wired connectivity products, and mobile communication components.
•
Data Center Group. Includes platforms designed for the enterprise, cloud, communications infrastructure, and technical computing segments.
•
Internet of Things Group. Includes platforms designed for Internet of Things market segments, including retail, transportation, industrial, and buildings and home use, along with a broad range of other market segments.
•
Software and services operating segments. Includes software products designed to deliver innovative solutions that secure computers, mobile devices, and networks, 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 and expenses such as:
•
results of operations from our NSG and New Devices Group;
•
amounts included within restructuring and asset impairment charges;
•
a portion of employee benefits, 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.
Net revenue and operating income (loss) for each period were as follows:
Years Ended
(In Millions)
 
Dec 26,
2015
 
Dec 27,
2014
 
Dec 28,
2013
Net revenue:
 
 
 
 
 
 
Client Computing Group
 
 
 
 
 
 
Platform

$
30,654


$
33,210


$
32,385

Other

1,565


1,662


2,260

 
 
32,219

 
34,872

 
34,645

Data Center Group
 
 
 
 
 
 
Platform
 
14,882

 
13,366

 
11,219

Other
 
1,095

 
1,021

 
944

 
 
15,977

 
14,387

 
12,163

Internet of Things
 
 
 
 
 
 
Platform
 
1,976

 
1,814

 
1,485

Other
 
322

 
328

 
316

 
 
2,298

 
2,142

 
1,801

Software and services operating segments
 
2,167

 
2,216

 
2,188

All other
 
2,694

 
2,253

 
1,911

Total net revenue
 
$
55,355

 
$
55,870

 
$
52,708

 
 
 
 
 
 
 
Operating income (loss):
 
 
 
 
 
 
Client Computing Group
 
$
8,165

 
$
10,323

 
$
8,708

Data Center Group
 
7,844

 
7,390

 
5,456

Internet of Things Group
 
515

 
583

 
532

Software and services operating segments
 
210

 
81

 
57

All other
 
(2,732
)
 
(3,030
)
 
(2,462
)
Total operating income
 
$
14,002

 
$
15,347

 
$
12,291


Hewlett-Packard Company, our largest customer in 2014, separated into HP Inc. and Hewlett Packard Enterprise Company on November 1, 2015. These entities collectively accounted for 18% of our net revenue in 2015 (18% in 2014 and 17% in 2013). Dell Inc. accounted for 15% of our net revenue (16% in 2014 and 15% in 2013), and Lenovo Group Limited accounted for 13% of our net revenue (12% in 2014 and 12% in 2013). A majority of the revenue from these customers was from the sale of platforms and other components by the CCG and DCG operating segments.
Net revenue by country as presented below is based on the billing location of the customer. Revenue from unaffiliated customers for each period was as follows:
Years Ended
(In Millions)
 
Dec 26,
2015
 
Dec 27,
2014
 
Dec 28,
2013
China (including Hong Kong)
 
$
11,679

 
$
11,197

 
$
9,890

Singapore
 
11,544

 
11,573

 
10,997

United States
 
11,121

 
9,828

 
9,091

Taiwan
 
10,661

 
8,955

 
8,888

Other countries
 
10,350

 
14,317

 
13,842

Total net revenue
 
$
55,355

 
$
55,870

 
$
52,708


Revenue from unaffiliated customers outside the U.S. totaled $44.2 billion in 2015 ($46.0 billion in 2014 and $43.6 billion in 2013).
Net property, plant and equipment by country at the end of each period was as follows:
(In Millions)
 
Dec 26,
2015
 
Dec 27,
2014
 
Dec 28,
2013
United States
 
$
22,611

 
$
24,020

 
$
23,624

Ireland
 
5,789

 
5,433

 
2,986

Israel
 
1,661

 
1,957

 
2,667

Other countries
 
1,797

 
1,828

 
2,151

Total property, plant and equipment, net
 
$
31,858

 
$
33,238

 
$
31,428


Net property, plant and equipment outside the U.S. totaled $9.2 billion as of December 26, 2015 ($9.2 billion as of December 27, 2014 and $7.8 billion as of December 28, 2013).