Segment and Geographic Information

12 Months Ended

May 29, 2011

Segment and Geographic Information

Segment and Geographic Information

Note 16. Segment and Geographic Information

We design, develop, manufacture and market a wide range of semiconductor products, most of which are analog and mixed-signal integrated circuits. We are organized by various product line business units. For segment reporting purposes, each of our product line business units represents an operating segment as defined under ASC Topic 280, "Segment Reporting," and our Chief Executive Officer is considered the chief operating decision-maker. Business units that have similarities, including economic characteristics, underlying technology, markets and customers, are aggregated into larger segments. For fiscal 2011, our Analog segment, which accounted for 93 percent of net sales, is the only operating segment that meets the criteria of a reportable segment. Operating segments that do not meet the criteria of a reportable segment are combined under "All Others."

               Beginning in fiscal 2011, we combined the activities of the former key market segments group together with certain emerging product lines that were previously a part of two separate power business units to form a new business unit called the strategic growth markets business unit. This business unit concentrates its efforts on selected high-growth emerging markets that represent promising opportunities to the company. The remaining product lines that were previously a part of the former performance power products business unit were combined with the remaining product lines within the infrastructure power business unit and were renamed the power products business unit. As a result, the Analog segment now comprises five operating segments which include the high-speed products, mobile devices power, power products, precision signal path and strategic growth markets business units. These business units represent the core analog focus and receive the majority of our research and development investment funds. The Analog segment is focused on utilizing our analog and mixed-signal design expertise to develop high-performance building blocks and integrated solutions aimed at end markets, such as wireless handsets (including smart phones) and other portable devices, and at applications for broader markets, such as industrial and medical, automotive, network infrastructure and photovoltaic systems.

               Aside from these operating segments, our corporate structure in fiscal 2011, 2010 and 2009 also included the centralized Worldwide Marketing and Sales Group, the Manufacturing Operations Group and the Corporate Group. Certain expenses of these groups are allocated to the operating segments and are included in their segment operating results.

               With the exception of the allocation of certain expenses, the significant accounting policies and practices used to prepare the consolidated financial statements as described in Note 1 to the Consolidated Financial Statements are generally followed in measuring the sales, segment income or loss and determination of assets for each reportable segment. We allocate certain expenses associated with centralized manufacturing, selling, marketing and general administration to operating segments based on either the percentage of net trade sales for each operating segment to total net trade sales or headcount, as appropriate. Certain R&D expenses primarily associated with centralized activities such as process development are allocated to operating segments based on the percentage of dedicated R&D expenses for each operating segment to total dedicated R&D expenses.

               The following table presents specified amounts included in the measure of segment operating results or the determination of segment assets:

(In Millions)	Analog Segment		All Others			Total
2011
Net sales to external customers	$	1,418.9	$	101.5		$	1,520.4
Income (loss) before income taxes	$	441.2	$	(38.2	)	$	403.0
Depreciation and amortization	$	5.0	$	75.3		$	80.3
Share-based compensation expense	$	16.3	$	38.7		$	55.0
Interest income	$	-	$	2.6		$	2.6
Interest expense	$	-	$	55.1		$	55.1
Net loss on derivative instrument in fair value hedge	$	-	$	2.1		$	2.1
Total assets	$	191.9	$	2,203.4		$	2,395.3
2010
Net sales to external customers	$	1,316.9	$	102.5		$	1,419.4
Income (loss) before income taxes	$	312.1	$	(43.5	)	$	268.6
Depreciation and amortization	$	5.0	$	86.8		$	91.8
Share-based compensation expense	$	19.0	$	54.8		$	73.8
Interest income	$	-	$	1.8		$	1.8
Interest expense	$	-	$	60.3		$	60.3
Loss on extinguishment of debt	$	-	$	2.1		$	2.1
Net loss on derivative instrument in fair value hedge	$	-	$	2.2		$	2.2
Total assets	$	177.4	$	2,097.4		$	2,274.8
2009
Net sales to external customers	$	1,322.8	$	137.6		$	1,460.4
Income (loss) before income taxes	$	237.8	$	(124.2	)	$	113.6
Depreciation and amortization	$	6.0	$	111.4		$	117.4
Share-based compensation expense	$	23.5	$	47.4		$	70.9
Interest income	$	-	$	10.4		$	10.4
Interest expense	$	-	$	72.7		$	72.7
In-process research and development charge	$	2.9	$	-		$	2.9
Total assets	$	187.1	$	1,776.2		$	1,963.3

               The information in the table above for fiscal 2010 and 2009 has been reclassified to present segment information based on the structure of our operating segments in fiscal 2011. Sales for the category "All Others," includes sales of products from non-analog business units that are no longer a part of our core focus, as well as sales generated from foundry and contract service arrangements.

               Total assets for the Analog segment consist only of those assets that are specifically dedicated to an operating segment and include inventories, equipment, equity investments, goodwill and amortizable intangibles assets. Depreciation and amortization presented for each segment include only such charges on dedicated segment assets. Similarly, share-based compensation expense presented for each segment includes only such charges related to employees who directly support the operating segments. The measurement of segment profit and loss includes an allocation of depreciation expense for shared manufacturing facilities and share-based compensation expense associated with direct labor contained in the standard cost of product for each segment.

               Our revenues from external customers are derived from the sales of semiconductor product and engineering-related services. For fiscal 2011, 2010 and 2009, sales from engineering-related services were immaterial and are included with semiconductor product sales. Our semiconductor product sales consist of integrated circuit components and are considered a group of similar products.

               Net sales to major customers as a percentage of total net sales were as follows:

		2011			2010			2009
Distributor:
	Avnet		20	%		17	%		15	%
	Arrow		16	%		15	%		13	%

               Sales to the distributors included above are mostly for our Analog segment products, but also include some sales for our other operating segment products.

               We operate our marketing and sales activities in four main geographic regions that include the Americas, Asia Pacific, Europe and Japan. Total sales by geographical area include sales to unaffiliated customers and inter-geographic transfers, which are based on standard cost. To control costs, a substantial portion of our products are transported between the Americas, Asia Pacific region and Europe while in the process of being manufactured and sold. In the information presented below, we have excluded these inter-geographic transfers.

               The following tables provide geographic sales and asset information by major countries within the main geographic areas:

(In Millions)			2011		2010		2009
Net sales:
	United States		$	352.0	$	334.9	$	341.1
	Foreign locations:
		People's Republic of China		465.9		450.5		462.3
		Germany		384.9		317.3		310.1
		Singapore		178.8		192.7		231.5
		Japan		138.8		124.0		115.4
				1,168.4		1,084.5		1,119.3
Total net sales			$	1,520.4	$	1,419.4	$	1,460.4
Long-lived assets:
	United States		$	237.1	$	244.1	$	294.1
	Foreign locations:
		United Kingdom		102.7		77.0		72.9
		Malaysia		79.0		66.3		69.9
		Rest of World		2.3		2.7		24.9
				184.0		146.0		167.7
Total long-lived assets			$	421.1	$	390.1	$	461.8