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Document And Entity Information (USD $)
12 Months Ended
Dec. 31, 2014
Feb. 17, 2015
Jun. 30, 2014
Document and Entity Information [Abstract]
Entity Registrant Name TEXAS INSTRUMENTS INC
Entity Central Index Key 0000097476
Current Fiscal Year End Date --12-31
Entity Filer Category Large Accelerated Filer
Document Type 10-K
Document Period End Date Dec 31, 2014
Document Fiscal Year Focus 2014
Document Fiscal Period Focus FY
Amendment Flag false
Entity Common Stock, Shares Outstanding 1,047,142,301
Entity Well-known Seasoned Issuer Yes
Entity Voluntary Filers No
Entity Current Reporting Status Yes
Entity Public Float $ 50,978,062,488
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Consolidated Statements of Income (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Statement [Abstract]
Revenue $ 13,045 $ 12,205 $ 12,825
Cost of revenue (COR) 5,618 5,841 6,457
Gross profit 7,427 6,364 6,368
Research and development (R&D) 1,358 1,522 1,877
Selling, general and administrative (SG&A) 1,843 1,858 1,804
Acquisition charges 330 341 450
Restructuring charges/other (51) (189) 264
Operating profit 3,947 2,832 1,973
Other income (expense), net (OI&E) 21 17 47
Interest and debt expense 94 95 85
Income before income taxes 3,874 2,754 1,935
Provision for income taxes 1,053 592 176
Net income 2,821 2,162 1,759
Earnings per common share (EPS):
Basic (in dollars per share) $ 2.61 $ 1.94 $ 1.53
Diluted (in dollars per share) $ 2.57 $ 1.91 $ 1.51
Average shares outstanding (millions):
Basic (in shares) 1,065 1,098 1,132
Diluted (in shares) 1,080 1,113 1,146
Cash dividends declared per common share $ 1.24 $ 1.07 $ 0.72
Income allocated to RSUs (43) (36) (31)
Income allocated to common stock for diluted EPS $ 2,778 $ 2,126 $ 1,728
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Consolidated Statements of Comprehensive Income (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement of Comprehensive Income [Abstract]
Net income $ 2,821 $ 2,162 $ 1,759
Net actuarial gains (losses) of defined benefit plans:
Adjustment, net of tax benefit (expense) of $25, ($60) and $29 (46) 105 (81)
Recognized within Net income, net of tax benefit (expense) of ($21), ($37) and ($104) 42 71 160
Prior service cost of defined benefit plans:
Adjustment, net of tax benefit (expense) of $0, $1 and $1 (1) (3) (2)
Recognized within Net income, net of tax benefit (expense) of $0, $2 and $0 0 (3) 0
Derivative instruments:
Change in fair value, net of tax benefit (expense) of $0, $0 and $1 0 0 (3)
Recognized within Net income, net of tax benefit (expense) of ($1), ($1) and $0 1 1 0
Available-for-sale investments:
Unrealized gains (losses), net of tax benefit (expense) of $0, $0 and ($1) 0 0 3
Other comprehensive income (loss), net of taxes (4) 171 77
Total comprehensive income $ 2,817 $ 2,333 $ 1,836
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Consolidated Statements of Comprehensive Income (Parenthetical) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Net actuarial gains (losses) of defined benefit plans:
Adjustment, net of tax benefit (expense) $ 25 $ (60) $ 29
Recognized within Net income, net of tax benefit (expense) (21) (37) (104)
Prior service cost of defined benefit plans:
Adjustment, net of tax benefit (expense) 0 1 1
Recognized within Net income, net of tax benefit (expense) 0 2 0
Derivative instruments:
Change in fair value, net of tax benefit (expense) 0 0 1
Recognized within Net income, net of tax benefit (expense) (1) (1) 0
Available-for-sale investments:
Unrealized gains (losses), net of tax benefit (expense) $ 0 $ 0 $ (1)
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Consolidated Balance Sheets (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Current assets:
Cash and cash equivalents $ 1,199 $ 1,627
Short-term investments 2,342 2,202
Accounts receivable, net of allowances of ($12) and ($22) 1,246 1,203
Raw materials 101 102
Work in process 896 919
Finished goods 787 710
Inventories 1,784 1,731
Deferred income taxes 347 393
Prepaid expenses and other current assets 850 863
Total current assets 7,768 8,019
Property, plant and equipment at cost 6,266 6,556
Accumulated depreciation (3,426) (3,157)
Property, plant and equipment, net 2,840 3,399
Long-term investments 224 216
Goodwill, net 4,362 4,362
Acquisition-related intangibles, net 1,902 2,223
Deferred income taxes 172 207
Capitalized software licenses, net 83 118
Overfunded retirement plans 127 130
Other assets 244 264
Total assets 17,722 18,938
Current liabilities:
Current portion of long-term debt 1,001 1,000
Accounts payable 437 422
Accrued compensation 651 554
Income taxes payable 71 119
Deferred income taxes 4 1
Accrued expenses and other liabilities 498 651
Total current liabilities 2,662 2,747
Long-term debt 3,641 4,158
Underfunded retirement plans 225 216
Deferred income taxes 399 548
Deferred credits and other liabilities 405 462
Total liabilities 7,332 8,131
Stockholders’ equity:
Preferred stock, $25 par value. Authorized – 10,000,000 shares. Participating cumulative preferred. None issued. 0 0
Common stock, $1 par value. Authorized – 2,400,000,000 shares. Shares issued – 1,740,815,939 1,741 1,741
Paid-in capital 1,368 1,211
Retained earnings 29,653 28,173
Treasury common stock at cost. Shares: 2014 – 694,189,127; 2013 – 658,012,970 (21,840) (19,790)
Accumulated other comprehensive income (loss), net of taxes (AOCI) (532) (528)
Total stockholders’ equity 10,390 10,807
Total liabilities and stockholders’ equity $ 17,722 $ 18,938
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Consolidated Balance Sheets (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Current assets:
Allowance for doubtful accounts receivable, current $ (12) $ (22)
Stockholders’ equity:
Preferred stock, par value (in dollars per share) $ 25 $ 25
Preferred stock, shares authorized (in shares) 10,000,000 10,000,000
Preferred stock, shares issued (in shares) 0 0
Common stock, par value (in dollars per share) $ 1 $ 1
Common stock, shares authorized (in shares) 2,400,000,000 2,400,000,000
Common stock, shares issued (in shares) 1,740,815,939 1,740,815,939
Treasury stock (in shares) 694,189,127 658,012,970
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Consolidated Statements of Cash Flows (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Cash flows from operating activities
Net income $ 2,821 $ 2,162 $ 1,759
Adjustments to Net income:
Depreciation 850 879 957
Amortization of acquisition-related intangibles 321 336 342
Amortization of capitalized software 59 82 102
Stock-based compensation 277 287 263
Gains on sales of assets (73) (6) 0
Deferred income taxes (61) 50 130
Gain on transfer of Japan substitutional pension 0 0 (144)
Increase (decrease) from changes in:
Accounts receivable (49) 16 311
Inventories (53) 26 5
Prepaid expenses and other current assets 65 (136) 162
Accounts payable and accrued expenses (194) (284) 99
Accrued compensation 89 18 (82)
Income taxes payable (81) 78 (229)
Changes in funded status of retirement plans (58) 28 (198)
Other (21) (152) (63)
Cash flows from operating activities 3,892 3,384 3,414
Cash flows from investing activities
Capital expenditures (385) (412) (495)
Proceeds from asset sales 142 21 0
Purchases of short-term investments (3,107) (3,907) (2,802)
Proceeds from short-term investments 2,966 4,249 2,198
Other 7 46 60
Cash flows from investing activities (377) (3) (1,039)
Cash flows from financing activities
Proceeds from issuance of long-term debt 498 986 1,492
Repayment of debt and commercial paper borrowings (1,000) (1,500) (1,375)
Dividends paid (1,323) (1,175) (819)
Stock repurchases (2,831) (2,868) (1,800)
Proceeds from common stock transactions 616 1,314 523
Excess tax benefit from share-based payments 100 80 38
Other (3) (7) (10)
Cash flows from financing activities (3,943) (3,170) (1,951)
Net change in Cash and cash equivalents (428) 211 424
Cash and cash equivalents at beginning of period 1,627 1,416 992
Cash and cash equivalents at end of period $ 1,199 $ 1,627 $ 1,416
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Consolidated Statements of Stockholders' Equity (USD $)
In Millions, unless otherwise specified
Total
Common Stock
Paid-in Capital
Retained Earnings
Treasury Common Stock
AOCI
Balance at Dec. 31, 2011 $ 1,741 $ 1,194 $ 26,278 $ (17,485) $ (776)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income 1,759 0 0 1,759 0 0
Dividends declared and paid 0 0 (819) 0 0
Common stock issued for stock-based awards 0 (337) 0 823 0
Stock repurchases 0 0 0 (1,800) 0
Stock-based compensation 0 263 0 0 0
Tax impact from exercise of options 133 0 56 0 0 0
Other comprehensive income (loss), net of taxes 77 0 0 0 0 77
Dividend equivalents paid on restricted stock units 0 0 (13) 0 0
Balance at Dec. 31, 2012 1,741 1,176 27,205 (18,462) (699)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income 2,162 0 0 2,162 0 0
Dividends declared and paid 0 0 (1,175) 0 0
Common stock issued for stock-based awards 0 (273) 0 1,540 0
Stock repurchases 0 0 0 (2,868) 0
Stock-based compensation 0 287 0 0 0
Tax impact from exercise of options 227 0 25 0 0 0
Other comprehensive income (loss), net of taxes 171 0 0 0 0 171
Dividend equivalents paid on restricted stock units 0 0 (19) 0 0
Other 0 (4) 0 0 0
Balance at Dec. 31, 2013 1,741 1,211 28,173 (19,790) (528)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income 2,821 0 0 2,821 0 0
Dividends declared and paid 0 0 (1,323) 0 0
Common stock issued for stock-based awards 0 (226) 0 781 0
Stock repurchases 0 0 0 (2,831) 0
Stock-based compensation 0 277 0 0 0
Tax impact from exercise of options 218 0 110 0 0 0
Other comprehensive income (loss), net of taxes (4) 0 0 0 0 (4)
Dividend equivalents paid on restricted stock units 0 0 (18) 0 0
Other 0 (4) 0 0 0
Balance at Dec. 31, 2014 $ 1,741 $ 1,368 $ 29,653 $ (21,840) $ (532)
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Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Statement of Stockholders' Equity [Abstract]
Dividends declared and paid (in dollars per share) $ 1.24 $ 1.07 $ 0.72
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Description of business, including segment and geographic area information
12 Months Ended
Dec. 31, 2014
Segment Reporting [Abstract]
Description of business, including segment and geographic area information
Description of business, including segment and geographic area information

We design, make and sell semiconductors to electronics designers and manufacturers all over the world. We have two reportable segments, which are established along major categories of products as follows:

Analog – consists of the following product lines: High Volume Analog & Logic; Power Management; High Performance Analog; and Silicon Valley Analog, which consists primarily of products that we acquired through our purchase of National Semiconductor Corporation (National) in 2011.
Embedded Processing – consists of the following product lines: Processor, Microcontrollers and Connectivity.
We report the results of our remaining business activities in Other. Other includes operating segments that do not meet the quantitative thresholds for individually reportable segments and cannot be aggregated with other operating segments. Other includes DLP® products, custom application-specific integrated circuits, calculators, royalties, and products from our former Wireless segment, which was eliminated effective January 1, 2013.
We also include in Other items that are not used in evaluating the results of or in allocating resources to our segments. These include acquisition-related charges (see Note 3); restructuring charges (see Note 4); and certain corporate-level items, such as litigation expenses, environmental costs, insurance settlements, and gains and losses from other activities, including asset dispositions. We allocate the remainder of our expenses associated with corporate activities to our operating segments based on specific methodologies, such as percentage of operating expenses or headcount.
Our centralized manufacturing and support organizations, such as facilities, procurement and logistics, provide support to our operating segments, including those in Other. Costs incurred by these organizations, including depreciation, are charged to the segments on a per-unit basis. Consequently, depreciation expense is not an independently identifiable component within the segments’ results and, therefore, is not provided. The assets and liabilities associated with these organizations are included in Other.

With the exception of goodwill, we do not identify or allocate assets by operating segment, nor does the chief operating decision maker evaluate operating segments using discrete asset information. There was no significant intersegment revenue. The accounting policies of the segments are the same as those described below in the summary of significant accounting policies and practices.

Segment information
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Revenue:
 
 
 
 
 
 
Analog
 
$
8,104

 
$
7,194

 
$
6,998

Embedded Processing
 
2,740

 
2,450

 
2,257

Other
 
2,201

 
2,561

 
3,570

Total revenue
 
$
13,045

 
$
12,205

 
$
12,825

Operating profit:
 
 

 
 

 
 

Analog
 
$
2,786

 
$
1,859

 
$
1,650

Embedded Processing
 
384

 
185

 
158

Other
 
777

 
788

 
165

Total operating profit
 
$
3,947

 
$
2,832

 
$
1,973



Geographic area information

The following geographic area information includes revenue, based on product shipment destination and royalty payor location, and property, plant and equipment, based on physical location:
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Revenue:
 
 
 
 
 
 
United States
 
$
1,625

 
$
1,666

 
$
1,596

Asia (a)
 
7,915

 
7,370

 
7,808

Europe
 
2,293

 
1,926

 
1,861

Japan
 
1,032

 
1,072

 
1,357

Rest of world
 
180

 
171

 
203

Total revenue
 
$
13,045

 
$
12,205

 
$
12,825



(a) Revenue from products shipped into China, including Hong Kong, was $5.7 billion in 2014, $5.2 billion in 2013 and $5.4 billion in 2012.
 
 
December 31,
 
 
2014
 
2013
 
2012
Property, plant and equipment, net:
 
 
 
 
 
 
United States
 
$
1,436

 
$
1,765

 
$
1,931

Asia
 
1,096

 
1,277

 
1,547

Europe
 
162

 
196

 
241

Japan
 
124

 
144

 
174

Rest of world
 
22

 
17

 
19

Total property, plant and equipment, net
 
$
2,840

 
$
3,399

 
$
3,912

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Basis of presentation and significant accounting policies and practices
12 Months Ended
Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of presentation and significant accounting policies and practices
Basis of presentation and significant accounting policies and practices
Basis of presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The basis of these financial statements is comparable for all periods presented herein.

The consolidated financial statements include the accounts of all subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. All dollar amounts in the financial statements and tables in these notes, except per-share amounts, are stated in millions of U.S. dollars unless otherwise indicated. We have reclassified certain amounts in the prior periods’ financial statements to conform to the 2014 presentation. The preparation of financial statements requires the use of estimates from which final results may vary.

Significant accounting policies and practices

Revenue recognition

We recognize revenue from sales of our products, including direct sales to our distributors, when title and risk of loss pass, which usually occurs upon shipment or delivery to the customer or distributor, depending upon the terms of the sales order; when persuasive evidence of an arrangement exists; when sales amounts are fixed or determinable; and when collectability is reasonably assured. For sales to distributors, payment is due on our standard commercial terms and is not contingent upon resale of the products. In 2014, about 60 percent of our revenue was generated from sales of our products to distributors.

We recognize revenue net of allowances, which are management’s estimates of future credits to be granted to customers or distributors under programs common in the semiconductor industry. These allowances are based on analysis of historical data, current economic conditions, and contractual terms and are recorded when revenue is recognized. Allowances may include volume-based incentives, product returns due to quality issues, incentives designed to maximize growth opportunities and special pricing arrangements. For instance, we sell to distributors at standard published prices, but we may grant them price adjustment credits in response to individual competitive opportunities. To estimate allowances, we use statistical percentages of revenue, which are determined quarterly based upon recent historical adjustment trends. Historical claims data are maintained for each of the programs, with differences among geographic regions taken into consideration. We continually monitor the actual claimed allowances against our estimates, and we adjust our estimates as appropriate to reflect trends in distributor revenue and inventory levels. Allowances are also adjusted when recent historical data do not represent anticipated future activity.

We may also provide distributors an allowance to scrap certain slow-selling or obsolete products in their inventory, estimated as a negotiated fixed percentage of each distributor’s purchases from us. In addition, if we publish a new price for a product that is lower than that paid by distributors for the same product still remaining in each distributor’s on-hand inventory, we may credit them for the difference between those prices. The allowance for this type of credit is based on the identified product price difference applied to our estimate of each distributor’s on-hand inventory of that product.

We believe we can reasonably and reliably estimate allowances for credits to distributors in a timely manner.

Revenue from sales of our products that are subject to inventory consignment agreements, including consignment arrangements with distributors, is recognized in accordance with the principles discussed above, but delivery occurs when the customer or distributor pulls product from consignment inventory that we store at designated locations. About 60 percent of our distributor revenue is generated from sales of consigned inventory. The allowances we record against this revenue are not material.

We determine the amount and timing of royalty revenue based on our contractual agreements with intellectual property licensees. We recognize royalty revenue when earned under the terms of the agreements and when we consider realization of payment to be probable.

In addition, we record allowances for accounts receivable that we estimate may not be collected. We monitor collectability of accounts receivable primarily through review of the accounts receivable aging. When collection is at risk, we assess the impact on amounts recorded for bad debts and, if necessary, will record a charge in the period such determination is made.

We recognize shipping fees received from customers in revenue, and we include the shipping and handling costs in COR.
Advertising costs

We expense advertising and other promotional costs as incurred. This expense was $45 million in 2014, $46 million in 2013 and $46 million in 2012.
Restructuring charges

Restructuring charges may consist of voluntary or involuntary severance-related charges, asset-related charges and other costs due to exit activities. We recognize voluntary termination benefits when the employee accepts the offered benefit arrangement. We recognize involuntary severance-related charges depending on whether the termination benefits are provided under an ongoing benefit arrangement or under a one-time benefit arrangement. If the former, we recognize the charges once they are probable and the amounts are estimable. If the latter, we recognize the charges once the benefits have been communicated to employees.

Restructuring activities associated with assets are recorded as an adjustment to the basis of the asset, not as a liability. When we commit to a plan to abandon a long-lived asset before the end of its previously estimated useful life, we accelerate the recognition of depreciation to reflect the use of the asset over its shortened useful life. When an asset is held to be sold, we write down the carrying value to its net realizable value and cease depreciation. Restructuring actions may be viewed as an impairment indicator requiring testing of the recoverability of intangible assets, including goodwill.
Income taxes

We account for income taxes using an asset and liability approach. We record the amount of taxes payable or refundable for the current year and the deferred tax assets and liabilities for future tax consequences of events that have been recognized in the financial statements or tax returns. We record a valuation allowance when it is more likely than not that some or all of the deferred tax assets will not be realized.
Other assessed taxes

Some transactions require us to collect taxes such as sales, value-added and excise taxes from our customers. These transactions are presented in our Consolidated Statements of Income on a net (excluded from revenue) basis.
Earnings per share (EPS)

Unvested share-based payment awards that contain non-forfeitable rights to receive dividends or dividend equivalents, such as our restricted stock units (RSUs), are considered to be participating securities and the two-class method is used for purposes of calculating EPS. Under the two-class method, a portion of Net income is allocated to these participating securities and, therefore, is excluded from the calculation of EPS allocated to common stock, as shown in the table below. 

Computation and reconciliation of earnings per common share are as follows (shares in millions):
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
 
 
Net Income
 
Shares
 
EPS
 
Net Income
 
Shares
 
EPS
 
Net Income
 
Shares
 
EPS
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
2,821

 
 
 
 
 
$
2,162

 
 
 
 
 
$
1,759

 
 
 
 
Income allocated to RSUs
 
(44
)
 
 
 
 
 
(37
)
 
 
 
 
 
(31
)
 
 
 
 
Income allocated to common stock for basic EPS calculation
 
$
2,777

 
1,065

 
$
2.61

 
$
2,125

 
1,098

 
$
1.94

 
$
1,728

 
1,132

 
$
1.53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustment for dilutive shares:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Stock-based compensation plans
 
 

 
15

 
 

 
 

 
15

 
 

 
 

 
14

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Net income
 
$
2,821

 
 

 
 

 
$
2,162

 
 

 
 

 
$
1,759

 
 

 
 

Income allocated to RSUs
 
(43
)
 
 

 
 

 
(36
)
 
 

 
 

 
(31
)
 
 

 
 

Income allocated to common stock for diluted EPS calculation
 
$
2,778

 
1,080

 
$
2.57

 
$
2,126

 
1,113

 
$
1.91

 
$
1,728

 
1,146

 
$
1.51


 
Potentially dilutive securities representing 11 million and 52 million shares of common stock that were outstanding during 2014 and 2012, respectively, were excluded from the computation of diluted earnings per common share for these periods because their effect would have been anti-dilutive. There were no potentially dilutive securities to exclude from the computation of diluted earnings per common share during 2013.

Investments
We present investments on our Consolidated Balance Sheets as cash equivalents, short-term investments or long-term investments. Specific details are as follows:

Cash equivalents and short-term investments: We consider investments in debt securities with maturities of 90 days or less from the date of our investment to be cash equivalents. We consider investments in debt securities with maturities beyond 90 days from the date of our investment as being available for use in current operations and include them in short-term investments. The primary objectives of our cash equivalent and short-term investment activities are to preserve capital and maintain liquidity while generating appropriate returns.
Long-term investments: Long-term investments consist of mutual funds, venture capital funds and non-marketable equity securities.
Classification of investments: Depending on our reasons for holding the investment and our ownership percentage, we classify our investments as either available for sale, trading, equity method or cost method, which are more fully described in Note 9. We determine cost or amortized cost, as appropriate, on a specific identification basis.

Inventories

Inventories are stated at the lower of cost or estimated net realizable value. Cost is generally computed on a currently adjusted standard cost basis, which approximates cost on a first-in first-out basis. Standard cost is based on the normal utilization of installed factory capacity. Cost associated with underutilization of capacity is expensed as incurred. Inventory held at consignment locations is included in our finished goods inventory. Consigned inventory was $258 million and $202 million as of December 31, 2014 and 2013, respectively.

We review inventory quarterly for salability and obsolescence. A statistical allowance is provided for inventory considered unlikely to be sold. The statistical allowance is based on an analysis of historical disposal activity, historical customer shipments, as well as estimated future sales. A specific allowance for each material type will be carried if there is a significant event not captured by the statistical allowance. We write off inventory in the period in which disposal occurs.

Property, plant and equipment; acquisition-related intangibles and other capitalized costs

Property, plant and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. Our cost basis includes certain assets acquired in business combinations that were initially recorded at fair value as of the date of acquisition. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements. We amortize acquisition-related intangibles on a straight-line basis over the estimated economic life of the assets. Capitalized software licenses generally are amortized on a straight-line basis over the term of the license. Fully depreciated or amortized assets are written off against accumulated depreciation or amortization.
Impairments of long-lived assets

We regularly review whether facts or circumstances exist that indicate the carrying values of property, plant and equipment or other long-lived assets, including intangible assets, are impaired. We assess the recoverability of assets by comparing the projected undiscounted net cash flows associated with those assets to their respective carrying amounts. Any impairment charge is based on the excess of the carrying amount over the fair value of those assets. Fair value is determined by available market valuations, if applicable, or by discounted cash flows.
Goodwill and indefinite-lived intangibles

Goodwill is not amortized but is reviewed for impairment annually or more frequently if certain impairment indicators arise. We perform our annual goodwill impairment test as of October 1 for our reporting units, which compares the fair value for each reporting unit to its associated carrying value, including goodwill. See Note 10 for additional information.
Foreign currency

The functional currency for our non-U.S. subsidiaries is the U.S. dollar. Accounts recorded in currencies other than the U.S. dollar are remeasured into the functional currency. Current assets (except inventories), deferred income taxes, other assets, current liabilities and long-term liabilities are remeasured at exchange rates in effect at the end of each reporting period. Property, plant and equipment with associated depreciation and inventories are valued at historic exchange rates. Revenue and expense accounts other than depreciation for each month are remeasured at the appropriate daily rate of exchange. Currency exchange gains and losses from remeasurement are credited or charged to OI&E.
Derivatives and hedging

We use derivative financial instruments to manage exposure to foreign exchange risk. These instruments are primarily forward foreign currency exchange contracts, which are used as economic hedges to reduce the earnings impact that exchange rate fluctuations may have on our non-U.S. dollar net balance sheet exposures. Gains and losses from changes in the fair value of these forward foreign currency exchange contracts are credited or charged to OI&E. We do not apply hedge accounting to our foreign currency derivative instruments.

In connection with the issuance of long-term debt, we use financial derivatives such as treasury rate lock agreements that are recognized in AOCI and amortized over the life of the related debt. The results of these derivative transactions have not been material.

We do not use derivatives for speculative or trading purposes.
Changes in accounting standards

In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This standard raises the threshold at which a disposal qualifies as a discontinued operation. Under the new guidance, only a disposal representing a strategic shift in operations that has or will have a major effect on an entity’s operations and financial results, such as a disposal of a major geographic area or a major line of business, should be presented as discontinued operations. In addition, the new standard requires additional disclosures of both discontinued operations and certain other disposals that do not meet the revised definition of a discontinued operation. This standard is effective for annual and interim reporting periods beginning as of January 1, 2015. In the event that a future disposition meets the revised criteria, we expect that this standard will have an impact on the presentation of our financial statements, and we will provide the appropriate disclosures at that time.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. This standard is effective for annual and interim reporting periods beginning as of January 1, 2017. We are currently evaluating the potential impact of this standard on our financial position and results of operations.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This standard sets forth management’s responsibility to evaluate, each reporting period, whether there is substantial doubt about an entity’s ability to continue as a going concern, and if so, to provide related footnote disclosures. The standard is effective for annual and interim reporting periods ending after December 15, 2016. We expect it will have no impact on our financial position and results of operations.
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Acquisition charges
12 Months Ended
Dec. 31, 2014
Business Combinations [Abstract]
Acquisition charges
Acquisition charges
We incurred various costs as a result of the 2011 acquisition of National that are included in Other for segment reporting purposes, consistent with how management measures the performance of its segments. Total acquisition-related charges are detailed below:
 
 
For Years Ended
December 31,
 
 
2014
 
2013
 
2012
Amortization of intangible assets
 
$
319

 
$
323

 
$
325

Stock-based compensation
 
11

 
11

 
17

Retention bonuses
 

 
7

 
57

Severance and other benefits
 

 

 
16

Transaction and other costs
 

 

 
35

As recorded in Acquisition charges
 
330

 
341

 
450

As recorded in COR
 

 

 
21

Total acquisition-related charges
 
$
330

 
$
341

 
$
471



Acquisition charges

The amount of recognized amortization of intangible assets resulting from the National acquisition is based on estimated useful lives. See Note 10 for additional information.

Stock-based compensation was recognized for the accelerated vesting of equity awards upon the termination of employees, with additional compensation being recognized over the applicable vesting period for the remaining grantees.

Retention bonuses reflect amounts paid to former National employees who fulfilled agreed-upon service period obligations and that were recognized ratably over the required service period.

Severance and other benefits costs were for former National employees who were terminated after the closing date. About 350 jobs were eliminated by the end of 2012 as a result of redundancies and cost efficiency measures. As of December 31, 2014, a total of $86 million in cumulative charges have been recognized, of which $84 million has been paid, including $41 million related to change of control provisions under existing employment agreements.

Transaction and other costs included various expenses incurred in connection with the National acquisition.

COR

In 2011, we discontinued using one of National’s distributors. We acquired the distributor’s inventory at fair value, resulting in an incremental charge of $21 million to COR upon sale of the inventory in 2012.
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Restructuring charges/other
12 Months Ended
Dec. 31, 2014
Restructuring and Related Activities [Abstract]
Restructuring charges/other
Restructuring charges/other

Restructuring charges/other is comprised of the following components:
 
For Years Ended December 31,
 
2014
 
2013
 
2012
Restructuring charges by action:
 
 
 
 
 
2013 actions
 
 
 
 
 
Severance and benefits cost (a)
$
16

 
$
49

 
$

Other exit costs
10

 

 

 
26

 
49

 

Prior actions
 
 
 
 
 
Severance and benefits cost (a)
(6
)
 
36

 
251

Accelerated depreciation
1

 
11

 
21

Other exit costs (a)
(1
)
 
30

 
128

 
(6
)
 
77

 
400

Total restructuring charges
20

 
126

 
400

 
 
 
 
 
 
Other:
 
 
 
 
 
Gains on sales of assets
(75
)
 

 

Gain on technology transfer

 
(315
)
 

Gain on transfer of Japan substitutional pension

 

 
(144
)
Other
4

 

 
8

Restructuring charges/other
$
(51
)
 
$
(189
)
 
$
264



(a) Includes changes in estimates.
Restructuring charges/other are recognized in Other for segment reporting purposes. Restructuring actions related to the acquisition of National are discussed in Note 3 and the associated costs are reflected in the Acquisition charges line of our Consolidated Statements of Income.

2013 actions

We announced in January 2014 cost-saving actions in Embedded Processing and in Japan to reduce expenses and focus our investments on markets with greater potential for sustainable growth and strong long-term returns. We expect the actions to be completed by mid-2015. Cost reductions include the elimination of about 1,100 jobs worldwide. Through December 31, 2014, we have recognized $75 million in cumulative restructuring charges, with no further material charges expected. As of December 31, 2014, $43 million has been paid to terminated employees for severance and benefits.

Prior actions

In 2012, we announced a restructuring of our Wireless business to reduce expenses and focus our investments on markets with greater potential for sustainable growth and strong long-term returns. This action was completed in 2013. We recognized $383 million in cumulative restructuring charges, including a $90 million impairment of goodwill. As of December 31, 2014, $247 million has been paid to terminated employees for severance and benefits.

Also in 2012, we announced closure of two older semiconductor manufacturing facilities in Houston, Texas, and Hiji, Japan. We recognized $200 million in cumulative restructuring charges related to these closures, completing both by the end of 2013. As of December 31, 2014, $103 million has been paid to terminated employees for severance and benefits.

As of December 31, 2014 and 2013, we carried immaterial liabilities related to actions commenced in 2008 and 2009. The related expense was recognized in periods prior to 2011.

The table below reflects the changes in accrued restructuring balances associated with these actions:
 
 
2013 Actions
 
Prior Actions
 
 
 
 
Severance
and Benefits
 
Other
Charges
 
Severance
and Benefits
 
Other
Charges
 
Total
Accrual at December 31, 2011
 
$

 
$

 
$
109

 
$
7

 
$
116

Restructuring charges (a)
 

 

 
251

 
149

 
400

Non-cash items (b)
 

 

 
3

 
(124
)
 
(121
)
Payments
 

 

 
(23
)
 
(23
)
 
(46
)
Remaining accrual at December 31, 2012
 

 

 
340

 
9

 
349

 
 
 
 
 
 
 
 
 
 
 
Restructuring charges (a)
 
49

 

 
36

 
41

 
126

Non-cash items (b)
 

 

 
(5
)
 
(17
)
 
(22
)
Payments
 

 

 
(266
)
 
(26
)
 
(292
)
Remaining accrual at December 31, 2013
 
49

 

 
105

 
7

 
161

 
 
 
 
 
 
 
 
 
 
 
Restructuring charges (a)
 
16

 
10

 
(6
)
 

 
20

Payments
 
(43
)
 
(1
)
 
(73
)
 
(7
)
 
(124
)
Remaining accrual at December 31, 2014
 
$
22

 
$
9

 
$
26

 
$

 
$
57



(a) Includes changes in estimates.
(b) Reflects charges for goodwill impairment, stock-based compensation, impacts of postretirement benefit plans and accelerated depreciation.

The accrual balances above are primarily reported as a component of either Accrued expenses and other liabilities or Deferred credits and other liabilities on our Consolidated Balance Sheets, depending on the expected timing of payment.

Other

Gains on sales of assets

We recognized $75 million of gains on sales of assets in 2014. This consisted of $30 million associated with the sale of our site in Nice, France; $28 million associated with the sales of real estate in Santa Clara, California; and $17 million of asset sales associated primarily with the closure of our Houston, Texas, and Hiji, Japan, manufacturing facilities.

Gain on technology transfer

During 2013, we recognized a gain of $315 million on the transfer of wireless connectivity technology to a customer. This technology was associated with the former Wireless business.

Gain on transfer of Japan substitutional pension

During 2012, we transferred the obligations and assets of the substitutional portion of our Japan pension plan to the government of Japan, resulting in a net gain of $144 million. See Note 11 for additional details.
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Stock-based compensation
12 Months Ended
Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based compensation
Stock-based compensation

We have stock options outstanding to participants under long-term incentive plans. We also have assumed stock options that were granted by companies that we later acquired. Unless the options are acquisition-related replacement options, the option price per share may not be less than 100 percent of the fair market value of our common stock on the date of the grant. Substantially all the options have a 10-year term and vest ratably over four years. Our options generally continue to vest after the option recipient retires.

We also have RSUs outstanding under long-term incentive plans. Each RSU represents the right to receive one share of TI common stock on the vesting date, which is generally four years after the date of grant. Upon vesting, the shares are issued without payment by the grantee. Beginning with 2013 grants, RSUs generally continue to vest after the recipient retires. Holders of most RSUs receive an annual cash payment equivalent to the dividends paid on our common stock.

We have options and RSUs outstanding to non-employee directors under director compensation plans. The plans generally provide for annual grants of stock options and RSUs, a one-time grant of RSUs to each new non-employee director and the issuance of TI common stock upon the distribution of stock units credited to deferred compensation accounts established for such directors.

We also have an employee stock purchase plan under which options are offered to all eligible employees in amounts based on a percentage of the employee’s compensation, subject to a cap. Under the plan, the option price per share is 85 percent of the fair market value on the exercise date, and options have a three-month term.

Total stock-based compensation expense recognized was as follows:
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Stock-based compensation expense recognized in:
 
 
 
 
 
 
COR
 
$
48

 
$
49

 
$
48

R&D
 
62

 
67

 
71

SG&A
 
156

 
160

 
127

Acquisition charges
 
11

 
11

 
17

Total
 
$
277

 
$
287

 
$
263



These amounts include expenses related to non-qualified stock options, RSUs and stock options offered under our employee stock purchase plan and are net of expected forfeitures.

We issue awards of non-qualified stock options with graded vesting provisions (e.g., 25 percent per year for four years). Generally, we recognize the related compensation expense on a straight-line basis over the minimum service period required for vesting of the award, adjusting for expected forfeiture activity. Awards issued to employees who are retirement eligible or nearing retirement eligibility are expensed on an accelerated basis.

Our RSUs generally vest four years after the date of grant. We recognize the related compensation expense on a straight-line basis over the vesting period, adjusting for expected forfeiture activity. Beginning with 2013 grants, RSUs issued to employees who are retirement eligible or nearing retirement eligibility are expensed on an accelerated basis.

Fair-value methods and assumptions

We account for all awards granted under our various stock-based compensation plans at fair value. We estimate the fair values for non-qualified stock options using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions.
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Weighted average grant date fair value, per share
 
$
8.13

 
$
6.78

 
$
8.31

Weighted average assumptions used:
 
 
 
 

 
 

Expected volatility
 
22
%
 
26
%
 
30
%
Expected lives (in years)
 
7.3

 
7.4

 
7.1

Risk-free interest rates
 
2.45
%
 
1.43
%
 
1.40
%
Expected dividend yields
 
2.72
%
 
2.56
%
 
2.10
%


We determine expected volatility on all options granted using available implied volatility rates. We believe that market-based measures of implied volatility are currently the best available indicators of the expected volatility used in these estimates.

We determine expected lives of options based on the historical option exercise experience of our optionees using a rolling 10-year average. We believe the historical experience method is the best estimate of future exercise patterns currently available.

Risk-free interest rates are determined using the implied yield currently available for zero-coupon U.S. government issues with a remaining term equal to the expected life of the options.

Expected dividend yields are based on the annualized approved quarterly dividend rate and the current market price of our common stock at the time of grant. No assumption for a future dividend rate change is included unless there is an approved plan to change the dividend in the near term.

The fair value per share of RSUs is determined based on the closing price of our common stock on the date of grant.

Our employee stock purchase plan is a discount-purchase plan and consequently the Black-Scholes-Merton option-pricing model is not used to determine the fair value per share of these awards. The fair value per share under this plan equals the amount of the discount.

Long-term incentive and director compensation plans

Stock option and RSU transactions under our long-term incentive and director compensation plans during 2014 were as follows:
 
 
Stock Options
 
RSUs
 
 
Shares
 
Weighted Average
Exercise Price
per Share
 
Shares
 
Weighted Average
Grant Date Fair
Value per Share
Outstanding grants, December 31, 2013
 
64,930,540

 
$
28.98

 
20,892,022

 
$
29.94

Granted
 
14,053,185

 
44.11

 
3,184,237

 
44.71

Vested RSUs
 

 

 
(5,609,627
)
 
23.68

Forfeited and expired
 
(1,832,897
)
 
36.54

 
(1,162,817
)
 
33.22

Exercised
 
(19,503,382
)
 
27.75

 

 

Outstanding grants, December 31, 2014
 
57,647,446

 
32.84

 
17,303,815

 
34.47



The weighted average grant date fair value of RSUs granted during the years 2014, 2013 and 2012 was $44.71, $33.70 and $31.60 per share, respectively. For the years ended December 31, 2014, 2013 and 2012, the total grant date fair value of shares vested from RSU grants was $133 million, $98 million and $120 million, respectively.

Summarized information about stock options outstanding at December 31, 2014, is as follows:
 
 
 
Stock Options Outstanding
 
Options Exercisable
Range of
Exercise Price
 
Number
Outstanding
(Shares)
 
Weighted Average
Remaining Contractual
Life (Years)
 
Weighted Average
Exercise Price
per Share
 
Number
Exercisable
(Shares)
 
Weighted Average
Exercise Price
per Share
$
14.47 to 20.00
 
4,061,577

 
4.0
 
$
14.98

 
4,061,577

 
$
14.98

 
20.01 to 30.00
 
11,270,125

 
3.7
 
25.47

 
11,250,200

 
25.46

 
30.01 to 40.00
 
28,910,636

 
6.5
 
33.00

 
12,288,339

 
33.14

 
40.01 to 50.00
 
13,399,020

 
9.1
 
44.10

 
1,750

 
42.66

 
50.01 to 55.41
 
6,088

 
9.9
 
55.41

 

 

 
14.47 to 55.41
 
57,647,446

 
6.4
 
32.84

 
27,601,866

 
27.34



During the years ended December 31, 2014, 2013 and 2012, the aggregate intrinsic value (i.e., the difference in the closing market price on the date of exercise and the exercise price paid by the optionee) of options exercised was $367 million, $427 million and $244 million, respectively.

Summarized information as of December 31, 2014, about outstanding stock options that are vested and expected to vest, as well as stock options that are currently exercisable, is as follows:
 
 
Outstanding Stock Options
(Fully Vested and Expected to Vest) (a)
 
Options
Exercisable
Number of outstanding (shares)
 
56,328,323

 
27,601,866

Weighted average remaining contractual life (in years)
 
6.3

 
4.4

Weighted average exercise price per share
 
$
32.69

 
$
27.34

Intrinsic value (millions of dollars)
 
$
1,170

 
$
721


(a) Includes effects of expected forfeitures of approximately 1 million shares. Excluding the effects of expected forfeitures, the aggregate intrinsic value of stock options outstanding was $1,189 million.

As of December 31, 2014, the total future compensation cost related to equity awards not yet recognized in the Consolidated Statements of Income was $308 million, consisting of $113 million related to unvested stock options and $195 million related to unvested RSUs. The $308 million is expected to be recognized as follows: $168 million in 2015, $91 million in 2016, $44 million in 2017 and $5 million in 2018.

Director deferred compensation

Directors who retire or resign from the board may receive stock distributions for compensation they elected to defer. For these stock distributions, we issued treasury shares. Director deferred stock activity during 2014 was as follows:
 
 
Director Deferred Stock (Shares)
Outstanding, December 31, 2013
 
129,264

New shares deferred
 
13,636

Issued
 
(7,178
)
Outstanding, December 31, 2014
 
135,722


Employee stock purchase plan

Options outstanding under the employee stock purchase plan at December 31, 2014, had an exercise price equal to 85 percent of the fair market value of TI common stock on the date of automatic exercise. The automatic exercise occurred on January 2, 2015, resulting in an exercise price of $45.46 per share. Of the total outstanding options, none were exercisable at year-end 2014.

Employee stock purchase plan transactions during 2014 were as follows:
 
 
Employee Stock
Purchase Plan
(Shares)
 
Exercise Price
Outstanding grants, December 31, 2013
 
485,408

 
$
36.64

Granted
 
1,673,479

 
41.60

Exercised
 
(1,784,184
)
 
39.44

Outstanding grants, December 31, 2014
 
374,703

 
45.46



The weighted average grant date fair value of options granted under the employee stock purchase plans during the years 2014, 2013 and 2012 was $7.34, $5.71 and $4.52 per share, respectively. During the years ended December 31, 2014, 2013 and 2012, the total intrinsic value of options exercised under these plans was $12 million, $13 million and $13 million, respectively.

Effect on shares outstanding and treasury shares
Treasury shares were acquired in connection with the board-authorized stock repurchase program. As of December 31, 2014, $3.17 billion of stock repurchase authorizations remain, and no expiration date has been specified.

Our current practice is to issue shares of common stock from treasury shares upon exercise of stock options, distribution of director deferred compensation and vesting of RSUs. The table below reflects the changes in our treasury shares:

 
 
Stock Options
 
RSUs
 
Treasury Shares
Balance, December 31, 2011
 
 
 
 
 
601,131,631

Repurchases
 
 
 
 
 
59,757,780

Shares used for:
 
 
 
 
 
 
Stock options/RSUs
 
(22,409,816
)
 
(4,182,928
)
 
 
Previously unissued common shares (a)
 
180,955

 
4,593

 
 
Stock applied to taxes
 

 
990,845

 
 
ESPP
 
(2,829,498
)
 

 
 
Director deferred stock
 

 

 
(6,592
)
Total issued
 
(25,058,359
)
 
(3,187,490
)
 
(28,245,849
)
Balance, December 31, 2012
 
 
 
 
 
632,636,970

 
 
 
 
 
 
 
Repurchases
 
 
 
 
 
77,564,013

Shares used for:
 
 
 
 
 
 
Stock options/RSUs
 
(45,507,711
)
 
(5,741,981
)
 
 
Stock applied to taxes
 

 
1,461,422

 
 
ESPP
 
(2,386,834
)
 

 
 
Director deferred stock
 

 

 
(12,909
)
Total issued
 
(47,894,545
)
 
(4,280,559
)
 
(52,175,104
)
Balance, December 31, 2013
 
 
 
 
 
658,012,970

 
 
 
 
 
 
 
Repurchases
 
 
 
 
 
61,665,209

Shares used for:
 
 
 
 
 
 
Stock options/RSUs
 
(19,503,382
)
 
(5,609,627
)
 
 
Stock applied to exercises or taxes
 
6,618

 
1,408,701

 
 
ESPP
 
(1,784,184
)
 

 
 
Director deferred stock
 

 

 
(7,178
)
Total issued
 
(21,280,948
)
 
(4,200,926
)
 
(25,481,874
)
Balance, December 31, 2014
 
 
 
 
 
694,189,127


(a) Beginning in 2013, only treasury shares were issued.


Shares available for future grants and reserved for issuance are summarized below:
 
 
December 31, 2014
Shares
 
Long-Term Incentive
and Director
Compensation Plans
 
Employee Stock
Purchase Plan
 
Total
Reserved for issuance (a)
 
121,127,656

 
39,565,038

 
160,692,694

Shares to be issued upon exercise of outstanding options and RSUs (a)
 
(75,086,983
)
 
(374,703
)
 
(75,461,686
)
Available for future grants
 
46,040,673

 
39,190,335

 
85,231,008



(a) Includes 135,722 shares credited to directors’ deferred stock accounts that settle in shares of TI common stock. These shares are not included as grants outstanding at December 31, 2014.

The effects on cash flows were as follows:

 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Proceeds from common stock transactions
 
$
616

 
$
1,314

 
$
523

Tax benefit realized from stock options exercised
 
218

 
227

 
133

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Profit sharing plans
12 Months Ended
Dec. 31, 2014
Profit sharing plans [Abstract]
Profit sharing plans
Profit sharing plans

Profit sharing benefits are generally formulaic and determined by one or more subsidiary or company-wide financial metrics. We pay profit sharing benefits primarily under the company-wide TI Employee Profit Sharing Plan. This plan provides for profit sharing to be paid based solely on TI’s operating margin for the full calendar year. Under this plan, TI must achieve a minimum threshold of 10 percent operating margin before any profit sharing is paid. At 10 percent operating margin, profit sharing will be 2 percent of eligible payroll. The maximum amount of profit sharing available under the plan is 20 percent of eligible payroll, which is paid only if TI’s operating margin is at or above 35 percent for a full calendar year.

We recognized $269 million, $161 million and $96 million of profit sharing expense under the TI Employee Profit Sharing Plan in 2014, 2013 and 2012, respectively.
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Income taxes
12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]
Income taxes
Income taxes

Income before Income Taxes
 
 
U.S.
 
Non-U.S.
 
Total
2014
 
$
2,684

 
$
1,190

 
$
3,874

2013
 
1,507

 
1,247

 
2,754

2012
 
319

 
1,616

 
1,935


 
Provision (Benefit) for Income Taxes
 
 
U.S. Federal
 
Non-U.S.
 
U.S. State
 
Total
2014
 
 
 
 
 
 
 
 
Current
 
$
911

 
$
194

 
$
9

 
$
1,114

Deferred
 
(73
)
 
11

 
1

 
(61
)
Total
 
$
838

 
$
205

 
$
10

 
$
1,053

 
 
 
 
 
 
 
 
 
2013
 
 

 
 

 
 

 
 

Current
 
$
291

 
$
247

 
$
4

 
$
542

Deferred
 
17

 
33

 

 
50

Total
 
$
308

 
$
280

 
$
4

 
$
592

 
 
 
 
 
 
 
 
 
2012
 
 

 
 

 
 

 
 

Current
 
$
(108
)
 
$
156

 
$
(2
)
 
$
46

Deferred
 
65

 
65

 

 
130

Total
 
$
(43
)
 
$
221

 
$
(2
)
 
$
176



Principal reconciling items from income tax computed at the statutory federal rate follow:
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Computed tax at statutory rate
 
$
1,356

 
$
964

 
$
677

Non-U.S. effective tax rates
 
(212
)
 
(156
)
 
(345
)
U.S. R&D tax credit
 
(59
)
 
(129
)
 

U.S. tax benefit for manufacturing
 
(51
)
 
(66
)
 
(158
)
Impact of changes to uncertain tax positions
 
3

 
(14
)
 
(88
)
Non-deductible expenses
 
6

 
13

 
42

Other
 
10

 
(20
)
 
48

Total provision for income taxes
 
$
1,053

 
$
592

 
$
176



The total provision for 2013 in the reconciliation above includes $79 million of discrete tax benefits primarily for the reinstatement of the U.S. R&D tax credit retroactive to 2012.

Included in the non-U.S. effective tax rates reconciling item are benefits from tax holidays of $44 million, $40 million and $51 million in 2014, 2013 and 2012, respectively. The tax benefits relate to our operations in Malaysia and the Philippines, and expire in 2018 and 2017, respectively. The terms of the Malaysia tax holiday are currently under governmental review as required for the end of the first five years of the holiday period. We do not expect any potential change in the holiday to have a material impact on the financial statements.

The total provision for 2012 includes $252 million of discrete tax benefits primarily for additional U.S. tax benefits for manufacturing related to the years 2000 through 2011 and, to a lesser extent, audit adjustments.

The primary components of deferred income tax assets and liabilities were as follows:
 
 
December 31,
 
 
2014
 
2013
Deferred income tax assets:
 
 
 
 
Deferred loss and tax credit carryforwards
 
$
289

 
$
345

Accrued expenses
 
248

 
265

Stock-based compensation
 
238

 
262

Inventories and related reserves
 
157

 
162

Retirement costs for defined benefit and retiree health care
 
96

 
101

Other
 
122

 
148

 
 
1,150

 
1,283

Valuation allowance
 
(195
)
 
(219
)
 
 
955

 
1,064

Deferred income tax liabilities:
 
 
 
 

Acquisition-related intangibles and fair-value adjustments
 
(688
)
 
(804
)
International earnings
 
(104
)
 
(121
)
Property, plant and equipment
 
(10
)
 
(57
)
Other
 
(37
)
 
(31
)
 
 
(839
)
 
(1,013
)
Net deferred income tax asset
 
$
116

 
$
51



The deferred income tax assets and liabilities based on tax jurisdictions are presented on the Consolidated Balance Sheets as follows:
 
 
December 31,
 
 
2014
 
2013
Current deferred income tax assets
 
$
347

 
$
393

Noncurrent deferred income tax assets
 
172

 
207

Current deferred income tax liabilities
 
(4
)
 
(1
)
Noncurrent deferred income tax liabilities
 
(399
)
 
(548
)
Net deferred income tax asset
 
$
116

 
$
51



We make an ongoing assessment regarding the realization of U.S. and non-U.S. deferred tax assets. This assessment is based on our evaluation of relevant criteria, including the existence of deferred tax liabilities that can be used to absorb deferred tax assets, taxable income in prior carryback years and expectations for future taxable income. In 2014, we recognized a net decrease of $24 million in our valuation allowance, due to unutilized tax credits.

We have U.S. and non-U.S. tax loss carryforwards of approximately $108 million, none of which will expire before the year 2024.

A provision has been made for deferred taxes on undistributed earnings of non-U.S. subsidiaries to the extent that dividend payments from these subsidiaries are expected to result in additional tax liability. The remaining undistributed earnings of approximately $7.67 billion at December 31, 2014, have been indefinitely reinvested outside of the United States; therefore, no U.S. tax provision has been made for taxes due upon remittance of these earnings. The indefinitely reinvested earnings of our non-U.S. subsidiaries are primarily invested in working capital and property, plant and equipment. Determination of the amount of unrecognized deferred income tax liability is not practical because of the complexities associated with its hypothetical calculation.

Cash payments made for income taxes, net of refunds, were $1.104 billion, $569 million and $171 million for the years ended December 31, 2014, 2013 and 2012, respectively.

Uncertain tax positions

We operate in a number of tax jurisdictions, and our income tax returns are subject to examination by tax authorities in those jurisdictions who may challenge any item on these tax returns. Because the matters challenged by authorities are typically complex, their ultimate outcome is uncertain. Before any benefit can be recorded in the financial statements, we must determine that it is “more likely than not” that a tax position will be sustained by the appropriate tax authorities. We recognize accrued interest related to uncertain tax positions and penalties as components of OI&E.

The changes in the total amounts of uncertain tax positions are summarized as follows:
 
 
2014
 
2013
 
2012
Balance, January 1
 
$
91

 
$
184

 
$
210

Additions based on tax positions related to the current year
 
10

 
7

 
12

Additions for tax positions of prior years
 
52

 
19

 
45

Reductions for tax positions of prior years
 
(9
)
 
(10
)
 
(92
)
Settlements with tax authorities
 
(36
)
 
(96
)
 
39

Expiration of the statute of limitations for assessing taxes
 

 
(13
)
 
(30
)
Balance, December 31
 
$
108

 
$
91

 
$
184

 
 
 
 
 
 
 
Interest income (expense) recognized in the year ended December 31
 
$
6

 
$
(10
)
 
$
32

 
 
 
 
 
 
 
Interest receivable (payable) as of December 31
 
$

 
$
(5
)
 
$
8



The liability for uncertain tax positions and interest payable are components of Deferred credits and other liabilities on our Consolidated Balance Sheets. Interest receivable is a component of Other assets on our Consolidated Balance Sheets.

The $108 million liability for uncertain tax positions as of December 31, 2014, is comprised of positions that, if recognized, would impact the tax rate. If these tax liabilities are ultimately realized, $56 million of existing deferred tax assets would also be realized, related to refunds from counterparty jurisdictions resulting from procedures for relief from double taxation. Regarding the $108 million liability:

About $76 million of the liability represents uncertain tax positions for tax years in jurisdictions in which audit assessments have not been made. Of this liability, $52 million relates to the cumulative effect of a tax depreciation-related method change. The balance of this liability is primarily related to transfer pricing issues for which procedures for relief from double taxation will mitigate the tax rate impact of any difference between the actual tax assessments and our estimates.
About $32 million of the liability represents audit assessments. Of the liability, $29 million is related to transfer pricing issues for which there are ongoing procedures for relief from double taxation. Settlement of the $29 million is subject to timely completion of the tax treaty processes and a significant portion of that liability may be settled within the next 12 months. Settlement will not have a significant tax rate impact, as the tax rates of the counterparty jurisdictions are similar.

All of the $91 million liability for uncertain tax positions as of December 31, 2013, is made up of positions that, if recognized, would impact the tax rate. If these tax liabilities are ultimately realized, $76 million of deferred tax assets would also be realized, primarily related to refunds from counterparty jurisdictions resulting from procedures for relief from double taxation.

As of December 31, 2014, the statute of limitations remains open for U.S. federal tax returns for 2010 and following years. Audit activities related to our U.S. federal tax returns through 2009 have been completed except for certain pending tax treaty procedures for relief from double taxation and the review of refunds claimed on amended returns for years prior to 2010. The procedures for relief from double taxation pertain to U.S. federal tax returns for the years 2004 through 2010.

In non-U.S. jurisdictions, the years open to audit represent the years still open under the statute of limitations. With respect to major jurisdictions outside the United States, our subsidiaries are no longer subject to income tax audits for years before 2007.
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Financial instruments and risk concentration
12 Months Ended
Dec. 31, 2014
Risks and Uncertainties [Abstract]
Financial instruments and risk concentration
Financial instruments and risk concentration

Financial instruments

We hold derivative financial instruments such as forward foreign currency exchange contracts, the fair value of which was not material as of December 31, 2014. Our forward foreign currency exchange contracts outstanding as of December 31, 2014, had a notional value of $504 million to hedge our non-U.S. dollar net balance sheet exposures, including $183 million to sell Japanese yen, $163 million to sell euros and $29 million to sell British pound sterling. Prior to the second quarter of 2013, we also held interest rate swaps. See Note 12 for more details.

Our investments in cash equivalents, short-term investments and certain long-term investments, as well as our postretirement plan assets and deferred compensation liabilities, are carried at fair value. The carrying values for other current financial assets and liabilities, such as accounts receivable and accounts payable, approximate fair value due to the short maturity of such instruments. The carrying value of our long-term debt approximates the fair value as measured using broker-dealer quotes, which are Level 2 inputs. See Note 9 for a description of fair value and the definition of Level 2 inputs.

Risk concentration

We are subject to counterparty risk from financial institutions, customers and issuers of debt securities. Financial instruments that could subject us to concentrations of credit risk are primarily cash deposits, cash equivalents, short-term investments and accounts receivable. To manage our credit risk exposure, we place cash investments in investment-grade debt securities and limit the amount of credit exposure to any one issuer. We also limit counterparties on cash deposits and financial derivative contracts to financial institutions with investment-grade ratings.

Concentrations of credit risk with respect to accounts receivable are limited due to our large number of customers and their dispersion across different industries and geographic areas. We maintain allowances for expected returns, disputes, adjustments, incentives and collectability. These allowances are deducted from accounts receivable on our Consolidated Balance Sheets.

Details of these accounts receivable allowances are as follows:
 
 
2014
 
2013
 
2012
Balance, January 1
 
$
22

 
$
31

 
$
19

Additions charged (credited) to operating results
 
(9
)
 
(9
)
 
12

Recoveries and write-offs, net
 
(1
)
 

 

Balance, December 31
 
$
12

 
$
22

 
$
31

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Valuation of debt and equity investments and certain liabilities
12 Months Ended
Dec. 31, 2014
Fair Value Disclosures [Abstract]
Valuation of debt and equity investments and certain liabilities
Valuation of debt and equity investments and certain liabilities

Debt and equity investments

We classify our investments as either available for sale, trading, equity method or cost method. Most of our investments are classified as available for sale.

Available-for-sale and trading securities are stated at fair value, which is generally based on market prices or broker quotes. See fair-value discussion below. Unrealized gains and losses on available-for-sale securities are recorded as an increase or decrease, net of taxes, in AOCI on our Consolidated Balance Sheets. We record other-than-temporary impairments on available-for-sale securities in OI&E in our Consolidated Statements of Income.

We classify certain mutual funds as trading securities. These mutual funds hold a variety of debt and equity investments intended to generate returns that offset changes in certain deferred compensation liabilities. We record changes in the fair value of these mutual funds and the related deferred compensation liabilities in SG&A.

Our other investments are not measured at fair value but are accounted for using either the equity method or cost method. These investments consist of interests in venture capital funds and other non-marketable equity securities. Gains and losses from equity-method investments are reflected in OI&E based on our ownership share of the investee’s financial results. Gains and losses on cost-method investments are recorded in OI&E when realized or when an impairment of the investment’s value is warranted based on our assessment of the recoverability of each investment.


Details of our investments are as follows:
 
 
December 31, 2014
 
December 31, 2013
 
 
Cash and Cash
Equivalents
 
Short-Term
Investments
 
Long-Term
Investments
 
Cash and Cash
Equivalents
 
Short-Term
Investments
 
Long-Term
Investments
Measured at fair value:
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
 
$
522

 
$

 
$

 
$
500

 
$

 
$

Corporate obligations
 
97

 
390

 

 
123

 
217

 

U.S. Government agency and Treasury securities
 
365

 
1,952

 

 
787

 
1,985

 

Trading securities
 
 

 
 

 
 

 
 

 
 

 
 

Mutual funds
 

 

 
185

 

 

 
179

Total
 
984

 
2,342

 
185

 
1,410

 
2,202

 
179

 
 
 
 
 
 
 
 
 
 
 
 
 
Other measurement basis:
 
 

 
 

 
 

 
 

 
 

 
 

Equity-method investments
 

 

 
27

 

 

 
24

Cost-method investments
 

 

 
12

 

 

 
13

Cash on hand
 
215

 

 

 
217

 

 

Total
 
$
1,199

 
$
2,342

 
$
224

 
$
1,627

 
$
2,202

 
$
216



At December 31, 2014 and 2013, we had no significant unrealized gains or losses associated with our available-for-sale investments. We did not recognize any credit losses related to available-for-sale investments for the years ended December 31, 2014, 2013 and 2012.

For the years ended December 31, 2014, 2013 and 2012, the proceeds from sales, redemptions and maturities of short-term available-for-sale investments were $2.97 billion, $4.25 billion and $2.20 billion, respectively. Gross realized gains and losses from these sales were not significant.
 
The following table presents the aggregate maturities of investments in debt securities classified as available for sale at December 31, 2014:
Due
 
Fair Value
One year or less
 
$
3,121

One to two years
 
205


Gross realized gains and losses from sales of long-term investments were not significant for 2014, 2013 and 2012. Other-than-temporary declines and impairments in the values of these investments recognized in OI&E were not material in 2014, and were $5 million and $7 million in 2013 and 2012, respectively.

Fair-value considerations

We measure and report certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The three-level hierarchy discussed below indicates the extent and level of judgment used to estimate fair-value measurements.

Level 1 - Uses unadjusted quoted prices that are available in active markets for identical assets or liabilities as of the reporting date.
Level 2 - Uses inputs other than Level 1 that are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data. We utilize a third-party data service to provide Level 2 valuations. We verify these valuations for reasonableness relative to unadjusted quotes obtained from brokers or dealers based on observable prices for similar assets in active markets.
Level 3 - Uses inputs that are unobservable, supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models that utilize management estimates of market participant assumptions.


The following are our assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2014 and 2013. We had no Level 3 assets or liabilities as of December 31, 2014 and 2013. These tables do not include cash on hand, assets held by our postretirement plans, or assets and liabilities that are measured at historical cost or any basis other than fair value.
 
 
Fair Value
December 31, 2014
 
Level 1
 
Level 2
Assets:
 
 
 
 
 
 
Money market funds
 
$
522

 
$
522

 
$

Corporate obligations
 
487

 

 
487

U.S. Government agency and Treasury securities
 
2,317

 
1,762

 
555

Mutual funds
 
185

 
185

 

Total assets
 
$
3,511

 
$
2,469

 
$
1,042

 
 
 
 
 
 
 
Liabilities:
 
 

 
 

 
 

Deferred compensation
 
$
202

 
$
202

 
$

Total liabilities
 
$
202

 
$
202

 
$

 
 
 
Fair Value
December 31, 2013
 
Level 1
 
Level 2
Assets:
 
 
 
 
 
 
Money market funds
 
$
500

 
$
500

 
$

Corporate obligations
 
340

 

 
340

U.S. Government agency and Treasury securities
 
2,772

 
2,107

 
665

Mutual funds
 
179

 
179

 

Total assets
 
$
3,791

 
$
2,786

 
$
1,005

 
 
 
 
 
 
 
Liabilities:
 
 

 
 

 
 

Deferred compensation
 
$
197

 
$
197

 
$

Total liabilities
 
$
197

 
$
197

 
$

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Goodwill and acquisition-related intangibles
12 Months Ended
Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill and acquisition-related intangibles
Goodwill and acquisition-related intangibles

The following table summarizes goodwill, net, by segment for the years ended December 31, 2014 and 2013.
 
 
Goodwill
Analog
 
$
4,158

Embedded Processing
 
172

Other
 
32

Total
 
$
4,362



We perform our annual goodwill impairment test as of October 1 and determine whether the fair value of each of our reporting units is in excess of its carrying value. Determination of fair value is based upon management estimates and judgment, using unobservable inputs in discounted cash flow models to calculate the fair value of each reporting unit. These unobservable inputs are considered Level 3 measurements. For the years ended December 31, 2014 and 2013, we determined no impairment was indicated. See Note 9 for additional information.

In November 2012, as a result of unsuccessful efforts to divest certain Wireless product lines and the subsequent decision to restructure and wind down those product lines, we reassessed the recoverability of the goodwill associated with the former Wireless segment. As a result, we recognized a non-cash, non-tax deductible impairment charge of $90 million for that goodwill. We recognized this impairment in Restructuring charges/other in the Consolidated Statements of Income, as discussed in Note 4. As of December 31, 2014 and 2013, the accumulated impairment of goodwill was $90 million.

The components of acquisition-related intangible assets as of December 31, 2014 and 2013, are as follows:
 
 
 
 
December 31, 2014
 
December 31, 2013
 Acquisition-Related Intangibles
 
Amortization
Period
(Years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Developed technology
 
5 - 10
 
$
2,135

 
$
714

 
$
1,421

 
$
2,157

 
$
526

 
$
1,631

Customer relationships
 
8
 
810

 
330

 
480

 
821

 
239

 
582

Other intangibles
 
5
 
3

 
2

 
1

 
5

 
3

 
2

In-process R&D
 
n/a
 

 
n/a

 

 
8

 
n/a

 
8

Total
 
 
 
$
2,948

 
$
1,046

 
$
1,902

 
$
2,991

 
$
768

 
$
2,223



Amortization of acquisition-related intangibles was $321 million, $336 million and $342 million for 2014, 2013 and 2012, respectively, primarily related to developed technology. Fully amortized assets are written off against accumulated amortization. Future estimated amortization of acquisition-related intangibles for the years ended December 31 is as follows:
 
Amortization of Acquisition-Related Intangibles
2015
$
319

2016
319

2017
318

2018
318

2019
288

Thereafter
340

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Postretirement benefit plans
12 Months Ended
Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
Postretirement benefit plans
Postretirement benefit plans

Plan descriptions

We have various employee retirement plans, including defined contribution, defined benefit and retiree health care benefit plans. For qualifying employees, we offer deferred compensation arrangements.

U.S. retirement plans

Our principal retirement plans in the U.S. are a defined contribution plan; an enhanced defined contribution plan; and qualified and non-qualified defined benefit pension plans. The defined benefit plans were closed to new participants in 1997, and current participants were allowed to make a one-time election to continue accruing a benefit in the plans, or to cease accruing a benefit and instead to participate in the enhanced defined contribution plan described below.

Both defined contribution plans offer an employer-matching savings option that allows employees to make pre-tax contributions to various investment choices, including a TI common stock fund. Employees who elected to continue accruing a benefit in the qualified defined benefit pension plans may also participate in the defined contribution plan, where employer-matching contributions are provided for up to 2 percent of the employee’s annual eligible earnings. Employees who elected not to continue accruing a benefit in the defined benefit pension plans, and employees hired after November 1997 and through December 31, 2003, may participate in the enhanced defined contribution plan. This plan provides for a fixed employer contribution of 2 percent of the employee’s annual eligible earnings, plus an employer-matching contribution of up to 4 percent of the employee’s annual eligible earnings. Employees hired after December 31, 2003, do not receive the fixed employer contribution of 2 percent of the employee’s annual eligible earnings.
At December 31, 2014 and 2013, as a result of employees’ elections, TI’s U.S. defined contribution plans held shares of TI common stock totaling 14 million shares and 15 million shares valued at $740 million and $678 million, respectively. Dividends paid on these shares for 2014 and 2013 were $19 million and $18 million, respectively.

Our aggregate expense for the U.S. defined contribution plans was $60 million in 2014, $62 million in 2013 and $70 million in 2012.

The defined benefit pension plans include employees still accruing benefits, as well as employees and participants who no longer accrue service-related benefits, but instead, may participate in the enhanced defined contribution plan. Benefits under the qualified defined benefit pension plan are determined using a formula based upon years of service and the highest five consecutive years of compensation. We intend to contribute amounts to this plan to meet the minimum funding requirements of applicable local laws and regulations, plus such additional amounts as we deem appropriate. The non-qualified defined benefit plans are unfunded and closed to new participants.
 
U.S. retiree health care benefit plan

U.S. employees who meet eligibility requirements are offered medical coverage during retirement. We make a contribution toward the cost of those retiree medical benefits for certain retirees and their dependents. The contribution rates are based upon various factors, the most important of which are an employee’s date of hire, date of retirement, years of service and eligibility for Medicare benefits. The balance of the cost is borne by the plan’s participants. Employees hired after January 1, 2001, are responsible for the full cost of their medical benefits during retirement.

Non-U.S. retirement plans

We provide retirement coverage for non-U.S. employees, as required by local laws or to the extent we deem appropriate, through a number of defined benefit and defined contribution plans. Retirement benefits are generally based on an employee’s years of service and compensation. Funding requirements are determined on an individual country and plan basis and are subject to local country practices and market circumstances.

As of December 31, 2014 and 2013, as a result of employees’ elections, TI’s non-U.S. defined contribution plans held TI common stock valued at $17 million and $15 million, respectively. Dividends paid on these shares of TI common stock for 2014 and 2013 were not material.
 
Effects on the Consolidated Statements of Income and Balance Sheets

Expense related to defined benefit and retiree health care benefit plans was as follows:
 
 
U.S. Defined Benefit
 
U.S. Retiree Health Care
 
Non-U.S. Defined Benefit
 
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
Service cost
 
$
21

 
$
26

 
$
24

 
$
4

 
$
5

 
$
5

 
$
39

 
$
41

 
$
45

Interest cost
 
45

 
45

 
44

 
22

 
20

 
25

 
68

 
61

 
75

Expected return on plan assets
 
(42
)
 
(48
)
 
(50
)
 
(20
)
 
(24
)
 
(23
)
 
(80
)
 
(67
)
 
(78
)
Amortization of prior service cost (credit)
 

 
1

 
1

 
4

 
4

 
3

 
(2
)
 
(3
)
 
(4
)
Recognized net actuarial loss
 
26

 
21

 
16

 
7

 
11

 
13

 
24

 
31

 
41

Net periodic benefit costs
 
50

 
45

 
35

 
17

 
16

 
23

 
49

 
63

 
79

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Settlement losses (a) (b)
 
5

 
41

 

 

 

 

 
1

 
4

 
193

Curtailment gain
 

 

 

 

 

 
(1
)
 
(2
)
 
(7
)
 

Special termination benefit gains (b)
 

 

 
(1
)
 

 

 

 

 

 
(337
)
Total, including other postretirement losses (gains)
 
$
55

 
$
86

 
$
34

 
$
17

 
$
16

 
$
22

 
$
48

 
$
60

 
$
(65
)

(a) Includes non-restructuring and restructuring-related settlement losses.
(b) Transfer of Japan substitutional pension in 2012: In Japan, we maintain employee pension fund plans (EPFs) pursuant to the Japanese Welfare Pension Insurance Law (JWPIL). An EPF consists of two portions: a substitutional portion based on JWPIL-determined minimum old-age pension benefits similar to Social Security benefits in the United States and a corporate portion established at the discretion of each employer. Employers and employees are exempt from contributing to the Japanese Pension Insurance (JPI) if the substitutional portion is funded by an EPF.

The JWPIL was amended to permit each EPF to separate the substitutional portion and transfer those obligations and related assets to the government of Japan. After such a transfer, the employer is required to contribute periodically to JPI, and the government of Japan is responsible for future benefit payments relating to the substitutional portion.

During the third quarter of 2012, our EPF received final approval for such a separation and transferred the obligations and assets of its substitutional portion to the government of Japan. On a pre-tax basis, this resulted in a net gain of $144 million recorded in Restructuring charges/other on our Consolidated Statements of Income and included in Other, as shown in Note 4. This net gain of $144 million consisted of two parts - a gain of $337 million, representing the difference between the fair values of the obligations settled of $533 million and the assets transferred from the pension trust to the government of Japan of $196 million, offset by a settlement loss of $193 million related to the recognition of previously unrecognized actuarial losses included in AOCI.

For the U.S. qualified pension and retiree health care plans, the expected return on plan assets component of net periodic benefit cost is based upon a market-related value of assets. In accordance with U.S. GAAP, the market-related value of assets is the fair value adjusted by a smoothing technique whereby certain gains and losses are phased in over a period of three years.
 
Changes in the benefit obligations and plan assets for the defined benefit and retiree health care benefit plans were as follows:
 
 
U.S. Defined Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Change in plan benefit obligation:
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation at beginning of year
 
$
955

 
$
1,098

 
$
472

 
$
509

 
$
2,276

 
$
2,414

Service cost
 
21

 
26

 
4

 
5

 
39

 
41

Interest cost
 
45

 
45

 
22

 
20

 
68

 
61

Participant contributions
 

 

 
19

 
18

 
5

 
1

Benefits paid
 
(66
)
 
(9
)
 
(45
)
 
(47
)
 
(84
)
 
(81
)
Medicare subsidy
 

 

 
4

 
3

 

 

Actuarial loss (gain)
 
133

 
(27
)
 
37

 
(36
)
 
275

 
96

Settlements
 
(12
)
 
(178
)
 

 

 
(7
)
 
(30
)
Curtailments
 

 

 

 

 
(11
)
 
(28
)
Effects of exchange rate changes
 

 

 

 

 
(245
)
 
(237
)
Other
 

 

 

 

 

 
39

Benefit obligation at end of year (BO)
 
$
1,076

 
$
955

 
$
513

 
$
472

 
$
2,316

 
$
2,276

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in plan assets:
 
 
 
 

 
 
 
 

 
 
 
 

Fair value of plan assets at beginning of year
 
$
941

 
$
1,071

 
$
485

 
$
517

 
$
2,179

 
$
2,218

Actual return on plan assets
 
132

 
1

 
24

 
41

 
295

 
201

Employer contributions (funding of qualified plans)
 
75

 
43

 
10

 

 
64

 
62

Employer contributions (payments for non-qualified plans)
 
12

 
13

 

 

 

 

Participant contributions
 

 

 
19

 
18

 
5

 
1

Benefits paid
 
(66
)
 
(9
)
 
(45
)
 
(45
)
 
(84
)
 
(81
)
Medicare subsidy
 

 

 
4

 

 

 

Settlements
 
(12
)
 
(178
)
 

 

 
(7
)
 
(30
)
Effects of exchange rate changes
 

 

 

 

 
(239
)
 
(232
)
Other
 

 

 

 
(46
)
 

 
40

Fair value of plan assets at end of year (FVPA)
 
$
1,082

 
$
941

 
$
497

 
$
485

 
$
2,213

 
$
2,179

 
 
 
 
 
 
 
 
 
 
 
 
 
Funded status (FVPA – BO) at end of year
 
$
6

 
$
(14
)
 
$
(16
)
 
$
13

 
$
(103
)
 
$
(97
)


Amounts recognized on the Consolidated Balance Sheets as of December 31, 2014, were as follows:
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
Total
Overfunded retirement plans
 
$
72

 
$

 
$
55

 
$
127

Accrued expenses and other liabilities
 
(9
)
 

 
(6
)
 
(15
)
Underfunded retirement plans
 
(57
)
 
(16
)
 
(152
)
 
(225
)
Funded status (FVPA – BO) at end of year
 
$
6

 
$
(16
)
 
$
(103
)
 
$
(113
)

Amounts recognized on the Consolidated Balance Sheets as of December 31, 2013, were as follows:
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
Total
Overfunded retirement plans
 
$
44

 
$
16

 
$
70

 
$
130

Accrued expenses and other liabilities
 
(7
)
 

 
(5
)
 
(12
)
Underfunded retirement plans
 
(51
)
 
(3
)
 
(162
)
 
(216
)
Funded status (FVPA – BO) at end of year
 
$
(14
)
 
$
13

 
$
(97
)
 
$
(98
)

Contributions to the plans meet or exceed all minimum funding requirements. We expect to contribute about $100 million to our retirement benefit plans in 2015. The amounts shown for underfunded U.S. defined benefit plans were for non-qualified pension plans, which we do not fund because contributions to them are not tax deductible.

Accumulated benefit obligations, which are generally less than the projected benefit obligations as they exclude the impact of future salary increases, were $968 million and $882 million at December 31, 2014 and 2013, respectively, for the U.S. defined benefit plans, and $2.15 billion and $2.12 billion at December 31, 2014 and 2013, respectively, for the non-U.S. defined benefit plans.

The amounts recorded in AOCI for the years ended December 31, 2014 and 2013, are detailed below by plan type:
 
 
U.S. Defined Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
Total
 
 
Net
Actuarial
Loss
 
Prior
Service
Credit
 
Net
Actuarial
Loss
 
Prior
Service
Cost
 
Net
Actuarial
Loss
 
Prior
Service
Credit
 
Net
Actuarial
Loss
 
Prior
Service
Credit
AOCI balance, net of taxes, December 31, 2013
 
$
149

 
$
(2
)
 
$
71

 
$
10

 
$
305

 
$
(9
)
 
$
525

 
$
(1
)
Changes in AOCI by category
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Adjustments
 
37

 

 
29

 

 
5

 
1

 
71

 
1

Recognized within Net income
 
(31
)
 
3

 
(7
)
 
(3
)
 
(25
)
 

 
(63
)
 

Tax effect
 
(2
)
 
(1
)
 
(8
)
 
1

 
6

 

 
(4
)
 

Total change to AOCI
 
4

 
2

 
14

 
(2
)
 
(14
)
 
1

 
4

 
1

AOCI balance, net of taxes, December 31, 2014
 
$
153

 
$

 
$
85

 
$
8

 
$
291

 
$
(8
)
 
$
529

 
$


The estimated amounts of net actuarial loss and unrecognized prior service cost (credit) included in AOCI as of December 31, 2014, that are expected to be amortized into net periodic benefit cost over the next fiscal year are: $19 million and none for the U.S. defined benefit plans; $9 million and $6 million for the U.S. retiree health care benefit plan; and $22 million and ($2) million for the non-U.S. defined benefit plans.

Information on plan assets

We report and measure the plan assets of our defined benefit pension and other postretirement plans at fair value. The tables below set forth the fair value of our plan assets as of December 31, 2014 and 2013, using the same three-level hierarchy of fair-value inputs described in Note 9.
 
 
Fair Value
December 31, 2014
 
Level 1
 
Level 2
 
Level 3
Assets of U.S. defined benefit plan
 
 
 
 
 
 
 
 
Fixed income securities and cash equivalents
 
$
707

 
$

 
$
707

 
$

Equity securities
 
375

 

 
375

 

Other
 

 

 

 

Total
 
$
1,082

 
$

 
$
1,082

 
$

 
 
 
 
 
 
 
 
 
Assets of U.S. retiree health care plan
 
 

 
 
 
 
 
 
Fixed income securities and cash equivalents
 
$
243

 
$
200

 
$
43

 
$

Equity securities
 
254

 

 
254

 

Total
 
$
497

 
$
200

 
$
297

 
$

 
 
 
 
 
 
 
 
 
Assets of non-U.S. defined benefit plans
 
 

 
 
 
 
 
 
Fixed income securities and cash equivalents
 
$
1,608

 
$
430

 
$
1,178

 
$

Equity securities
 
600

 
6

 
594

 

Other
 
5

 

 

 
5

Total
 
$
2,213

 
$
436

 
$
1,772

 
$
5


 
 
Fair Value
December 31, 2013
 
Level 1
 
Level 2
 
Level 3
Assets of U.S. defined benefit plan
 
 
 
 
 
 
 
 
Fixed income securities and cash equivalents
 
$
607

 
$

 
$
607

 
$

Equity securities
 
297

 

 
297

 

Other
 
37

 

 

 
37

Total
 
$
941

 
$

 
$
904

 
$
37

 
 
 
 
 
 
 
 
 
Assets of U.S. retiree health care plan
 
 

 
 

 
 

 
 

Fixed income securities and cash equivalents
 
$
238

 
$
193

 
$
45

 
$

Equity securities
 
247

 

 
247

 

Total
 
$
485

 
$
193

 
$
292

 
$

 
 
 
 
 
 
 
 
 
Assets of non-U.S. defined benefit plans
 
 

 
 

 
 

 
 

Fixed income securities and cash equivalents
 
$
1,521

 
$
397

 
$
1,124

 
$

Equity securities
 
650

 
6

 
644

 

Other
 
8

 

 

 
8

Total
 
$
2,179

 
$
403

 
$
1,768

 
$
8


The investments in our major benefit plans largely consist of low-cost, broad-market index funds to mitigate risks of concentration within market sectors. Our investment policy is designed to better match the interest rate sensitivity of the plan assets and liabilities. The appropriate mix of equity and bond investments is determined primarily through the use of detailed asset-liability modeling studies that look to balance the impact of changes in the discount rate against the need to provide asset growth to cover future service cost. Most of our plans around the world have a greater proportion of fixed income securities with return characteristics that are more closely aligned with changes in the liabilities caused by discount rate volatility. For the U.S. plans, we utilize an option collar strategy to reduce the volatility of returns on investments in U.S. equity funds.

The only Level 3 assets in our worldwide benefit plans for the periods presented are private equity limited partnerships in our U.S. pension plan, which were sold in 2014, and a diversified property fund in a non-U.S. pension plan. These investments are valued using inputs from the fund managers and internal models. The following table summarizes the change in the fair values for Level 3 plan assets for the years ending December 31, 2014 and 2013:
 
 
Level 3 Plan Assets
 
 
U.S. Defined
Benefit
 
Non-U.S. Defined
Benefit
Balance, December 31, 2012
 
$
37

 
$
19

Redemptions
 

 
(10
)
Unrealized loss
 

 
(1
)
Balance, December 31, 2013
 
37

 
8

Redemptions and sales
 
(45
)
 
(2
)
Unrealized gain (loss)
 
8

 
(1
)
Balance, December 31, 2014
 
$

 
$
5


 
Assumptions and investment policies
 
 
Defined Benefit
 
U.S. Retiree
Health Care
 
 
2014
 
2013
 
2014
 
2013
Weighted average assumptions used to determine benefit obligations:
 
 
 
 
 
 
 
 
U.S. discount rate
 
4.23%
 
5.11%
 
4.07%
 
4.83%
Non-U.S. discount rate
 
2.34%
 
3.01%
 

 

 
 
 
 
 
 
 
 
 
U.S. average long-term pay progression
 
3.30%
 
3.50%
 

 

Non-U.S. average long-term pay progression
 
3.27%
 
3.11%
 

 

 
 
 
 
 
 
 
 
 
Weighted average assumptions used to determine net periodic benefit cost:
 
 
 
 
 
 
 
 
U.S. discount rate
 
5.11%
 
4.59%
 
4.83%
 
3.94%
Non-U.S. discount rate
 
3.01%
 
2.74%
 

 

 
 
 
 
 
 
 
 
 
U.S. long-term rate of return on plan assets
 
5.25%
 
5.25%
 
4.50%
 
4.75%
Non-U.S. long-term rate of return on plan assets
 
3.75%
 
3.34%
 

 

 
 
 
 
 
 
 
 
 
U.S. average long-term pay progression
 
3.50%
 
3.60%
 

 

Non-U.S. average long-term pay progression
 
3.11%
 
3.01%
 

 



We utilize a variety of methods to select an appropriate discount rate depending on the depth of the corporate bond market in the country in which the benefit plan operates. In the United States, we use a settlement approach whereby a portfolio of bonds is selected from the universe of actively traded high-quality U.S. corporate bonds. The selected portfolio is designed to provide cash flows sufficient to pay the plan’s expected benefit payments when due. The resulting discount rate reflects the rate of return of the selected portfolio of bonds. For our non-U.S. locations with a sufficient number of actively traded high-quality bonds, an analysis is performed in which the projected cash flows from the defined benefit plans are discounted against a yield curve constructed with an appropriate universe of high-quality corporate bonds available in each country. In this manner, a present value is developed. The discount rate selected is the single equivalent rate that produces the same present value. For countries that lack a sufficient corporate bond market, a government bond index adjusted for an appropriate risk premium is used to establish the discount rate.

Assumptions for the expected long-term rate of return on plan assets are based on future expectations for returns for each asset class and the effect of periodic target asset allocation rebalancing. We adjust the results for the payment of reasonable expenses of the plan from plan assets. We believe our assumptions are appropriate based on the investment mix and long-term nature of the plans’ investments. Assumptions used for the non-U.S. defined benefit plans reflect the different economic environments within the various countries.

The table below shows target allocation ranges for the plans that hold a substantial majority of the defined benefit assets.
Asset Category
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S. Defined
Benefit
Fixed income securities and cash equivalents
 
65%
 
50%
 
60% - 100%
Equity securities
 
35%
 
50%
 
0% - 40%

We rebalance the plans’ investments when they are not within the target allocation ranges.

Weighted average asset allocations as of December 31, are as follows:
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S. Defined
Benefit
Asset Category
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Fixed income securities and cash equivalents
 
65%
 
65%
 
49%
 
49%
 
73%
 
70%
Equity securities
 
35%
 
35%
 
51%
 
51%
 
27%
 
30%

None of the plan assets related to the defined benefit pension plans and retiree health care benefit plan are directly invested in TI common stock. As of December 31, 2014, we do not expect to return any of the defined benefit pension plans’ assets to TI in the next 12 months.

The following table shows the benefits we expect to pay to participants from the plans in the next 10 years and assumes that retirement eligible participants take their benefits immediately. Almost all of the payments will be made from plan assets and not from company assets.
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Medicare
Subsidy
 
Non-U.S. Defined
Benefit
2015
 
$
217

 
$
36

 
$
(4
)
 
$
76

2016
 
95

 
37

 
(4
)
 
78

2017
 
91

 
39

 
(4
)
 
82

2018
 
93

 
40

 
(5
)
 
85

2019
 
93

 
40

 
(5
)
 
89

2020 - 2024
 
435

 
194

 
(9
)
 
501


Assumed health care cost trend rates for the U.S. retiree health care benefit plan at December 31 are as follows:
 
 
2014
 
2013
Assumed health care cost trend rate for next year
 
7.0%
 
7.0%
Ultimate trend rate
 
5.0%
 
5.0%
Year in which ultimate trend rate is reached
 
2023
 
2022

A one percentage point increase or decrease in health care cost trend rates over all future periods would have increased or decreased the accumulated postretirement benefit obligation for the U.S. retiree health care benefit plan at December 31, 2014, by $27 million or $22 million, respectively. The service cost and interest cost components of 2014 plan expense would have increased or decreased by $1 million.
 
Deferred compensation arrangements

We have a deferred compensation plan that allows U.S. employees whose base salary and management responsibility exceed a certain level to defer receipt of a portion of their cash compensation. Payments under this plan are made based on the participant’s distribution election and plan balance. Participants can earn a return on their deferred compensation based on notional investments in the same investment funds that are offered in our defined contribution plans.

As of December 31, 2014, our liability to participants of the deferred compensation plans was $202 million and is recorded in Deferred credits and other liabilities on our Consolidated Balance Sheets. This amount reflects the accumulated participant deferrals and earnings thereon as of that date. As of December 31, 2014, we held $185 million in mutual funds related to these plans that are recorded in Long-term investments on our Consolidated Balance Sheets, and serve as an economic hedge against changes in fair values of our other deferred compensation liabilities. We record changes in the fair value of the liability and the related investment in SG&A as discussed in Note 9.
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Debt and lines of credit
12 Months Ended
Dec. 31, 2014
Debt Disclosure [Abstract]
Debt and lines of credit
Debt and lines of credit

Short-term borrowings

We maintain a line of credit to support commercial paper borrowings, if any, and to provide additional liquidity through bank loans. As of December 31, 2014, we had a variable-rate revolving credit facility from a consortium of investment-grade banks that allows us to borrow up to $2 billion through March 2019. The interest rate on borrowings under this credit facility, if drawn, is indexed to the applicable London Interbank Offered Rate (LIBOR). As of December 31, 2014, our credit facility was undrawn and we had no commercial paper outstanding.

Long-term debt

In March 2014, we issued an aggregate principal amount of $500 million of fixed-rate long-term debt, with $250 million due in 2017 and $250 million due in 2021. We incurred $3 million of issuance and other related costs, which are being amortized to Interest and debt expense over the term of the debt. The proceeds of the offering were $498 million, net of the original issuance discount and were used toward the repayment of the $1.0 billion of debt that matured in May 2014.

In May 2013, we issued an aggregate principal amount of $1.0 billion of fixed-rate long-term debt, with $500 million due in 2018 and $500 million due in 2023. We incurred $6 million of issuance and other related costs that are being amortized to Interest and debt expense over the term of the debt. The proceeds of the offering were $986 million, net of the original issuance discount and were used toward the repayment of $1.5 billion of maturing debt, including floating-rate notes. In connection with this repayment, we settled a floating-to-fixed interest rate swap, associated with the maturing debt.

In August 2012, we issued an aggregate principal amount of $1.5 billion of fixed-rate long-term debt, with $750 million due in 2015 and $750 million due in 2019. The proceeds of the offering were $1.492 billion, net of the original issuance discount. We also incurred $7 million of issuance and other related costs that are being amortized to Interest and debt expense over the term of the debt.

Long-term debt outstanding as of December 31, 2014 and 2013 is as follows:
 
December 31,
 
2014
 
2013
Notes due 2014 at 1.375%
$

 
$
1,000

Notes due 2015 at 3.95% (assumed with National acquisition)
250

 
250

Notes due 2015 at 0.45%
750

 
750

Notes due 2016 at 2.375%
1,000

 
1,000

Notes due 2017 at 6.60% (assumed with National acquisition)
375

 
375

Notes due 2017 at 0.875%
250

 

Notes due 2018 at 1.00%
500

 
500

Notes due 2019 at 1.65%
750

 
750

Notes due 2021 at 2.75%
250

 

Notes due 2023 at 2.25%
500

 
500

 
4,625

 
5,125

Net unamortized premium
17

 
33

Current portion of long-term debt
(1,001
)
 
(1,000
)
Long-term debt
$
3,641

 
$
4,158



Interest and debt expense was $94 million in 2014, $95 million in 2013 and $85 million in 2012. This was net of the amortization of the debt premium and other debt issuance costs. Cash payments for interest on long-term debt were $102 million in both 2014 and 2013 and $97 million in 2012. Capitalized interest was not material.
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Commitments and contingencies
12 Months Ended
Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Commitments and contingencies
Commitments and contingencies

Operating leases

We conduct certain operations in leased facilities and also lease a portion of our data processing and other equipment. In addition, certain long-term supply agreements to purchase industrial gases are accounted for as operating leases. Lease agreements frequently include purchase and renewal provisions and require us to pay taxes, insurance and maintenance costs. Rental and lease expense incurred was $113 million, $120 million and $124 million in 2014, 2013 and 2012, respectively.

Capitalized software licenses

We have licenses for certain internal-use electronic design automation software that we account for as capital leases. The related liabilities are apportioned between Accounts payable and Deferred credits and other liabilities on our Consolidated Balance Sheets, depending on the contractual timing of payments.
 
Purchase commitments

Some of our purchase commitments entered in the ordinary course of business provide for minimum payments.

As of December 31, 2014, we had committed to make the following minimum payments under our non-cancellable operating leases, capitalized software licenses and purchase commitments:
 
 
Operating
Leases
 
Capitalized
Software
Licenses
 
Purchase
Commitments
2015
 
$
87

 
$
39

 
$
96

2016
 
66

 
27

 
52

2017
 
45

 

 
35

2018
 
33

 

 
14

2019
 
21

 

 
10

Thereafter
 
80

 

 
2



Indemnification guarantees

We routinely sell products with an intellectual property indemnification included in the terms of sale. Historically, we have had only minimal, infrequent losses associated with these indemnities. Consequently, we cannot reasonably estimate any future liabilities that may result.
 
Warranty costs/product liabilities

We accrue for known product-related claims if a loss is probable and can be reasonably estimated. During the periods presented, there have been no material accruals or payments regarding product warranty or product liability. Historically, we have experienced a low rate of payments on product claims. Although we cannot predict the likelihood or amount of any future claims, we do not believe they will have a material adverse effect on our financial condition, results of operations or liquidity. Consistent with general industry practice, we enter into formal contracts with certain customers that include negotiated warranty remedies. Typically, under these agreements our warranty for semiconductor products includes three years of coverage; an obligation to repair, replace or refund; and a maximum payment obligation tied to the price paid for our products. In some cases, product claims may exceed the price of our products.

General

We are subject to various legal and administrative proceedings. Although it is not possible to predict the outcome of these matters, we believe that the results of these proceedings will not have a material adverse effect on our financial condition, results of operations or liquidity.

Discontinued operations indemnity

In connection with the 2006 sale of the former Sensors & Controls (S&C) business, we have agreed to indemnify Sensata Technologies, Inc., for specified litigation matters and certain liabilities, including environmental liabilities. In a settlement with a third party, we have agreed to indemnify that party for certain events relating to S&C products, which events we consider remote. We believe our total remaining potential exposure from both of these indemnities will not exceed $200 million. As of December 31, 2014, we believe future payments related to these indemnity obligations will not have a material effect on our financial condition, results of operations or liquidity.
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Supplemental financial information
12 Months Ended
Dec. 31, 2014
Supplemental Financial Information [Abstract]
Supplemental financial information
Supplemental financial information

Other Income (Expense), Net
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Interest income
 
$
7

 
$
10

 
$
8

Tax interest income (expense)
 
6

 
(10
)
 
32

Net gains on investments
 
5

 
18

 
18

Other (a)
 
3

 
(1
)
 
(11
)
Total
 
$
21

 
$
17

 
$
47


(a) Includes lease income of approximately $15 million per year, primarily from the purchaser of a former business. As of December 31, 2014, the aggregate amount of non-cancellable future lease payments to be received from these leases is $51 million. These leases contain renewal options. Other also includes miscellaneous non-operational items such as losses related to former businesses, including settlements in 2012; gains and losses from currency exchange rate changes; and gains and losses from our derivative financial instruments, primarily forward foreign currency exchange contracts.

Prepaid Expenses and Other Current Assets
 
 
December 31,
 
 
2014
 
2013
Prepaid taxes on intercompany inventory profits
 
$
693

 
$
667

Other prepaid expenses and current assets
 
157

 
196

Total
 
$
850

 
$
863



Property, Plant and Equipment at Cost
 
 
Depreciable Lives
(Years)
 
December 31,
 
 
 
2014
 
2013
Land
 
n/a
 
$
137

 
$
175

Buildings and improvements
 
5 - 40
 
2,801

 
2,913

Machinery and equipment
 
3 - 10
 
3,328

 
3,468

Total
 
 
 
$
6,266

 
$
6,556


Accrued Expenses and Other Liabilities
 
 
December 31,
 
 
2014
 
2013
Customer incentive programs and allowances
 
$
101

 
$
143

Severance and related expenses
 
60

 
158

Other
 
337

 
350

Total
 
$
498

 
$
651



Accumulated Other Comprehensive Income (Loss), Net of Taxes
 
 
December 31,
 
 
2014
 
2013
Postretirement benefit plans:
 
 
 
 

Net actuarial loss
 
$
(529
)
 
$
(525
)
Prior service credit
 

 
1

Cash flow hedge derivative
 
(3
)
 
(4
)
Total
 
$
(532
)
 
$
(528
)


Details on amounts reclassified out of Accumulated other comprehensive income (loss), net of taxes to Net income

Our Consolidated Statements of Comprehensive Income include items that have been recognized within Net income during the years ended December 31, 2014 and 2013. The table below details where on the Consolidated Statements of Income these transactions are recorded.
 
 
For Years Ended December 31,
 
Impact to Related Statement of Income Line
Details about AOCI Components
 
2014
 
2013
 
Net actuarial gains (losses) of defined benefit plans:
 
 
 
 
 
 
Recognized net actuarial loss and Settlement losses (a)
 
$
63

 
$
108

 
Increase to Pension expense (b)
Tax effect
 
(21
)
 
(37
)
 
Decrease to Provision for income taxes
Recognized within Net income, net of taxes
 
$
42

 
$
71

 
Decrease to Net income
 
 
 
 
 
 
 
Prior service cost of defined benefit plans:
 
 
 
 
 
 
Amortization of prior service cost (credit) and Curtailment gain (a)
 
$

 
$
(5
)
 
Decrease to Pension expense (b)
Tax effect
 

 
2

 
Increase to Provision for income taxes
Recognized within Net income, net of taxes
 
$

 
$
(3
)
 
Increase to Net income
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
Amortization of treasury rate locks
 
$
2

 
$
2

 
Increase to Interest and debt expense
Tax effect
 
(1
)
 
(1
)
 
Decrease to Provision for income taxes
Recognized within Net income, net of taxes
 
$
1

 
$
1

 
Decrease to Net income

(a) Detailed in Note 11.
(b) Pension expense is included in COR, R&D, SG&A and Restructuring charges/other in the Consolidated Statements of Income.
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Quarterly financial data (unaudited)
12 Months Ended
Dec. 31, 2014
Quarterly Financial Information Disclosure [Abstract]
Quarterly financial data (unaudited)
Quarterly financial data (unaudited)

 
 
Quarter
2014
 
1st
 
2nd
 
3rd
 
4th
Revenue
 
$
2,983

 
$
3,292

 
$
3,501

 
$
3,269

Gross profit
 
1,607

 
1,881

 
2,044

 
1,895

Included in Operating profit:
 
 
 
 
 
 
 
 
Acquisition charges
 
83

 
82

 
83

 
82

Restructuring charges/other
 
(11
)
 
(4
)
 
(9
)
 
(27
)
Operating profit
 
690

 
982

 
1,175

 
1,100

Net income
 
487

 
683

 
826

 
825

 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.44

 
$
0.63

 
$
0.77

 
$
0.78

Diluted earnings per common share
 
0.44

 
0.62

 
0.76

 
0.76

 
 
 
 
 
 
 
 
 
 
 
Quarter
2013
 
1st
 
2nd
 
3rd
 
4th
Revenue
 
$
2,885

 
$
3,047

 
$
3,244

 
$
3,028

Gross profit
 
1,374

 
1,570

 
1,779

 
1,640

Included in Operating profit:
 
 
 
 
 
 
 
 
Acquisition charges
 
86

 
86

 
86

 
84

Restructuring charges/other
 
15

 
(282
)
 
16

 
62

Operating profit
 
395

 
906

 
844

 
687

Net income
 
362

 
660

 
629

 
511

 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.32

 
$
0.59

 
$
0.56

 
$
0.46

Diluted earnings per common share
 
0.32

 
0.58

 
0.56

 
0.46

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Basis of presentation and significant accounting policies and practices (Policies)
12 Months Ended
Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of presentation
Basis of presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The basis of these financial statements is comparable for all periods presented herein.

The consolidated financial statements include the accounts of all subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. All dollar amounts in the financial statements and tables in these notes, except per-share amounts, are stated in millions of U.S. dollars unless otherwise indicated. We have reclassified certain amounts in the prior periods’ financial statements to conform to the 2014 presentation. The preparation of financial statements requires the use of estimates from which final results may vary.
Revenue recognition
Revenue recognition

We recognize revenue from sales of our products, including direct sales to our distributors, when title and risk of loss pass, which usually occurs upon shipment or delivery to the customer or distributor, depending upon the terms of the sales order; when persuasive evidence of an arrangement exists; when sales amounts are fixed or determinable; and when collectability is reasonably assured. For sales to distributors, payment is due on our standard commercial terms and is not contingent upon resale of the products. In 2014, about 60 percent of our revenue was generated from sales of our products to distributors.

We recognize revenue net of allowances, which are management’s estimates of future credits to be granted to customers or distributors under programs common in the semiconductor industry. These allowances are based on analysis of historical data, current economic conditions, and contractual terms and are recorded when revenue is recognized. Allowances may include volume-based incentives, product returns due to quality issues, incentives designed to maximize growth opportunities and special pricing arrangements. For instance, we sell to distributors at standard published prices, but we may grant them price adjustment credits in response to individual competitive opportunities. To estimate allowances, we use statistical percentages of revenue, which are determined quarterly based upon recent historical adjustment trends. Historical claims data are maintained for each of the programs, with differences among geographic regions taken into consideration. We continually monitor the actual claimed allowances against our estimates, and we adjust our estimates as appropriate to reflect trends in distributor revenue and inventory levels. Allowances are also adjusted when recent historical data do not represent anticipated future activity.

We may also provide distributors an allowance to scrap certain slow-selling or obsolete products in their inventory, estimated as a negotiated fixed percentage of each distributor’s purchases from us. In addition, if we publish a new price for a product that is lower than that paid by distributors for the same product still remaining in each distributor’s on-hand inventory, we may credit them for the difference between those prices. The allowance for this type of credit is based on the identified product price difference applied to our estimate of each distributor’s on-hand inventory of that product.

We believe we can reasonably and reliably estimate allowances for credits to distributors in a timely manner.

Revenue from sales of our products that are subject to inventory consignment agreements, including consignment arrangements with distributors, is recognized in accordance with the principles discussed above, but delivery occurs when the customer or distributor pulls product from consignment inventory that we store at designated locations. About 60 percent of our distributor revenue is generated from sales of consigned inventory. The allowances we record against this revenue are not material.

We determine the amount and timing of royalty revenue based on our contractual agreements with intellectual property licensees. We recognize royalty revenue when earned under the terms of the agreements and when we consider realization of payment to be probable.

In addition, we record allowances for accounts receivable that we estimate may not be collected. We monitor collectability of accounts receivable primarily through review of the accounts receivable aging. When collection is at risk, we assess the impact on amounts recorded for bad debts and, if necessary, will record a charge in the period such determination is made.

We recognize shipping fees received from customers in revenue, and we include the shipping and handling costs in COR.
Advertising costs
Advertising costs

We expense advertising and other promotional costs as incurred.
Restructuring charges
Restructuring charges

Restructuring charges may consist of voluntary or involuntary severance-related charges, asset-related charges and other costs due to exit activities. We recognize voluntary termination benefits when the employee accepts the offered benefit arrangement. We recognize involuntary severance-related charges depending on whether the termination benefits are provided under an ongoing benefit arrangement or under a one-time benefit arrangement. If the former, we recognize the charges once they are probable and the amounts are estimable. If the latter, we recognize the charges once the benefits have been communicated to employees.

Restructuring activities associated with assets are recorded as an adjustment to the basis of the asset, not as a liability. When we commit to a plan to abandon a long-lived asset before the end of its previously estimated useful life, we accelerate the recognition of depreciation to reflect the use of the asset over its shortened useful life. When an asset is held to be sold, we write down the carrying value to its net realizable value and cease depreciation. Restructuring actions may be viewed as an impairment indicator requiring testing of the recoverability of intangible assets, including goodwill.
Income taxes
Income taxes

We account for income taxes using an asset and liability approach. We record the amount of taxes payable or refundable for the current year and the deferred tax assets and liabilities for future tax consequences of events that have been recognized in the financial statements or tax returns. We record a valuation allowance when it is more likely than not that some or all of the deferred tax assets will not be realized.
Other assessed taxes
Other assessed taxes

Some transactions require us to collect taxes such as sales, value-added and excise taxes from our customers. These transactions are presented in our Consolidated Statements of Income on a net (excluded from revenue) basis.
Earnings per share (EPS)
Earnings per share (EPS)

Unvested share-based payment awards that contain non-forfeitable rights to receive dividends or dividend equivalents, such as our restricted stock units (RSUs), are considered to be participating securities and the two-class method is used for purposes of calculating EPS. Under the two-class method, a portion of Net income is allocated to these participating securities and, therefore, is excluded from the calculation of EPS allocated to common stock
Investments
Investments
We present investments on our Consolidated Balance Sheets as cash equivalents, short-term investments or long-term investments. Specific details are as follows:

Cash equivalents and short-term investments: We consider investments in debt securities with maturities of 90 days or less from the date of our investment to be cash equivalents. We consider investments in debt securities with maturities beyond 90 days from the date of our investment as being available for use in current operations and include them in short-term investments. The primary objectives of our cash equivalent and short-term investment activities are to preserve capital and maintain liquidity while generating appropriate returns.
Long-term investments: Long-term investments consist of mutual funds, venture capital funds and non-marketable equity securities.
Classification of investments: Depending on our reasons for holding the investment and our ownership percentage, we classify our investments as either available for sale, trading, equity method or cost method, which are more fully described in Note 9. We determine cost or amortized cost, as appropriate, on a specific identification basis.

We classify our investments as either available for sale, trading, equity method or cost method. Most of our investments are classified as available for sale.

Available-for-sale and trading securities are stated at fair value, which is generally based on market prices or broker quotes. See fair-value discussion below. Unrealized gains and losses on available-for-sale securities are recorded as an increase or decrease, net of taxes, in AOCI on our Consolidated Balance Sheets. We record other-than-temporary impairments on available-for-sale securities in OI&E in our Consolidated Statements of Income.

We classify certain mutual funds as trading securities. These mutual funds hold a variety of debt and equity investments intended to generate returns that offset changes in certain deferred compensation liabilities. We record changes in the fair value of these mutual funds and the related deferred compensation liabilities in SG&A.

Our other investments are not measured at fair value but are accounted for using either the equity method or cost method. These investments consist of interests in venture capital funds and other non-marketable equity securities. Gains and losses from equity-method investments are reflected in OI&E based on our ownership share of the investee’s financial results. Gains and losses on cost-method investments are recorded in OI&E when realized or when an impairment of the investment’s value is warranted based on our assessment of the recoverability of each investment.
Inventories
Inventories

Inventories are stated at the lower of cost or estimated net realizable value. Cost is generally computed on a currently adjusted standard cost basis, which approximates cost on a first-in first-out basis. Standard cost is based on the normal utilization of installed factory capacity. Cost associated with underutilization of capacity is expensed as incurred. Inventory held at consignment locations is included in our finished goods inventory. Consigned inventory was $258 million and $202 million as of December 31, 2014 and 2013, respectively.

We review inventory quarterly for salability and obsolescence. A statistical allowance is provided for inventory considered unlikely to be sold. The statistical allowance is based on an analysis of historical disposal activity, historical customer shipments, as well as estimated future sales. A specific allowance for each material type will be carried if there is a significant event not captured by the statistical allowance. We write off inventory in the period in which disposal occurs.

Property, plant and equipment; acquisition-related intangibles and other capitalized costs
Property, plant and equipment; acquisition-related intangibles and other capitalized costs

Property, plant and equipment are stated at cost and depreciated over their estimated useful lives using the straight-line method. Our cost basis includes certain assets acquired in business combinations that were initially recorded at fair value as of the date of acquisition. Leasehold improvements are amortized using the straight-line method over the shorter of the remaining lease term or the estimated useful lives of the improvements. We amortize acquisition-related intangibles on a straight-line basis over the estimated economic life of the assets. Capitalized software licenses generally are amortized on a straight-line basis over the term of the license. Fully depreciated or amortized assets are written off against accumulated depreciation or amortization.
Impairments of long-lived assets
Impairments of long-lived assets

We regularly review whether facts or circumstances exist that indicate the carrying values of property, plant and equipment or other long-lived assets, including intangible assets, are impaired. We assess the recoverability of assets by comparing the projected undiscounted net cash flows associated with those assets to their respective carrying amounts. Any impairment charge is based on the excess of the carrying amount over the fair value of those assets. Fair value is determined by available market valuations, if applicable, or by discounted cash flows.
Goodwill and indefinite-lived intangibles
Goodwill and indefinite-lived intangibles

Goodwill is not amortized but is reviewed for impairment annually or more frequently if certain impairment indicators arise. We perform our annual goodwill impairment test as of October 1 for our reporting units, which compares the fair value for each reporting unit to its associated carrying value, including goodwill.
Foreign currency
Foreign currency

The functional currency for our non-U.S. subsidiaries is the U.S. dollar. Accounts recorded in currencies other than the U.S. dollar are remeasured into the functional currency. Current assets (except inventories), deferred income taxes, other assets, current liabilities and long-term liabilities are remeasured at exchange rates in effect at the end of each reporting period. Property, plant and equipment with associated depreciation and inventories are valued at historic exchange rates. Revenue and expense accounts other than depreciation for each month are remeasured at the appropriate daily rate of exchange. Currency exchange gains and losses from remeasurement are credited or charged to OI&E.
Derivatives and hedging
Derivatives and hedging

We use derivative financial instruments to manage exposure to foreign exchange risk. These instruments are primarily forward foreign currency exchange contracts, which are used as economic hedges to reduce the earnings impact that exchange rate fluctuations may have on our non-U.S. dollar net balance sheet exposures. Gains and losses from changes in the fair value of these forward foreign currency exchange contracts are credited or charged to OI&E. We do not apply hedge accounting to our foreign currency derivative instruments.

In connection with the issuance of long-term debt, we use financial derivatives such as treasury rate lock agreements that are recognized in AOCI and amortized over the life of the related debt. The results of these derivative transactions have not been material.

We do not use derivatives for speculative or trading purposes.
Stock-based compensation
We determine expected volatility on all options granted using available implied volatility rates. We believe that market-based measures of implied volatility are currently the best available indicators of the expected volatility used in these estimates.

We determine expected lives of options based on the historical option exercise experience of our optionees using a rolling 10-year average. We believe the historical experience method is the best estimate of future exercise patterns currently available.

Risk-free interest rates are determined using the implied yield currently available for zero-coupon U.S. government issues with a remaining term equal to the expected life of the options.

Expected dividend yields are based on the annualized approved quarterly dividend rate and the current market price of our common stock at the time of grant. No assumption for a future dividend rate change is included unless there is an approved plan to change the dividend in the near term.

The fair value per share of RSUs is determined based on the closing price of our common stock on the date of grant.

Our employee stock purchase plan is a discount-purchase plan and consequently the Black-Scholes-Merton option-pricing model is not used to determine the fair value per share of these awards. The fair value per share under this plan equals the amount of the discount.

We issue awards of non-qualified stock options with graded vesting provisions (e.g., 25 percent per year for four years). Generally, we recognize the related compensation expense on a straight-line basis over the minimum service period required for vesting of the award, adjusting for expected forfeiture activity. Awards issued to employees who are retirement eligible or nearing retirement eligibility are expensed on an accelerated basis.

Our RSUs generally vest four years after the date of grant. We recognize the related compensation expense on a straight-line basis over the vesting period, adjusting for expected forfeiture activity. Beginning with 2013 grants, RSUs issued to employees who are retirement eligible or nearing retirement eligibility are expensed on an accelerated basis.

Fair value
Fair-value considerations

We measure and report certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The three-level hierarchy discussed below indicates the extent and level of judgment used to estimate fair-value measurements.

Level 1 - Uses unadjusted quoted prices that are available in active markets for identical assets or liabilities as of the reporting date.
Level 2 - Uses inputs other than Level 1 that are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data. We utilize a third-party data service to provide Level 2 valuations. We verify these valuations for reasonableness relative to unadjusted quotes obtained from brokers or dealers based on observable prices for similar assets in active markets.
Level 3 - Uses inputs that are unobservable, supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models that utilize management estimates of market participant assumptions.

Indemnification guarantees and Warranty costs/product liabilities
Indemnification guarantees

We routinely sell products with an intellectual property indemnification included in the terms of sale. Historically, we have had only minimal, infrequent losses associated with these indemnities. Consequently, we cannot reasonably estimate any future liabilities that may result.
 
Warranty costs/product liabilities

We accrue for known product-related claims if a loss is probable and can be reasonably estimated. During the periods presented, there have been no material accruals or payments regarding product warranty or product liability. Historically, we have experienced a low rate of payments on product claims. Although we cannot predict the likelihood or amount of any future claims, we do not believe they will have a material adverse effect on our financial condition, results of operations or liquidity. Consistent with general industry practice, we enter into formal contracts with certain customers that include negotiated warranty remedies. Typically, under these agreements our warranty for semiconductor products includes three years of coverage; an obligation to repair, replace or refund; and a maximum payment obligation tied to the price paid for our products. In some cases, product claims may exceed the price of our products.

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Description of business, including segment and geographic area information (Tables)
12 Months Ended
Dec. 31, 2014
Segment Reporting [Abstract]
Schedule of revenue and operating profit, by segment
Segment information
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Revenue:
 
 
 
 
 
 
Analog
 
$
8,104

 
$
7,194

 
$
6,998

Embedded Processing
 
2,740

 
2,450

 
2,257

Other
 
2,201

 
2,561

 
3,570

Total revenue
 
$
13,045

 
$
12,205

 
$
12,825

Operating profit:
 
 

 
 

 
 

Analog
 
$
2,786

 
$
1,859

 
$
1,650

Embedded Processing
 
384

 
185

 
158

Other
 
777

 
788

 
165

Total operating profit
 
$
3,947

 
$
2,832

 
$
1,973

Schedule of revenue, by geographic area
The following geographic area information includes revenue, based on product shipment destination and royalty payor location, and property, plant and equipment, based on physical location:
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Revenue:
 
 
 
 
 
 
United States
 
$
1,625

 
$
1,666

 
$
1,596

Asia (a)
 
7,915

 
7,370

 
7,808

Europe
 
2,293

 
1,926

 
1,861

Japan
 
1,032

 
1,072

 
1,357

Rest of world
 
180

 
171

 
203

Total revenue
 
$
13,045

 
$
12,205

 
$
12,825



(a) Revenue from products shipped into China, including Hong Kong, was $5.7 billion in 2014, $5.2 billion in 2013 and $5.4 billion in 2012.
Schedule property, plant and equipment, net, by geographic area
 
 
December 31,
 
 
2014
 
2013
 
2012
Property, plant and equipment, net:
 
 
 
 
 
 
United States
 
$
1,436

 
$
1,765

 
$
1,931

Asia
 
1,096

 
1,277

 
1,547

Europe
 
162

 
196

 
241

Japan
 
124

 
144

 
174

Rest of world
 
22

 
17

 
19

Total property, plant and equipment, net
 
$
2,840

 
$
3,399

 
$
3,912

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Basis of presentation and significant accounting policies and practices (Tables)
12 Months Ended
Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of earnings per share, basic and diluted
Computation and reconciliation of earnings per common share are as follows (shares in millions):
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
 
 
Net Income
 
Shares
 
EPS
 
Net Income
 
Shares
 
EPS
 
Net Income
 
Shares
 
EPS
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
$
2,821

 
 
 
 
 
$
2,162

 
 
 
 
 
$
1,759

 
 
 
 
Income allocated to RSUs
 
(44
)
 
 
 
 
 
(37
)
 
 
 
 
 
(31
)
 
 
 
 
Income allocated to common stock for basic EPS calculation
 
$
2,777

 
1,065

 
$
2.61

 
$
2,125

 
1,098

 
$
1.94

 
$
1,728

 
1,132

 
$
1.53

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjustment for dilutive shares:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Stock-based compensation plans
 
 

 
15

 
 

 
 

 
15

 
 

 
 

 
14

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted EPS:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Net income
 
$
2,821

 
 

 
 

 
$
2,162

 
 

 
 

 
$
1,759

 
 

 
 

Income allocated to RSUs
 
(43
)
 
 

 
 

 
(36
)
 
 

 
 

 
(31
)
 
 

 
 

Income allocated to common stock for diluted EPS calculation
 
$
2,778

 
1,080

 
$
2.57

 
$
2,126

 
1,113

 
$
1.91

 
$
1,728

 
1,146

 
$
1.51

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Acquisition charges (Tables)
12 Months Ended
Dec. 31, 2014
Business Combinations [Abstract]
Total acquisition-related charges associated with the National acquisition
Total acquisition-related charges are detailed below:
 
 
For Years Ended
December 31,
 
 
2014
 
2013
 
2012
Amortization of intangible assets
 
$
319

 
$
323

 
$
325

Stock-based compensation
 
11

 
11

 
17

Retention bonuses
 

 
7

 
57

Severance and other benefits
 

 

 
16

Transaction and other costs
 

 

 
35

As recorded in Acquisition charges
 
330

 
341

 
450

As recorded in COR
 

 

 
21

Total acquisition-related charges
 
$
330

 
$
341

 
$
471

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Restructuring charges/other (Tables)
12 Months Ended
Dec. 31, 2014
Restructuring and Related Activities [Abstract]
Schedule of restructuring charges/other
Restructuring charges/other is comprised of the following components:
 
For Years Ended December 31,
 
2014
 
2013
 
2012
Restructuring charges by action:
 
 
 
 
 
2013 actions
 
 
 
 
 
Severance and benefits cost (a)
$
16

 
$
49

 
$

Other exit costs
10

 

 

 
26

 
49

 

Prior actions
 
 
 
 
 
Severance and benefits cost (a)
(6
)
 
36

 
251

Accelerated depreciation
1

 
11

 
21

Other exit costs (a)
(1
)
 
30

 
128

 
(6
)
 
77

 
400

Total restructuring charges
20

 
126

 
400

 
 
 
 
 
 
Other:
 
 
 
 
 
Gains on sales of assets
(75
)
 

 

Gain on technology transfer

 
(315
)
 

Gain on transfer of Japan substitutional pension

 

 
(144
)
Other
4

 

 
8

Restructuring charges/other
$
(51
)
 
$
(189
)
 
$
264



(a) Includes changes in estimates.
Changes in accrued restructuring balances
The table below reflects the changes in accrued restructuring balances associated with these actions:
 
 
2013 Actions
 
Prior Actions
 
 
 
 
Severance
and Benefits
 
Other
Charges
 
Severance
and Benefits
 
Other
Charges
 
Total
Accrual at December 31, 2011
 
$

 
$

 
$
109

 
$
7

 
$
116

Restructuring charges (a)
 

 

 
251

 
149

 
400

Non-cash items (b)
 

 

 
3

 
(124
)
 
(121
)
Payments
 

 

 
(23
)
 
(23
)
 
(46
)
Remaining accrual at December 31, 2012
 

 

 
340

 
9

 
349

 
 
 
 
 
 
 
 
 
 
 
Restructuring charges (a)
 
49

 

 
36

 
41

 
126

Non-cash items (b)
 

 

 
(5
)
 
(17
)
 
(22
)
Payments
 

 

 
(266
)
 
(26
)
 
(292
)
Remaining accrual at December 31, 2013
 
49

 

 
105

 
7

 
161

 
 
 
 
 
 
 
 
 
 
 
Restructuring charges (a)
 
16

 
10

 
(6
)
 

 
20

Payments
 
(43
)
 
(1
)
 
(73
)
 
(7
)
 
(124
)
Remaining accrual at December 31, 2014
 
$
22

 
$
9

 
$
26

 
$

 
$
57



(a) Includes changes in estimates.
(b) Reflects charges for goodwill impairment, stock-based compensation, impacts of postretirement benefit plans and accelerated depreciation.

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Stock-based compensation (Tables)
12 Months Ended
Dec. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of stock-based compensation expense allocation within the Consolidated Statements of Income
Total stock-based compensation expense recognized was as follows:
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Stock-based compensation expense recognized in:
 
 
 
 
 
 
COR
 
$
48

 
$
49

 
$
48

R&D
 
62

 
67

 
71

SG&A
 
156

 
160

 
127

Acquisition charges
 
11

 
11

 
17

Total
 
$
277

 
$
287

 
$
263

Schedule of weighted average assumptions used to estimate the fair values for non-qualified stock options
We estimate the fair values for non-qualified stock options using the Black-Scholes-Merton option-pricing model with the following weighted average assumptions.
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Weighted average grant date fair value, per share
 
$
8.13

 
$
6.78

 
$
8.31

Weighted average assumptions used:
 
 
 
 

 
 

Expected volatility
 
22
%
 
26
%
 
30
%
Expected lives (in years)
 
7.3

 
7.4

 
7.1

Risk-free interest rates
 
2.45
%
 
1.43
%
 
1.40
%
Expected dividend yields
 
2.72
%
 
2.56
%
 
2.10
%
Schedule of stock option and RSU transactions under long-term incentive and director compensation plans
Stock option and RSU transactions under our long-term incentive and director compensation plans during 2014 were as follows:
 
 
Stock Options
 
RSUs
 
 
Shares
 
Weighted Average
Exercise Price
per Share
 
Shares
 
Weighted Average
Grant Date Fair
Value per Share
Outstanding grants, December 31, 2013
 
64,930,540

 
$
28.98

 
20,892,022

 
$
29.94

Granted
 
14,053,185

 
44.11

 
3,184,237

 
44.71

Vested RSUs
 

 

 
(5,609,627
)
 
23.68

Forfeited and expired
 
(1,832,897
)
 
36.54

 
(1,162,817
)
 
33.22

Exercised
 
(19,503,382
)
 
27.75

 

 

Outstanding grants, December 31, 2014
 
57,647,446

 
32.84

 
17,303,815

 
34.47

Schedule of shares outstanding under stock option plans, by exercise price range
Summarized information about stock options outstanding at December 31, 2014, is as follows:
 
 
 
Stock Options Outstanding
 
Options Exercisable
Range of
Exercise Price
 
Number
Outstanding
(Shares)
 
Weighted Average
Remaining Contractual
Life (Years)
 
Weighted Average
Exercise Price
per Share
 
Number
Exercisable
(Shares)
 
Weighted Average
Exercise Price
per Share
$
14.47 to 20.00
 
4,061,577

 
4.0
 
$
14.98

 
4,061,577

 
$
14.98

 
20.01 to 30.00
 
11,270,125

 
3.7
 
25.47

 
11,250,200

 
25.46

 
30.01 to 40.00
 
28,910,636

 
6.5
 
33.00

 
12,288,339

 
33.14

 
40.01 to 50.00
 
13,399,020

 
9.1
 
44.10

 
1,750

 
42.66

 
50.01 to 55.41
 
6,088

 
9.9
 
55.41

 

 

 
14.47 to 55.41
 
57,647,446

 
6.4
 
32.84

 
27,601,866

 
27.34

Schedule of stock options that are vested and expected to vest, outstanding and exercisable
Summarized information as of December 31, 2014, about outstanding stock options that are vested and expected to vest, as well as stock options that are currently exercisable, is as follows:
 
 
Outstanding Stock Options
(Fully Vested and Expected to Vest) (a)
 
Options
Exercisable
Number of outstanding (shares)
 
56,328,323

 
27,601,866

Weighted average remaining contractual life (in years)
 
6.3

 
4.4

Weighted average exercise price per share
 
$
32.69

 
$
27.34

Intrinsic value (millions of dollars)
 
$
1,170

 
$
721


(a) Includes effects of expected forfeitures of approximately 1 million shares. Excluding the effects of expected forfeitures, the aggregate intrinsic value of stock options outstanding was $1,189 million.

Schedule of director deferred compensation payable in shares
Director deferred stock activity during 2014 was as follows:
 
 
Director Deferred Stock (Shares)
Outstanding, December 31, 2013
 
129,264

New shares deferred
 
13,636

Issued
 
(7,178
)
Outstanding, December 31, 2014
 
135,722


Schedule of employee stock purchase plan transactions
Employee stock purchase plan transactions during 2014 were as follows:
 
 
Employee Stock
Purchase Plan
(Shares)
 
Exercise Price
Outstanding grants, December 31, 2013
 
485,408

 
$
36.64

Granted
 
1,673,479

 
41.60

Exercised
 
(1,784,184
)
 
39.44

Outstanding grants, December 31, 2014
 
374,703

 
45.46

Schedule of changes in treasury stock
The table below reflects the changes in our treasury shares:

 
 
Stock Options
 
RSUs
 
Treasury Shares
Balance, December 31, 2011
 
 
 
 
 
601,131,631

Repurchases
 
 
 
 
 
59,757,780

Shares used for:
 
 
 
 
 
 
Stock options/RSUs
 
(22,409,816
)
 
(4,182,928
)
 
 
Previously unissued common shares (a)
 
180,955

 
4,593

 
 
Stock applied to taxes
 

 
990,845

 
 
ESPP
 
(2,829,498
)
 

 
 
Director deferred stock
 

 

 
(6,592
)
Total issued
 
(25,058,359
)
 
(3,187,490
)
 
(28,245,849
)
Balance, December 31, 2012
 
 
 
 
 
632,636,970

 
 
 
 
 
 
 
Repurchases
 
 
 
 
 
77,564,013

Shares used for:
 
 
 
 
 
 
Stock options/RSUs
 
(45,507,711
)
 
(5,741,981
)
 
 
Stock applied to taxes
 

 
1,461,422

 
 
ESPP
 
(2,386,834
)
 

 
 
Director deferred stock
 

 

 
(12,909
)
Total issued
 
(47,894,545
)
 
(4,280,559
)
 
(52,175,104
)
Balance, December 31, 2013
 
 
 
 
 
658,012,970

 
 
 
 
 
 
 
Repurchases
 
 
 
 
 
61,665,209

Shares used for:
 
 
 
 
 
 
Stock options/RSUs
 
(19,503,382
)
 
(5,609,627
)
 
 
Stock applied to exercises or taxes
 
6,618

 
1,408,701

 
 
ESPP
 
(1,784,184
)
 

 
 
Director deferred stock
 

 

 
(7,178
)
Total issued
 
(21,280,948
)
 
(4,200,926
)
 
(25,481,874
)
Balance, December 31, 2014
 
 
 
 
 
694,189,127


(a) Beginning in 2013, only treasury shares were issued.
Schedule of shares reserved for issuance and available for future grant
Shares available for future grants and reserved for issuance are summarized below:
 
 
December 31, 2014
Shares
 
Long-Term Incentive
and Director
Compensation Plans
 
Employee Stock
Purchase Plan
 
Total
Reserved for issuance (a)
 
121,127,656

 
39,565,038

 
160,692,694

Shares to be issued upon exercise of outstanding options and RSUs (a)
 
(75,086,983
)
 
(374,703
)
 
(75,461,686
)
Available for future grants
 
46,040,673

 
39,190,335

 
85,231,008



(a) Includes 135,722 shares credited to directors’ deferred stock accounts that settle in shares of TI common stock. These shares are not included as grants outstanding at December 31, 2014.
Schedule of cash proceeds received from share-based payment awards
The effects on cash flows were as follows:

 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Proceeds from common stock transactions
 
$
616

 
$
1,314

 
$
523

Tax benefit realized from stock options exercised
 
218

 
227

 
133

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Income taxes (Tables)
12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]
Income before income taxes
Income before Income Taxes
 
 
U.S.
 
Non-U.S.
 
Total
2014
 
$
2,684

 
$
1,190

 
$
3,874

2013
 
1,507

 
1,247

 
2,754

2012
 
319

 
1,616

 
1,935

Provision (benefit) for income taxes
Provision (Benefit) for Income Taxes
 
 
U.S. Federal
 
Non-U.S.
 
U.S. State
 
Total
2014
 
 
 
 
 
 
 
 
Current
 
$
911

 
$
194

 
$
9

 
$
1,114

Deferred
 
(73
)
 
11

 
1

 
(61
)
Total
 
$
838

 
$
205

 
$
10

 
$
1,053

 
 
 
 
 
 
 
 
 
2013
 
 

 
 

 
 

 
 

Current
 
$
291

 
$
247

 
$
4

 
$
542

Deferred
 
17

 
33

 

 
50

Total
 
$
308

 
$
280

 
$
4

 
$
592

 
 
 
 
 
 
 
 
 
2012
 
 

 
 

 
 

 
 

Current
 
$
(108
)
 
$
156

 
$
(2
)
 
$
46

Deferred
 
65

 
65

 

 
130

Total
 
$
(43
)
 
$
221

 
$
(2
)
 
$
176

Principal reconciling items from income tax computed at statutory federal rate
Principal reconciling items from income tax computed at the statutory federal rate follow:
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Computed tax at statutory rate
 
$
1,356

 
$
964

 
$
677

Non-U.S. effective tax rates
 
(212
)
 
(156
)
 
(345
)
U.S. R&D tax credit
 
(59
)
 
(129
)
 

U.S. tax benefit for manufacturing
 
(51
)
 
(66
)
 
(158
)
Impact of changes to uncertain tax positions
 
3

 
(14
)
 
(88
)
Non-deductible expenses
 
6

 
13

 
42

Other
 
10

 
(20
)
 
48

Total provision for income taxes
 
$
1,053

 
$
592

 
$
176

Primary components of deferred income tax assets and liabilities
The primary components of deferred income tax assets and liabilities were as follows:
 
 
December 31,
 
 
2014
 
2013
Deferred income tax assets:
 
 
 
 
Deferred loss and tax credit carryforwards
 
$
289

 
$
345

Accrued expenses
 
248

 
265

Stock-based compensation
 
238

 
262

Inventories and related reserves
 
157

 
162

Retirement costs for defined benefit and retiree health care
 
96

 
101

Other
 
122

 
148

 
 
1,150

 
1,283

Valuation allowance
 
(195
)
 
(219
)
 
 
955

 
1,064

Deferred income tax liabilities:
 
 
 
 

Acquisition-related intangibles and fair-value adjustments
 
(688
)
 
(804
)
International earnings
 
(104
)
 
(121
)
Property, plant and equipment
 
(10
)
 
(57
)
Other
 
(37
)
 
(31
)
 
 
(839
)
 
(1,013
)
Net deferred income tax asset
 
$
116

 
$
51

Deferred income tax assets and liabilities presentation on the Balance sheet
The deferred income tax assets and liabilities based on tax jurisdictions are presented on the Consolidated Balance Sheets as follows:
 
 
December 31,
 
 
2014
 
2013
Current deferred income tax assets
 
$
347

 
$
393

Noncurrent deferred income tax assets
 
172

 
207

Current deferred income tax liabilities
 
(4
)
 
(1
)
Noncurrent deferred income tax liabilities
 
(399
)
 
(548
)
Net deferred income tax asset
 
$
116

 
$
51

Summary of income tax contingencies
The changes in the total amounts of uncertain tax positions are summarized as follows:
 
 
2014
 
2013
 
2012
Balance, January 1
 
$
91

 
$
184

 
$
210

Additions based on tax positions related to the current year
 
10

 
7

 
12

Additions for tax positions of prior years
 
52

 
19

 
45

Reductions for tax positions of prior years
 
(9
)
 
(10
)
 
(92
)
Settlements with tax authorities
 
(36
)
 
(96
)
 
39

Expiration of the statute of limitations for assessing taxes
 

 
(13
)
 
(30
)
Balance, December 31
 
$
108

 
$
91

 
$
184

 
 
 
 
 
 
 
Interest income (expense) recognized in the year ended December 31
 
$
6

 
$
(10
)
 
$
32

 
 
 
 
 
 
 
Interest receivable (payable) as of December 31
 
$

 
$
(5
)
 
$
8

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Financial instruments and risk concentration (Tables)
12 Months Ended
Dec. 31, 2014
Risks and Uncertainties [Abstract]
Details on accounts receivable allowances
Details of these accounts receivable allowances are as follows:
 
 
2014
 
2013
 
2012
Balance, January 1
 
$
22

 
$
31

 
$
19

Additions charged (credited) to operating results
 
(9
)
 
(9
)
 
12

Recoveries and write-offs, net
 
(1
)
 

 

Balance, December 31
 
$
12

 
$
22

 
$
31

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Valuation of debt and equity investments and certain liabilities (Tables)
12 Months Ended
Dec. 31, 2014
Fair Value Disclosures [Abstract]
Investments
Details of our investments are as follows:
 
 
December 31, 2014
 
December 31, 2013
 
 
Cash and Cash
Equivalents
 
Short-Term
Investments
 
Long-Term
Investments
 
Cash and Cash
Equivalents
 
Short-Term
Investments
 
Long-Term
Investments
Measured at fair value:
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities
 
 
 
 
 
 
 
 
 
 
 
 
Money market funds
 
$
522

 
$

 
$

 
$
500

 
$

 
$

Corporate obligations
 
97

 
390

 

 
123

 
217

 

U.S. Government agency and Treasury securities
 
365

 
1,952

 

 
787

 
1,985

 

Trading securities
 
 

 
 

 
 

 
 

 
 

 
 

Mutual funds
 

 

 
185

 

 

 
179

Total
 
984

 
2,342

 
185

 
1,410

 
2,202

 
179

 
 
 
 
 
 
 
 
 
 
 
 
 
Other measurement basis:
 
 

 
 

 
 

 
 

 
 

 
 

Equity-method investments
 

 

 
27

 

 

 
24

Cost-method investments
 

 

 
12

 

 

 
13

Cash on hand
 
215

 

 

 
217

 

 

Total
 
$
1,199

 
$
2,342

 
$
224

 
$
1,627

 
$
2,202

 
$
216

Aggregate maturities of investments in debt securities classified as available-for-sale
The following table presents the aggregate maturities of investments in debt securities classified as available for sale at December 31, 2014:
Due
 
Fair Value
One year or less
 
$
3,121

One to two years
 
205

Assets and liabilities accounted for at fair value
The following are our assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2014 and 2013. We had no Level 3 assets or liabilities as of December 31, 2014 and 2013. These tables do not include cash on hand, assets held by our postretirement plans, or assets and liabilities that are measured at historical cost or any basis other than fair value.
 
 
Fair Value
December 31, 2014
 
Level 1
 
Level 2
Assets:
 
 
 
 
 
 
Money market funds
 
$
522

 
$
522

 
$

Corporate obligations
 
487

 

 
487

U.S. Government agency and Treasury securities
 
2,317

 
1,762

 
555

Mutual funds
 
185

 
185

 

Total assets
 
$
3,511

 
$
2,469

 
$
1,042

 
 
 
 
 
 
 
Liabilities:
 
 

 
 

 
 

Deferred compensation
 
$
202

 
$
202

 
$

Total liabilities
 
$
202

 
$
202

 
$

 
 
 
Fair Value
December 31, 2013
 
Level 1
 
Level 2
Assets:
 
 
 
 
 
 
Money market funds
 
$
500

 
$
500

 
$

Corporate obligations
 
340

 

 
340

U.S. Government agency and Treasury securities
 
2,772

 
2,107

 
665

Mutual funds
 
179

 
179

 

Total assets
 
$
3,791

 
$
2,786

 
$
1,005

 
 
 
 
 
 
 
Liabilities:
 
 

 
 

 
 

Deferred compensation
 
$
197

 
$
197

 
$

Total liabilities
 
$
197

 
$
197

 
$



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Goodwill and acquisition-related intangibles (Tables)
12 Months Ended
Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of goodwill
The following table summarizes goodwill, net, by segment for the years ended December 31, 2014 and 2013.
 
 
Goodwill
Analog
 
$
4,158

Embedded Processing
 
172

Other
 
32

Total
 
$
4,362

Schedule of acquisition-related intangible assets
The components of acquisition-related intangible assets as of December 31, 2014 and 2013, are as follows:
 
 
 
 
December 31, 2014
 
December 31, 2013
 Acquisition-Related Intangibles
 
Amortization
Period
(Years)
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Developed technology
 
5 - 10
 
$
2,135

 
$
714

 
$
1,421

 
$
2,157

 
$
526

 
$
1,631

Customer relationships
 
8
 
810

 
330

 
480

 
821

 
239

 
582

Other intangibles
 
5
 
3

 
2

 
1

 
5

 
3

 
2

In-process R&D
 
n/a
 

 
n/a

 

 
8

 
n/a

 
8

Total
 
 
 
$
2,948

 
$
1,046

 
$
1,902

 
$
2,991

 
$
768

 
$
2,223



Estimated amortization of acquisition-related finite lived intangibles for future years
Future estimated amortization of acquisition-related intangibles for the years ended December 31 is as follows:
 
Amortization of Acquisition-Related Intangibles
2015
$
319

2016
319

2017
318

2018
318

2019
288

Thereafter
340

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Postretirement benefit plans (Tables)
12 Months Ended
Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
Schedule of expense related to defined benefit and retiree health care benefit plans
Expense related to defined benefit and retiree health care benefit plans was as follows:
 
 
U.S. Defined Benefit
 
U.S. Retiree Health Care
 
Non-U.S. Defined Benefit
 
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
Service cost
 
$
21

 
$
26

 
$
24

 
$
4

 
$
5

 
$
5

 
$
39

 
$
41

 
$
45

Interest cost
 
45

 
45

 
44

 
22

 
20

 
25

 
68

 
61

 
75

Expected return on plan assets
 
(42
)
 
(48
)
 
(50
)
 
(20
)
 
(24
)
 
(23
)
 
(80
)
 
(67
)
 
(78
)
Amortization of prior service cost (credit)
 

 
1

 
1

 
4

 
4

 
3

 
(2
)
 
(3
)
 
(4
)
Recognized net actuarial loss
 
26

 
21

 
16

 
7

 
11

 
13

 
24

 
31

 
41

Net periodic benefit costs
 
50

 
45

 
35

 
17

 
16

 
23

 
49

 
63

 
79

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Settlement losses (a) (b)
 
5

 
41

 

 

 

 

 
1

 
4

 
193

Curtailment gain
 

 

 

 

 

 
(1
)
 
(2
)
 
(7
)
 

Special termination benefit gains (b)
 

 

 
(1
)
 

 

 

 

 

 
(337
)
Total, including other postretirement losses (gains)
 
$
55

 
$
86

 
$
34

 
$
17

 
$
16

 
$
22

 
$
48

 
$
60

 
$
(65
)

(a) Includes non-restructuring and restructuring-related settlement losses.
(b) Transfer of Japan substitutional pension in 2012: In Japan, we maintain employee pension fund plans (EPFs) pursuant to the Japanese Welfare Pension Insurance Law (JWPIL). An EPF consists of two portions: a substitutional portion based on JWPIL-determined minimum old-age pension benefits similar to Social Security benefits in the United States and a corporate portion established at the discretion of each employer. Employers and employees are exempt from contributing to the Japanese Pension Insurance (JPI) if the substitutional portion is funded by an EPF.

The JWPIL was amended to permit each EPF to separate the substitutional portion and transfer those obligations and related assets to the government of Japan. After such a transfer, the employer is required to contribute periodically to JPI, and the government of Japan is responsible for future benefit payments relating to the substitutional portion.

During the third quarter of 2012, our EPF received final approval for such a separation and transferred the obligations and assets of its substitutional portion to the government of Japan. On a pre-tax basis, this resulted in a net gain of $144 million recorded in Restructuring charges/other on our Consolidated Statements of Income and included in Other, as shown in Note 4. This net gain of $144 million consisted of two parts - a gain of $337 million, representing the difference between the fair values of the obligations settled of $533 million and the assets transferred from the pension trust to the government of Japan of $196 million, offset by a settlement loss of $193 million related to the recognition of previously unrecognized actuarial losses included in AOCI.

Schedule of changes in the benefit obligations and plan assets for the defined benefit and retiree health care benefit plans
Changes in the benefit obligations and plan assets for the defined benefit and retiree health care benefit plans were as follows:
 
 
U.S. Defined Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Change in plan benefit obligation:
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation at beginning of year
 
$
955

 
$
1,098

 
$
472

 
$
509

 
$
2,276

 
$
2,414

Service cost
 
21

 
26

 
4

 
5

 
39

 
41

Interest cost
 
45

 
45

 
22

 
20

 
68

 
61

Participant contributions
 

 

 
19

 
18

 
5

 
1

Benefits paid
 
(66
)
 
(9
)
 
(45
)
 
(47
)
 
(84
)
 
(81
)
Medicare subsidy
 

 

 
4

 
3

 

 

Actuarial loss (gain)
 
133

 
(27
)
 
37

 
(36
)
 
275

 
96

Settlements
 
(12
)
 
(178
)
 

 

 
(7
)
 
(30
)
Curtailments
 

 

 

 

 
(11
)
 
(28
)
Effects of exchange rate changes
 

 

 

 

 
(245
)
 
(237
)
Other
 

 

 

 

 

 
39

Benefit obligation at end of year (BO)
 
$
1,076

 
$
955

 
$
513

 
$
472

 
$
2,316

 
$
2,276

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in plan assets:
 
 
 
 

 
 
 
 

 
 
 
 

Fair value of plan assets at beginning of year
 
$
941

 
$
1,071

 
$
485

 
$
517

 
$
2,179

 
$
2,218

Actual return on plan assets
 
132

 
1

 
24

 
41

 
295

 
201

Employer contributions (funding of qualified plans)
 
75

 
43

 
10

 

 
64

 
62

Employer contributions (payments for non-qualified plans)
 
12

 
13

 

 

 

 

Participant contributions
 

 

 
19

 
18

 
5

 
1

Benefits paid
 
(66
)
 
(9
)
 
(45
)
 
(45
)
 
(84
)
 
(81
)
Medicare subsidy
 

 

 
4

 

 

 

Settlements
 
(12
)
 
(178
)
 

 

 
(7
)
 
(30
)
Effects of exchange rate changes
 

 

 

 

 
(239
)
 
(232
)
Other
 

 

 

 
(46
)
 

 
40

Fair value of plan assets at end of year (FVPA)
 
$
1,082

 
$
941

 
$
497

 
$
485

 
$
2,213

 
$
2,179

 
 
 
 
 
 
 
 
 
 
 
 
 
Funded status (FVPA – BO) at end of year
 
$
6

 
$
(14
)
 
$
(16
)
 
$
13

 
$
(103
)
 
$
(97
)
Schedule of amounts recognized in balance sheet

Amounts recognized on the Consolidated Balance Sheets as of December 31, 2014, were as follows:
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
Total
Overfunded retirement plans
 
$
72

 
$

 
$
55

 
$
127

Accrued expenses and other liabilities
 
(9
)
 

 
(6
)
 
(15
)
Underfunded retirement plans
 
(57
)
 
(16
)
 
(152
)
 
(225
)
Funded status (FVPA – BO) at end of year
 
$
6

 
$
(16
)
 
$
(103
)
 
$
(113
)

Amounts recognized on the Consolidated Balance Sheets as of December 31, 2013, were as follows:
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
Total
Overfunded retirement plans
 
$
44

 
$
16

 
$
70

 
$
130

Accrued expenses and other liabilities
 
(7
)
 

 
(5
)
 
(12
)
Underfunded retirement plans
 
(51
)
 
(3
)
 
(162
)
 
(216
)
Funded status (FVPA – BO) at end of year
 
$
(14
)
 
$
13

 
$
(97
)
 
$
(98
)

Schedule of amounts recognized in other comprehensive income (loss)
The amounts recorded in AOCI for the years ended December 31, 2014 and 2013, are detailed below by plan type:
 
 
U.S. Defined Benefit
 
U.S. Retiree
Health Care
 
Non-U.S.
Defined Benefit
 
Total
 
 
Net
Actuarial
Loss
 
Prior
Service
Credit
 
Net
Actuarial
Loss
 
Prior
Service
Cost
 
Net
Actuarial
Loss
 
Prior
Service
Credit
 
Net
Actuarial
Loss
 
Prior
Service
Credit
AOCI balance, net of taxes, December 31, 2013
 
$
149

 
$
(2
)
 
$
71

 
$
10

 
$
305

 
$
(9
)
 
$
525

 
$
(1
)
Changes in AOCI by category
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 

Adjustments
 
37

 

 
29

 

 
5

 
1

 
71

 
1

Recognized within Net income
 
(31
)
 
3

 
(7
)
 
(3
)
 
(25
)
 

 
(63
)
 

Tax effect
 
(2
)
 
(1
)
 
(8
)
 
1

 
6

 

 
(4
)
 

Total change to AOCI
 
4

 
2

 
14

 
(2
)
 
(14
)
 
1

 
4

 
1

AOCI balance, net of taxes, December 31, 2014
 
$
153

 
$

 
$
85

 
$
8

 
$
291

 
$
(8
)
 
$
529

 
$


Schedule of allocation of plan assets
Weighted average asset allocations as of December 31, are as follows:
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S. Defined
Benefit
Asset Category
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
Fixed income securities and cash equivalents
 
65%
 
65%
 
49%
 
49%
 
73%
 
70%
Equity securities
 
35%
 
35%
 
51%
 
51%
 
27%
 
30%

The table below shows target allocation ranges for the plans that hold a substantial majority of the defined benefit assets.
Asset Category
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Non-U.S. Defined
Benefit
Fixed income securities and cash equivalents
 
65%
 
50%
 
60% - 100%
Equity securities
 
35%
 
50%
 
0% - 40%

The tables below set forth the fair value of our plan assets as of December 31, 2014 and 2013, using the same three-level hierarchy of fair-value inputs described in Note 9.
 
 
Fair Value
December 31, 2014
 
Level 1
 
Level 2
 
Level 3
Assets of U.S. defined benefit plan
 
 
 
 
 
 
 
 
Fixed income securities and cash equivalents
 
$
707

 
$

 
$
707

 
$

Equity securities
 
375

 

 
375

 

Other
 

 

 

 

Total
 
$
1,082

 
$

 
$
1,082

 
$

 
 
 
 
 
 
 
 
 
Assets of U.S. retiree health care plan
 
 

 
 
 
 
 
 
Fixed income securities and cash equivalents
 
$
243

 
$
200

 
$
43

 
$

Equity securities
 
254

 

 
254

 

Total
 
$
497

 
$
200

 
$
297

 
$

 
 
 
 
 
 
 
 
 
Assets of non-U.S. defined benefit plans
 
 

 
 
 
 
 
 
Fixed income securities and cash equivalents
 
$
1,608

 
$
430

 
$
1,178

 
$

Equity securities
 
600

 
6

 
594

 

Other
 
5

 

 

 
5

Total
 
$
2,213

 
$
436

 
$
1,772

 
$
5


 
 
Fair Value
December 31, 2013
 
Level 1
 
Level 2
 
Level 3
Assets of U.S. defined benefit plan
 
 
 
 
 
 
 
 
Fixed income securities and cash equivalents
 
$
607

 
$

 
$
607

 
$

Equity securities
 
297

 

 
297

 

Other
 
37

 

 

 
37

Total
 
$
941

 
$

 
$
904

 
$
37

 
 
 
 
 
 
 
 
 
Assets of U.S. retiree health care plan
 
 

 
 

 
 

 
 

Fixed income securities and cash equivalents
 
$
238

 
$
193

 
$
45

 
$

Equity securities
 
247

 

 
247

 

Total
 
$
485

 
$
193

 
$
292

 
$

 
 
 
 
 
 
 
 
 
Assets of non-U.S. defined benefit plans
 
 

 
 

 
 

 
 

Fixed income securities and cash equivalents
 
$
1,521

 
$
397

 
$
1,124

 
$

Equity securities
 
650

 
6

 
644

 

Other
 
8

 

 

 
8

Total
 
$
2,179

 
$
403

 
$
1,768

 
$
8


Schedule of effect of significant unobservable inputs, changes in plan assets
The following table summarizes the change in the fair values for Level 3 plan assets for the years ending December 31, 2014 and 2013:
 
 
Level 3 Plan Assets
 
 
U.S. Defined
Benefit
 
Non-U.S. Defined
Benefit
Balance, December 31, 2012
 
$
37

 
$
19

Redemptions
 

 
(10
)
Unrealized loss
 

 
(1
)
Balance, December 31, 2013
 
37

 
8

Redemptions and sales
 
(45
)
 
(2
)
Unrealized gain (loss)
 
8

 
(1
)
Balance, December 31, 2014
 
$

 
$
5

Schedule of assumptions used
Assumptions and investment policies
 
 
Defined Benefit
 
U.S. Retiree
Health Care
 
 
2014
 
2013
 
2014
 
2013
Weighted average assumptions used to determine benefit obligations:
 
 
 
 
 
 
 
 
U.S. discount rate
 
4.23%
 
5.11%
 
4.07%
 
4.83%
Non-U.S. discount rate
 
2.34%
 
3.01%
 

 

 
 
 
 
 
 
 
 
 
U.S. average long-term pay progression
 
3.30%
 
3.50%
 

 

Non-U.S. average long-term pay progression
 
3.27%
 
3.11%
 

 

 
 
 
 
 
 
 
 
 
Weighted average assumptions used to determine net periodic benefit cost:
 
 
 
 
 
 
 
 
U.S. discount rate
 
5.11%
 
4.59%
 
4.83%
 
3.94%
Non-U.S. discount rate
 
3.01%
 
2.74%
 

 

 
 
 
 
 
 
 
 
 
U.S. long-term rate of return on plan assets
 
5.25%
 
5.25%
 
4.50%
 
4.75%
Non-U.S. long-term rate of return on plan assets
 
3.75%
 
3.34%
 

 

 
 
 
 
 
 
 
 
 
U.S. average long-term pay progression
 
3.50%
 
3.60%
 

 

Non-U.S. average long-term pay progression
 
3.11%
 
3.01%
 

 

Schedule of expected benefit payments
The following table shows the benefits we expect to pay to participants from the plans in the next 10 years and assumes that retirement eligible participants take their benefits immediately. Almost all of the payments will be made from plan assets and not from company assets.
 
 
U.S. Defined
Benefit
 
U.S. Retiree
Health Care
 
Medicare
Subsidy
 
Non-U.S. Defined
Benefit
2015
 
$
217

 
$
36

 
$
(4
)
 
$
76

2016
 
95

 
37

 
(4
)
 
78

2017
 
91

 
39

 
(4
)
 
82

2018
 
93

 
40

 
(5
)
 
85

2019
 
93

 
40

 
(5
)
 
89

2020 - 2024
 
435

 
194

 
(9
)
 
501


Schedule of effect of one-percentage-point change in assumed health care cost trend rates
Assumed health care cost trend rates for the U.S. retiree health care benefit plan at December 31 are as follows:
 
 
2014
 
2013
Assumed health care cost trend rate for next year
 
7.0%
 
7.0%
Ultimate trend rate
 
5.0%
 
5.0%
Year in which ultimate trend rate is reached
 
2023
 
2022

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Debt and lines of credit (Tables)
12 Months Ended
Dec. 31, 2014
Debt Disclosure [Abstract]
Schedule of long-term debt Instruments
Long-term debt outstanding as of December 31, 2014 and 2013 is as follows:
 
December 31,
 
2014
 
2013
Notes due 2014 at 1.375%
$

 
$
1,000

Notes due 2015 at 3.95% (assumed with National acquisition)
250

 
250

Notes due 2015 at 0.45%
750

 
750

Notes due 2016 at 2.375%
1,000

 
1,000

Notes due 2017 at 6.60% (assumed with National acquisition)
375

 
375

Notes due 2017 at 0.875%
250

 

Notes due 2018 at 1.00%
500

 
500

Notes due 2019 at 1.65%
750

 
750

Notes due 2021 at 2.75%
250

 

Notes due 2023 at 2.25%
500

 
500

 
4,625

 
5,125

Net unamortized premium
17

 
33

Current portion of long-term debt
(1,001
)
 
(1,000
)
Long-term debt
$
3,641

 
$
4,158

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Commitments and contingencies (Tables)
12 Months Ended
Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
Minimum payments under non-cancellable operating leases capitalized software licenses and purchase commitments
As of December 31, 2014, we had committed to make the following minimum payments under our non-cancellable operating leases, capitalized software licenses and purchase commitments:
 
 
Operating
Leases
 
Capitalized
Software
Licenses
 
Purchase
Commitments
2015
 
$
87

 
$
39

 
$
96

2016
 
66

 
27

 
52

2017
 
45

 

 
35

2018
 
33

 

 
14

2019
 
21

 

 
10

Thereafter
 
80

 

 
2

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Supplemental financial information (Tables)
12 Months Ended
Dec. 31, 2014
Supplemental Financial Information [Abstract]
Other income (expense), net
Other Income (Expense), Net
 
 
For Years Ended December 31,
 
 
2014
 
2013
 
2012
Interest income
 
$
7

 
$
10

 
$
8

Tax interest income (expense)
 
6

 
(10
)
 
32

Net gains on investments
 
5

 
18

 
18

Other (a)
 
3

 
(1
)
 
(11
)
Total
 
$
21

 
$
17

 
$
47


(a) Includes lease income of approximately $15 million per year, primarily from the purchaser of a former business. As of December 31, 2014, the aggregate amount of non-cancellable future lease payments to be received from these leases is $51 million. These leases contain renewal options. Other also includes miscellaneous non-operational items such as losses related to former businesses, including settlements in 2012; gains and losses from currency exchange rate changes; and gains and losses from our derivative financial instruments, primarily forward foreign currency exchange contracts.
Prepaid expenses and other current assets
Prepaid Expenses and Other Current Assets
 
 
December 31,
 
 
2014
 
2013
Prepaid taxes on intercompany inventory profits
 
$
693

 
$
667

Other prepaid expenses and current assets
 
157

 
196

Total
 
$
850

 
$
863

Property, plant and equipment at cost
Property, Plant and Equipment at Cost
 
 
Depreciable Lives
(Years)
 
December 31,
 
 
 
2014
 
2013
Land
 
n/a
 
$
137

 
$
175

Buildings and improvements
 
5 - 40
 
2,801

 
2,913

Machinery and equipment
 
3 - 10
 
3,328

 
3,468

Total
 
 
 
$
6,266

 
$
6,556

Accrued expenses and other liabilities
Accrued Expenses and Other Liabilities
 
 
December 31,
 
 
2014
 
2013
Customer incentive programs and allowances
 
$
101

 
$
143

Severance and related expenses
 
60

 
158

Other
 
337

 
350

Total
 
$
498

 
$
651

Accumulated other comprehensive income (loss), net of taxes
Accumulated Other Comprehensive Income (Loss), Net of Taxes
 
 
December 31,
 
 
2014
 
2013
Postretirement benefit plans:
 
 
 
 

Net actuarial loss
 
$
(529
)
 
$
(525
)
Prior service credit
 

 
1

Cash flow hedge derivative
 
(3
)
 
(4
)
Total
 
$
(532
)
 
$
(528
)
Amounts reclassified out of AOCI to Net income, net of taxes
The table below details where on the Consolidated Statements of Income these transactions are recorded.
 
 
For Years Ended December 31,
 
Impact to Related Statement of Income Line
Details about AOCI Components
 
2014
 
2013
 
Net actuarial gains (losses) of defined benefit plans:
 
 
 
 
 
 
Recognized net actuarial loss and Settlement losses (a)
 
$
63

 
$
108

 
Increase to Pension expense (b)
Tax effect
 
(21
)
 
(37
)
 
Decrease to Provision for income taxes
Recognized within Net income, net of taxes
 
$
42

 
$
71

 
Decrease to Net income
 
 
 
 
 
 
 
Prior service cost of defined benefit plans:
 
 
 
 
 
 
Amortization of prior service cost (credit) and Curtailment gain (a)
 
$

 
$
(5
)
 
Decrease to Pension expense (b)
Tax effect
 

 
2

 
Increase to Provision for income taxes
Recognized within Net income, net of taxes
 
$

 
$
(3
)
 
Increase to Net income
 
 
 
 
 
 
 
Derivative instruments:
 
 
 
 
 
 
Amortization of treasury rate locks
 
$
2

 
$
2

 
Increase to Interest and debt expense
Tax effect
 
(1
)
 
(1
)
 
Decrease to Provision for income taxes
Recognized within Net income, net of taxes
 
$
1

 
$
1

 
Decrease to Net income

(a) Detailed in Note 11.
(b) Pension expense is included in COR, R&D, SG&A and Restructuring charges/other in the Consolidated Statements of Income.
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Quarterly financial data (unaudited) (Tables)
12 Months Ended
Dec. 31, 2014
Quarterly Financial Information Disclosure [Abstract]
Schedule of quarterly financial data
 
 
Quarter
2014
 
1st
 
2nd
 
3rd
 
4th
Revenue
 
$
2,983

 
$
3,292

 
$
3,501

 
$
3,269

Gross profit
 
1,607

 
1,881

 
2,044

 
1,895

Included in Operating profit:
 
 
 
 
 
 
 
 
Acquisition charges
 
83

 
82

 
83

 
82

Restructuring charges/other
 
(11
)
 
(4
)
 
(9
)
 
(27
)
Operating profit
 
690

 
982

 
1,175

 
1,100

Net income
 
487

 
683

 
826

 
825

 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.44

 
$
0.63

 
$
0.77

 
$
0.78

Diluted earnings per common share
 
0.44

 
0.62

 
0.76

 
0.76

 
 
 
 
 
 
 
 
 
 
 
Quarter
2013
 
1st
 
2nd
 
3rd
 
4th
Revenue
 
$
2,885

 
$
3,047

 
$
3,244

 
$
3,028

Gross profit
 
1,374

 
1,570

 
1,779

 
1,640

Included in Operating profit:
 
 
 
 
 
 
 
 
Acquisition charges
 
86

 
86

 
86

 
84

Restructuring charges/other
 
15

 
(282
)
 
16

 
62

Operating profit
 
395

 
906

 
844

 
687

Net income
 
362

 
660

 
629

 
511

 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
Basic earnings per common share
 
$
0.32

 
$
0.59

 
$
0.56

 
$
0.46

Diluted earnings per common share
 
0.32

 
0.58

 
0.56

 
0.46

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Description of business, including segment and geographic area information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Reportable_Segments
Dec. 31, 2013
Dec. 31, 2012
Segment Reporting Information [Line Items]
Number of reportable segments 2
Revenue $ 3,269 $ 3,501 $ 3,292 $ 2,983 $ 3,028 $ 3,244 $ 3,047 $ 2,885 $ 13,045 $ 12,205 $ 12,825
Operating profit 1,100 1,175 982 690 687 844 906 395 3,947 2,832 1,973
Property, plant and equipment, net 2,840 3,399 2,840 3,399 3,912
Analog
Segment Reporting Information [Line Items]
Revenue 8,104 7,194 6,998
Operating profit 2,786 1,859 1,650
Embedded Processing
Segment Reporting Information [Line Items]
Revenue 2,740 2,450 2,257
Operating profit 384 185 158
Other
Segment Reporting Information [Line Items]
Revenue 2,201 2,561 3,570
Operating profit 777 788 165
United States
Segment Reporting Information [Line Items]
Revenue 1,625 1,666 1,596
Property, plant and equipment, net 1,436 1,765 1,436 1,765 1,931
Asia
Segment Reporting Information [Line Items]
Revenue 7,915 [1] 7,370 [1] 7,808 [1]
Property, plant and equipment, net 1,096 1,277 1,096 1,277 1,547
Europe
Segment Reporting Information [Line Items]
Revenue 2,293 1,926 1,861
Property, plant and equipment, net 162 196 162 196 241
Japan
Segment Reporting Information [Line Items]
Revenue 1,032 1,072 1,357
Property, plant and equipment, net 124 144 124 144 174
Rest of world
Segment Reporting Information [Line Items]
Revenue 180 171 203
Property, plant and equipment, net 22 17 22 17 19
China (including Hong Kong)
Segment Reporting Information [Line Items]
Revenue $ 5,700 $ 5,200 $ 5,400
[1] Revenue from products shipped into China, including Hong Kong, was $5.7 billion in 2014, $5.2 billion in 2013 and $5.4 billion in 2012.
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Basis of presentation and significant accounting policies and practices (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Percent of revenue from sales to distributors 60.00%
Percent of distributor revenue from sales of consigned inventory 60.00%
Advertising expense $ 45 $ 46 $ 46
Maximum length to maturity of a security, from the investment date, where it is classified as cash and cash equivalent 90 days
Length to maturity from the investment date of a security where the length of time is too short to be classified as a short-term investment 90 days
Consigned inventory $ 258 $ 202
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Basis of presentation and significant accounting policies and practices - Earnings per share (Details) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Basic EPS:
Net income $ 825 $ 826 $ 683 $ 487 $ 511 $ 629 $ 660 $ 362 $ 2,821 $ 2,162 $ 1,759
Income allocated to RSUs (44) (37) (31)
Income allocated to common stock for basic EPS calculation 2,777 2,125 1,728
Weighted average number of shares outstanding, basic (in shares) 1,065,000,000 1,098,000,000 1,132,000,000
Basic earnings per common share $ 0.78 $ 0.77 $ 0.63 $ 0.44 $ 0.46 $ 0.56 $ 0.59 $ 0.32 $ 2.61 $ 1.94 $ 1.53
Adjustment for dilutive shares:
Stock-based compensation plans (in shares) 15,000,000 15,000,000 14,000,000
Diluted EPS:
Net income 825 826 683 487 511 629 660 362 2,821 2,162 1,759
Income allocated to RSUs (43) (36) (31)
Income allocated to common stock for diluted EPS calculation $ 2,778 $ 2,126 $ 1,728
Weighted average number of shares outstanding, diluted (in shares) 1,080,000,000 1,113,000,000 1,146,000,000
Diluted earnings per common share $ 0.76 $ 0.76 $ 0.62 $ 0.44 $ 0.46 $ 0.56 $ 0.58 $ 0.32 $ 2.57 $ 1.91 $ 1.51
Antidilutive securities excluded from computation of earnings per share, Amount (in shares) 11,000,000 0 52,000,000
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Acquisition charges (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended 48 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Business Combination, Separately Recognized Transactions [Line Items]
Acquisition charges $ 82 $ 83 $ 82 $ 83 $ 84 $ 86 $ 86 $ 86 $ 330 $ 341 $ 450
National Semiconductor
Business Combination, Separately Recognized Transactions [Line Items]
Acquisition-related charges 330 341 471
Number of jobs eliminated (in jobs) 350
National Semiconductor | Amortization of intangible assets
Business Combination, Separately Recognized Transactions [Line Items]
Acquisition charges 319 323 325
National Semiconductor | Stock-based compensation
Business Combination, Separately Recognized Transactions [Line Items]
Acquisition charges 11 11 17
National Semiconductor | Retention bonuses
Business Combination, Separately Recognized Transactions [Line Items]
Acquisition charges 0 7 57
National Semiconductor | Severance and other benefits
Business Combination, Separately Recognized Transactions [Line Items]
Acquisition charges 0 0 16
National Semiconductor | Transaction and other costs
Business Combination, Separately Recognized Transactions [Line Items]
Acquisition charges 0 0 35
National Semiconductor | As recorded in Acquisition charges
Business Combination, Separately Recognized Transactions [Line Items]
Acquisition charges 330 341 450
National Semiconductor | As recorded in COR
Business Combination, Separately Recognized Transactions [Line Items]
Acquisition-related charges 0 0 21
National Semiconductor | Acquisition Costs, Severance and other benefits
Business Combination, Separately Recognized Transactions [Line Items]
Acquisition charges 86
Payments against cumulative charges related to National 84
National Semiconductor | Acquisition Costs, Severance and other benefits, Change of control
Business Combination, Separately Recognized Transactions [Line Items]
Payments against cumulative charges related to National $ 41
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Restructuring charges/other (Details) (USD $)
12 Months Ended 15 Months Ended 24 Months Ended 26 Months Ended 36 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Jobs
Dec. 31, 2013
Dec. 31, 2014
Dec. 31, 2014
Restructuring and Related Cost [Line Items]
Restructuring charges $ 20,000,000 [1] $ 126,000,000 [1] $ 400,000,000 [1]
Payments for severance costs 124,000,000 292,000,000 46,000,000
Goodwill impairment loss 0 0 90,000,000
Gains on sales of assets 75,000,000 0 0
Gain on technology transfer 0 315,000,000 0
Gain on transfer of Japan substitutional pension 0 0 144,000,000
Semiconductor manufacturing facilities in Hiji, Japan, and Houston, Texas
Restructuring and Related Cost [Line Items]
Gains on sales of assets 17,000,000
Semiconductor manufacturing facility in Nice, France
Restructuring and Related Cost [Line Items]
Gains on sales of assets 30,000,000
Real estate in Santa Clara, California
Restructuring and Related Cost [Line Items]
Gains on sales of assets 28,000,000
2013 Actions
Restructuring and Related Cost [Line Items]
Expected number of positions eliminated 1,100
Restructuring charges 26,000,000 49,000,000 0 75,000,000
Prior Actions
Restructuring and Related Cost [Line Items]
Restructuring charges (6,000,000) 77,000,000 400,000,000
Prior Actions | Semiconductor manufacturing facilities in Hiji, Japan, and Houston, Texas
Restructuring and Related Cost [Line Items]
Restructuring charges 200,000,000
Restructuring and related activities, Number of facilities closing 2
Former Reporting Segment Wireless | Prior Actions
Restructuring and Related Cost [Line Items]
Restructuring charges 383,000,000
Goodwill impairment loss 90,000,000
Employee Severance And Benefits Charges Reserves Member | 2013 Actions
Restructuring and Related Cost [Line Items]
Restructuring charges 16,000,000 [1] 49,000,000 [1] 0 [1]
Payments for severance costs 43,000,000 0 0 43,000,000
Employee Severance And Benefits Charges Reserves Member | Prior Actions
Restructuring and Related Cost [Line Items]
Restructuring charges (6,000,000) [1] 36,000,000 [1] 251,000,000 [1]
Payments for severance costs 73,000,000 266,000,000 23,000,000
Employee Severance And Benefits Charges Reserves Member | Prior Actions | Semiconductor manufacturing facilities in Hiji, Japan, and Houston, Texas
Restructuring and Related Cost [Line Items]
Payments for severance costs 103,000,000
Employee Severance And Benefits Charges Reserves Member | Former Reporting Segment Wireless | Prior Actions
Restructuring and Related Cost [Line Items]
Payments for severance costs $ 247,000,000
[1] Includes changes in estimates.
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Restructuring charges/other - Components of restructuring charges (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended 15 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Restructuring Cost and Reserve [Line Items]
Restructuring charges $ 20 [1] $ 126 [1] $ 400 [1]
Gains on sales of assets (75) 0 0
Gain on technology transfer 0 (315) 0
Gain on transfer of Japan substitutional pension 0 0 (144)
Other 4 0 8
Restructuring charges/other (27) (9) (4) (11) 62 16 (282) 15 (51) (189) 264
2013 Actions
Restructuring Cost and Reserve [Line Items]
Severance and benefits cost 16 [1] 49 [1] 0 [1]
Other exit costs 10 0 0
Restructuring charges 26 49 0 75
Prior Actions
Restructuring Cost and Reserve [Line Items]
Severance and benefits cost (6) [1] 36 [1] 251 [1]
Other exit costs (1) [1] 30 [1] 128 [1]
Accelerated depreciation 1 11 21
Restructuring charges $ (6) $ 77 $ 400
[1] Includes changes in estimates.
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Restructuring charges/other - Restructuring reserve (Details) (USD $)
12 Months Ended 15 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2014
Restructuring Reserve [Roll Forward]
Beginning accrual $ 161,000,000 $ 349,000,000 $ 116,000,000
Restructuring charges 20,000,000 [1] 126,000,000 [1] 400,000,000 [1]
Non-cash items (22,000,000) [2] (121,000,000) [2]
Payments (124,000,000) (292,000,000) (46,000,000)
Remaining accrual 57,000,000 161,000,000 349,000,000 57,000,000
2013 Actions
Restructuring Reserve [Roll Forward]
Restructuring charges 26,000,000 49,000,000 0 75,000,000
Prior Actions
Restructuring Reserve [Roll Forward]
Restructuring charges (6,000,000) 77,000,000 400,000,000
Severance and benefits cost | 2013 Actions
Restructuring Reserve [Roll Forward]
Beginning accrual 49,000,000 0 0
Restructuring charges 16,000,000 [1] 49,000,000 [1] 0 [1]
Non-cash items 0 [2] 0 [2]
Payments (43,000,000) 0 0 (43,000,000)
Remaining accrual 22,000,000 49,000,000 0 22,000,000
Severance and benefits cost | Prior Actions
Restructuring Reserve [Roll Forward]
Beginning accrual 105,000,000 340,000,000 109,000,000
Restructuring charges (6,000,000) [1] 36,000,000 [1] 251,000,000 [1]
Non-cash items (5,000,000) [2] 3,000,000 [2]
Payments (73,000,000) (266,000,000) (23,000,000)
Remaining accrual 26,000,000 105,000,000 340,000,000 26,000,000
Other Charges | 2013 Actions
Restructuring Reserve [Roll Forward]
Beginning accrual 0 0 0
Restructuring charges 10,000,000 [1] 0 [1] 0 [1]
Non-cash items 0 [2] 0 [2]
Payments (1,000,000) 0 0
Remaining accrual 9,000,000 0 0 9,000,000
Other Charges | Prior Actions
Restructuring Reserve [Roll Forward]
Beginning accrual 7,000,000 9,000,000 7,000,000
Restructuring charges 0 [1] 41,000,000 [1] 149,000,000 [1]
Non-cash items (17,000,000) [2] (124,000,000) [2]
Payments (7,000,000) (26,000,000) (23,000,000)
Remaining accrual $ 0 $ 7,000,000 $ 9,000,000 $ 0
[1] Includes changes in estimates.
[2] Reflects charges for goodwill impairment, stock-based compensation, impacts of postretirement benefit plans and accelerated depreciation.
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Stock-based compensation (Details) (USD $)
12 Months Ended 0 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Jan. 02, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Future compensation cost not yet recognized in the Statements of Income 308,000,000
Future compensation costs to be recognized in 2015 168,000,000
Future compensation costs to be recognized in 2016 91,000,000
Future compensation costs to be recognized in 2017 44,000,000
Future compensation costs to be recognized in 2018 5,000,000
Remaining stock repurchase authorizations 3,170,000,000
Employee Stock Option
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Award vesting period (in years) 4 years
Look back period to determine option life used in Black Scholes Merton pricing model 10 years
Restricted Stock Units (RSUs)
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Award vesting period (in years) 4 years
Long-term incentive and director compensation plans | Employee Stock Option
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Long-term incentive and director compensation plans option pricing (in percent) 100.00%
Term of the long term incentive stock options 10 years
Award vesting period (in years) 4 years
Aggregate intrinsic value of options exercised 367,000,000 427,000,000 244,000,000
Future compensation cost not yet recognized in the Statements of Income 113,000,000
Weighted-average exercise price, Exercised (in dollars per share) 27.75
Outstanding options exercisable (in shares) 27,601,866
Long-term incentive and director compensation plans | Restricted Stock Units (RSUs)
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Award vesting period (in years) 4 years
Long-term incentive plan RSU conversion to common stock feature Each RSU represents the right to receive one share of TI common stock on the vesting date
Weighted-average grant-date fair value, Granted (in dollars per share) 44.71 $ 33.7 $ 31.6
Total fair value of shares vested from RSU lapses 133,000,000 98,000,000 120,000,000
Future compensation cost not yet recognized in the Statements of Income 195,000,000
TI employees 2005 stock purchase plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Percent of the underlying common stock's market price participants pay for options (in hundredths) 85.00%
Employee stock purchase plan option term (in months) 3 months
Aggregate intrinsic value of options exercised 12,000,000 $ 13,000,000 $ 13,000,000
Weighted-average exercise price, Exercised (in dollars per share) 39.44
Outstanding options exercisable (in shares) 0
Weighted average grant date fair value of options granted (dollars per share) 7.34 $ 5.71 $ 4.52
Subsequent Event | TI employees 2005 stock purchase plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Weighted-average exercise price, Exercised (in dollars per share) $ 45.46
Annual Vesting | Employee Stock Option
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Non-qualified stock options award vesting rights 25.00%
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Stock-based compensation - Expense (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense $ 277 $ 287 $ 263
COR
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense 48 49 48
R&D
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense 62 67 71
SG&A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense 156 160 127
Acquisition charges
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense $ 11 $ 11 $ 17
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Stock-based compensation - Fair-value methods and assumptions (Details) (USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Fair value assumptions method used for non-qualified stock options Black-Scholes-Merton option-pricing model
Weighted average grant date fair value, per share (in dollars per share) $ 8.13 $ 6.78 $ 8.31
Expected volatility (in percent) 22.00% 26.00% 30.00%
Expected lives 7 years 3 months 18 days 7 years 4 months 24 days 7 years 1 month 6 days
Risk-free interest rates (in percent) 2.45% 1.43% 1.40%
Expected dividend yields (in percent) 2.72% 2.56% 2.10%
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Stock-based compensation - Stock options and RSUs outstanding (Details) (USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Employee Stock Option
Stock Options, Shares
Exercised (in shares) (19,503,382) (45,507,711) (22,409,816)
Employee Stock Option | Long-term incentive and director compensation plans
Stock Options, Shares
Options outstanding, Beginning balance (in shares) 64,930,540
Granted (in shares) 14,053,185
Forfeited and expired (in shares) (1,832,897)
Exercised (in shares) (19,503,382)
Options outstanding, Ending balance (in shares) 57,647,446
Stock Options, Weighted Average Exercise Price per Share
Weighted-average exercise price, Outstanding, Beginning of period (in dollars per share) 28.98
Weighted-average exercise price, Granted (in dollars per share) 44.11
Weighted-average exercise price, Expired and forfeited (in dollars per share) 36.54
Weighted-average exercise price, Exercised (in dollars per share) 27.75
Weighted-average exercise price, Outstanding, End of period (in dollars per share) 32.84
Restricted Stock Units (RSUs)
Restricted Stock Units, Shares
Vested RSUs (in shares) (5,609,627) (5,741,981) (4,182,928)
Restricted Stock Units (RSUs) | Long-term incentive and director compensation plans
Restricted Stock Units, Shares
Awards outstanding other than options, Beginning balance (in shares) 20,892,022
Granted (in shares) 3,184,237
Vested RSUs (in shares) (5,609,627)
Expired and forfeited (in shares) (1,162,817)
Awards outstanding other than options, Ending balance (in shares) 17,303,815 20,892,022
Restricted Stock Units, Weighted Average Grant Date Fair Value per Share
Weighted-average grant date fair value, Beginning of period (in dollars per share) 29.94
Weighted-average grant-date fair value, Granted (in dollars per share) 44.71 33.7 31.6
Weighted-average grant date fair value, Vested RSUs (in dollars per share) 23.68
Weighted-average grant date fair value, Expired and forfeited (in dollars per share) 33.22
Weighted-average grant date fair value, Ending of period (in dollars per share) 34.47 29.94
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Stock-based compensation - Range of exercise prices (Details) (Employee Stock Option, Long-term incentive and director compensation plans, USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, Minimum $ 14.47
Range of Exercise Price, Maximum $ 55.41
Number Outstanding (Shares) 57,647,446 64,930,540
Weighted Average Remaining Contractual Life (Years) 6 years 4 months 24 days
Options Outstanding Weighted Average Exercise Price per Share $ 32.84 $ 28.98
Number Exercisable (Shares) 27,601,866
Options Exercisable Weighted Average Exercise Price per Share $ 27.34
Range Of Exercise Prices $14.47 to $20.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, Minimum $ 14.47
Range of Exercise Price, Maximum $ 20
Number Outstanding (Shares) 4,061,577
Weighted Average Remaining Contractual Life (Years) 4 years
Options Outstanding Weighted Average Exercise Price per Share $ 14.98
Number Exercisable (Shares) 4,061,577
Options Exercisable Weighted Average Exercise Price per Share $ 14.98
Range Of Exercise Prices $20.01 to $30.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, Minimum $ 20.01
Range of Exercise Price, Maximum $ 30
Number Outstanding (Shares) 11,270,125
Weighted Average Remaining Contractual Life (Years) 3 years 8 months 12 days
Options Outstanding Weighted Average Exercise Price per Share $ 25.47
Number Exercisable (Shares) 11,250,200
Options Exercisable Weighted Average Exercise Price per Share $ 25.46
Range Of Exercise Prices $30.01 to $40.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, Minimum $ 30.01
Range of Exercise Price, Maximum $ 40
Number Outstanding (Shares) 28,910,636
Weighted Average Remaining Contractual Life (Years) 6 years 6 months
Options Outstanding Weighted Average Exercise Price per Share $ 33
Number Exercisable (Shares) 12,288,339
Options Exercisable Weighted Average Exercise Price per Share $ 33.14
Range Of Exercise Prices $40.01 to $50.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, Minimum $ 40.01
Range of Exercise Price, Maximum $ 50
Number Outstanding (Shares) 13,399,020
Weighted Average Remaining Contractual Life (Years) 9 years 1 month 6 days
Options Outstanding Weighted Average Exercise Price per Share $ 44.1
Number Exercisable (Shares) 1,750
Options Exercisable Weighted Average Exercise Price per Share $ 42.66
Range Of Exercise Prices $50.01 to $55.41
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of Exercise Price, Minimum $ 50.01
Range of Exercise Price, Maximum $ 55.41
Number Outstanding (Shares) 6,088
Weighted Average Remaining Contractual Life (Years) 9 years 10 months 24 days
Options Outstanding Weighted Average Exercise Price per Share $ 55.41
Number Exercisable (Shares) 0
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Stock-based compensation - Options vested and expected to vest (Details) (Long-term incentive and director compensation plans, Employee Stock Option, USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Long-term incentive and director compensation plans | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of outstanding shares, vested and expected to vest (in shares) 56,328,323 [1]
Weighted-average remaining contractual life, vested and expected to vest (in years) 6 years 3 months 18 days [1]
Weighted-average exercise price per share, vested and expected to vest (in dollars per share) $ 32.69 [1]
Intrinsic value, vested and expected to vest (millions of dollars) $ 1,170 [1]
Outstanding options exercisable (in shares) 27,601,866
Weighted-average remaining contractual life, options exercisable 4 years 4 months 24 days
Weighted-average exercise price per share, options exercisable (in dollars per share) $ 27.34
Intrinsic value, options exercisable (millions of dollars) 721
Expected forfeitures, effects of which are included (in shares) 1,000,000
Aggregate intrinsic value of stock options outstanding, excluding the effects of expected forfeitures $ 1,189
[1] Includes effects of expected forfeitures of approximately 1 million shares. Excluding the effects of expected forfeitures, the aggregate intrinsic value of stock options outstanding was $1,189 million.
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Stock-based compensation - Director deferred compensation (Details) (Director)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Director
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Beginning balance, Directors deferred compensation account (in shares) 129,264
New shares deferred (in shares) 13,636
Issued (in shares) (7,178) (12,909) (6,592)
Ending balance, Directors deferred compensation account (in shares) 135,722 129,264
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Stock-based compensation - Employee stock purchase plan (Details) (TI employees 2005 stock purchase plan, USD $)
12 Months Ended
Dec. 31, 2014
TI employees 2005 stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options outstanding, Beginning balance (in shares) 485,408
Granted (in shares) 1,673,479
Exercised (in shares) (1,784,184)
Options outstanding, Ending balance (in shares) 374,703
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted-average exercise price, Outstanding, Beginning of period (in dollars per share) $ 36.64
Weighted-average exercise price, Granted (in dollars per share) $ 41.6
Weighted-average exercise price, Exercised (in dollars per share) $ 39.44
Weighted-average exercise price, Outstanding, End of period (in dollars per share) $ 45.46
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Stock-based compensation - Effect on shares outstanding and treasury shares (Details)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Schedule of Changes in Treasury Stock [Line Items]
Treasury stock (in shares) 694,189,127 658,012,970 632,636,970 601,131,631
Repurchases 61,665,209 77,564,013 59,757,780
Total issued (in shares) (25,481,874) (52,175,104) (28,245,849)
Director
Schedule of Changes in Treasury Stock [Line Items]
Issued (in shares) (7,178) (12,909) (6,592)
Employee Stock Option
Schedule of Changes in Treasury Stock [Line Items]
Exercised (in shares) (19,503,382) (45,507,711) (22,409,816)
Previously unissued common shares (in shares) 180,955 [1]
Stock applied to taxes 0 0
Total issued (in shares) (21,280,948) (47,894,545) (25,058,359)
Stock applied to exercises or taxes 6,618
Employee Stock Option | Director
Schedule of Changes in Treasury Stock [Line Items]
Issued (in shares) 0 0 0
Restricted Stock Units (RSUs)
Schedule of Changes in Treasury Stock [Line Items]
Vested RSUs (in shares) (5,609,627) (5,741,981) (4,182,928)
Previously unissued common shares (in shares) 4,593 [1]
Stock applied to taxes 1,461,422 990,845
Total issued (in shares) (4,200,926) (4,280,559) (3,187,490)
Stock applied to exercises or taxes 1,408,701
Restricted Stock Units (RSUs) | Director
Schedule of Changes in Treasury Stock [Line Items]
Issued (in shares) 0 0 0
TI employees 2005 stock purchase plan
Schedule of Changes in Treasury Stock [Line Items]
Exercised (in shares) (1,784,184)
TI employees 2005 stock purchase plan | Employee Stock Option
Schedule of Changes in Treasury Stock [Line Items]
Exercised (in shares) (1,784,184) (2,386,834) (2,829,498)
TI employees 2005 stock purchase plan | Restricted Stock Units (RSUs)
Schedule of Changes in Treasury Stock [Line Items]
Vested RSUs (in shares) 0 0 0
[1] Beginning in 2013, only treasury shares were issued.
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Stock-based compensation - Shares available for future grants and reserve for issuance (Details)
Dec. 31, 2014
Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved for issuance (in shares) 160,692,694 [1]
Shares to be issued upon exercise of outstanding options and RSUs (75,461,686) [1]
Available for future grants 85,231,008
Long-term incentive and director compensation plans
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved for issuance (in shares) 121,127,656 [1]
Shares to be issued upon exercise of outstanding options and RSUs (75,086,983) [1]
Available for future grants 46,040,673
TI employees 2005 stock purchase plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Reserved for issuance (in shares) 39,565,038 [1]
Shares to be issued upon exercise of outstanding options and RSUs (374,703) [1]
Available for future grants 39,190,335
Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Directors deferred compensation account (in shares) 135,722 129,264
[1] Includes 135,722 shares credited to directors’ deferred stock accounts that settle in shares of TI common stock. These shares are not included as grants outstanding at December 31, 2014.
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Stock-based compensation - Effects on cash flows (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Proceeds from common stock transactions $ 616 $ 1,314 $ 523
Tax benefit realized from stock options exercised $ 218 $ 227 $ 133
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Profit sharing plans (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Profit sharing plans [Abstract]
Minimum percentage amount of operating margin the company must attain for full calendar year for any profit sharing per individual to be paid (in hundredths) 10.00%
Amount of gross compensation eligible for profit sharing deferral per individual in calendar year when minimum operating margin is attained by company (in hundredths) 2.00%
Maximum amount of gross compensation eligible for profit sharing per individual in calendar year when 35% operating margin is attained by company (in hundredths) 20.00%
Percentage of operating margin the company must attain for full calendar year for maximum amount of profit sharing per individual to be paid (in hundredths) 35.00%
Profit sharing expense $ 269 $ 161 $ 96
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Income taxes (Details) (USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Income Tax Contingency [Line Items]
Discrete tax benefits related to reinstatement of the U.S. R&D tax credit $ 79,000,000
Discrete tax benefits related to U.S. benefit for manufacturing 252,000,000
Deferred tax asset, change in amount related to unutilized tax credits 24,000,000
Tax loss carryforward, U.S. and non-U.S. 108,000,000
Tax loss carryforward, U.S. and non-U.S., set to expire 0
Amount of undistributed foreign earnings 7,670,000,000
Cash payments for income taxes 1,104,000,000 569,000,000 171,000,000
Amount of deferred tax assets possibly to be realized 56,000,000 76,000,000
Unrecognized tax benefits 108,000,000 91,000,000 184,000,000 210,000,000
Audit Assessments Not Made
Income Tax Contingency [Line Items]
Unrecognized tax benefits 76,000,000
Change in Accounting Method Accounted for as Change in Estimate
Income Tax Contingency [Line Items]
Amount of unrecorded changes in unrecognized tax benefits 52,000,000
Audit Assessments
Income Tax Contingency [Line Items]
Unrecognized tax benefits 32,000,000
Increase Liability for Transfer Pricing Issues
Income Tax Contingency [Line Items]
Amount of unrecorded changes in unrecognized tax benefits 29,000,000
Settlement with Taxing Authority
Income Tax Contingency [Line Items]
Amount of unrecorded changes in unrecognized tax benefits 29,000,000
Foreign Tax Authority
Income Tax Contingency [Line Items]
Benefits from tax holidays $ 44,000,000 $ 40,000,000 $ 51,000,000
Tax holiday, review time period 5 years
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Income taxes - Income before income taxes (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]
Income before income taxes - U.S. $ 2,684 $ 1,507 $ 319
Income before income taxes - Non-U.S. 1,190 1,247 1,616
Income before income taxes $ 3,874 $ 2,754 $ 1,935
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Income taxes - Provision (benefit) for income taxes (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]
U.S. Federal - Current $ 911 $ 291 $ (108)
Non-U.S. - Current 194 247 156
U.S. State - Current 9 4 (2)
Total current income tax expense (benefit) 1,114 542 46
U.S. Federal - Deferred (73) 17 65
Non-U.S. - Deferred 11 33 65
U.S. State - Deferred 1 0 0
Total deferred income tax expense (benefit) (61) 50 130
Total U.S. Federal income taxes 838 308 (43)
Total Non-U.S. income taxes 205 280 221
Total U.S. State income taxes 10 4 (2)
Provision for income taxes $ 1,053 $ 592 $ 176
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Income taxes - Reconciliation items from income tax computed at statutory federal rate (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Income Tax Disclosure [Abstract]
Computed tax at statutory rate $ 1,356 $ 964 $ 677
Non-U.S. effective tax rates (212) (156) (345)
U.S. R&D tax credit (59) (129) 0
U.S. tax benefit for manufacturing (51) (66) (158)
Impact of changes to uncertain tax positions 3 (14) (88)
Non-deductible expenses 6 13 42
Other 10 (20) 48
Provision for income taxes $ 1,053 $ 592 $ 176
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Income taxes - Components of deferred income tax assets and liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Deferred income tax assets:
Deferred loss and tax credit carryforwards $ 289 $ 345
Accrued expenses 248 265
Stock-based compensation 238 262
Inventories and related reserves 157 162
Retirement costs for defined benefit and retiree health care 96 101
Other 122 148
Deferred income tax assets, gross 1,150 1,283
Valuation allowance (195) (219)
Deferred income tax assets, net 955 1,064
Deferred income tax liabilities:
Acquisition-related intangibles and fair-value adjustments (688) (804)
International earnings (104) (121)
Property, plant and equipment (10) (57)
Other (37) (31)
Deferred income tax liabilities, net (839) (1,013)
Net deferred income tax asset $ 116 $ 51
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Income taxes - Deferred income tax assets and liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Income Tax Disclosure [Abstract]
Current deferred income tax assets $ 347 $ 393
Noncurrent deferred income tax assets 172 207
Current deferred income tax liabilities (4) (1)
Noncurrent deferred income tax liabilities (399) (548)
Net deferred income tax asset $ 116 $ 51
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Income taxes - Uncertain tax positions (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance, January 1 $ 91 $ 184 $ 210
Additions based on tax positions related to the current year 10 7 12
Additions for tax positions of prior years 52 19 45
Reductions for tax positions of prior years (9) (10) (92)
Settlements with tax authorities (36) (96) 39
Expiration of the statute of limitations for assessing taxes 0 (13) (30)
Balance, December 31 108 91 184
Interest income (expense) recognized in the year ended December 31 6 (10) 32
Interest receivable (payable) as of December 31 $ 0 $ (5) $ 8
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Financial instruments and risk concentration (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Allowance for doubtful accounts, current
Accounts receivable allowances [Roll Forward]
Balance at beginning of year $ 22 $ 31 $ 19
Additions charged (credited) to operating results (9) (9) 12
Recoveries and write-offs, net (1) 0 0
Balance at end of year 12 22 31
Foreign Exchange Forward
Valuation and Qualifying Accounts Disclosure [Line Items]
Notional value of forward foreign currency exchange contracts 504
Foreign Exchange Forward | Japanese Yen
Valuation and Qualifying Accounts Disclosure [Line Items]
Notional value of forward foreign currency exchange contracts 183
Foreign Exchange Forward | Euros
Valuation and Qualifying Accounts Disclosure [Line Items]
Notional value of forward foreign currency exchange contracts 163
Foreign Exchange Forward | British Pound
Valuation and Qualifying Accounts Disclosure [Line Items]
Notional value of forward foreign currency exchange contracts $ 29
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Valuation of debt and equity investments and certain liabilities - Investments at fair value (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents $ 1,199 $ 1,627
Short-Term Investments 2,342 2,202
Long-Term Investments 224 216
Proceeds from sales, redemptions and maturities of short-term available-for-sale securities 2,966 4,249 2,198
Aggregate maturities of investments in money market funds and other debt securities classified as available for sale [Abstract]
One year or less 3,121
One to two years 205
Other-than-temporary declines and impairments in investments recognized in other income and expense 5 7
Estimate of Fair Value Measurement
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents 984 1,410
Short-Term Investments 2,342 2,202
Long-Term Investments 185 179
Estimate of Fair Value Measurement | Available-for-sale Securities | Money market funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents 522 500
Short-Term Investments 0 0
Long-Term Investments 0 0
Estimate of Fair Value Measurement | Available-for-sale Securities | Corporate obligations
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents 97 123
Short-Term Investments 390 217
Long-Term Investments 0 0
Estimate of Fair Value Measurement | Available-for-sale Securities | U.S. Government agency and Treasury securities
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents 365 787
Short-Term Investments 1,952 1,985
Long-Term Investments 0 0
Estimate of Fair Value Measurement | Trading Securities | Mutual funds
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents 0 0
Short-Term Investments 0 0
Long-Term Investments 185 179
Portion at Other than Fair Value Measurement | Equity-method investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents 0 0
Short-Term Investments 0 0
Long-Term Investments 27 24
Portion at Other than Fair Value Measurement | Cost-method investments
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents 0 0
Short-Term Investments 0 0
Long-Term Investments 12 13
Portion at Other than Fair Value Measurement | Cash on hand
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and Cash Equivalents 215 217
Short-Term Investments 0 0
Long-Term Investments $ 0 $ 0
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Valuation of debt and equity investments and certain liabilities - Fair value assets and liabilities measured on recurring basis (Details) (Fair Value, Measurements, Recurring, USD $)
Dec. 31, 2014
Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value $ 3,511,000,000 $ 3,791,000,000
Total liabilities fair value 202,000,000 197,000,000
Deferred compensation
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities fair value 202,000,000 197,000,000
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 522,000,000 500,000,000
Corporate obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 487,000,000 340,000,000
U.S. Government agency and Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 2,317,000,000 2,772,000,000
Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 185,000,000 179,000,000
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 2,469,000,000 2,786,000,000
Total liabilities fair value 202,000,000 197,000,000
Level 1 | Deferred compensation
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities fair value 202,000,000 197,000,000
Level 1 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 522,000,000 500,000,000
Level 1 | Corporate obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 0 0
Level 1 | U.S. Government agency and Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 1,762,000,000 2,107,000,000
Level 1 | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 185,000,000 179,000,000
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 1,042,000,000 1,005,000,000
Total liabilities fair value 0 0
Level 2 | Deferred compensation
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total liabilities fair value 0 0
Level 2 | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 0 0
Level 2 | Corporate obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 487,000,000 340,000,000
Level 2 | U.S. Government agency and Treasury securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 555,000,000 665,000,000
Level 2 | Mutual funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 0 0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets fair value 0 0
Total liabilities fair value $ 0 $ 0
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Goodwill and acquisition-related intangibles - Goodwill (Details) (USD $)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Goodwill [Line Items]
Goodwill, net $ 4,362,000,000 $ 4,362,000,000
Goodwill impairment loss 0 0 90,000,000
Accumulated impairment of goodwill 90,000,000 90,000,000
Analog
Goodwill [Line Items]
Goodwill, net 4,158,000,000 4,158,000,000
Embedded Processing
Goodwill [Line Items]
Goodwill, net 172,000,000 172,000,000
Other
Goodwill [Line Items]
Goodwill, net $ 32,000,000 $ 32,000,000
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Goodwill and acquisition-related intangibles - Acquisition-related intangibles (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Finite-Lived Intangible Assets, Net [Abstract]
Acquisition-related intangibles, gross carrying amount $ 2,948 $ 2,991
Acquisition-related intangibles, accumulated amortization 1,046 768
Acquisition-related intangibles, net 1,902 2,223
Amortization of acquisition-related intangibles 321 336 342
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
2015 319
2016 319
2017 318
2018 318
2019 288
Thereafter 340
Developed technology
Finite-Lived Intangible Assets, Net [Abstract]
Acquisition-related intangibles, gross carrying amount 2,135 2,157
Acquisition-related intangibles, accumulated amortization 714 526
Acquisition-related intangibles, net 1,421 1,631
Customer relationships
Finite-Lived Intangible Assets, Net [Abstract]
Acquisition-related intangibles, amortization period 8 years
Acquisition-related intangibles, gross carrying amount 810 821
Acquisition-related intangibles, accumulated amortization 330 239
Acquisition-related intangibles, net 480 582
Other intangibles
Finite-Lived Intangible Assets, Net [Abstract]
Acquisition-related intangibles, amortization period 5 years
Acquisition-related intangibles, gross carrying amount 3 5
Acquisition-related intangibles, accumulated amortization 2 3
Acquisition-related intangibles, net 1 2
In-process R&D
Finite-Lived Intangible Assets, Net [Abstract]
Acquisition-related intangibles, gross carrying amount 0 8
Acquisition-related intangibles, net $ 0 $ 8
Minimum | Developed technology
Finite-Lived Intangible Assets, Net [Abstract]
Acquisition-related intangibles, amortization period 5 years
Maximum | Developed technology
Finite-Lived Intangible Assets, Net [Abstract]
Acquisition-related intangibles, amortization period 10 years
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Postretirement benefit plans (Details) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Description of employer contributions to the U.S. retirement plans Both defined contribution plans offer an employer-matching savings option that allows employees to make pre-tax contributions to various investment choices, including a TI common stock fund. Employees who elected to continue accruing a benefit in the qualified defined benefit pension plans may also participate in the defined contribution plan, where employer-matching contributions are provided for up to 2 percent of the employee’s annual eligible earnings. Employees who elected not to continue accruing a benefit in the defined benefit pension plans, and employees hired after November 1997 and through December 31, 2003, may participate in the enhanced defined contribution plan. This plan provides for a fixed employer contribution of 2 percent of the employee’s annual eligible earnings, plus an employer-matching contribution of up to 4 percent of the employee’s annual eligible earnings. Employees hired after December 31, 2003, do not receive the fixed employer contribution of 2 percent of the employee’s annual eligible earnings.
Number of company shares held by the U.S. defined contribution plans at year-end (in shares) 14,000,000 15,000,000
Value of the company shares held by the U.S. defined contribution plans at year-end $ 740 $ 678
Dividends paid on the company shares held by the U.S. defined contribution plans at year-end 19 18
Aggregate expense for the U.S. defined contribution plans 60 62 70
Defined benefit pension plan formula, highest consecutive years of compensation (in years) 5 years
Value of the company shares held by the non-U.S. retirement plans at year-end 17 15
Length of time certain gains and losses are considered when determining the market-related value of assets related to the U.S. Qualified pension and retiree health care plans (in years) 3 years
Expected contribution to retirement benefit plans in next fiscal year 100
Defined benefit plan assets directly invested in TI common stock 0
Liability to participants of the deferred compensation plan 202
Deferred compensation plan assets 185
U.S. defined benefit plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Accumulated benefit obligation 968 882
Future amortization of net actuarial loss 19
Future amortization of unrecognized prior service cost (credit) 0
U.S. retiree health care plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Future amortization of net actuarial loss 9
Future amortization of unrecognized prior service cost (credit) 6
Effect of a one-percentage point change in assumed health care cost trend rates [Abstract]
Effect of a one percentage point increase on accumulated postretirement benefit obligation (in hundredths) 27
Effect of a one percentage point decrease on accumulated postretirement benefit obligation (in hundredths) 22
Effect of a one percentage point increase on service and interest cost components (in hundredths) 1
Effect of a one percentage point increase on service and interest cost components (in hundredths) 1
Non-U.S. defined benefit plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Accumulated benefit obligation 2,150 2,120
Future amortization of net actuarial loss 22
Future amortization of unrecognized prior service cost (credit) $ (2)
Defined contribution plan, also still accruing defined benefits
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Defined contribution plan, employer matching contribution (percent) 2.00%
Enhanced defined contribution plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Defined contribution plan, employer matching contribution (percent) 4.00%
Defined contribution plan, employer fixed contribution (percent) 2.00%
Defined contribution plan
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Defined contribution plan, employer matching contribution (percent) 4.00%
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Postretirement benefit plans - Defined benefit plans (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended 3 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Sep. 30, 2012
Defined Benefit Plan Disclosure [Line Items]
Restructuring charges/other $ (27) $ (9) $ (4) $ (11) $ 62 $ 16 $ (282) $ 15 $ (51) $ (189) $ 264
U.S. defined benefit plan
Defined Benefit Plan Disclosure [Line Items]
Service cost 21 26 24
Interest cost 45 45 44
Expected return on plan assets (42) (48) (50)
Amortization of prior service cost (credit) 0 1 1
Recognized net actuarial loss 26 21 16
Net periodic benefit costs 50 45 35
Settlement losses 5 [1],[2] 41 [1],[2] 0 [1],[2]
Curtailment gain 0 0 0
Special termination benefit gains 0 [1] 0 [1] (1) [1]
Total, including other postretirement losses (gains) 55 86 34
Fair value of benefit obligation 1,076 955 1,076 955 1,098
Fair value of plan assets 1,082 941 1,082 941 1,071
U.S. retiree health care plan
Defined Benefit Plan Disclosure [Line Items]
Service cost 4 5 5
Interest cost 22 20 25
Expected return on plan assets (20) (24) (23)
Amortization of prior service cost (credit) 4 4 3
Recognized net actuarial loss 7 11 13
Net periodic benefit costs 17 16 23
Settlement losses 0 [1],[2] 0 [1],[2] 0 [1],[2]
Curtailment gain 0 0 (1)
Special termination benefit gains 0 [1] 0 [1] 0 [1]
Total, including other postretirement losses (gains) 17 16 22
Fair value of benefit obligation 513 472 513 472 509
Fair value of plan assets 497 485 497 485 517
Non-U.S. defined benefit plan
Defined Benefit Plan Disclosure [Line Items]
Service cost 39 41 45
Interest cost 68 61 75
Expected return on plan assets (80) (67) (78)
Amortization of prior service cost (credit) (2) (3) (4)
Recognized net actuarial loss 24 31 41
Net periodic benefit costs 49 63 79
Settlement losses 1 [1],[2] 4 [1],[2] 193 [1],[2]
Curtailment gain (2) (7) 0
Special termination benefit gains 0 [1] 0 [1] (337) [1]
Total, including other postretirement losses (gains) 48 60 (65)
Restructuring charges/other (144)
Fair value of benefit obligation 2,316 2,276 2,316 2,276 2,414
Fair value of plan assets 2,213 2,179 2,213 2,179 2,218
Non-U.S. defined benefit plan | Difference Between Fair Values of the Obligations Settled and Assets Transferred
Defined Benefit Plan Disclosure [Line Items]
Restructuring charges/other (337)
Non-U.S. defined benefit plan | Obligation and Assets Transferred to Japan Subsitutional Pension
Defined Benefit Plan Disclosure [Line Items]
Fair value of benefit obligation 533
Fair value of plan assets 196
Non-U.S. defined benefit plan | Offset By Settlement Loss Related to Recognition of Previously Unrecognized Actuarial Losses Included In Accumulated Other Comprehensive Income
Defined Benefit Plan Disclosure [Line Items]
Restructuring charges/other $ 193
[1] Transfer of Japan substitutional pension in 2012: In Japan, we maintain employee pension fund plans (EPFs) pursuant to the Japanese Welfare Pension Insurance Law (JWPIL). An EPF consists of two portions: a substitutional portion based on JWPIL-determined minimum old-age pension benefits similar to Social Security benefits in the United States and a corporate portion established at the discretion of each employer. Employers and employees are exempt from contributing to the Japanese Pension Insurance (JPI) if the substitutional portion is funded by an EPF.The JWPIL was amended to permit each EPF to separate the substitutional portion and transfer those obligations and related assets to the government of Japan. After such a transfer, the employer is required to contribute periodically to JPI, and the government of Japan is responsible for future benefit payments relating to the substitutional portion.During the third quarter of 2012, our EPF received final approval for such a separation and transferred the obligations and assets of its substitutional portion to the government of Japan. On a pre-tax basis, this resulted in a net gain of $144 million recorded in Restructuring charges/other on our Consolidated Statements of Income and included in Other, as shown in Note 4. This net gain of $144 million consisted of two parts - a gain of $337 million, representing the difference between the fair values of the obligations settled of $533 million and the assets transferred from the pension trust to the government of Japan of $196 million, offset by a settlement loss of $193 million related to the recognition of previously unrecognized actuarial losses included in AOCI.
[2] Includes non-restructuring and restructuring-related settlement losses.
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Postretirement benefit plans - Benefit obligations and plan assets (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Funded status (FVPA – BO) at end of year $ (113) $ (98)
U.S. defined benefit plan
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Benefit obligation at beginning of year 955 1,098
Service cost 21 26 24
Interest cost 45 45 44
Participant contributions 0 0
Benefits paid (66) (9)
Medicare subsidy 0 0
Actuarial loss (gain) 133 (27)
Settlements (12) (178)
Curtailments 0 0
Effects of exchange rate changes 0 0
Other 0 0
Benefit obligation at end of year (BO) 1,076 955 1,098
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year 941 1,071
Actual return on plan assets 132 1
Employer contributions (funding of qualified plans) 75 43
Employer contributions (payments for non-qualified plans) 12 13
Participant contributions 0 0
Benefits paid (66) (9)
Medicare subsidy 0 0
Settlements (12) (178)
Effects of exchange rate changes 0 0
Other 0 0
Fair value of plan assets at end of year (FVPA) 1,082 941 1,071
Funded status (FVPA – BO) at end of year 6 (14)
U.S. retiree health care plan
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Benefit obligation at beginning of year 472 509
Service cost 4 5 5
Interest cost 22 20 25
Participant contributions 19 18
Benefits paid (45) (47)
Medicare subsidy 4 3
Actuarial loss (gain) 37 (36)
Settlements 0 0
Curtailments 0 0
Effects of exchange rate changes 0 0
Other 0 0
Benefit obligation at end of year (BO) 513 472 509
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year 485 517
Actual return on plan assets 24 41
Employer contributions (funding of qualified plans) 10 0
Employer contributions (payments for non-qualified plans) 0 0
Participant contributions 19 18
Benefits paid (45) (45)
Medicare subsidy 4 0
Settlements 0 0
Effects of exchange rate changes 0 0
Other 0 (46)
Fair value of plan assets at end of year (FVPA) 497 485 517
Funded status (FVPA – BO) at end of year (16) 13
Non-U.S. defined benefit plan
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
Benefit obligation at beginning of year 2,276 2,414
Service cost 39 41 45
Interest cost 68 61 75
Participant contributions 5 1
Benefits paid (84) (81)
Medicare subsidy 0 0
Actuarial loss (gain) 275 96
Settlements (7) (30)
Curtailments (11) (28)
Effects of exchange rate changes (245) (237)
Other 0 39
Benefit obligation at end of year (BO) 2,316 2,276 2,414
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year 2,179 2,218
Actual return on plan assets 295 201
Employer contributions (funding of qualified plans) 64 62
Employer contributions (payments for non-qualified plans) 0 0
Participant contributions 5 1
Benefits paid (84) (81)
Medicare subsidy 0 0
Settlements (7) (30)
Effects of exchange rate changes (239) (232)
Other 0 40
Fair value of plan assets at end of year (FVPA) 2,213 2,179 2,218
Funded status (FVPA – BO) at end of year $ (103) $ (97)
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Postretirement benefit plans - Amounts recognized on the balance sheet (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
Overfunded retirement plans $ 127 $ 130
Accrued expenses and other liabilities (15) (12)
Underfunded retirement plans (225) (216)
Funded status (FVPA – BO) at end of year (113) (98)
U.S. defined benefit plan
Defined Benefit Plan Disclosure [Line Items]
Overfunded retirement plans 72 44
Accrued expenses and other liabilities (9) (7)
Underfunded retirement plans (57) (51)
Funded status (FVPA – BO) at end of year 6 (14)
U.S. retiree health care plan
Defined Benefit Plan Disclosure [Line Items]
Overfunded retirement plans 0 16
Accrued expenses and other liabilities 0 0
Underfunded retirement plans (16) (3)
Funded status (FVPA – BO) at end of year (16) 13
Non-U.S. defined benefit plan
Defined Benefit Plan Disclosure [Line Items]
Overfunded retirement plans 55 70
Accrued expenses and other liabilities (6) (5)
Underfunded retirement plans (152) (162)
Funded status (FVPA – BO) at end of year $ (103) $ (97)
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Postretirement benefit plans - Amounts recognized in AOCI (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Defined Benefit Plan Amounts Recognized In Other Comprehensive Income Roll Forward
AOCI balance, net actuarial loss portion (net of taxes), beginning of period $ 525
Adjustments, net actuarial loss 71
Recognized within Net income, net actuarial loss (63)
Tax effect, net actuarial loss (4)
Total change to AOCI, net actuarial loss 4
AOCI balance, net actuarial loss portion (net of taxes), period end 529
Defined Benefit Plan Amounts Recognized In Other comprehensive Income Prior Service Cost (Credit) Portion [Roll Forward]
AOCI balance, net prior service cost (credit) (net of taxes), beginning of period (1)
Adjustments, prior service cost (credit) 1
Recognized within Net income, prior service cost (credit) 0
Tax effect, prior service cost (credit) 0
Total change to AOCI, prior service cost 1
AOCI balance, net prior service cost (credit) (net of taxes), period end 0
U.S. defined benefit plan
Defined Benefit Plan Amounts Recognized In Other Comprehensive Income Roll Forward
AOCI balance, net actuarial loss portion (net of taxes), beginning of period 149
Adjustments, net actuarial loss 37
Recognized within Net income, net actuarial loss (31)
Tax effect, net actuarial loss (2)
Total change to AOCI, net actuarial loss 4
AOCI balance, net actuarial loss portion (net of taxes), period end 153
Defined Benefit Plan Amounts Recognized In Other comprehensive Income Prior Service Cost (Credit) Portion [Roll Forward]
AOCI balance, net prior service cost (credit) (net of taxes), beginning of period (2)
Adjustments, prior service cost (credit) 0
Recognized within Net income, prior service cost (credit) 3
Tax effect, prior service cost (credit) (1)
Total change to AOCI, prior service cost 2
AOCI balance, net prior service cost (credit) (net of taxes), period end 0
U.S. retiree health care plan
Defined Benefit Plan Amounts Recognized In Other Comprehensive Income Roll Forward
AOCI balance, net actuarial loss portion (net of taxes), beginning of period 71
Adjustments, net actuarial loss 29
Recognized within Net income, net actuarial loss (7)
Tax effect, net actuarial loss (8)
Total change to AOCI, net actuarial loss 14
AOCI balance, net actuarial loss portion (net of taxes), period end 85
Defined Benefit Plan Amounts Recognized In Other comprehensive Income Prior Service Cost (Credit) Portion [Roll Forward]
AOCI balance, net prior service cost (credit) (net of taxes), beginning of period 10
Adjustments, prior service cost (credit) 0
Recognized within Net income, prior service cost (credit) (3)
Tax effect, prior service cost (credit) 1
Total change to AOCI, prior service cost (2)
AOCI balance, net prior service cost (credit) (net of taxes), period end 8
Non-U.S. defined benefit plan
Defined Benefit Plan Amounts Recognized In Other Comprehensive Income Roll Forward
AOCI balance, net actuarial loss portion (net of taxes), beginning of period 305
Adjustments, net actuarial loss 5
Recognized within Net income, net actuarial loss (25)
Tax effect, net actuarial loss 6
Total change to AOCI, net actuarial loss (14)
AOCI balance, net actuarial loss portion (net of taxes), period end 291
Defined Benefit Plan Amounts Recognized In Other comprehensive Income Prior Service Cost (Credit) Portion [Roll Forward]
AOCI balance, net prior service cost (credit) (net of taxes), beginning of period (9)
Adjustments, prior service cost (credit) 1
Recognized within Net income, prior service cost (credit) 0
Tax effect, prior service cost (credit) 0
Total change to AOCI, prior service cost 1
AOCI balance, net prior service cost (credit) (net of taxes), period end $ (8)
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Postretirement benefit plans - Plan assets by level three heirarchy (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
U.S. defined benefit plan
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets $ 1,082 $ 941 $ 1,071
U.S. defined benefit plan | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
U.S. defined benefit plan | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 1,082 904
U.S. defined benefit plan | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 37 37
U.S. defined benefit plan | Fixed income securities and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 707 607
U.S. defined benefit plan | Fixed income securities and cash equivalents | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
U.S. defined benefit plan | Fixed income securities and cash equivalents | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 707 607
U.S. defined benefit plan | Fixed income securities and cash equivalents | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
U.S. defined benefit plan | Equity securities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 375 297
U.S. defined benefit plan | Equity securities | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
U.S. defined benefit plan | Equity securities | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 375 297
U.S. defined benefit plan | Equity securities | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
U.S. defined benefit plan | Other
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 37
U.S. defined benefit plan | Other | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
U.S. defined benefit plan | Other | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
U.S. defined benefit plan | Other | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 37
U.S. retiree health care plan
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 497 485 517
U.S. retiree health care plan | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 200 193
U.S. retiree health care plan | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 297 292
U.S. retiree health care plan | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
U.S. retiree health care plan | Fixed income securities and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 243 238
U.S. retiree health care plan | Fixed income securities and cash equivalents | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 200 193
U.S. retiree health care plan | Fixed income securities and cash equivalents | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 43 45
U.S. retiree health care plan | Fixed income securities and cash equivalents | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
U.S. retiree health care plan | Equity securities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 254 247
U.S. retiree health care plan | Equity securities | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
U.S. retiree health care plan | Equity securities | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 254 247
U.S. retiree health care plan | Equity securities | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
Non-U.S. defined benefit plan
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 2,213 2,179 2,218
Non-U.S. defined benefit plan | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 436 403
Non-U.S. defined benefit plan | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 1,772 1,768
Non-U.S. defined benefit plan | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 5 8 19
Non-U.S. defined benefit plan | Fixed income securities and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 1,608 1,521
Non-U.S. defined benefit plan | Fixed income securities and cash equivalents | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 430 397
Non-U.S. defined benefit plan | Fixed income securities and cash equivalents | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 1,178 1,124
Non-U.S. defined benefit plan | Fixed income securities and cash equivalents | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
Non-U.S. defined benefit plan | Equity securities
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 600 650
Non-U.S. defined benefit plan | Equity securities | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 6 6
Non-U.S. defined benefit plan | Equity securities | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 594 644
Non-U.S. defined benefit plan | Equity securities | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
Non-U.S. defined benefit plan | Other
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 5 8
Non-U.S. defined benefit plan | Other | Level 1
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
Non-U.S. defined benefit plan | Other | Level 2
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets 0 0
Non-U.S. defined benefit plan | Other | Level 3
Defined Benefit Plan Disclosure [Line Items]
Fair value of plan assets $ 5 $ 8
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Postretirement benefit plans - Changes in fair values for Level 3 (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
U.S. defined benefit plan
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year $ 1,071
Fair value of plan assets at end of year (FVPA) 1,082 941 1,071
U.S. defined benefit plan | Level 3
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year 37 37
Redemptions and sales (45) 0
Unrealized gain (loss) 8 0
Fair value of plan assets at end of year (FVPA) 0 37
Non-U.S. defined benefit plan
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year 2,218
Fair value of plan assets at end of year (FVPA) 2,213 2,179 2,218
Non-U.S. defined benefit plan | Level 3
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward]
Fair value of plan assets at beginning of year 8 19
Redemptions and sales (2) (10)
Unrealized gain (loss) (1) (1)
Fair value of plan assets at end of year (FVPA) $ 5 $ 8
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Postretirement benefit plans - Weighted average assumptions used (Details)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
U.S. defined benefit plan
Weighted average assumptions used to determine benefit obligations [Abstract]
Discount rate (in percents) 4.23% 5.11%
Long-term pay progression (in percents) 3.30% 3.50%
Weighted average assumptions used to determine net periodic benefit cost [Abstract]
Discount rate (in percents) 5.11% 4.59%
Long term rate of return on plan assets (in percents) 5.25% 5.25%
Long-term pay progression (in percents) 3.50% 3.60%
U.S. retiree health care plan
Weighted average assumptions used to determine benefit obligations [Abstract]
Discount rate (in percents) 4.07% 4.83%
Weighted average assumptions used to determine net periodic benefit cost [Abstract]
Discount rate (in percents) 4.83% 3.94%
Long term rate of return on plan assets (in percents) 4.50% 4.75%
Non-U.S. defined benefit plan
Weighted average assumptions used to determine benefit obligations [Abstract]
Discount rate (in percents) 2.34% 3.01%
Long-term pay progression (in percents) 3.27% 3.11%
Weighted average assumptions used to determine net periodic benefit cost [Abstract]
Discount rate (in percents) 3.01% 2.74%
Long term rate of return on plan assets (in percents) 3.75% 3.34%
Long-term pay progression (in percents) 3.11% 3.01%
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Postretirement benefit plans - Weighted average allocations (Details)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
U.S. defined benefit plan | Fixed income securities and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Targeted allocation (in percents) 65.00%
Actual plan asset allocation (in percents) 65.00% 65.00%
U.S. defined benefit plan | Equity securities
Defined Benefit Plan Disclosure [Line Items]
Targeted allocation (in percents) 35.00%
Actual plan asset allocation (in percents) 35.00% 35.00%
U.S. retiree health care plan | Fixed income securities and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Targeted allocation (in percents) 50.00%
Actual plan asset allocation (in percents) 49.00% 49.00%
U.S. retiree health care plan | Equity securities
Defined Benefit Plan Disclosure [Line Items]
Targeted allocation (in percents) 50.00%
Actual plan asset allocation (in percents) 51.00% 51.00%
Non-U.S. defined benefit plan | Fixed income securities and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Targeted allocation range minimum (in percents) 60.00%
Targeted allocation range maximum (in percents) 100.00%
Actual plan asset allocation (in percents) 73.00% 70.00%
Non-U.S. defined benefit plan | Equity securities
Defined Benefit Plan Disclosure [Line Items]
Targeted allocation range minimum (in percents) 0.00%
Targeted allocation range maximum (in percents) 40.00%
Actual plan asset allocation (in percents) 27.00% 30.00%
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Postretirement benefit plans - Benefits expected to pay (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
2015 Medicare subsidy $ (4)
2016 Medicare subsidy (4)
2017 Medicare subsidy (4)
2018 Medicare subsidy (5)
2019 Medicare subsidy (5)
2020 - 2024 Medicare subsidy (9)
U.S. defined benefit plan
Defined Benefit Plan Disclosure [Line Items]
2015 payment 217
2016 payment 95
2017 payment 91
2018 payment 93
2019 payment 93
2020 - 2024 payment 435
U.S. retiree health care plan
Defined Benefit Plan Disclosure [Line Items]
2015 payment 36
2016 payment 37
2017 payment 39
2018 payment 40
2019 payment 40
2020 - 2024 payment 194
Non-U.S. defined benefit plan
Defined Benefit Plan Disclosure [Line Items]
2015 payment 76
2016 payment 78
2017 payment 82
2018 payment 85
2019 payment 89
2020 - 2024 payment $ 501
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Postretirement benefit plans - Health care cost trend rates (Details) (U.S. retiree health care plan)
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
U.S. retiree health care plan
Defined Benefit Plan Disclosure [Line Items]
Assumed health care cost trend rate for next year (in percents) 7.00% 7.00%
Ultimate trend rate (in percents) 5.00% 5.00%
Year in which ultimate trend rate is reached 2023 2022
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Debt and lines of credit (Details) (USD $)
12 Months Ended 1 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Mar. 31, 2014
May 31, 2013
Aug. 31, 2012
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity through March 2019 $ 2,000,000,000
Commercial paper 0
Long-term debt, gross 4,625,000,000 5,125,000,000
Proceeds from issuance of long-term debt 498,000,000 986,000,000 1,492,000,000
Interest and debt expense 94,000,000 95,000,000 85,000,000
Interest paid 102,000,000 102,000,000 97,000,000
Notes payable
Debt Instrument [Line Items]
Long-term debt, gross 500,000,000 1,000,000,000 1,500,000,000
Payments of debt issuance costs 3,000,000 6,000,000 7,000,000
Proceeds from issuance of long-term debt 498,000,000 986,000,000 1,492,000,000
Repayments of long-term debt 1,000,000,000 1,500,000,000
Notes payable | Notes due 2017 at 0.875%
Debt Instrument [Line Items]
Long-term debt, gross 250,000,000 0 250,000,000
Notes payable | Notes due 2021 at 2.75%
Debt Instrument [Line Items]
Long-term debt, gross 250,000,000 0 250,000,000
Notes payable | Notes due 2018 at 1.00%
Debt Instrument [Line Items]
Long-term debt, gross 500,000,000 500,000,000 500,000,000
Notes payable | Notes due 2023 at 2.25%
Debt Instrument [Line Items]
Long-term debt, gross 500,000,000 500,000,000 500,000,000
Notes payable | Notes due 2015 at 0.45%
Debt Instrument [Line Items]
Long-term debt, gross 750,000,000 750,000,000 750,000,000
Notes payable | Notes due 2019 at 1.65%
Debt Instrument [Line Items]
Long-term debt, gross $ 750,000,000 $ 750,000,000 $ 750,000,000
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Debt and lines of credit - Schedule of long-term debt outstanding (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Mar. 31, 2014
May 31, 2013
Aug. 31, 2012
Debt Instrument [Line Items]
Long-term debt, gross $ 4,625 $ 5,125
Net unamortized premium 17 33
Current portion of long-term debt (1,001) (1,000)
Long-term debt 3,641 4,158
Notes payable
Debt Instrument [Line Items]
Long-term debt, gross 500 1,000 1,500
Notes payable | Notes due 2014 at 1.375%
Debt Instrument [Line Items]
Long-term debt, gross 0 1,000
Long-term debt stated interest rate ( in percents) 1.38% 1.38%
Notes payable | Notes due 2015 at 0.45%
Debt Instrument [Line Items]
Long-term debt, gross 750 750 750
Long-term debt stated interest rate ( in percents) 0.45% 0.45%
Notes payable | Notes due 2016 at 2.375%
Debt Instrument [Line Items]
Long-term debt, gross 1,000 1,000
Long-term debt stated interest rate ( in percents) 2.38% 2.38%
Notes payable | Notes due 2017 at 0.875%
Debt Instrument [Line Items]
Long-term debt, gross 250 0 250
Long-term debt stated interest rate ( in percents) 0.88% 0.88%
Notes payable | Notes due 2018 at 1.00%
Debt Instrument [Line Items]
Long-term debt, gross 500 500 500
Long-term debt stated interest rate ( in percents) 1.00% 1.00%
Notes payable | Notes due 2019 at 1.65%
Debt Instrument [Line Items]
Long-term debt, gross 750 750 750
Long-term debt stated interest rate ( in percents) 1.65% 1.65%
Notes payable | Notes due 2021 at 2.75%
Debt Instrument [Line Items]
Long-term debt, gross 250 0 250
Long-term debt stated interest rate ( in percents) 2.75% 2.75%
Notes payable | Notes due 2023 at 2.25%
Debt Instrument [Line Items]
Long-term debt, gross 500 500 500
Long-term debt stated interest rate ( in percents) 2.25% 2.25%
National Semiconductor | Notes payable | Notes due 2015 at 3.95% (assumed with National acquisition)
Debt Instrument [Line Items]
Long-term debt, gross 250 250
Long-term debt stated interest rate ( in percents) 3.95% 3.95%
National Semiconductor | Notes payable | Notes due 2017 at 6.60% (assumed with National acquisition)
Debt Instrument [Line Items]
Long-term debt, gross $ 375 $ 375
Long-term debt stated interest rate ( in percents) 6.60% 6.60%
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Commitments and contingencies (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Rental and lease expense incurred $ 113 $ 120 $ 124
Standard product warranty description three years of coverage; an obligation to repair, replace or refund; and a maximum payment obligation tied to the price paid for our products
Standard product warranty coverage (in years) 3 years
Operating Leases
2015 87
2016 66
2017 45
2018 33
2019 21
Thereafter 80
Purchase Commitments
2015 96
2016 52
2017 35
2018 14
2019 10
Thereafter 2
Discontinued operation - indemnification obligation potential exposure 200
Capitalized Software Licenses
Capitalized Software Licenses
2015 39
2016 27
2017 0
2018 0
2019 0
Thereafter $ 0
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Supplemental financial information - Other income (expense), net (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Supplemental Financial Information [Abstract]
Interest income $ 7 $ 10 $ 8
Tax interest income (expense) 6 (10) 32
Net gains on investments 5 18 18
Other 3 [1] (1) [1] (11) [1]
Total 21 17 47
Lease income 15 15 15
Aggregate amount of non-cancellable future lease payments $ 51
[1] Includes lease income of approximately $15 million per year, primarily from the purchaser of a former business. As of December 31, 2014, the aggregate amount of non-cancellable future lease payments to be received from these leases is $51 million. These leases contain renewal options. Other also includes miscellaneous non-operational items such as losses related to former businesses, including settlements in 2012; gains and losses from currency exchange rate changes; and gains and losses from our derivative financial instruments, primarily forward foreign currency exchange contracts.
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Supplemental financial information - Prepaid expenses and other current assets (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Supplemental Financial Information [Abstract]
Prepaid taxes on intercompany inventory profits $ 693 $ 667
Other prepaid expenses and current assets 157 196
Total $ 850 $ 863
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Supplemental financial information - Property, plant and equipment at cost (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost $ 6,266 $ 6,556
Lease income 15 15 15
Land
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost 137 175
Buildings and improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost 2,801 2,913
Buildings and improvements | Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost, depreciable lives 5 years
Buildings and improvements | Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost, depreciable lives 40 years
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost $ 3,328 $ 3,468
Machinery and equipment | Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost, depreciable lives 3 years
Machinery and equipment | Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment at cost, depreciable lives 10 years
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Supplemental financial information - Accrued expenses and other liabilities (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Supplemental Financial Information [Abstract]
Customer incentive programs and allowances $ 101 $ 143
Severance and related expenses 60 158
Other 337 350
Total $ 498 $ 651
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Supplemental financial information - Accumulated other comprehensive income (loss), net of taxes (Details) (USD $)
In Millions, unless otherwise specified
Dec. 31, 2014
Dec. 31, 2013
Supplemental Financial Information [Abstract]
Net actuarial loss $ (529) $ (525)
Prior service credit 0 1
Cash flow hedge derivative (3) (4)
Total $ (532) $ (528)
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Supplemental financial information - Amounts reclassified out of AOCI (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net actuarial gains (losses) of defined benefit plans $ (63)
Prior service cost of defined benefit plans 0
Interest and debt expense 94 95 85
Provision for income taxes 1,053 592 176
Net income (825) (826) (683) (487) (511) (629) (660) (362) (2,821) (2,162) (1,759)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment, Net Unamortized Gain (Loss) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net actuarial gains (losses) of defined benefit plans 63 [1],[2] 108 [1],[2]
Provision for income taxes (21) (37)
Net income 42 71
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Defined Benefit Plans Adjustment, Net Prior Service Cost (Credit) [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Prior service cost of defined benefit plans 0 [1],[2] (5) [1],[2]
Provision for income taxes 0 2
Net income 0 (3)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest and debt expense 2 2
Provision for income taxes (1) (1)
Net income $ 1 $ 1
[1] Pension expense is included in COR, R&D, SG&A and Restructuring charges/other in the Consolidated Statements of Income.
[2] Detailed in Note 11.
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Quarterly financial data (unaudited) (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 12 Months Ended
Dec. 31, 2014
Sep. 30, 2014
Jun. 30, 2014
Mar. 31, 2014
Dec. 31, 2013
Sep. 30, 2013
Jun. 30, 2013
Mar. 31, 2013
Dec. 31, 2014
Dec. 31, 2013
Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]
Revenue $ 3,269 $ 3,501 $ 3,292 $ 2,983 $ 3,028 $ 3,244 $ 3,047 $ 2,885 $ 13,045 $ 12,205 $ 12,825
Gross profit 1,895 2,044 1,881 1,607 1,640 1,779 1,570 1,374 7,427 6,364 6,368
Acquisition charges 82 83 82 83 84 86 86 86 330 341 450
Restructuring charges/other (27) (9) (4) (11) 62 16 (282) 15 (51) (189) 264
Operating profit 1,100 1,175 982 690 687 844 906 395 3,947 2,832 1,973
Net income $ 825 $ 826 $ 683 $ 487 $ 511 $ 629 $ 660 $ 362 $ 2,821 $ 2,162 $ 1,759
Basic earnings per common share $ 0.78 $ 0.77 $ 0.63 $ 0.44 $ 0.46 $ 0.56 $ 0.59 $ 0.32 $ 2.61 $ 1.94 $ 1.53
Diluted earnings per common share $ 0.76 $ 0.76 $ 0.62 $ 0.44 $ 0.46 $ 0.56 $ 0.58 $ 0.32 $ 2.57 $ 1.91 $ 1.51
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