What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-05 compared with 2020-02-20 · 80 added, 122 removed, 1052 unchanged (16% of the section changed)

40 unchanged sentences

Adjustments, net of tax effect of $ 3 , ($ 37 ) and $ 35

( 41 ) 88 ( 98 )

Recognized within net income, net of tax effect of ($ 9 ), ($ 13 ) and ($ 15 )

1 unchanged sentence

Adjustments, net of tax effect of $ 0 , $ 0 and $ 1

— ( 6 ) ( 2 )

Recognized within net income, net of tax effect of $ 0 , $ 0 and $ 1

2 unchanged sentences

Change in fair value, net of tax effect of $ 0 , $ 0 and $ 1

Recognized within net income, net of tax effect of $ 0 , $ 0 and $ 0

Other comprehensive income (loss), net of taxes ( 13 ) 126 ( 59 )

109 unchanged sentences

Dividend equivalents on RSUs — — ( 17 ) — —

Cumulative effect of accounting changes — — 236 — ( 30 )

Other — ( 3 ) — — —

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Dividend equivalents on RSUs — — ( 17 ) — —

Cumulative effect of accounting changes — — 236 — ( 30 )

Other — ( 2 ) — 1 —

16 unchanged sentences

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 – consisting of the following product lines:

Power, Signal Chain and High Volume.

• Embedded Processing – consisting of the following product lines:

Connected Microcontrollers and Processors.

We have two reportable segments, Analog and Embedded Processing, each of which represents groups of similar products that are combined on the basis of similar design and development requirements, product characteristics, manufacturing processes and distribution channels.

• Analog semiconductors change real-world signals, such as sound, temperature, pressure or images, by conditioning them, amplifying them and often converting them to a stream of digital data that can be processed by other semiconductors, such as embedded processors.

Analog semiconductors are also used to manage power in all electronic equipment by converting, distributing, storing, discharging, isolating and measuring electrical energy, whether the equipment is plugged into a wall or using a battery.

Our Analog segment consists of two major product lines:

Power and Signal Chain.

• Embedded Processing products are the digital “brains” of many types of electronic equipment.

They are designed to handle specific tasks and can be optimized for various combinations of performance, power and cost, depending on the application.

During 2020, we reorganized the product lines within our Analog segment to simplify our business structure into our Power and Signal Chain product lines.

These changes had no effect on either our previously reported consolidated financial statements or our reportable segment results.

We report the results of our remaining business activities in Other.

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We have no material intersegment revenue.

The accounting policies of the segments are consistent with those described below in the summary of significant accounting policies and practices.

The accounting policies of the segments are consistent with those described in the summary of significant accounting policies and practices.

Segment information

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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, except for the effects of adopting a new accounting standard in 2019 related to leases.

The basis of these financial statements is comparable for all periods presented herein.

The consolidated financial statements include the accounts of all subsidiaries.

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Revenue recognition

We generate revenue primarily from the sale of semiconductor products, either directly to a customer or to a distributor, or at the conclusion of a consignment process.

We generate revenue primarily from the sale of semiconductor products, either directly to a customer or to a distributor.

We have a variety of types of contracts with our customers and distributors.

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In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component.

In addition, we record allowances for accounts receivable that we estimate may not be collected.

In addition, we record an allowance for credit losses on accounts receivable that we estimate may not be collected.

We monitor collectability of accounts receivable primarily through review of accounts receivable aging.

When collection is at risk, we assess the impact on amounts recorded for bad debts and, if necessary, record a charge in the period such determination is made.

When collection is at risk, we assess the impact on amounts recorded for credit losses and, if necessary, record a charge in the period such determination is made.

We recognize shipping fees, if any, received from customers in revenue.

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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 the amount of taxes payable or refundable for the current year and the deferred tax assets and liabilities for future tax consequences related to 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.

14 unchanged sentences

We use the two-class method for calculating EPS because the restricted stock units (RSUs) we grant are participating securities containing non-forfeitable rights to receive dividend equivalents.

Under the two-class method, a portion of net income is allocated to RSUs and excluded from the calculation of income allocated to common stock, as shown in the table below.

Under the two-class method, a portion of net income is allocated to RSUs and excluded from the calculation of income allocated to common stock.

Computation and reconciliation of earnings per common share are as follows (shares in millions):

58 unchanged sentences

We do not apply hedge accounting to our foreign currency derivative instruments.

We are exposed to variability in compensation charges related to certain deferred compensation obligations to employees.

We use total return swaps to economically hedge this exposure and offset the related compensation expense, recognizing changes in the value of the swaps and the related deferred compensation liabilities in SG&A.

In connection with the issuance of long-term debt, we may use financial derivatives such as treasury-rate lock agreements that are recognized in AOCI and amortized over the life of the related debt.

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Changes in accounting standards – adopted standards for current period

Accounting Standards Update (ASU) No.

2016-02, Leases (Topic 842)

We adopted ASU No.

2016-02, Leases (ASC 842) effective January 1, 2019, using the modified retrospective transition method applied to leases existing at, or entered into after, the adoption date.

The reported results for 2019 reflect the application of the new accounting guidance, while the reported results for prior periods are not adjusted and continue to be reported in accordance with our historical accounting under ASC 840, Leases.

In addition, we elected the package of practical expedients permitted under the transition guidance that allowed us to apply prior conclusions related to lease definition, classification and initial direct costs.

The adoption of the new standard resulted in the recognition of $ 229 million of lease liabilities with corresponding lease assets as of January 1, 2019.

The standard did not materially impact our results of operations and had no impact on cash flows.

Other standards

The following standards were also adopted:

We adopted the following Accounting Standards Updates (ASU) during the current period, none of which had a material impact on our financial position or results of operations.

ASU Description Adopted Date

2017-12 Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities January 1, 2019

2018-14 Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20):

Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans January 1, 2019

Changes in accounting standards – standards not yet adopted

2016-13 Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments

This standard requires entities to use a current lifetime expected credit loss methodology to measure impairments of certain financial assets.

Using this methodology will result in earlier recognition of losses than under the current incurred loss approach, which requires waiting to recognize a loss until it is probable of being incurred.

Credit losses relating to available-for-sale debt securities will be recorded through an allowance for credit losses rather than as a reduction to the amortized cost basis of the securities.

We are adopting this standard effective January 1, 2020, applying the guidance on a modified retrospective basis.

In preparation for adoption of the standard, we have updated certain policies and related processes, but this standard will not have a material impact on our financial position or results of operations.

Other standards

We are evaluating the impact of the following standards, but we do not expect them to have a material impact on our financial position or results of operations.

We are adopting these standards as of their effective dates.

ASU Description Effective Date

Measurement of Credit Losses on Financial Instruments January 1, 2020

2018-13 Fair Value Measurement (Topic 820):

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The weighted average grant date fair values per share of options granted under the ESPP in 2020, 2019 and 2018 were $ 19.19 , $ 18.05 and $ 15.43 , respectively.

The total intrinsic value of options exercised under these plans was $ 13 million in 2019, 2018 and 2017.

In 2020, 2019 and 2018, the total intrinsic value of options exercised under these plans was $ 14 million, $ 13 million and $ 13 million, respectively.

As of December 31, 2020, the number of shares remaining available for future issuance under this plan was 33,097,602 .

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tax benefit for foreign derived intangible income ( 6.1 ) ( 4.9 ) ( 5.3 )

Impact of changes in uncertain tax positions ( 4.0 ) ( 0.1 ) —

excess tax benefit for stock compensation ( 2.5 ) ( 3.1 ) ( 2.0 )

R&D tax credit ( 1.3 ) ( 1.4 ) ( 1.3 )

effective tax rates 0.3 0.1 ( 2.5 )

Tax Act transitional non-cash expense — — 4.2

Tax Act enactment-date effects and measurement period adjustments — ( 0.7 ) 12.7

tax benefit for manufacturing — — ( 1.6 )

Other ( 0.1 ) 0.9 ( 0.1 )

Effective tax rate 7.0 % 12.4 % 16.5 %

Tax Cuts and Jobs Act (the Tax Act) was enacted on December 22, 2017.

The Tax Act reduces the U.S.

statutory income tax rate from 35% to 21% and requires companies to pay a one-time tax on indefinitely reinvested earnings of certain non-U.S.

subsidiaries that were previously tax deferred.

We applied the guidance in Staff Accounting Bulletin No.

118 when accounting for the enactment-date effects of the Tax Act in 2017 and throughout 2018.

As of December 31, 2018, we completed our accounting for the enactment-date income tax effects of the Tax Act.

We booked a provisional amount of $ 773 million in 2017 and reduced our provisional amount by $ 44 million in 2018, for a net of $ 729 million.

The earnings represented by non-cash operating assets, such as fixed assets and inventory, will continue to be permanently reinvested outside the United States.

Provisions of the Tax Act, such as the one-time tax on indefinitely reinvested earnings and the global intangible low-taxed income (GILTI) tax for years beginning in 2018, eliminate any additional U.S.

Provisions of the U.S.

Tax Cuts and Jobs Act (the Tax Act), such as the one-time tax on indefinitely reinvested earnings and the global intangible low-taxed income (GILTI) tax for years beginning in 2018, eliminate any additional U.S.

taxation resulting from repatriation of earnings of non-U.S.

19 unchanged sentences

Property, plant and equipment ( 116 ) ( 164 )

Acquisition-related intangibles and fair-value adjustments ( 82 ) ( 142 )

International earnings ( 44 ) ( 62 )

Acquisition-related intangibles and fair-value adjustments ( 40 ) ( 82 )

Other ( 13 ) ( 55 )

8 unchanged sentences

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.

Valuation allowances increased by $ 8 million, $ 7 million and $ 37 million in 2019, 2018 and 2017, respectively.

Valuation allowances decreased $ 1 million in 2020 and increased $ 8 million and $ 7 million in 2019 and 2018, respectively.

These changes had no impact to net income in 2020, 2019 or 2018.

tax loss carryforwards of approximately $ 6 million, none of which will expire before the year 2029.

Cash payments made for income taxes, net of refunds, were $ 570 million, $ 705 million and $ 1.80 billion in 2019, 2018 and 2017, respectively.

We have no tax loss carryforwards as of December 31, 2020.

Cash payments made for income taxes, net of refunds, were $ 720 million, $ 570 million and $ 705 million in 2020, 2019 and 2018, respectively.

Uncertain tax positions

10 unchanged sentences

Settlements with tax authorities — ( 8 ) ( 18 )

Expiration of the statute of limitations for assessing taxes ( 3 ) — —

Balance, December 31 $ 89 $ 303 $ 286

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All of the $ 89 million and $ 303 million liabilities for uncertain tax positions as of December 31, 2020 and 2019, respectively, are comprised of positions that, if recognized, would lower the effective tax rate.

If these liabilities are ultimately realized, $ 2 million and $ 30 million of existing deferred tax assets in 2019 and 2018, respectively, would also be realized.

It is reasonably possible that the $ 303 million liability as of December 31, 2019, could decrease by up to $ 249 million in 2020 for the resolution of a tax depreciation-related position.

If these liabilities are ultimately realized, $ 2 million of existing deferred tax assets in both 2020 and 2019 would also be realized.

Reductions for tax positions of prior years in 2020 include a $ 249 million tax benefit for the effective settlement of a depreciation-related uncertain tax position.

Accrued interest of $ 46 million related to this uncertain tax position was reversed and included in OI&E.

As of December 31, 2020, the statute of limitations remains open for U.S.

1 unchanged sentence

Audit activities related to our U.S.

federal tax returns through 2012 have been completed except for certain pending tax treaty procedures for relief from double taxation.

federal tax returns through 2015 have been completed except for certain pending tax treaty procedures for relief from double taxation and an Internal Revenue Service appeals process related to the 2013 through 2015 audit.

The procedures for relief from double taxation pertain to U.S.

federal tax returns for the years 2007 through 2012.

The audit of the U.S.

federal tax returns for 2013 through 2015 is underway.

jurisdictions, the years open to audit represent the years still open under the statute of limitations.

4 unchanged sentences

Our forward foreign currency exchange contracts outstanding as of December 31, 2020, had a notional value of $ 416 million to hedge our non-U.S.

dollar net balance sheet exposures, including $ 136 million to sell Japanese yen, $ 106 million to sell Indian rupees and $ 74 million to sell British pounds.

dollar net balance sheet exposures, including $ 147 million to sell Japanese yen, $ 85 million to sell euros and $ 82 million to sell British pounds.

Our investments in cash equivalents, short-term investments and certain long-term investments, as well as our deferred compensation liabilities, are carried at fair value.

10 unchanged sentences

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.

We maintain allowances for expected returns, disputes, adjustments, incentives and credit losses.

These allowances are deducted from accounts receivable on our Consolidated Balance Sheets.

1 unchanged sentence

Major customer

One of our end customers accounted for 10 %, 8 % and 8 % of revenue in 2020, 2019 and 2018, respectively, recognized primarily in our Analog segment.

No end customer accounted for 10% or more of revenue in 2019 or 2018 .

Valuation of debt and equity investments and certain liabilities

Debt and equity investments measured at fair value

Available-for-sale debt investments and trading securities are stated at fair value, which is generally based on market prices or broker quotes.

See Fair-value considerations below.

Unrealized gains and losses from available-for-sale debt securities are recorded as an increase or decrease, net of taxes, in AOCI on our Consolidated Balance Sheets.

Other-than-temporary impairments on available-for-sale debt securities are recorded 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.

Investments measured at fair value

Available-for-sale debt investments, money market funds and mutual funds are stated at fair value, which is generally based on market prices or broker quotes.

See Fair-value considerations .

Unrealized gains and losses from available-for-sale debt securities are recorded as an increase or decrease, net of taxes, in AOCI on our Consolidated Balance Sheets, and any credit losses on available-for-sale debt securities are recorded as an allowance for credit losses with an offset recognized in OI&E in our Consolidated Statements of Income.

Our 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.

Other equity investments

Other investments

Our other investments include equity-method investments and non-marketable equity investments, which are not measured at fair value.

8 unchanged sentences

Measured at fair value:

Available-for-sale debt securities:

Money market funds $ 886 $ — $ — $ 1,213 $ — $ —

1 unchanged sentence

government agency and Treasury securities 1,340 3,054 — 604 1,734 —

Trading securities:

Mutual funds — — 18 — — 272

7 unchanged sentences

We did no t recognize any credit losses related to available-for-sale investments in 2020, 2019 or 2018.

All of our debt securities classified as available for sale as of December 31, 2020, have maturities within one year.

In 2020, 2019 and 2018, the proceeds from sales, redemptions and maturities of short-term available-for-sale investments were $ 5.29 billion, $ 2.31 billion and $ 6.71 billion, respectively.

Gross realized gains and losses from these sales were not material.

The following table presents the aggregate maturities of our available-for-sale debt investments as of December 31, 2019:

One year or less $ 4,921

One to two years 20

There were no other-than-temporary declines and impairments in the values of our debt investments in 2019, 2018 or 2017.

In 2019, 2018 and 2017, net gains and losses associated with our equity investments were $ 32 million, $ 5 million and $ 4 million, respectively.

These amounts include realized gains of $ 29 million, $ 11 million and $ 6 million on equity investments sold during 2019, 2018 and 2017, respectively.

In 2020, we entered into total return swaps to economically hedge the variability of certain deferred compensation obligations to employees.

As a result, we received proceeds of $ 253 million from the sale of investments in mutual funds that were previously being utilized to offset this exposure.

Fair-value considerations

37 unchanged sentences

$ 1,895 $ 1,753 $ 142 $ 2,000 $ 1,660 $ 340

Customer relationships 8 — — — 810 734 76

Other intangibles 5 10 — 10 — — —

Total $ 1,905 $ 1,753 $ 152 $ 2,000 $ 1,660 $ 340

2 unchanged sentences

These amounts are included in Other for segment reporting purposes, consistent with how management measures the performance of its segments.

Amortization of acquisition-related intangibles was $ 288 million in 2019 and $ 318 million in 2018 and 2017.

Amortization of acquisition-related intangibles was $ 198 million, $ 288 million and $ 318 million in 2020, 2019 and 2018, respectively.

Fully amortized assets are written off against accumulated amortization.

The remaining estimated amortization is $ 198 million in 2020 and $ 142 million in 2021.

The remaining estimated amortization is $ 144 million in 2021.

Postretirement benefit plans

3 unchanged sentences

retirement plans

Our principal retirement plans in the United States 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 then 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.

Our principal retirement plans in the United States are a defined contribution plan, an enhanced defined contribution plan and qualified and non-qualified defined benefit pension plans.

Both defined contribution plans offer an employer-matching savings option that allows employees to make pretax and post-tax contributions to various investment choices.

4 unchanged sentences

As of December 31, 2020 and 2019, as a result of employees’ elections, TI’s U.S.

defined contribution plans held shares of TI common stock totaling 8 million shares and 9 million shares valued at $ 988 million and $ 821 million, respectively.

defined contribution plans held shares of TI common stock totaling 7 million shares and 8 million shares valued at $ 1.12 billion and $ 988 million, respectively.

Dividends paid on these shares in 2020 and 2019 were $ 27 million and $ 26 million, respectively.

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Effects on our Consolidated Statements of Income and Balance Sheets

Expense related to defined benefit and retiree health care benefit plans is as follows:

Expenses related to defined benefit and retiree health care benefit plans are as follows:

Defined Benefit U.S.

43 unchanged sentences

Effects of exchange rate changes — — — — 172 13

Other — — — ( 23 ) — —

Fair value of plan assets at end of year $ 1,061 $ 987 $ 389 $ 356 $ 3,008 $ 2,661

98 unchanged sentences

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.

For countries that lack a sufficient corporate bond market, a government bond index 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.

36 unchanged sentences

This amount reflects the accumulated participant deferrals and earnings thereon as of that date.

As of December 31, 2019, we held $ 272 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 6.

We utilize total return swaps and investments in mutual funds that serve as economic hedges of our exposure to changes in the fair value of these liabilities.

We record changes in the fair value of the liability and the related total return swaps and mutual funds in SG&A, as discussed in Note 6.

As of December 31, 2020, we held $ 18 million in mutual funds related to these plans that are recorded in long-term investments on our Consolidated Balance Sheets.

Debt and lines of credit

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Long-term debt

We retired $ 750 million of maturing debt in August 2019.

In March 2020, we issued a principal amount of $ 750 million of fixed-rate, long-term debt due in 2025.

We incurred $ 7 million of issuance and other related costs.

We incurred $ 4 million of issuance costs.

The proceeds of the offering were $ 749 million, net of the original issuance discount, and were used for general corporate purposes and the repayment of maturing debt.

In April 2020, we retired $ 500 million of maturing debt.

In May 2020, we issued a principal amount of $ 750 million of fixed-rate, long-term debt due in 2030.

We incurred $ 5 million of issuance costs.

The proceeds of the offering were $ 749 million, net of the original issuance discount, and were used for general corporate purposes.

In March 2019, we issued a principal amount of $ 750 million of fixed-rate, long-term debt due in 2039.

We incurred $ 7 million of issuance costs.

The proceeds of the offering were $ 743 million, net of the original issuance discount, and were used for general corporate purposes.

In August 2019, we retired $ 750 million of maturing debt.

In September 2019, we issued a principal amount of $ 750 million of fixed-rate, long-term debt due in 2029.

We incurred $ 5 million of issuance and other related costs.

We incurred $ 5 million of issuance costs.

The proceeds of the offering were $ 748 million, net of the original issuance discount, and were used for general corporate purposes.

We retired $ 500 million of maturing debt in May 2018.

In May 2018, we retired $ 500 million of maturing debt.

In the second quarter of 2018, we issued an aggregate principal amount of $ 1.5 billion of fixed-rate, long-term debt due in 2048, comprised of the issuance of $ 1.3 billion in May 2018 and an additional $ 200 million in June 2018.

1 unchanged sentence

The proceeds of the offering were $ 1.5 billion, net of the original issuance discount and premium, and were used for general corporate purposes.

We retired $ 250 million of maturing debt in March 2017 and another $ 375 million in June 2017.

In May 2017, we issued an aggregate principal amount of $ 600 million of fixed-rate, long-term debt.

The offering consisted of the reissuance of $ 300 million of 2.75 % notes due in 2021 at a premium and the issuance of $ 300 million of 2.625 % notes due in 2024 at a discount.

We incurred $ 3 million of issuance and other related costs.

The proceeds of the offerings were $ 605 million, net of the original issuance discount and premium, and were used for the repayment of maturing debt and general corporate purposes.

In November 2017, we issued a principal amount of $ 500 million of fixed-rate, long-term debt due in 2027.

We incurred $ 3 million of issuance and other related costs.

The proceeds of the offering were $ 494 million, net of the original issuance discount, and were used for general corporate purposes.

Long-term debt outstanding is as follows:

9 unchanged sentences

Notes due 2039 at 3.875 %

Notes due 2048 at 4.15 %

Total debt 6,850 5,850

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Details of our operating leases are as follows:

For Year Ended

For Years Ended

Lease cost related to lease liabilities $ 70 $ 66

3 unchanged sentences

Lease assets obtained in exchange for new lease liabilities $ 59 $ 167

Weighted average remaining lease term 8.2 years

Weighted average remaining lease term 8.9 years 8.2 years

Weighted average discount rate 3.02 % 3.37 %

4 unchanged sentences

Total lease liabilities $ 321

As of December 31, 2018, we had committed to make the following minimum payments under our non-cancellable operating leases, as reported under ASC 840:

2019 2020 2021 2022 2023 Thereafter Total

Operating leases $ 56 $ 46 $ 36 $ 29 $ 18 $ 39 $ 224

Commitments and contingencies

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Restructuring charges/other $ 24 $ ( 36 ) $ 3

(a) Includes severance and benefits, accelerated depreciation, changes in estimates or other exit costs.

(a) Includes severance and benefits, accelerated depreciation, changes in estimates and other exit costs.

Changes in accrued restructuring balances

7 unchanged sentences

The restructuring accrual balances are reported as a component of either accrued expenses and other liabilities or other long-term liabilities on our Consolidated Balance Sheets, depending on the expected timing of payment.

In April 2019, we sold our manufacturing facility in Greenock, Scotland.

In 2020, we recognized $ 25 million of restructuring charges primarily for severance and benefit costs associated with our Embedded Processing business.

As of December 31, 2020, $ 8 million of payments have been made.

In January 2020, we announced a multiyear plan to close our two remaining factories with 150-millimeter production, which are more than 50 years old and located in Sherman and Dallas, Texas.

Production will be transitioned from these sites to our more advanced and cost-effective 300-millimeter wafer fabrication facilities in North Texas.

We expect this transition to be completed in the next three to five years .

We expect this transition to be completed in the next two to four years .

Charges for these closures cannot be reasonably estimated until a later phase of the transition.

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Total $ 313 $ 175 $ 98

(a) Other income includes interest, royalty and lease income, as well as investment gains and losses.

(b) Other expense includes a portion of pension and other retiree benefit costs.

It also includes currency gains and losses, tax interest and miscellaneous items.

(a) Other income includes royalty income, reversals of tax interest accruals, interest and lease income, as well as investment gains and losses.

(b) Other expense includes a portion of pension and other retiree benefit costs, currency gains and losses and miscellaneous items.

Property, plant and equipment at cost

6 unchanged sentences

Long-term portion of transition tax on indefinitely reinvested earnings $ 457 $ 506

Uncertain tax positions 303 286

Deferred compensation plans 350 298

Operating lease liabilities 249 259

Uncertain tax positions 89 303

Other 160 148

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Recognized within net income, net of taxes $ ( 1 ) $ — $ ( 3 ) Increase to net income

Derivative instruments:

Amortization of treasury-rate locks $ — $ — $ 1 Increase to interest and debt expense

Tax effect — — — Decrease to provision for income taxes

Recognized within net income, net of taxes $ — $ — $ 1 Decrease to net income

(a) Detailed in Note 8.

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Critical a udit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

The critical audit matter communicated is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

18 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data