Annual report pursuant to Section 13 and 15(d)

Supplementary Financial Information

v2.4.0.6
Supplementary Financial Information
 12 Months Ended
Dec. 31, 2011
Supplementary Financial Information [Abstract]  
Supplementary Financial Information

Supplementary Financial Information

The Company uses a 52 or 53 week fiscal year ending on the last Saturday in December. All quarters of 2011 and 2010 except the first quarter of 2011 consisted of 13 weeks; the first quarter of 2011 consisted of 14 weeks.

 

     (In millions, except per share amounts)  
      2011     2010  
      Dec. 31     Oct. 1     Jul. 2     Apr. 2     Dec. 25     Sep. 25     Jun. 26     Mar. 27  

Net revenue

    $ 1,691      $ 1,690      $ 1,574      $ 1,613      $ 1,649      $ 1,618      $ 1,653      $ 1,574   

Cost of sales

      918        934        854        922        906        879        915        833   

Gross margin

      773        756        720        691        743        739        738        741   

Research and development

      358        361        367        367        352        359        371        323   

Marketing, general and administrative

      243        249        239        261        250        236        229        219   

Legal settlements(1)

     —          —          —          —          (283 )      —          —          —     

Amortization of acquired intangible assets

      3        8        9        9        11        16        17        17   

Restructuring charges (reversals), net (2)

     98        —          —          —          —          —          (4 )      —     

Operating income

      71        138        105        54        413        128        125        182   

Interest income

      2        3        2        3        2        3        3        3   

Interest expense

      (43 )      (42 )      (47 )      (48 )      (39 )      (56 )      (55 )      (49 ) 

Other income (expense), net

      (207 )(3)       (7 )      4        11        14        (6 )      (1 )      304   

Income before equity income (loss) and dilution gain in investee and income taxes

      (177 )      92        64        20        390        69        72        440   

Provision (benefit) for income taxes

      (4 )      (5 )      3        2       42 (4)      1        5        —     

Equity income (loss) and dilution gain in investee, net(5)

     —          —          —          492        27        (186 )      (120 )      (183 ) 

Net income (loss) from continuing operations

      (173 )      97        61        510        375        (118 )      (43 )      257   

Income (loss) from discontinued operations, net of tax

      (4 )(6)       —          —          —          —          —          —          —     

Net income (loss)

      (177 )      97        61        510        375        (118 )      (43 )      257   

Net income (loss) per share

                 

Basic

Continuing operations

    $ (0.24 )    $ 0.13      $ 0.08      $ 0.71      $ 0.52      $ 0.17      $ 0.06      $ 0.36   

Discontinued operations

      (0.01 )      —          —          —          —          —          —          —     

Basic net income (loss) per share

    $ (0.24 )    $ 0.13      $ 0.08      $ 0.71      $ 0.52      $ 0.17      $ 0.06      $ 0.36   

Diluted

Continuing operations

    $ (0.24 )    $ 0.13      $ 0.08      $ 0.68      $ 0.50      $ 0.17      $ 0.06      $ 0.35   

Discontinued operations

      (0.01 )      —          —          —          —          —          —          —     

Diluted net income (loss) per share

    $ (0.24 )    $ 0.13      $ 0.08      $ 0.68      $ 0.50      $ 0.17      $ 0.06      $ 0.35   

Shares used in per share calculation

                 

Basic

      732        729        724        720        717        713        709        707   

Diluted

      732        741        743        764        758        713        709        754   

 

(1) 

On December 22, 2010, the Company entered into settlement agreement with Samsung. Pursuant to the settlement agreement, Samsung agreed to pay the Company $283 million, net of withholding taxes. The Company recorded this amount as a gain in 2010.

(2) 

During the fourth fiscal quarter of 2011, the Company implemented a restructuring plan and incurred a net restructuring charge of $98 million primarily related to severance and costs related to the continuation of certain employee benefits, contract or program termination costs and asset impairments.

(3) 

During the fourth quarter of 2011, the Company recorded a non-cash impairment charge of approximately $209 million related to its investment in GF.

(4) 

The tax provision in the fourth quarter of 2010 is primarily due to withholding taxes that the Company paid in connection with the settlement agreement with Samsung.

(5) 

As of beginning of 2010, the Company deconsolidated GF and began to account for its ownership interest in GF under the equity method of accounting. The Company recorded a non-cash gain of $325 million on deconsolidation of GF and a loss of $462 million for the Company's share of GF's operating results in 2010. As of beginning of 2011, the Company changed the method of accounting for its investment GF from the equity method to the cost method of accounting. As a result of the change, the Company recognized a non-cash gain of approximately $492 million in the first quarter of 2011, net of certain transaction related charges.

(6) 

In the fourth fiscal quarter of 2008, the Company sold its Digital Television business unit to Broadcom Corporation. The Company had classified its Digital Television unit as discontinued operations at the time it decided to divest the business unit. Pursuant to the asset sale agreement, Broadcom had three years after the closing date to obtain reimbursement from the Company for a portion of any severance costs that Broadcom incurred during this time period to the extent the severance costs related to any of the Company's former employees. The loss from discontinued operations represents payments to Broadcom in the fourth fiscal quarter of 2011.