Annual report pursuant to Section 13 and 15(d)

Segment Reporting

v2.4.1.9
Segment Reporting
 12 Months Ended
Dec. 27, 2014
Segment Reporting [Abstract]  
Segment Reporting
Segment Reporting
Management, including the Chief Operating Decision Maker, who is the Company’s Chief Executive Officer, reviews and assesses operating performance using segment net revenues and operating income (loss) before interest, other income (expense), net and income taxes. These performance measures include the allocation of expenses to the operating segments based on management’s judgment. In connection with the Company’s continued strategic transformation, effective July 1, 2014, the Company realigned its organizational structure. As a result of this organizational change, the Company has the following two reportable segments:
•the Computing and Graphics segment, which primarily includes desktop and notebook processors
and chipsets, discrete graphics processing units (GPUs) and professional graphics; and
•the Enterprise, Embedded and Semi-Custom segment, which primarily includes server and
embedded processors, dense servers, semi-custom System-on-Chip (SoC) products, engineering services
and royalties.
Effective October 8, 2014, Dr. Lisa T. Su became the Company's Chief Executive Officer, succeeding Rory P. Read. This management change did not result in a change in the Company's reportable segments or to the fact that the Chief Operating Decision Maker is the Chief Executive Officer.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because management does not consider these expenses and credits in evaluating the performance of the reportable segments. Also included in this category are amortizations of acquired intangible assets, employee stock-based compensation expense, net restructuring and other special charges, workforce rebalancing severance charges, goodwill impairment charges, significant or unusual lower of cost or market inventory adjustments, loss on debt repurchases, a charge related to the limited waiver of exclusivity from GF and a net gain from licenses and settlement agreements regarding patent-related matters. The Company also reported the results of former businesses in the All Other category because the operating results were not material. In addition, during 2014, the Company reclassified $273 million of lower of cost or market inventory adjustment previously recorded in Computing and Graphics segment in 2012 to All Other category to conform with the current year's presentation.
The following table provides a summary of net revenue and operating loss by segment and income (loss) before income taxes for 2014, 2013 and 2012. The prior period results have been recast to reflect the Company’s new reportable segments.
 
 
2014
 
2013
 
2012
 
(In millions)
Net revenue:
 
 
 
 
 
Computing and Graphics
$
3,132

 
$
3,720

 
$
4,724

Enterprise, Embedded and Semi-Custom
2,374

 
1,577

 
698

All Other
—

 
2

 
—

Total net revenue
$
5,506

 
$
5,299

 
$
5,422

Operating income (loss):
 
 
 
 
 
Computing and Graphics
$
(76
)
 
$
(101
)
 
$
129

Enterprise, Embedded and Semi-Custom
399

 
295

 
18

All Other
(478
)
 
(91
)
 
(1,203
)
Total operating income (loss)
$
(155
)
 
$
103

 
$
(1,056
)
Interest income
3

 
5

 
8

Interest expense
(177
)
 
(177
)
 
(175
)
Other income (expense), net
(69
)
 
(5
)
 
6

Loss before income taxes
$
(398
)
 
$
(74
)
 
$
(1,217
)

The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information.
The Company’s operations outside the United States include research and development activities; assembly, test, mark and packaging activities; and sales, marketing and administrative activities. The Company conducts product and system research and development activities for its products in the United States, with additional design and development engineering teams located in China, Canada, India, Singapore, Taiwan, and Israel. The Company’s assembly, test, mark and packaging facilities are located in Malaysia and China. The Company’s material sales and marketing offices are located in the United States, Latin America, Europe and Asia.
The following table summarizes sales to external customers by country, which is based on the billing location of the customer:
 
2014
 
2013
 
2012
 
(In millions)
United States
$
1,030

 
$
801

 
$
407

Europe
325

 
460

 
469

China
2,324

 
2,519

 
3,131

Singapore
371

 
610

 
856

Japan
1,324

 
710

 
305

Other countries
132

 
199

 
254

Total sales to external customers
$
5,506

 
$
5,299

 
$
5,422


The Company had three customers that accounted for more than 10% of the Company’s consolidated net revenue in 2014 and 2013 and one customer that accounted for more than 10% of the Company's consolidated net revenue in 2012. Net sales to these customers were approximately 23%, 13% and 13% of consolidated net revenue in 2014, 17%, 11% and 10% of consolidated net revenue in 2013 and 22% of consolidated net revenue in 2012. The majority of the revenue from these customers was related to products from the Enterprise, Embedded and Semi-Custom segment in 2014 and 2013.  In 2012, the majority of the revenue from the customer was related to products from the Computing and Graphics segment.
The following table summarizes long-lived assets by geographic areas:
 
December 27,
2014
 
December 28,
2013
 
(In millions)
United States
$
149

 
$
153

Malaysia
57

 
66

China
45

 
46

Singapore
17

 
18

Other countries
34

 
63

Total long-lived assets
$
302

 
$
346