Annual report pursuant to Section 13 and 15(d)

Segment Reporting

v3.3.1.900
Segment Reporting
 12 Months Ended
Dec. 26, 2015
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, semi-custom System-on-Chip (SoC) products, engineering services
and royalties.
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, restructuring and other special charges, net, technology node transition charge, workforce rebalancing severance charges, goodwill impairment charge, significant or unusual lower of cost or market inventory adjustments 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.
The following table provides a summary of net revenue and operating income (loss) by segment and income (loss) before income taxes for 2015, 2014 and 2013. The results prior to July 1, 2014 have been recast to reflect the Company’s new reportable segments.
 
 
2015
 
2014
 
2013
 
(In millions)
Net revenue:
 
 
 
 
 
Computing and Graphics
$
1,805

 
$
3,132

 
$
3,720

Enterprise, Embedded and Semi-Custom
2,186

 
2,374

 
1,577

All Other
—

 
—

 
2

Total net revenue
$
3,991

 
$
5,506

 
$
5,299

Operating income (loss):
 
 
 
 
 
Computing and Graphics
$
(502
)
 
$
(76
)
 
$
(101
)
Enterprise, Embedded and Semi-Custom
215

 
399

 
295

All Other
(194
)
 
(478
)
 
(91
)
Total operating income (loss)
$
(481
)
 
$
(155
)
 
$
103

Interest expense
(160
)
 
(177
)
 
(177
)
Other expense, net
(5
)
 
(66
)
 
—

Loss before income taxes
$
(646
)
 
$
(398
)
 
$
(74
)

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:
 
2015
 
2014
 
2013
 
(In millions)
United States
$
984

 
$
1,030

 
$
801

Europe
168

 
325

 
460

China
1,145

 
2,324

 
2,519

Singapore
356

 
371

 
610

Japan
1,254

 
1,324

 
710

Other countries
84

 
132

 
199

Total sales to external customers
$
3,991

 
$
5,506

 
$
5,299


The Company had two customers that accounted for more than 10% of the Company’s consolidated net revenue in 2015. The Company had three customers that accounted for more than 10% of the Company’s consolidated net revenue in 2014 and 2013. Net sales to these customers were approximately 31% and 18% of consolidated net revenue in 2015, 23%, 13% and 13% of consolidated net revenue in 2014 and 17%, 11% and 10% of consolidated net revenue in 2013. The majority of the revenue from these customers was related to products from the Enterprise, Embedded and Semi-Custom segment.  
The following table summarizes long-lived assets by geographic areas:
 
2015
 
2014
 
(In millions)
United States
$
123

 
$
149

Malaysia
11

 
57

China
5

 
45

Singapore
25

 
17

Other countries
24

 
34

Total long-lived assets
$
188

 
$
302