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Gross Margin by Segment
The following table presents the total gross margin for each segment (in millions, except percentages):
AMOUNT PERCENTAGES
Years Ended July 27, 2013 July 28, 2012 July 30, 2011 July 27, 2013 July 28, 2012 July 30, 2011
Gross margin:
Americas ................................. $17,887 $16,639 $15,766 62.5% 62.8% 63.0%
EMEA ................................... 7,876 7,605 7,452 64.5% 63.0% 64.2%
APJC .................................... 4,637 4,519 4,143 59.8% 60.4% 62.8%
Segment total .............................. 30,400 28,763 27,361 62.5% 62.4% 63.3%
Unallocated corporate items (1) ................ (960) (554) (825)
Total ................................. $29,440 $28,209 $26,536 60.6% 61.2% 61.4%
(1) The unallocated corporate items include the effects of amortization and impairments of acquisition-related intangible
assets, share-based compensation expense, impacts to cost of sales from purchase accounting adjustments to inventory,
charges related to asset impairments and restructurings, significant litigation settlements (which consisted of $172 million
recorded to cost of sales for the TiVo patent litigation settlement in the fourth quarter of fiscal 2013), and certain other
charges. We do not allocate these items to the gross margin for each segment because management does not include such
information in measuring the performance of the operating segments.
Fiscal 2013 Compared with Fiscal 2012
We experienced a gross margin percentage decrease in our Americas and APJC segments, while our EMEA segment
experienced a gross margin percentage increase.
The Americas segment experienced a slight gross margin percentage decline due to the impact of higher sales discounts,
rebates and unfavorable pricing, and also due to unfavorable mix impacts, partially offset by productivity improvements.
The gross margin percentage increase in our EMEA segment was primarily the result of productivity improvements from
lower overall manufacturing costs and, to a lesser degree, favorable mix impacts and higher service gross margin. Partially
offsetting these favorable impacts to gross margin were negative impacts from higher sales discounts, rebates and unfavorable
pricing.
The APJC segment gross margin percentage declined due primarily to the impact of higher sales discounts, rebates and
unfavorable pricing, lower service gross margin, and unfavorable mix impacts. Partially offsetting these factors were
productivity improvements, driven in large part by lower overall manufacturing costs and higher volume.
The gross margin percentage for a particular segment may fluctuate, and period-to-period changes in such percentages may or
may not be indicative of a trend for that segment. Our product and service gross margins may be impacted by economic
downturns or uncertain economic conditions as well as our movement into new market opportunities, and could decline if any
of the factors that impact our gross margins are adversely affected in future periods.
Fiscal 2012 Compared with Fiscal 2011
For fiscal 2012, we experienced a gross margin percentage decline across all of our geographic segments as compared with
fiscal 2011.
The Americas segment experienced a slight gross margin percentage decline with the impact of higher sales discounts, rebates
and unfavorable pricing being substantially offset by higher volume, higher service gross margin, lower overall manufacturing
and delivery costs, and favorable mix impacts. Significantly lower revenue from the consumer market resulted in a positive
gross margin mix impact to the Americas segment for fiscal 2012.
The gross margin percentage decline in our EMEA segment was primarily the result of unfavorable mix impacts; higher sales
discounts, rebates and unfavorable pricing; and lower service gross margin due to increased headcount-related costs. These
decreases were partially offset by lower overall manufacturing and delivery costs and increased volume in this segment.
The APJC segment experienced the largest gross margin percentage decline of all of our geographic segments due primarily to
the impact of higher sales discounts, rebates and unfavorable pricing, lower service gross margin, and unfavorable mix
impacts. These decreases were partially offset by increased volume and lower overall manufacturing and delivery costs.
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