AMD 2004 Annual Report Download - page 29

Table of Contents
The following is a summary of our net sales and operating income (loss) by segment and category for 2004, 2003 and 2002.
2004 2003 2002
(in millions)
Net sales
Computation Products $ 2,528 $ 1,960 $ 1,756
Memory Products 2,342 1,419 741
Personal Connectivity Solutions 131 140 166
All Other — — 34
Total Net Sales $ 5,001 $ 3,519 $ 2,697
Operating income (loss)
Computation Products $ 303 $ (23) $ (661)
Memory Products 35 (189) (159)
Personal Connectivity Solutions (72) (14) (25)
All Other (44) (7) (380)
Total Operating Income (Loss) $ 222 $ (233) $ (1,225)
Computation Products
Computation Products net sales of $2.5 billion in 2004 increased 29 percent compared to net sales of $2.0 billion in 2003. The increase was primarily due
to a 19 percent increase in average selling prices and a nine percent increase in microprocessor unit shipments. The increase in average selling prices was
primarily due to increased sales of our higher-priced AMD64-based processors, particularly our AMD Athlon 64 processors, which contributed to a richer
product mix. Similarly, the increase in unit shipments reflected the increased demand for these processors. As of December 26, 2004, sales of AMD64-based
processors represented approximately one-half of our net sales for the Computation Products segment. Sales increased across all geographic regions, and growth
was particularly strong in North America and Asia.
Computation Products net sales of $2.0 billion in 2003 increased 12 percent compared to net sales of $1.8 billion in 2002. The increase was primarily due
to a 15 percent increase in microprocessor unit shipments due primarily to increased demand from our OEM customers. The increase in net sales was partially
offset by a decline of four percent in the average selling prices.
Computation Products operating income of $303 million in 2004 increased by $326 million compared to an operating loss of $23 million in 2003. The
increase was primarily due to a 29 percent increase in net sales, partially offset by a 12 percent increase in operating expenses. Operating expenses increased due
primarily to an increase in marketing and cooperative advertising costs of $79 million in connection with our AMD64-based products, a nine percent increase in
unit shipments, and a $28 million increase in research and development costs. The increase in research and development costs was due primarily to a $29 million
increase in Fab 36 start-up costs and a $24 million increase in silicon design related to future generations of our microprocessors offset by a $23 million decrease
in Fab 30 research and development activities.
Computation Products operating loss of $23 million in 2003 improved by $638 million compared to an operating loss of $661 million in 2002. The
improvement was primarily due to a 12 percent increase in net sales and a decrease in both manufacturing costs of $330 million and marketing, general and
administrative expenses of $39 million, as a result of our cost reduction initiatives and the 2002 Restructuring Plan. In addition, cooperative advertising and
marketing expenses decreased by $55 million from 2002.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005