AMD 2010 Annual Report Download - page 59

cost of sales due to higher GPU unit shipments, a $22 million increase in research and development expenses and
a $15 million increase in marketing, general and administrative expenses. Research and development expenses
and marketing, general and administrative expenses increased for the reasons set forth under “Expenses,” below.
Graphics operating income was $35 million in 2009 compared to operating income of $9 million 2008. The
increase in operating results was primarily due to a $41 million increase in net revenue described above and a
$29 million decrease in marketing, general and administrative expenses due to a reduction in discretionary
spending. These were partially offset by a $29 million increase in cost of sales because of higher GPU unit
shipments.
Foundry
Foundry net revenue was $1.1 billion in 2009. Foundry operating loss was $433 million in 2009. In 2010
and 2008, we did not have a Foundry segment.
All Other
All Other net revenue of $14 million in 2010 decreased by 79% compared to net revenue of $66 million in
2009. All Other net revenue decreased because of a significant reduction in customer orders for Handheld
products. Customer orders decreased as we continued to exit this business.
All Other net revenue of $66 million in 2009 decreased 21% compared to $85 million in 2008. All Other net
revenue decreased because we no longer developed new Handheld products, and we experienced reduced
customer orders in 2009. We decided to exit the Handheld business after selling certain graphics and multimedia
technology assets and intellectual property to Qualcomm in the first quarter of 2009.
All Other operating income in 2010 was $170 million compared to $968 million in 2009. The decrease in
operating results was primarily attributable to an absence of $1.2 billion of income from the settlement of our
litigation with Intel in the fourth quarter of 2009 and the decrease in revenue referenced above, partially offset by
$283 million of income from the settlement of our litigation with Samsung in the fourth quarter of 2010, a $77
million decrease in cost of sales, an absence of $65 million in restructuring charges, a $38 million decrease in
research and development expenses, a $21 million decrease in marketing, general and administrative expenses
and a $9 million decrease in amortization due to certain fully amortized acquired intangible assets. Cost of sales
decreased primarily due to a one-time benefit recognized in the first quarter of 2010 related to the
deconsolidation of GF and lower Handheld product unit shipments. Research and development expenses and
marketing, general and administrative expenses decreased for the reasons set forth under “Expenses,” below.
All Other operating income of $968 million in 2009 increased by $2.5 billion compared to an operating loss
of $1.5 billion in 2008. The improvement in operating results was primarily attributable to $1.242 billion of
income from the settlement of our litigation with Intel in the fourth quarter of 2009. Additionally, in 2008, we
had a $1.1 billion impairment charge, which included a goodwill write-down of $1.0 billion and a write-down of
specific intangible assets of $130 million. There were no corresponding charges in 2009. The improvement was
also impacted by a $67 million decrease in amortization of acquired intangible assets due to the write-down of
certain intangible assets in 2008 and a $25 million decrease in restructuring charges.
Intersegment Eliminations
Intersegment eliminations represent eliminations during consolidation in revenue and in cost of sales and
profits on inventory between the Computing Solutions segment and the Foundry segment. For 2009,
intersegment eliminations of revenue were $1.1 billion and intersegment eliminations of cost of sales and profits
on inventory were $48 million. Prior to the first quarter of 2009 and in 2010, we did not have an Intersegment
Eliminations category and, therefore, the results of operations in 2009 for that category are not comparable to
2010 and 2008.
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