AMD 2012 Annual Report Download - page 58

Download and view the complete annual report

Please find page 58 of the 2012 AMD annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

All Other operating loss of $930 million in 2012 included a $703 million charge related to the limited
waiver of exclusivity from GF, $100 million of net restructuring charges, stock-based compensation expense of
$97 million and $14 million related to amortization of acquired intangible assets.
All Other operating loss of $239 million in 2011 included $98 million of net restructuring charges, $90
million of stock-based compensation expense, $29 million related to amortization of acquired intangible assets
and a $24 million charge recorded in connection with a payment to GF primarily related to certain GF
manufacturing assets that did not benefit us.
All Other operating income of $170 million in 2010 included $283 million of income from the settlement of
our litigation with Samsung in the fourth quarter of 2010, a $30 million one-time benefit recognized in the first
quarter of 2010 related to the deconsolidation of GF, and $14 million of net revenue, partially offset by $87
million of stock-based compensation expense and $61 million related to the amortization of acquired intangible
assets.
Comparison of Gross Margin, Expenses, Interest Income, Interest Expense, Other Income (Expense), Net,
Income Taxes and Equity Income (Loss) and Dilution Gain in Investee, Net
The following is a summary of certain consolidated statement of operations data for 2012, 2011 and 2010.
2012 2011 2010
(In millions, except for percentages)
Cost of sales .................................................... $4,187 $3,628 $3,533
Gross margin ................................................... 1,235 2,940 2,961
Gross margin percentage .......................................... 23% 45% 46%
Research and development ......................................... 1,354 1,453 1,405
Marketing, general and administrative ................................ 823 992 934
Legal settlement ................................................. — — (283)
Amortization of acquired intangible assets ............................ 14 29 61
Restructuring charges (reversals), net ................................ 100 98 (4)
Interest income .................................................. 8 10 11
Interest expense ................................................. (175) (180) (199)
Other income (expense), net ........................................ 6 (199) 311
Provision (benefit) for income taxes ................................. (34) (4) 38
Equity income (loss) and dilution gain in investee, net ................... $ — $ 492 $ (462)
Gross Margin
Gross margin as a percentage of net revenue was 23% in 2012 compared to 45% in 2011. Gross margin in
2012 included a $703 million charge related to the limited waiver of exclusivity from GF, a LCM charge of $273
million and a $5 million charge recorded to cost of sales related to a legal settlement. Gross margin in 2011
included a $24 million charge recorded in connection with a payment to GF primarily related to certain GF
manufacturing assets and a charge of approximately $5 million recorded to cost of sales related to a legal
settlement. Absent the effects of the charges as described above, which we believe are not indicative of our
ongoing operating performance, our gross margin would have been 41% in 2012 compared to 45% in 2011.
Gross margin in 2012 was also adversely impacted by the $100 million inventory write-down in the third quarter
of 2012 referenced above as well as lower average selling price for microprocessor products.
Gross margin as a percentage of net revenue was 45% in 2011 compared to 46% in 2010. Gross margin in
2011 included a $24 million charge recorded in connection with a payment to GF for certain GF manufacturing
assets and a charge of approximately $5 million related to a legal settlement. Gross margin in 2010 included a
$69 million benefit related to the deconsolidation of GF. Absent the effects of these events, which we believe are
50