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Enterprise, Embedded and Semi-Custom operating income was $295 million in 2013 compared to $18
million in 2012. The improvement in operating results was primarily due to the increase in net revenue
referenced above, partially offset by a $702 million increase in cost of sales and a $12 million increase in
marketing, general and administrative expenses, partially offset by a $112 million decrease in research and
development expenses. The increase in cost of sales was primarily due to the commencement of unit shipments
of our semi-custom SoC products in the second quarter of 2013. Marketing, general and administrative expenses
increased and research and development expenses decreased for the reasons set forth under “Expenses” below.
All Other
All Other revenue pertains to results from former businesses, which were immaterial in 2014, 2013 and
2012.
All Other operating loss of $478 million in 2014 included a goodwill impairment charge of $233 million,
stock-based compensation expense of $81 million, net restructuring and other special charges of $71 million,
lower of cost or market inventory adjustment of $58 million, $14 million related to workforce rebalancing
severance charges, $14 million related to amortization of acquired intangible assets and $7 million related to
other expenses.
All Other operating loss of $91 million in 2013 included stock-based compensation expense of $91 million,
net restructuring and other special charges of $30 million and $18 million related to amortization of acquired
intangible assets. During the fourth quarter of 2013, we entered into licenses and settlements regarding patent-
related matters, for which we received in aggregate $48 million in net cash, which we recorded as an offset to
operating expenses.
All Other operating loss of $1.2 billion in 2012 included a $703 million charge related to the limited waiver
of exclusivity from GF, lower of cost or market inventory adjustment of $273 million related to the fee for GF’s
waiver of a portion of our obligations, $100 million of net restructuring charges, stock-based compensation
expense of $97 million, $14 million related to amortization of acquired intangible assets and $6 million related to
our acquisition of SeaMicro, Inc. (SeaMicro) in 2012.
Comparison of Gross Margin, Expenses, Interest Income, Interest Expense, Other Income (Expense), Net and
Income Taxes
The following is a summary of certain consolidated statement of operations data for 2014, 2013 and 2012.
2014 2013 2012
(In millions, except for percentages)
Cost of sales .................................................... $3,667 $3,321 $4,187
Gross margin ................................................... 1,839 1,978 1,235
Gross margin percentage .......................................... 33% 37% 23%
Research and development ......................................... 1,072 1,201 1,354
Marketing, general and administrative ................................ 604 674 823
Amortization of acquired intangible assets ............................ 14 18 14
Restructuring and other special charges, net ........................... 71 30 100
Goodwill impairment charge ....................................... 233 — —
Legal settlements, net ............................................. — (48) —
Interest income ..................................................358
Interest expense ................................................. (177) (177) (175)
Other income (expense), net ........................................ (69) (5) 6
Provision (benefit) for income taxes ................................. $ 5 $ 9 $ (34)
48