Annual report pursuant to Section 13 and 15(d)

Segment Reporting

v3.6.0.2
Segment Reporting
 12 Months Ended
Dec. 31, 2016
Segment Reporting [Abstract]  
Segment Reporting
Segment Reporting
Management, including the Chief Operating Decision Maker, who is the Company’s Chief Executive Officer, reviews and assesses operating performance using segment net revenues and operating income (loss) before interest, other income (expense), net, and income taxes. These performance measures include the allocation of expenses to the operating segments based on management’s judgment. The Company has the following two reportable segments:
•
the Computing and Graphics segment, which primarily includes desktop and notebook processors and chipsets, discrete graphics processing units (GPUs) and professional graphics; and
•
the Enterprise, Embedded and Semi-Custom segment, which primarily includes server and embedded processors, semi-custom System-on-Chip (SoC) products, development services, technology for game consoles and licensing portions of its intellectual property portfolio.
In addition to these reportable segments, the Company has an All Other category, which is not a reportable segment. This category primarily includes certain expenses and credits that are not allocated to any of the reportable segments because management does not consider these expenses and credits in evaluating the performance of the reportable segments. Also included in this category are employee stock-based compensation expense, the charge related to the Sixth Amendment to the WSA with GF, restructuring and other special charges, net, amortization of acquired intangible assets, workforce rebalancing severance charges, goodwill impairment charge and significant or unusual lower of cost or market inventory adjustments. The Company also reported the results of former businesses in the All Other category because the operating results were not material.
The following table provides a summary of net revenue and operating income (loss) by segment for 2016, 2015 and 2014. The results prior to July 1, 2014 have been recast to reflect the Company’s new reportable segments.
 
2016
 
2015
 
2014
 
(In millions)
Net revenue:
 
 
 
 
 
Computing and Graphics
$
1,967

 
$
1,805

 
$
3,132

Enterprise, Embedded and Semi-Custom
2,305

 
2,186

 
2,374

Total net revenue
$
4,272

 
$
3,991

 
$
5,506

Operating income (loss):
 
 
 
 
 
Computing and Graphics
$
(238
)
 
$
(502
)
 
$
(76
)
Enterprise, Embedded and Semi-Custom
283

 
215

 
399

All Other
(417
)
 
(194
)
 
(478
)
Total operating loss
$
(372
)
 
$
(481
)
 
$
(155
)

The following table provides major items included in All Other category:
 
2016
 
2015
 
2014
 
(In millions)
Operating loss:
 
 
 
 
 
Stock-based compensation expense
$
(86
)
 
$
(63
)
 
$
(81
)
Restructuring and other special charges, net
10

 
(129
)
 
(71
)
Amortization of acquired intangible assets
—

 
(3
)
 
(14
)
Charge related to the Sixth Amendment to the WSA with GF
(340
)
 
—

 
—

Goodwill impairment
—

 
—

 
(233
)
Lower of cost or market inventory adjustment
—

 
—

 
(58
)
Workforce rebalancing severance charges
—

 
—

 
(14
)
Other
(1
)
 
1

 
(7
)
Total operating loss
$
(417
)
 
$
(194
)
 
$
(478
)

The Company does not discretely allocate assets to its operating segments, nor does management evaluate operating segments using discrete asset information.
The Company’s operations outside the United States include research and development activities; assembly, test, mark and packaging activities; and sales, marketing and administrative activities. The Company conducts product and system research and development activities for its products in the United States, with additional design and development engineering teams located in China, Canada, India, Singapore, and Taiwan. The Company’s ATMP facilities located in Malaysia and China were sold in the second quarter of 2016 (see NOTE 4). The Company’s material sales and marketing offices are located in the United States, Latin America, Europe and Asia.
The following table summarizes sales to external customers by country, which is based on the billing location of the customer:
 
2016
 
2015
 
2014
 
(In millions)
United States
$
923

 
$
984

 
$
1,030

Europe
155

 
168

 
325

China
1,108

 
1,145

 
2,324

Singapore
571

 
356

 
371

Japan
1,443

 
1,254

 
1,324

Other countries
72

 
84

 
132

Total sales to external customers
$
4,272

 
$
3,991

 
$
5,506


The following table summarizes sales to major customers that accounted for at least 10% of the Company’s consolidated net revenue for the respective years:
 
2016
 
2015
 
2014
Customer A
33
%
 
31
%
 
23
%
Customer B
16
%
 
18
%
 
13
%
Customer C
10
%
 
8
%
 
13
%

Sales to customers A and B consisted of products from the Company's Enterprise, Embedded and Semi-Custom segment and sales to customer C consisted primarily of products from the Company's Computing and Graphics segment.
The following table summarizes long-lived assets by geographic areas:
 
2016
 
2015
 
(In millions)
United States
$
104

 
$
123

Malaysia
9

 
11

China
7

 
5

Singapore
24

 
25

Other countries
20

 
24

Total long-lived assets
$
164

 
$
188