Operating expenses for the three years ended December 27, 2008 were as follows:

(In Millions)		2008			2007			2006
Research and development		$	5,722		$	5,755		$	5,873
Marketing, general and administrative		$	5,458		$	5,417		$	6,138
Restructuring and asset impairment charges		$	710		$	516		$	555

Research and Development. R&D spending was flat in 2008 compared to 2007 and decreased $118 million, or 2%, in 2007 compared to 2006. In 2008 compared to 2007, we had lower product development expenses resulting from our divested businesses and slightly lower profit-dependent compensation. These decreases were offset by higher process development costs as we transition from manufacturing start-up costs related to our 45nm process technology to research and development of our next-generation 32nm process technology. The decrease in 2007 compared to 2006 was primarily due to lower process development costs as we transitioned from R&D to manufacturing using our 45nm process technology, partially offset by higher profit-dependent compensation.

Marketing, General and Administrative. Marketing, general and administrative expenses were flat in 2008 compared to 2007 and decreased $721 million, or 12%, in 2007 compared to 2006. In 2008 compared to 2007, we had higher legal expenses that were offset by lower profit-dependent compensation and lower advertising expenses. The decrease in 2007 compared to 2006 was primarily due to lower headcount, lower share-based compensation, and lower cooperative advertising expenses, partially offset by higher profit-dependent compensation.

R&D, combined with marketing, general and administrative expenses, were 30% of net revenue in 2008, 29% of net revenue in 2007, and 34% of net revenue in 2006.

Restructuring and Asset Impairment Charges. The following table summarizes restructuring and asset impairment charges by plan for the three years ended December 27, 2008:

(In Millions)		2008			2007			2006
2008 NAND plan		$	215		$	—		$	—
2006 efficiency program			495			516			555
Total restructuring and asset impairment charges		$	710		$	516		$	555

We may incur additional restructuring charges in the future for employee severance and benefit arrangements, and facility-related or other exit activities. Subsequent to the end of 2008, management approved plans to restructure some of our manufacturing and assembly and test operations, and align our manufacturing and assembly and test capacity to current market conditions. These actions, which are expected to take place beginning in 2009, include closing two assembly and test facilities in Malaysia, one facility in the Philippines, and one facility in China; stopping production at a 200mm wafer fabrication facility in Oregon; and ending production at our 200mm wafer fabrication facility in California. Our outlook for the first quarter of 2009 is for additional restructuring and asset impairment charges of $160 million.

2008 NAND Plan

In the fourth quarter of 2008, management approved a plan with Micron to discontinue the supply of NAND flash memory from the 200mm facility within the IMFT manufacturing network. The agreement resulted in a $215 million restructuring charge, primarily related to the IMFT 200mm supply agreement. The restructuring charge resulted in a reduction of our investment in IMFT of $184 million, a cash payment to Micron of $24 million, and other cash payments of $7 million.

2006 Efficiency Program

The following table summarizes charges for the 2006 efficiency program for the three years ended December 27, 2008:

(In Millions)		2008			2007			2006
Employee severance and benefit arrangements		$	151		$	289		$	238
Asset impairments			344			227			317
Total restructuring and asset impairment charges		$	495		$	516		$	555

In the third quarter of 2006, management approved several actions recommended by our structure and efficiency task force as part of a restructuring plan designed to improve operational efficiency and financial results. Some of these activities have involved cost savings or other actions that did not result in restructuring charges, such as better utilization of assets, reduced spending, and organizational efficiencies. The efficiency program has included targeted headcount reductions for various groups within the company, which we have met through employee attrition and terminations. Business divestures have further reduced headcount.

During 2006, we completed the divestiture of three businesses. For further discussion, see "Note 12: Divestitures" in Part II, Item 8 of this Form 10-K. In connection with the divestiture of certain assets of our communications and application processor business, we recorded impairment charges of $103 million related to the write-down of manufacturing tools to their fair value, less the cost to dispose of the assets. We determined the fair value using a market-based valuation technique. In addition, as a result of both this divestiture and a subsequent assessment of our worldwide manufacturing capacity operations, we placed for sale our fabrication facility in Colorado Springs, Colorado. This plan resulted in an impairment charge of $214 million to write down to fair value the land, building, and equipment asset grouping that has been principally used to support our communications and application processor business. We determined the fair market value of the asset grouping using an average of the results from using the cost approach and market approach valuation techniques.

During 2007, we incurred an additional $54 million in asset impairment charges as a result of market conditions related to the Colorado Springs facility. Also, we recorded land and building write-downs related to certain facilities in Santa Clara, California. In addition, we incurred $85 million in asset impairment charges related to assets that we sold in conjunction with the divestiture of our NOR flash memory business. We determined the impairment charges based on the fair value, less selling costs, that we expected to receive upon completion of the divestiture.

During 2008, we incurred additional asset impairment charges related to the Colorado Springs facility, based on market conditions. Also, we incurred $275 million in additional asset impairment charges related to assets that we sold in conjunction with the divestiture of our NOR flash memory business. We determined the impairment charges using the revised fair value of the equity and note receivable that we received upon completion of the divestiture, less selling costs. The lower fair value was primarily a result of a decline in the outlook for the flash memory market segment. For further information on this divestiture, see "Note 12: Divestitures" in Part II, Item 8 of this Form 10-K.

The following table summarizes the restructuring and asset impairment activity for the 2006 efficiency program during 2007 and 2008:

(In Millions)		Employee Severance and Benefits			Asset Impairments			Total
Accrued restructuring balance as of December 30, 2006		$	48		$	—		$	48
Additional accruals			299			227			526
Adjustments			(10)			—			(10)
Cash payments			(210)			—			(210)
Non-cash settlements			—			(227)			(227)
Accrued restructuring balance as of December 29, 2007		$	127		$	—		$	127
Additional accruals			167			344			511
Adjustments			(16)			—			(16)
Cash payments			(221)			—			(221)
Non-cash settlements			—			(344)			(344)
Accrued restructuring balance as of December 27, 2008		$	57		$	—		$	57

We recorded the additional accruals, net of adjustments, as restructuring and asset impairment charges. The remaining accrual as of December 27, 2008 was related to severance benefits that we recorded within accrued compensation and benefits.

From the third quarter of 2006 through the fourth quarter of 2008, we incurred a total of $1.6 billion in restructuring and asset impairment charges related to this program. These charges included a total of $678 million related to employee severance and benefit arrangements for approximately 11,900 employees, of which 10,800 employees had left the company as of December 27, 2008. A substantial majority of these employee terminations affected employees within manufacturing, information technology, and marketing. Of the employee severance and benefit charges incurred as of December 27, 2008, we had paid $621 million. The restructuring and asset impairment charges also included $888 million in asset impairment charges.

We estimate that employee severance and benefit charges from the third quarter of 2006 to the fourth quarter of 2008 will result in gross annual savings of approximately $1.1 billion, a portion of which we began to realize in the third quarter of 2006. We are realizing these savings within marketing, general and administrative expenses; cost of sales; and R&D.