Intel 2013 Annual Report Download - page 33

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in
addition to the accompanying consolidated financial statements and notes to assist readers in understanding our
results of operations, financial condition, and cash flows. MD&A is organized as follows:
• Overview. Discussion of our business and overall analysis of financial and other highlights affecting the
company in order to provide context for the remainder of MD&A.
• Critical Accounting Estimates. Accounting estimates that we believe are most important to understanding the
assumptions and judgments incorporated in our reported financial results and forecasts.
• Results of Operations. An analysis of our financial results comparing 2013 to 2012 and comparing 2012 to
2011.
• Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows, and discussion
of our financial condition and potential sources of liquidity.
• Fair Value of Financial Instruments. Discussion of the methodologies used in the valuation of our financial
instruments.
• Contractual Obligations and Off-Balance-Sheet Arrangements. Overview of contractual obligations, contingent
liabilities, commitments, and off-balance-sheet arrangements outstanding as of December 28, 2013, including
expected payment schedule.
The various sections of this MD&A contain a number of forward-looking statements that involve a number of risks
and uncertainties. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,”
“continues,” “may,” “will,” “should,” and variations of such words and similar expressions are intended to identify
such forward-looking statements. In addition, any statements that refer to projections of our future financial
performance, our anticipated growth and trends in our businesses, uncertain events or assumptions, and other
characterizations of future events or circumstances are forward-looking statements. Such statements are based on
our current expectations and could be affected by the uncertainties and risk factors described throughout this filing
and particularly in “Risk Factors” in Part I, Item 1A of this Form 10-K. Our actual results may differ materially, and
these forward-looking statements do not reflect the potential impact of any divestitures, mergers, acquisitions, or
other business combinations that had not been completed as of February 14, 2014.
Overview
Our results of operations for each period were as follows:
Three Months Ended Twelve Months Ended
(Dollars in Millions, Except Per Share
Amounts) Dec. 28, 2013 Sept. 28, 2013 Change Dec. 28, 2013 Dec. 29, 2012 Change
Net revenue $ 13,834 $ 13,483 $ 351 $ 52,708 $ 53,341 $ (633)
Gross margin $ 8,571 $ 8,414 $ 157 $ 31,521 $ 33,151 $ (1,630)
Gross margin percentage 62.0% 62.4% (0.4)% 59.8% 62.1% (2.3)%
Operating income $ 3,549 $ 3,504 $ 45 $ 12,291 $ 14,638 $ (2,347)
Net income $ 2,625 $ 2,950 $ (325) $ 9,620 $ 11,005 $ (1,385)
Diluted earnings per common share $ 0.51 $ 0.58 $ (0.07) $ 1.89 $ 2.13 $ (0.24)
Revenue for 2013 was down 1% from 2012. PCCG experienced lower platform unit sales in the first half of the year,
but saw offsetting growth in the back half as the PC market began to show signs of stabilization. DCG continued to
benefit from the build out of Internet cloud computing and the strength of our product portfolio resulting in increased
platform volumes for DCG for the year. Higher factory start-up costs for our next-generation 14nm process
technology led to a decrease in gross margin compared to 2012. In response to the current business environment
and to better align resources, management approved several restructuring actions including targeted workforce
reductions as well as the exit of certain businesses and facilities. These actions resulted in restructuring and asset
impairment charges of $240 million for 2013.
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