AMD 2013 Annual Report Download - page 49

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the consolidated financial statements as of
December 28, 2013 and December 29, 2012 and for each of the three years in the period ended December 28,
2013 and related notes, which are included in this Annual Report on Form 10-K as well as with the other sections
of this Annual Report on Form 10-K, including “Part I, Item 1: Business,” “Part II, Item 6: Selected Financial
Data” and “Part II, Item 8: Financial Statements and Supplementary Data.”
Introduction
We are a global semiconductor company with facilities around the world. Within the global semiconductor
industry, we offer primarily:
(i) x86 microprocessors, as standalone devices or as incorporated as an accelerated processing unit (APU),
chipsets, embedded processors and dense servers; and
(ii) graphics processing units (GPUs), including professional graphics, semi-custom System-on-Chip
(SOC) products, development services and technology for game consoles.
In this MD&A, we will describe the results of operations and the financial condition for us and our
consolidated subsidiaries, including a discussion of our results of operations for 2013 compared to 2012 and 2012
compared to 2011, an analysis of changes in our financial condition and a discussion of our contractual
obligations and off balance sheet arrangements.
Overview
During 2013, we focused on executing our three-phase transformation plan designed to restructure,
accelerate and transform AMD to better align our business to the changing computing landscape and to position
ourselves to take advantage of new opportunities in high-growth adjacent markets. As of the end of 2013, we
completed the first two phases of our strategic transformation plan that we outlined in October 2012, achieving
key milestones in our corporate and financial transformation. We completed the restructuring of our company,
creating a more efficient business with significantly lower operating expenses. From the first quarter of 2012 to
the fourth quarter of 2013, we decreased operating expenses by approximately 31%.
We also launched new products in accordance with our product roadmap and ramped our new semi-custom
design capabilities in 2013. In the first half of 2013, Sony announced that it would use a semi-custom APU based
on our “Jaguar” CPU core and next-generation Radeon graphics in its PlayStation®4 game console system, and
Microsoft announced that the Xbox One would feature an AMD semi-custom SOC product. We began shipping
our AMD semi-custom SOCs in the second quarter of 2013 to support the launch of the PlayStation®4 and Xbox
One in the fourth quarter of 2013. With respect to our graphics products, we launched our AMD Radeon R7 and
R9 series desktop graphics cards designed for enthusiast gamers, and we launched our AMD Radeon R7, R9 and
R5 M200 series mobile discrete graphics processors based on our Graphics Core Next architecture for notebook
GPUs in October 2013. For the traditional PC market, we introduced several new client processors, including our
next generation 2013 AMD Elite Performance A-Series APUs, codenamed “Richland,” for premium ultrathin,
traditional and performance notebooks and our AMD Elite Performance A-Series APUs for desktop PCs. We
also launched our next generation 2013 AMD Mainstream quad-core x86 SOC, codenamed “Kabini,” designed
for entry-level and small-form factor touch notebooks and our 2013 AMD Elite Mobility SOC, codenamed
“Temash,” our first 28nm, quad-core x86 SOC designed for small form-factor notebooks, tablets and hybrids 13
inches and below.
Net revenue for 2013 was $5.3 billion, a decrease of 2% compared to 2012 net revenue of $5.4 billion. Our
operating income for 2013 improved to $103 million, compared to an operating loss of $1.1 billion in 2012. Our
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