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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 27, 2014 and December 28, 2013 and for each of the three years in the period ended December 27,
2014 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 worldwide. Within the global semiconductor
industry, we offer primarily:
(i) x86 microprocessors, as standalone devices or as incorporated as an accelerated processing unit (APU),
chipsets, discrete graphics processing units (GPUs) and professional graphics; and
(ii) server and embedded processors, dense servers, semi-custom System-on-Chip (SoC) products 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 2014 compared to 2013 and 2013
compared to 2012, an analysis of changes in our financial condition and a discussion of our contractual
obligations and off balance sheet arrangements.
Overview
Net revenue for 2014 was $5.5 billion, an increase of 4% compared to 2013 net revenue of $5.3 billion. The
increase in net revenue from 2013 was due to a 51% increase in Embedded, Enterprise and Semi-Custom
segment revenue, primarily due to higher semi-custom SoC sales. The annual increase in Embedded, Enterprise
and Semi-Custom segment net revenue was offset by a 16% decrease in Computing and Graphics segment net
revenue. The annual decrease in the Computing and Graphics segment was primarily due to lower desktop
processor and chipset sales. While we believe the pace of the decline in the PC market is slowing, our annual
Computing and Graphics segment results reflect the ongoing challenges of a competitive consumer PC market.
During 2014, as part of our strategy to transform our business to attain approximately 50% of our revenue
from high-growth adjacent markets by the end of 2015, we continued to focus on introducing a more diverse
product portfolio. By the end of 2014, we derived approximately 40% of our annual revenues from high-growth
markets. In the second quarter of 2014, we announced our ambidextrous computing roadmap to develop custom
high-performance ARM and x86 processor cores for 2016. At the same time, we publicly demonstrated the AMD
Opteron™ A1100 Series, our first 64-bit ARM-based server processor based on 28 nanometer (nm) technology.
During 2014, we continued to experience strong demand for our AMD semi-custom SoCs that are found in Sony
PlayStation®4 and Microsoft Xbox One. We also launched a number of new embedded products during 2014,
including the second-generation AMD Embedded R-series APU and CPU, the new x86 AMD Embedded G-
Series SoC, the AMD Embedded G-Series CPU and the AMD Embedded Radeon™ E8860 GPU. We also
continued to develop and introduce differentiated products in 2014. We expanded our notebook APU offerings in
2014 with the introduction of the AMD 2014 Performance Mobile APU designed for ultrathin and high-
performance mobile PCs, the AMD Pro A-Series APU for commercial PCs and the third-generation AMD
mainstream and low-powered mobile APU designed for commercial and consumer mobile devices. We also
launched a number of graphics products in 2014, including the AMD Radeon™ R9 295X2 and AMD Radeon™
R9 285 designed for performance gaming.
In 2014, we made progress in improving our balance sheet by re-profiling our debt maturity schedule.
During 2014, we repurchased $487 million in aggregate principal amount of our 6.00% Convertible Senior Notes
due 2015 (6.00% Notes), reducing the outstanding aggregate principal amount to $42 million. We repurchased
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