EXHIBIT 99.1
Q1 REVENUE $8.0 BILLION
Q1 EARNINGS EXCLUDING ACQUISITION-RELATED COSTS* $0.88 PER SHARE
Q1 EARNINGS PER SHARE $0.78
BOTH PER SHARE AMOUNTS INCLUDE $0.17 TAX BENEFIT
*Acquisition-related costs consist of one-time write-offs of purchased
in-process research and development and the ongoing amortization of goodwill
and other acquisition-related intangibles. Other acquisition-related
intangibles include, for example, the value of the acquired companies'
developed technology, trademarks and workforce-in-place. Earnings excluding
acquisition-related costs differ from earnings presented according to
generally accepted accounting principles because they exclude these costs.
SANTA CLARA, Calif., April 18, 2000 -- Intel Corporation announced first
quarter revenue of $8.0 billion, up 13 percent from the first quarter of 1999
and down 2 percent sequentially.
For the first quarter, net income excluding acquisition-related costs
was $3.1 billion, up 52 percent from the first quarter of 1999 and up 28
percent sequentially. First quarter earnings excluding acquisition-related
costs were $0.88 per share, an increase of 52 percent from $0.58 in the first
quarter of 1999, and up 28 percent sequentially.
During the quarter Intel announced that the Internal Revenue Service
had closed its examination of the company's tax returns up to and including
1998. As part of this closure, the company reversed previously accrued taxes
reducing the quarter's tax provision by $600 million, or approximately $0.17
per share.
Including acquisition-related costs in accordance with generally
accepted accounting principles, first quarter net income was $2.7 billion, up
37 percent from first quarter 1999 and up 30 percent sequentially. Earnings
per share were $0.78, up 37 percent from $0.57 in the first quarter of 1999
and up 28 percent sequentially.
Acquisition-related costs in the first quarter consisted of $62 million
in one-time charges for purchased in-process research and development and $313
million of amortization of goodwill and other acquisition-related intangibles.
"Demand in the first quarter was stronger than we expected at the
beginning of the year and continues to be stronger as we enter the second
quarter," said Craig R. Barrett, president and chief executive officer. "We
also expect a strong second half, and are accelerating our investments in
capacity to meet future demand."
"While supply remains tight entering the second quarter, we are
ramping our 0.18-micron manufacturing technology rapidly in five facilities,"
Barrett continued, "and expanding to eight facilities by year-end, which will
substantially increase supply in the coming quarters. We are excited about our
product introductions slated for the second half, when we will refresh our
entire microprocessor line -- including the launches of the Itanium-TM-
processor and processors code-named Willamette and Timna."
Intel announced five networking and communications acquisitions in
the first quarter, three of which, GIGA A/S, Ambient Technologies, Inc. and
Thinkit Technologies, Inc., closed during the quarter and two, Basis
Communications Corporation and Voice Technologies Group, Inc., are still
pending. Background on each of these acquisitions can be found in the First
Quarter Highlights section of this release.
During the quarter, the company paid its quarterly cash dividend of
$0.03 per share. The dividend was paid on March 1, 2000, to stockholders of
record on February 7, 2000. Intel has paid a regular quarterly cash dividend
for over seven years.
During the quarter, the company repurchased a total of 9.8 million
shares of common stock, at a cost of $1 billion, under an ongoing program.
Since the program began in 1990, the company has repurchased 669.7 million
shares at a total cost of $19.2 billion.
BUSINESS OUTLOOK
THE FOLLOWING STATEMENTS ARE BASED ON CURRENT EXPECTATIONS. THESE STATEMENTS
ARE FORWARD-LOOKING, AND ACTUAL RESULTS MAY DIFFER MATERIALLY. THESE
STATEMENTS DO NOT INCLUDE THE POTENTIAL IMPACT OF ANY MERGERS OR ACQUISITIONS
THAT MAY BE COMPLETED AFTER APRIL 1, 2000.
** The company expects revenue for the second quarter of 2000 to be
approximately flat with first quarter revenue of $8.0 billion. Product supply
will continue to be tight in the second quarter as demand is expected to be
better than seasonally normal. The company expects a strong second half with
improved product availability.
** Gross margin percentage in the second quarter of 2000 is expected be flat
to down a point with first quarter gross margin percentage of 63 percent,
primarily due to startup and ramp costs associated with 0.18-micron
fabrication facilities (fabs). Intel's gross margin expectation for 2000 is 61
percent, plus or minus a few points. Based on Q1 results and current
expectations, gross margin percentage for 2000 is expected to be at the mid to
high part of that range. In the
short term, Intel's gross margin percentage varies primarily with revenue
levels and product mix as well as changes in unit costs.
** Expenses (R&D, excluding in-process R&D, plus MG&A) in the second quarter
of 2000 are expected to be up 2 to 4 percent from first quarter expenses of
$2.1 billion, primarily due to higher R&D spending. Expenses are dependent in
part on the level of revenue.
** R&D spending, excluding in-process R&D, is expected to be approximately
$3.9 billion for 2000, up from previous guidance of $3.8 billion.
** The company expects interest and other income for the second quarter of
2000 to be approximately $725 million, depending on interest rates, cash
balances, equity market levels and volatility, the realization of expected
gains on investments, including gains on investments acquired by third
parties, and assuming no unanticipated items.
** The tax rate for 2000 is expected to be approximately 31.7 percent,
excluding the impact of the recently announced agreement with the Internal
Revenue Service and acquisition-related costs from both prior and future
mergers or acquisitions.
** Capital spending for 2000 is expected to be approximately $6.0 billion, up
from previous guidance of $5.0 billion, due primarily to an upward revision of
the company's anticipated capacity requirements.
** Depreciation is expected to be approximately $790 million in the second
quarter and $3.5 billion for the full year 2000, up from previous guidance of
$3.4 billion.
** Amortization of goodwill and other acquisition-related intangibles is
expected to be approximately $370 million in the second quarter and $1.4
billion for the full year 2000.
The statements by Craig R. Barrett, the statements in the Technology
and Manufacturing Review and the above statements contained in this outlook
are forward-looking statements that involve a number of risks and
uncertainties. In addition to factors discussed above, among other factors
that could cause actual results to differ materially are the following:
business and economic conditions and growth in the computing industry in
various geographic regions; changes in customer order patterns; changes in the
mixes of microprocessor types and speeds, purchased components and other
products; competitive factors, such as rival chip architectures and
manufacturing technologies, competing software-compatible microprocessors and
acceptance of new products in specific market segments; pricing pressures;
development and timing of introduction of compelling software applications;
insufficient, excess or obsolete inventory and variations in inventory
valuation; continued success in technological advances, including development
and implementation of new processes and strategic products for specific
market segments; execution of the manufacturing ramp, including the transition
to the 0.18-micron process technology; shortage of manufacturing capacity; the
ability to grow new networking, communications, wireless and other
Internet-related businesses and successfully integrate and operate any
acquired businesses; unanticipated costs or other adverse effects associated
with processors and other products containing errata (deviations from
published specifications); litigation involving antitrust, intellectual
property, consumer and other issues; and other risk factors listed from time
to time in the company's SEC reports, including but not limited to the report
on Form 10-K for the year ended December 25, 1999 (Part II, Item 7, Outlook
section).
INTEL CORPORATION
CONSOLIDATED SUMMARY INCOME STATEMENT DATA
(In millions, except per share amounts)
Three Months Ended
--------------------------------
Apr. 1, Mar. 27,
2000 1999
-------------- --------------
NET REVENUE $ 8,021 $ 7,103
-------------- --------------
Cost of sales 2,964 2,894
Research and development 951 663
Marketing, general and administrative 1,124 891
Amortization of goodwill and other
acquisition-related intangibles 313 18
Purchased in-process research and
development 62 -
-------------- --------------
Operating costs and expenses 5,414 4,466
-------------- --------------
OPERATING INCOME 2,607 2,637
Interest and other 640 347
-------------- --------------
INCOME BEFORE TAXES 3,247 2,984
Income taxes 515 985
-------------- --------------
NET INCOME $ 2,732 $ 1,999
============== ==============
BASIC EARNINGS PER SHARE $ 0.82 $ 0.60
============== ==============
DILUTED EARNINGS PER SHARE $ 0.78 $ 0.57
============== ==============
COMMON SHARES OUTSTANDING 3,341 3,324
COMMON SHARES ASSUMING DILUTION 3,497 3,478
Note: Certain prior period amounts have been reclassified to conform
with the current presentation.
- --------------------------------------------------------------------------------
PRO FORMA INFORMATION EXCLUDING
ACQUISITION-RELATED COSTS
The following pro forma supplemental information excludes the effect of
amortization of goodwill and other acquisition-related intangibles as well as
in-process research and development. This pro forma information is not prepared
in accordance with generally accepted accounting principles.
Three Months Ended
--------------------------------
Apr. 1, Mar. 27,
2000 1999
-------------- --------------
Pro forma operating costs and expenses $ 5,039 $ 4,448
Pro forma operating income $ 2,982 $ 2,655
Net income excluding acquisition-related
costs $ 3,074 $ 2,017
Basic earnings per share excluding
acquisition-related costs $ 0.92 $ 0.61
Diluted earnings per share excluding
acquisition-related costs $ 0.88 * $ 0.58
* Includes a $0.17 one-time tax benefit related to the closure of the I.R.S.
audit of tax returns for years up to and including 1998.
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions, except per share amounts)
Apr. 1, Dec. 25,
2000 1999
------------- --------------
CURRENT ASSETS
Cash and short-term investments $ 11,216 $ 11,788
Accounts receivable 3,706 3,700
Inventories:
Raw materials 228 183
Work in process 802 755
Finished goods 532 540
------------- --------------
1,562 1,478
Deferred tax assets and other 977 853
------------- --------------
Total current assets 17,461 17,819
Property, plant and equipment, net 11,879 11,715
Marketable strategic equity securities 9,809 7,121
Other long-term investments 1,163 790
Goodwill and other acquisition-related
intangibles 5,978 4,934
Other assets 1,574 1,470
------------- --------------
TOTAL ASSETS $ 47,864 $ 43,849
============= ==============
CURRENT LIABILITIES
Short-term debt $ 373 $ 230
Accounts payable and accrued liabilities 4,638 4,565
Deferred income on shipments to
distributors 548 609
Income taxes payable 1,548 1,695
------------- --------------
Total current liabilities 7,107 7,099
LONG-TERM DEBT 868 955
DEFERRED TAX LIABILITIES 3,750 3,130
PUT WARRANTS - 130
STOCKHOLDERS' EQUITY
Common stock and capital in excess
of par value 7,748 7,316
Other stockholders' equity 28,391 25,219
------------- --------------
Total stockholders' equity 36,139 32,535
------------- --------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 47,864 $ 43,849
============= ==============