Intel Reports First Quarter 2019 Financial Results

04/25/2019

Intel Reports First-Quarter 2019 Financial Results

News Summary:

  • First-quarter revenue was $16.1 billion, flat year-over-year (YoY); data-centric revenue declined 5 percent and PC-centric revenue grew 4 percent.
  • First-quarter GAAP earnings-per-share (EPS) of $0.87 declined 6 percent YoY; non-GAAP EPS of $0.89 was up 2 percent.
  • Expecting second-quarter revenue of $15.6 billion; second-quarter GAAP EPS of $0.83 and non-GAAP EPS of $0.89.
  • Expecting full-year revenue of $69.0 billion, full-year GAAP EPS of $4.14 and non-GAAP EPS of $4.35; down from January guidance.

SANTA CLARA, Calif., April 25, 2019 -- Intel Corporation today reported first-quarter 2019 financial results.

"Results for the first quarter were slightly higher than our January expectations. We shipped a strong mix of high-performance products and continued spending discipline while ramping 10nm and managing a challenging NAND pricing environment. Looking ahead, we're taking a more cautious view of the year, although we expect market conditions to improve in the second half," said Bob Swan, Intel CEO. "Our team is focused on expanding our market opportunity, accelerating our innovation and improving execution while evolving our culture. We aim to capitalize on key technology inflections that set us up to play a larger role in our customers’ success, while improving returns for our owners."

 

Q1 2019 Financial Highlights

GAAP

Non-GAAP

Q1 2019

Q1 2018

vs. Q1 2018

Q1 2019

Q1 2018

vs. Q1 2018

Revenue ($B)

$16.1

$16.1

flat

$16.1^

$16.1^

flat

Gross Margin

56.6%

60.6%

down 4 pts

58.3%

62.3%

down 4 pts

R&D and MG&A ($B)

$4.9

$5.2

down 7%

$4.9^

$5.2^

down 7%

Operating Income ($B)

$4.2

$4.5

down 7%

$4.5

$4.8

down 6%

Tax Rate

12.6%

11.1%

up 1.5 pts

12.5%

11.7%

up 0.7 pt

Net Income ($B)

$4.0

$4.5

down 11%

$4.0

$4.2

down 3%

Earnings Per Share

$0.87

$0.93

down 6%

$0.89

$0.87

up 2%

* Data-centric businesses include DCG, IOTG, Mobileye, NSG, PSG and All Other
^ No adjustment on a non-GAAP basis

In the first quarter, the company generated approximately $5.0 billion in cash from operations, paid dividends of $1.4 billion and used $2.5 billion to repurchase 49 million shares of stock.

 

Business Unit Summary

Key Business Unit Revenue and Trends

Q1 2019

vs. Q1 2018

            PC-centric

CCG

$8.6 billion

up 

4%

            Data-centric

DCG

$4.9 billion

down 

6%

IOTG

$910 million

up 

8%

Mobileye

$209 million

up 

38%

NSG

$915 million

down 

12%

PSG

$486 million

down 

2%

down 

5%*

^ No adjustment on a non-GAAP basis
* Data-centric businesses include DCG, IOTG, Mobileye, NSG, PSG and All Other
1 IOTG growth rate excludes Q1'18 $74M for Wind River revenue

In the first quarter, Intel achieved 4 percent growth in the PC-centric business while data-centric revenue declined 5 percent.

The PC-centric business (CCG) was up 4 percent in the first quarter due to a strong mix of Intel's higher performance products and strength in gaming, large commercial and modem. Intel's first high-volume 10nm processor, code-named Ice Lake, remains on track to be in volume systems on retail shelves for the 2019 holiday selling season.

Collectively, Intel's data-centric businesses declined 5 percent YoY in the first quarter. In the Data Center Group (DCG), the cloud segment grew 5 percent while the communications service provider segment declined 4 percent and enterprise and government revenue declined 21 percent. First-quarter Internet of Things Group (IOTG) revenue grew 8 percent YoY (19 percent excluding Wind River1), and Mobileye achieved record first-quarter revenue of $209 million, up 38 percent YoY as customer momentum continued. Intel's memory business (NSG) was down 12 percent YoY in a challenging pricing environment. Intel's Programmable Solutions Group (PSG) revenue was down 2 percent YoY in the first quarter.

The first quarter marked the introduction of a broad, new portfolio of data-centric products from Intel featuring the 2nd-Generation Intel® Xeon® Scalable® processor family with integrated Intel® Deep Learning Boost (Intel® DL Boost) for AI deep learning inferencing acceleration and support for Intel® Optane™ DC persistent memory, the revolutionary technology that brings affordable, high-capacity persistent memory to Intel’s data-centric computing portfolio. Intel also introduced more than 50 workload-optimized Intel® Xeon® processors, a 56-core, 12 memory channel Intel® Xeon® Platinum 9200 processor, and the new Intel® Agilex™ line of 10nm-based FPGAs.

Additional information regarding Intel’s results can be found in the Q1'19 Earnings Presentation available at: www.intc.com/results.cfm.

 

Business Outlook

Intel's guidance for the second-quarter and full-year 2019 includes both GAAP and non-GAAP estimates. Reconciliations between these GAAP and non-GAAP financial measures are included below.

Q2 2019

GAAP

Non-GAAP

Approximately

Approximately

Revenue

$15.6 billion

$15.6 billion^

Operating margin

27%

29%

Tax rate

11.5%

11.5%^

Earnings per share

$0.83

$0.89

Full-Year 2019

GAAP

Non-GAAP

Approximately

Approximately

Revenue

$69.0 billion

$69.0 billion^

Operating margin

30%

32%

Tax rate

12.0%

12.0%^

Earnings per share

$4.14

$4.35

Full-year capital spending

$15.5 billion

$15.5 billion^

Free cash flow

N/A

$15.0 billion

^ No adjustment on a non-GAAP basis

Intel’s Business Outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments and other significant transactions that may be completed after April 25, 2019. Actual results may differ materially from Intel’s Business Outlook as a result of, among other things, the factors described under “Forward-Looking Statements” below.

 

Earnings Webcast

Intel will hold a public webcast at 2:00 p.m. PDT today to discuss the results for its first quarter of 2019. The live public webcast can be accessed on Intel's Investor Relations website at www.intc.com/results.cfm. The Q1'19 Earnings Presentation, webcast replay, and audio download will also be available on the site.

Intel plans to report its earnings for the second quarter of 2019 on July 25, 2019 promptly after close of market, and related materials will be available at www.intc.com/results.cfm. A public webcast of Intel’s earnings conference call will follow at 2:00 p.m. PDT at www.intc.com.

 

Forward-Looking Statements

Intel’s Business Outlook and other statements in this release that refer to future plans and expectations are forward-looking statements that involve a number of risks and uncertainties. Words such as "anticipates," "expects," "intends," "goals," "plans," "believes," "seeks," "estimates," "continues," "may," "will," "would," "should," "could," and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements that refer to or are based on estimates, forecasts, projections, uncertain events or assumptions, including statements relating to total addressable market (TAM) or market opportunity, future products and the expected availability and benefits of such products, and anticipated trends in our businesses or the markets relevant to them, also identify forward-looking statements. All forward-looking statements included in this release are based on management's expectations as of the date of this release and, except as required by law, Intel disclaims any obligation to update these forward-looking statements to reflect future events or circumstances. Forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements. Intel presently considers the following to be among the important factors that could cause actual results to differ materially from the company's expectations.

  • Demand for Intel's products is highly variable and could differ from expectations due to factors including changes in business and economic conditions; customer confidence or income levels, and the levels of customer capital spending; the introduction, availability and market acceptance of Intel's products, products used together with Intel products, and competitors' products; competitive and pricing pressures, including actions taken by competitors; supply constraints and other disruptions affecting customers; changes in customer order patterns including order cancellations; changes in customer needs and emerging technology trends; and changes in the level of inventory at customers.
  • Intel's results could vary significantly from expectations based on capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; changes in revenue levels; segment product mix; the timing and execution of the manufacturing ramp and associated costs; excess or obsolete inventory; changes in unit costs; defects or disruptions in the supply of materials or resources; and product manufacturing quality/yields. Variations in results may also be caused by the timing of Intel product introductions and related expenses, including marketing programs, and Intel's ability to respond quickly to technological developments and to introduce new products or incorporate new features into existing products, as well as decisions to exit product lines or businesses, which may result in restructuring and asset impairment charges.
  • Intel's results could be affected by adverse economic, social, political and physical/infrastructure conditions in countries where Intel, its customers or its suppliers operate, including recession or slowing growth, military conflict and other security risks, natural disasters, infrastructure disruptions, health concerns, fluctuations in currency exchange rates, sanctions and tariffs, and continuing uncertainty regarding social, political, immigration, and tax and trade policies in the U.S. and abroad, including the United Kingdom's vote to withdraw from the European Union. Results may also be affected by the formal or informal imposition by countries of new or revised export and/or import and doing-business regulations, which could be changed without prior notice.
  • Intel operates in highly competitive industries and its operations have high costs that are either fixed or difficult to reduce in the short term. In addition, in connection with our strategic transformation to a data-centric company, we have entered new areas and introduced adjacent products, where we face new sources of competition and uncertain market demand or acceptance of our products, and these new areas and products may not grow as projected.
  • The amount, timing and execution of Intel's stock repurchase program may fluctuate based on Intel's priorities for the use of cash for other purposes—such as investing in our business, including operational and capital spending, acquisitions, and returning cash to our stockholders as dividend payments—and because of changes in cash flows, tax laws, or the market price of our common stock.
  • Intel's expected tax rate is based on current tax law, including current interpretations of the Tax Cuts and Jobs Act of 2017 (”TCJA”), and current expected income and may be affected by evolving interpretations of TCJA; changes in the volume and mix of profits earned across jurisdictions with varying tax rates; changes in the estimates of credits, benefits and deductions; the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties; and the ability to realize deferred tax assets.
  • Intel's results could be affected by gains or losses from equity securities and interest and other, which could vary depending on gains or losses on the change in fair value, sale, exchange, or impairments of equity and debt investments, interest rates, cash balances, and changes in fair value of derivative instruments.
  • Product defects or errata (deviations from published specifications) may adversely impact our expenses, revenues and reputation.
  • We or third parties regularly identify security vulnerabilities with respect to our processors and other products as well as the operating systems and workloads running on them. Security vulnerabilities and any limitations of, or adverse effects resulting from, mitigation techniques can adversely affect our results of operations, financial condition, customer relationships, prospects, and reputation in a number of ways, any of which may be material, including incurring significant costs related to developing and deploying updates and mitigations, writing down inventory value, a reduction in the competitiveness of our products, defending against product claims and litigation, responding to regulatory inquiries or actions, paying damages, addressing customer satisfaction considerations, or taking other remedial steps with respect to third parties. Adverse publicity about security vulnerabilities or mitigations could damage our reputation with customers or users and reduce demand for our products and services. A detailed description of these risks is set forth in the "Risk Factors" section of our most recent reports on Forms 10-K and 10-Q.
  • Intel's results could be affected by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust, commercial, disclosure and other issues. An unfavorable ruling could include monetary damages or an injunction prohibiting Intel from manufacturing or selling one or more products, precluding particular business practices, impacting Intel's ability to design its products, or requiring other remedies such as compulsory licensing of intellectual property.
  • Intel's results may be affected by the timing of closing of acquisitions, divestitures and other significant transactions.

Detailed information regarding these and other factors that could affect Intel's business and results is included in Intel's SEC filings, including the company's most recent reports on Forms 10-K and 10-Q, particularly the "Risk Factors" sections of those reports. Copies of these filings may be obtained by visiting our Investor Relations website at www.intc.com or the SEC's website at www.sec.gov.

 

About Intel

Intel (NASDAQ: INTC), a leader in the semiconductor industry, is shaping the data-centric future with computing and communications technology that is the foundation of the world’s innovations. The company’s engineering expertise is helping address the world’s greatest challenges as well as helping secure, power and connect billions of devices and the infrastructure of the smart, connected world - from the cloud to the network to the edge and everything in between. Find more information about Intel at newsroom.intel.com and intel.com.

Intel, the Intel logo, Intel Agilex, Intel Optane, Thunderbolt, and Xeon are trademarks of Intel Corporation or its subsidiaries in the U.S. and/or other countries.


CONTACTS: Brooke Wells Cara Walker
Investor Relations Media Relations
503-613-8230 503-696-0831
brooke.wells@intel.com cara.walker@intel.com

INTEL CORPORATION
CONSOLIDATED SUMMARY STATEMENT OF INCOME DATA

Three Months Ended


(In Millions, Except Per Share Amounts; Unaudited)

Mar 30,
2019

Mar 31,
2018

NET REVENUE

$

16,061 

$

16,066 

Cost of sales

6,972 

6,335 

GROSS MARGIN

9,089 

9,731 

Research and development (R&D)

3,332 

3,311 

Marketing, general and administrative (MG&A)

1,533 

1,900 

R&D AND MG&A

4,865 

 

5,211 

Restructuring and other charges

— 

 

— 

Amortization of acquisition-related intangibles

50 

 

50 

OPERATING EXPENSES

4,915 

 

5,261 

OPERATING INCOME

4,174 

4,470 

Gains (losses) on equity investments, net

434 

 

643 

Interest and other, net

(61)

 

(102)

 

INCOME BEFORE TAXES

4,547 

5,011 

Provision for taxes

573 

557 

NET INCOME

$

3,974 

$

4,454 

EARNINGS PER SHARE - BASIC

$

0.88 

$

0.95 

EARNINGS PER SHARE - DILUTED

$

0.87 

$

0.93 

WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:

BASIC

4,492 

4,674 

DILUTED

4,564 

4,790 

INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA


(In Millions)

Mar 30,
2019

Dec 29,
2018

CURRENT ASSETS

Cash and cash equivalents

$

3,154 

$

3,019 

Short-term investments

2,698 

2,788 

Trading assets

6,181 

5,843 

Total cash investments

12,033 

11,650 

Accounts receivable

6,957 

6,722 

Inventories

Raw materials

789 

813 

Work in process

4,758 

4,511 

Finished goods

2,218 

1,929 

7,765 

7,253 

Other current assets

2,305 

3,162 

TOTAL CURRENT ASSETS

29,060 

28,787 

Property, plant and equipment, net

50,040 

48,976 

Equity investments

5,254 

6,042 

Other long-term investments

3,465 

3,388 

Goodwill

24,521 

24,513 

Identified intangible assets, net

11,457 

11,836 

Other long-term assets

5,661 

4,421 

TOTAL ASSETS

$

129,458 

$

127,963 

CURRENT LIABILITIES

Short-term debt

$

2,750 

$

1,261 

Accounts payable

4,059 

3,824 

Accrued compensation and benefits

1,984 

3,622 

Other accrued liabilities

10,118 

7,919 

TOTAL CURRENT LIABILITIES

18,911 

16,626 

Debt

25,737 

25,098 

Contract liabilities

1,775 

2,049 

Income taxes payable, non-current

4,781 

4,897 

Deferred income taxes

1,521 

1,665 

Other long-term liabilities

2,797 

2,646 

TEMPORARY EQUITY

275 

419 

Stockholders' equity

Preferred stock

— 

— 

Common stock and capital in excess of par value

25,346 

25,365 

Accumulated other comprehensive income (loss)

(813)

 

(974)

 

Retained earnings

49,128 

50,172 

TOTAL STOCKHOLDERS' EQUITY

73,661 

74,563 

TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY

$

129,458 

$

127,963 

INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION

Three Months Ended


(In Millions)

Mar 30,
2019

Mar 31,
2018

SELECTED CASH FLOW INFORMATION:

Operating activities:

Net cash provided by operating activities

$

4,959 

$

6,284 

Depreciation

$

2,229 

$

1,806 

Share-based compensation

$

389 

$

433 

Amortization of intangibles

$

396 

$

390 

Investing activities:

Additions to property, plant and equipment

$

(3,321)

 

$

(2,910)

 

Financing activities:

Repayment of debt and debt conversion

$

(861)

 

$

(327)

 

Repurchase of common stock

$

(2,530)

 

$

(1,914)

 

Payment of dividends to stockholders

$

(1,414)

 

$

(1,400)

 

 

EARNINGS PER SHARE OF COMMON STOCK INFORMATION:

Weighted average shares of common stock outstanding – basic

4,492 

4,674 

Dilutive effect of employee equity incentive plans

53 

65 

Dilutive effect of convertible debt

19 

51 

Weighted average shares of common stock outstanding – diluted

4,564 

4,790 

 

STOCK BUYBACK:

Shares repurchased

49 

41 

Cumulative shares repurchased (in billions)

5.2 

5.0 

Remaining dollars authorized for buyback (in billions)

$

14.9 

$

11.3 

 

OTHER INFORMATION:

Employees (in thousands)

108.8 

103.7 

INTEL CORPORATION
SUPPLEMENTAL OPERATING SEGMENT RESULTS

Three Months Ended


(In Millions)

Mar 30,
2019

Mar 31,
2018

Net Revenue

Client Computing Group

Platform

$

7,824 

$

7,615 

Adjacency

762 

605 

8,586 

8,220 

Data Center Group

Platform

4,482 

4,824 

Adjacency

420 

410 

4,902 

5,234 

Internet of Things Group

Platform

825 

719 

Adjacency

85 

121 

910 

840 

Mobileye

209 

151 

Non-Volatile Memory Solutions Group

915 

1,040 

Programmable Solutions Group

486 

498 

All Other

53 

83 

TOTAL NET REVENUE

$

16,061 

$

16,066 

Operating income (loss)

Client Computing Group

$

3,072 

$

2,791 

Data Center Group

1,841 

2,602 

Internet of Things Group

251 

227 

Mobileye

68 

10 

Non-Volatile Memory Solutions Group

(297)

 

(81)

 

Programmable Solutions Group

89 

97 

All Other

(850)

 

(1,176)

 

TOTAL OPERATING INCOME

$

4,174 

$

4,470 

Revenue for our reportable and non-reportable operating segments is primarily related to the following product lines:

  • CCG includes platforms designed for end-user form factors, focusing on higher growth segments of 2-in-1, thin-and-light, commercial and gaming, and growing adjacencies such as WiFi and Thunderbolt™.
  • DCG includes workload-optimized platforms and related products designed for cloud, enterprise, and communication infrastructure market segments.
  • IOTG includes high-performance compute solutions for targeted verticals and embedded applications in market segments such as retail, manufacturing, health care, energy, automotive, and government.
  • Mobileye includes computer vision and machine learning-based sensing, data analysis, localization mapping and driving policy technology for advanced driver assistance systems (ADAS) and autonomous driving.
  • NSG includes Intel® Optane™ technology and 3D NAND flash memory, primarily used in solid-state drives (SSDs).
  • PSG includes programmable semiconductors, primarily field-programmable gate arrays (FPGAs), and related products for a broad range of markets, such as communications, data center, industrial, and military.

We have sales and marketing, manufacturing, engineering, finance, and administration groups. Expenses for these groups are generally allocated to the operating segments and the expenses are included in the following operating results.

All other category includes revenue, expenses, and charges such as:

  • results of operations from non-reportable segments not otherwise presented;
  • historical results of operations from divested businesses;
  • results of operations of start-up businesses that support our initiatives, including our foundry business;
  • amounts included within restructuring and other charges;
  • a portion of employee benefits, compensation, and other expenses not allocated to the operating segments; and
  • acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.

A substantial majority of our revenue is generated from the sale of platform products. Platform products incorporate various components and technologies, including a microprocessor and chipset, a stand-alone SoC, or a multi-chip package based on Intel® architecture. Our remaining primary product lines are incorporated in "adjacency."

INTEL CORPORATION
SUPPLEMENTAL PLATFORM REVENUE INFORMATION

Q1 2019
compared to Q4
2018

Q1 2019
compared to Q1
2018

Client Computing Group Platform

Notebook platform volumes

(16)%

(7)%

Notebook platform average selling prices

9%

13%

Desktop platform volumes

(13)%

(8)%

Desktop platform average selling prices

3%

7%

Data Center Group Platform

Unit Volumes

(17)%

(8)%

Average Selling Prices

(4)%

1%


INTEL CORPORATION

EXPLANATION OF NON-GAAP MEASURES

In addition to disclosing financial results in accordance with U.S. generally accepted accounting principles (GAAP), this earnings release contains references to the non-GAAP financial measures included in the table below. We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance.

Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects. Income tax effects have been calculated using an appropriate tax rate for each adjustment. We also provide a non-GAAP financial measure of free cash flow, as described below. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated.

Amortization of acquisition-related intangible assets: Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology, brands, and customer relationships acquired in connection with business combinations. We record charges related to the amortization of these intangibles within both cost of sales and operating expenses in our GAAP financial statements. Amortization charges for our acquisition-related intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. Consequently, our non-GAAP adjustments exclude these charges to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.

Ongoing mark-to-market on marketable equity securities: We exclude gains and losses resulting from ongoing mark-to-market adjustments of our marketable equity securities, after the initial mark-to-market adjustment is recorded upon a security becoming marketable, when calculating certain non-GAAP measures, as we do not believe this volatility correlates to our core operational performance. Consequently, our non-GAAP earnings per share figures exclude these impacts to facilitate an evaluation of our current performance and comparisons to our past operating performance.

Gains or losses from divestiture: We recognized a tax provision adjustment in Q1 2018 due to our divestiture of Wind River in Q2 2018. Consequently, our non-GAAP earnings per share figures exclude this impact to facilitate an evaluation of our current performance and comparisons to our past performance.

Free cash flow: We reference a non-GAAP financial measure of free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and quality of earnings. We believe this non-GAAP financial measure is helpful to investors in understanding our capital requirements and provides an additional means to reflect the cash flow trends of our business.

 

INTEL CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP OUTLOOK TO NON-GAAP OUTLOOK

Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measures disclosed by the company have limitations and should not be considered a substitute for, or superior to, the financial measures prepared in accordance with GAAP, and the financial outlook prepared in accordance with GAAP and the reconciliations from this Business Outlook should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

 

Q2 2019 Outlook

 

Full-Year 2019

 

Approximately

 

Approximately

GAAP OPERATING MARGIN

 

27 

%

 

30 

%

Amortization of acquisition-related intangible assets

 

%

 

%

NON-GAAP OPERATING MARGIN

 

29 

%

 

32 

%

                 

GAAP DILUTED EARNINGS PER COMMON SHARE

$

0.83 

$

4.14 

Amortization of acquisition-related intangible assets

 

0.07 

 

0.29 

Ongoing mark-to-market on marketable equity securities

 

— 

 

(0.06)

 

Income tax effect

 

(0.01)

 

 

(0.02)

 

NON-GAAP DILUTED EARNINGS PER COMMON SHARE

$

0.89 

$

4.35 

                 
(In Billions)

 

 

Full-Year 2019

GAAP CASH FROM OPERATIONS

$

30.5 

Additions to property, plant and equipment

 

 

 

 

(15.5)

 

FREE CASH FLOW

$

15.0 

INTEL CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS

Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measure disclosed by the company has limitations and should not be considered a substitute for, or superior to, the financial measure prepared in accordance with GAAP, and the reconciliations from GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustment made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

Three Months Ended


(In Millions, Except Per Share Amounts)

Mar 30,
2019

Mar 31,
2018

GAAP GROSS MARGIN

$

9,089 

$

9,731 

Amortization of acquisition-related intangible assets

 

281 

 

275 

NON-GAAP GROSS MARGIN

$

9,370 

$

10,006 

 

GAAP GROSS MARGIN PERCENTAGE

 

56.6 

%

 

60.6 

%

Amortization of acquisition-related intangible assets

 

1.7 

%

 

1.7 

%

NON-GAAP GROSS MARGIN PERCENTAGE

 

58.3 

%

 

62.3 

%

 

GAAP OPERATING INCOME

$

4,174 

$

4,470 

Amortization of acquisition-related intangible assets

 

331 

 

325 

NON-GAAP OPERATING INCOME

$

4,505 

$

4,795 

 

GAAP TAX RATE

 

12.6 

%

 

11.1 

%

Other

 

(0.1)

%

 

0.6 

%

NON-GAAP TAX RATE

 

12.5 

%

 

11.7 

%

 

GAAP NET INCOME

$

3,974 

$

4,454 

Amortization of acquisition-related intangible assets

 

331 

 

325 

Ongoing mark-to-market on marketable equity securities

 

(253)

 

 

(606)

 

Income tax effect

 

(4)

 

 

NON-GAAP NET INCOME

$

4,048 

$

4,175 

 

GAAP DILUTED EARNINGS PER COMMON SHARE

$

0.87 

$

0.93 

Amortization of acquisition-related intangible assets

 

0.07 

 

0.07 

Ongoing mark-to-market on marketable equity securities

 

(0.05)

 

 

(0.13)

 

Income tax effect

 

— 

 

— 

NON-GAAP DILUTED EARNINGS PER COMMON SHARE

$

0.89 

$

0.87 

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