Intel Reports Record Year and Record Fourth Quarter
Full-Year Results
-- Revenue $43.6 billion, up $8.5 billion, 24 percent year-over-year
-- Gross margin of 66 percent, up 10 percentage points year-over-year
-- Operating income $15.9 billion, up $10.2 billion, 179 percent
year-over-year
-- Net income $11.7 billion, up $7.3 billion, 167 percent year-over-year
-- EPS $2.05, up $1.28, 166 percent year-over-year
Full-Year Results, Excluding the EC Fine and AMD Settlement Agreement
-- On a non-GAAP basis, operating income $15.9 billion, up $7.5 Billion, 89
percent year-over-year
-- On a non-GAAP basis, net income $11.7 billion, up $5.0 billion, 76
percent year-over-year
-- On a non-GAAP basis, EPS $2.05, up 88 cents, 75 percent year-over-year
Fourth-Quarter Results
-- Revenue $11.5 billion, up $355 million, 3 percent sequentially
-- Record gross margin of 67.5 percent, up 1.5 percentage points
sequentially
-- Operating income $4.3 billion, up $211 million, 5 percent sequentially
-- Net income $3.4 billion, up $433 million, 15 percent sequentially
-- EPS 59 cents, up 7 cents, 13 percent sequentially
SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intel Corporation today reported full-year revenue of $43.6 billion, operating income of $15.9 billion, net income of $11.7 billion, and EPS of $2.05 - all records. The company generated approximately $16.7 billion in cash from operations, paid cash dividends of $3.5 billion, and used $1.5 billion to repurchase 70 million shares of common stock.
For the fourth-quarter, Intel posted revenue of $11.5 billion. The company reported fourth-quarter operating income of $4.3 billion, net income of $3.4 billion, and EPS of 59 cents. Fourth-quarter revenue, operating income, net income, and EPS were also all records.
"2010 was the best year in Intel's history. We believe that 2011 will be even better," said Paul Otellini, Intel president and CEO.
GAAP Financial Comparison
Annual Results
2010 vs. 2009
Revenue $43.6 billion up 24%
Operating Income $15.9 billion up 179%
Net Income $11.7 billion up 167%
Earnings Per Share $2.05 up 166%
Quarterly Results
Q4 2010 vs. Q3 2010 vs. Q4 2009
Revenue $11.5 billion up 3% up 8%
Operating Income $4.3 billion up 5% up 74%
Net Income $3.4 billion up 15% up 48%
Earnings Per Share 59 cents up 13% up 48%
Non-GAAP Financial Comparison
Annual Results
2010 2009 vs. 2009
Revenue $43.6 billion $35.1 billion up 24%
Operating Income $15.9 billion $8.4 billion up 89%
Net Income $11.7 billion $6.6 billion up 76%
Earnings Per Share $2.05 $1.17 up 75%
2009 Non-GAAP results exclude the European Commission fine of $1.45 billion and the settlement agreement with AMD of $1.25 billion, and the related tax impacts of this charge.
Quarterly Results
Q4 2010 Q4 2009 vs. Q4 2009
Revenue $11.5 billion $10.6 billion up 8%
Operating Income $4.3 billion $3.7 billion up 16%
Net Income $3.4 billion $3.1 billion up 10%
Earnings Per Share 59 cents 55 cents up 7%
Q4 2009 Non-GAAP results exclude the settlement agreement with AMD of $1.25 billion and the related tax impacts of this charge.
Full-Year 2010 Key Financial Information
-- PC Client Group revenue up 21 percent, Data Center Group revenue up 35
percent, other Intel architecture group revenue up 27 percent, and Intel
(R) Atom(TM) microprocessor and chipset revenue of $1.6 billion up 8
percent.
-- Gross margin of 66 percent, up 10 percentage points compared to 2009.
-- Full-year capital spending was $5.2 billion, consistent with the
company's expectation.
-- The company used $1.5 billion to repurchase 70 million shares of common
stock.
Q4 2010 Key Financial Information
-- PC Client Group revenue flat, Data Center Group revenue up 15 percent,
other Intel architecture group flat, and Intel Atom microprocessor and
chipset revenue of $391 million flat, all sequentially.
-- The average selling price (ASP) for microprocessors was slightly up
sequentially.
-- Gross margin was 67.5 percent, slightly above the company's expectation.
-- R&D plus MG&A spending of $3.4 billion was higher than the company's
expectation.
-- The net gain of $140 million from equity investments and interest and
other was better than the company's expectation.
-- The effective tax rate was 24 percent, lower than the company's
expectation of 31 percent primarily due to the retroactive reinstatement
of the U.S. R&D tax credit.
Business Outlook
Intel's Business Outlook does not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after Jan. 13.
Q1 2011
-- Revenue: $11.5 billion, plus or minus $400 million.
-- Gross margin percentage: 64 percent, plus or minus a couple percentage
points.
-- R&D plus MG&A spending: approximately $3.4 billion.
-- Impact of equity investments and interest and other: gain of
approximately $200 million.
-- Depreciation: approximately $1.2 billion.
Full-Year 2011
-- Gross margin percentage: 65 percent, plus or minus a few percentage
points.
-- Spending (R&D plus MG&A): $13.9 billion, plus or minus $200 million.
-- R&D spending: approximately $7.3 billion.
-- Tax rate: approximately 29 percent.
-- Depreciation: approximately $5 billion, plus or minus $100 million.
-- Capital spending: expected to be $9.0 billion, plus or minus $300
million.
For additional information regarding Intel's results and Outlook, please see the CFO commentary at: www.intc.com/results.cfm.
Status of Business Outlook
During the quarter, Intel's corporate representatives may reiterate the Business Outlook during private meetings with investors, investment analysts, the media and others. From the close of business on March 4 until publication of the company's first-quarter earnings release, Intel will observe a "Quiet Period" during which the Business Outlook disclosed in the company's news releases and filings with the SEC should be considered as historical, speaking as of prior to the Quiet Period only and not subject to an update by the company.
Risk Factors
The above statements and any others in this document that refer to plans and expectations for the first quarter, the year and the future are forward-looking statements that involve a number of risks and uncertainties. Many factors could affect Intel's actual results, and variances from Intel's current expectations regarding such factors could cause actual results to differ materially from those expressed in these forward-looking statements. Intel presently considers the following to be the important factors that could cause actual results to differ materially from the company's expectations.
-- Demand could be different from Intel's expectations due to factors
including changes in business and economic conditions; customer
acceptance of Intel's and competitors' products; changes in customer
order patterns including order cancellations; and changes in the level
of inventory at customers.
-- Intel operates in intensely competitive industries that are
characterized by a high percentage of costs that are fixed or difficult
to reduce in the short term and product demand that is highly variable
and difficult to forecast. Revenue and the gross margin percentage are
affected by the timing of Intel product introductions and the demand for
and market acceptance of Intel's products; actions taken by Intel's
competitors, including product offerings and introductions, marketing
programs and pricing pressures and Intel's response to such actions; and
Intel's ability to respond quickly to technological developments and to
incorporate new features into its products.
-- The gross margin percentage 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; product mix and pricing; the timing and
execution of the manufacturing ramp and associated costs; start-up
costs; excess or obsolete inventory; changes in unit costs; defects or
disruptions in the supply of materials or resources; product
manufacturing quality/yields; and impairments of long-lived assets,
including manufacturing, assembly/test and intangible assets.
-- Expenses, particularly certain marketing and compensation expenses, as
well as restructuring and asset impairment charges, vary depending on
the level of demand for Intel's products and the level of revenue and
profits.
-- The tax rate expectation is based on current tax law and current
expected income. The tax rate may be affected by the jurisdictions in
which profits are determined to be earned and taxed; 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.
-- Gains or losses from equity securities and interest and other could vary
from expectations depending on gains or losses on the sale, exchange,
change in the fair value or impairments of debt and equity investments;
interest rates; cash balances; and changes in fair value of derivative
instruments.
-- The majority of Intel's non-marketable equity investment portfolio
balance is concentrated in companies in the flash memory market segment,
and declines in this market segment or changes in management's plans
with respect to Intel's investments in this market segment could result
in significant impairment charges, impacting restructuring charges as
well as gains/losses on equity investments and interest and other.
-- Intel's results could be impacted by adverse economic, social, political
and physical/infrastructure conditions in countries where Intel, its
customers or its suppliers operate, including military conflict and
other security risks, natural disasters, infrastructure disruptions,
health concerns and fluctuations in currency exchange rates.
-- Intel's results could be affected by the timing of closing of
acquisitions and divestitures.
-- Intel's results could be affected by adverse effects associated with
product defects and errata (deviations from published specifications),
and by litigation or regulatory matters involving intellectual property,
stockholder, consumer, antitrust and other issues, such as the
litigation and regulatory matters described in Intel's SEC reports. An
unfavorable ruling could include monetary damages or an injunction
prohibiting us 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.
A detailed discussion of these and other factors that could affect Intel's results is included in Intel's SEC filings, including the report on Form 10-Q for the fiscal quarter ended Sept. 25, 2010.
Earnings Webcast
Intel will hold a public webcast at 2:30 p.m. PST today on its Investor Relations web site at www.intc.com. A webcast replay and MP3 download will also be made available on the site.
Intel plans to report its earnings for the first quarter of 2011 on Tuesday, April 19, 2011. Immediately following the earnings report, the company plans to publish a commentary by Stacy J. Smith, vice president and chief financial officer at www.intc.com/results.cfm. A public webcast of Intel's earnings conference call will follow at 2:30 p.m. PST at www.intc.com.
Intel [NASDAQ: INTC], the world leader in silicon innovation, develops technologies, products and initiatives to continually advance how people work and live. Additional information about Intel is available at www.intel.com/pressroom and blogs.intel.com
Intel, the Intel logo, and Intel Atom are trademarks of Intel Corporation in the United States and other countries.
* Other names and brands may be claimed as the property of others.
INTEL CORPORATION
CONSOLIDATED SUMMARY STATEMENT OF INCOME DATA
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
2010 2009 2010 2009
NET REVENUE $ 11,457 $ 10,569 $ 43,623 $ 35,127
Cost of sales 3,727 3,729 14,808 15,566
GROSS MARGIN 7,730 6,840 28,815 19,561
Research and development 1,671 1,603 6,576 5,653
Marketing, general and administrative 1,705 1,468 6,309 5,234
R&D AND MG&A 3,376 3,071 12,885 10,887
AMD settlement - 1,250 - 1,250
European Commission fine - - - 1,447
Restructuring and asset impairment - 3 - 231
charges
Amortization of acquisition-related 7 19 18 35
intangibles
OPERATING EXPENSES 3,383 4,343 12,903 13,850
OPERATING INCOME 4,347 2,497 15,912 5,711
Gains (losses) on equity investments, 109 91 348 (170)
net
Interest and other, net 31 5 109 163
INCOME BEFORE TAXES 4,487 2,593 16,369 5,704
Provision for taxes 1,099 311 4,697 1,335
NET INCOME $ 3,388 $ 2,282 $ 11,672 $ 4,369
BASIC EARNINGS PER COMMON SHARE $ 0.61 $ 0.41 $ 2.10 $ 0.79
DILUTED EARNINGS PER COMMON SHARE $ 0.59 $ 0.40 $ 2.05 $ 0.77
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
BASIC 5,554 5,522 5,555 5,557
DILUTED 5,698 5,650 5,696 5,645
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
Dec. 25, Sept. 25, Dec. 26,
2010 2010 2009
CURRENT ASSETS
Cash and cash equivalents $ 5,498 $ 5,517 $ 3,987
Short-term investments 11,294 9,470 5,285
Trading assets 5,093 5,763 4,648
Accounts receivable, net 2,867 2,911 2,273
Inventories:
Raw materials 471 380 437
Work in process 1,928 1,634 1,469
Finished goods 1,425 1,409 1,029
3,824 3,423 2,935
Deferred tax assets 1,397 1,233 1,216
Other current assets 1,590 1,182 813
TOTAL CURRENT ASSETS 31,563 29,499 21,157
Property, plant and equipment, net 17,899 17,189 17,225
Marketable equity securities 1,008 1,054 773
Other long-term investments 3,026 3,482 4,179
Goodwill 4,531 4,481 4,421
Other long-term assets 5,111 4,883 5,340
TOTAL ASSETS $ 63,138 $ 60,588 $ 53,095
CURRENT LIABILITIES
Short-term debt $ 38 $ 259 $ 172
Accounts payable 2,290 1,903 1,883
Accrued compensation and benefits 2,888 2,270 2,448
Accrued advertising 1,007 1,017 773
Deferred income on shipments to distributors 622 626 593
Other accrued liabilities 2,225 2,762 1,722
TOTAL CURRENT LIABILITIES 9,070 8,837 7,591
Long-term income taxes payable 190 174 193
Long-term debt 2,077 2,073 2,049
Long-term deferred tax liabilities 927 681 555
Other long-term liabilities 1,236 1,127 1,003
Stockholders' equity:
Preferred stock -- -- --
Common stock and capital in excess of par value 16,178 16,096 14,993
Accumulated other comprehensive income (loss) 333 531 393
Retained earnings 33,127 31,069 26,318
TOTAL STOCKHOLDERS' EQUITY 49,638 47,696 41,704
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 63,138 $ 60,588 $ 53,095
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q4 2010 Q3 2010 Q4 2009
GEOGRAPHIC REVENUE:
Asia-Pacific $ 6,514 $ 6,404 $ 5,964
57% 58% 57%
Americas $ 2,296 $ 2,240 $ 2,088
20% 20% 20%
Europe $ 1,582 $ 1,326 $ 1,524
14% 12% 14%
Japan $ 1,065 $ 1,132 $ 993
9% 10% 9%
CASH INVESTMENTS:
Cash and short-term investments $ 16,792 $ 14,987 $ 9,272
Trading assets - marketable debt securities (1) 4,705 5,341 4,648
Total cash investments $ 21,497 $ 20,328 $ 13,920
TRADING ASSETS:
Trading assets - equity securities (2) $ 388 $ 422 $ --
Total trading assets - sum of 1+2 $ 5,093 $ 5,763 $ 4,648
SELECTED CASH FLOW INFORMATION:
Depreciation $ 1,146 $ 1,086 $ 1,172
Share-based compensation $ 213 $ 224 $ 200
Amortization of intangibles $ 60 $ 56 $ 89
Capital spending $ (1,869) $ (1,362) $ (1,081)
Investments in non-marketable equity instruments $ (151) $ (73) $ (85)
Stock repurchase program $ (1,500) $ -- $ --
Proceeds from sales of shares to employees, tax $ 54 $ 150 $ 36
benefit & other
Dividends paid $ (879) $ (877) $ (774)
Net cash received/(used) for $ (148) $ -- $ --
divestitures/acquisitions
EARNINGS PER COMMON SHARE INFORMATION:
Weighted average common shares outstanding - 5,554 5,575 5,522
basic
Dilutive effect of employee equity incentive 92 67 77
plans
Dilutive effect of convertible debt 52 52 51
Weighted average common shares outstanding - 5,698 5,694 5,650
diluted
STOCK BUYBACK:
Shares repurchased 70 -- --
Cumulative shares repurchased (in billions) 3.4 3.4 3.4
Remaining dollars authorized for buyback (in $ 4.2 $ 5.7 $ 5.7
billions)
OTHER INFORMATION:
Employees (in thousands) 82.5 81.7 79.8
INTEL CORPORATION
SUPPLEMENTAL OPERATING GROUP RESULTS
($ in millions)
Three Months Ended Twelve Months Ended
Q4 2010 Q4 2009 Q4 2010 Q4 2009
Net Revenue
PC Client Group
Microprocessor revenue $ 6,348 $ 5,881 $ 24,721 $ 19,914
Chipset, motherboard and other 1,682 1,877 6,877 6,261
revenue
8,030 7,758 31,598 26,175
Data Center Group
Microprocessor revenue 2,165 1,703 7,361 5,301
Chipset, motherboard and other 357 323 1,332 1,149
revenue
2,522 2,026 8,693 6,450
Other Intel architecture group 497 410 1,784 1,402
Intel architecture group revenue 11,049 10,194 42,075 34,027
Other operating groups 392 367 1,501 970
Corporate 16 8 47 130
TOTAL NET REVENUE $ 11,457 $ 10,569 $ 43,623 $ 35,127
Operating income (loss)
PC Client Group $ 3,620 $ 3,340 $ 13,628 $ 7,585
Data Center Group 1,426 972 4,395 2,299
Other Intel architecture group (13) 12 (60) (179)
Intel architecture group operating 5,033 4,324 17,963 9,705
income
Other operating groups (75) (22) (159) (284)
Corporate (611) (1,805) (1,892) (3,710)
TOTAL OPERATING INCOME $ 4,347 $ 2,497 $ 15,912 $ 5,711
INTEL CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
In addition to disclosing financial results calculated in accordance with
United States (U.S.)
generally accepted accounting principles (GAAP), this earnings release
contains non-GAAP
financial measures that exclude the charge incurred in the fourth quarter of
2009 as a result of
the settlement agreement with Advanced Micro Devices, Inc. (AMD) in the amount
of $1.25 billion,
and a charge incurred in the second quarter of 2009 as a result of the
European Commission (EC)
fine in the amount of EUR1.06 billion, or about $1.45 billion. These non-GAAP
measures also
exclude the associated impacts of the AMD settlement on our tax provision. The
EC fine did not
impact the income tax provision because it was not tax deductible.
The non-GAAP financial measures disclosed by the company 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. Management believes the non-GAAP financial measures are
appropriate for
both its own assessment of, and to show the reader, how our performance
compares to other
periods. Set forth below are reconciliations of the non-GAAP financial
measures to the most
directly comparable GAAP financial measures.
In the GAAP results in this earnings release the AMD settlement charge is
presented separately
within operating expenses for the three and twelve months ended December 26,
2009 and the EC
fine charge is presented separately within operating expenses for the twelve
months ended
December 26, 2009.
(In millions, except per-share amounts)
Three Months Ended Twelve Months Ended
Dec 25, Dec 26, Dec 25, Dec 26,
2010 2009 2010 2009
GAAP OPERATING INCOME $ 4,347 $ 2,497 $ 15,912 $ 5,711
Adjustment for
AMD settlement - 1,250 - 1,250
EC fine - - - 1,447
OPERATING INCOME EXCLUDING ADJUSTMENTS $ 4,347 $ 3,747 $ 15,912 $ 8,408
GAAP NET INCOME $ 3,388 $ 2,282 $ 11,672 $ 4,369
Adjustment for
AMD settlement - 1,250 - 1,250
EC fine - - - 1,447
Income tax impacts - (438) - (438)
NET INCOME EXCLUDING ADJUSTMENTS $ 3,388 $ 3,094 $ 11,672 $ 6,628
GAAP DILUTED EARNINGS PER COMMON SHARE $ 0.59 $ 0.40 $ 2.05 $ 0.77
Adjustment for
AMD settlement - 0.22 - 0.22
EC fine - - - 0.26
Income tax impacts - (0.07) - (0.08)
DILUTED EARNINGS PER COMMON SHARE $ 0.59 $ 0.55 $ 2.05 $ 1.17
EXCLUDING ADJUSTMENTS
Source: Intel Corporation
Released Jan 13, 2011 • 4:15 PM EST