Intel Fourth-Quarter Net Income $2.3 Billion, Up 875%
Fourth-Quarter Results
-- Revenue $10.6 Billion, up $2.3 Billion and 28% Year-over-Year
-- Record Gross Margin of 65%, up 12 Points Year-over-Year
-- Operating Income $2.5 Billion, up $958 Million and 62% Year-over-Year
-- Net Income $2.3 Billion, up $2.0 Billion and 875% Year-over-Year
-- EPS 40 Cents, up 36 Cents Year-over-Year
Fourth-Quarter Results, Excluding the Settlement Agreement with AMD
-- Non-GAAP Operating Income $3.7 Billion, up $2.2 Billion and 143%
Year-over-Year
-- Non-GAAP Net Income $3.1 Billion, up $2.3 Billion and 267%
Year-over-Year
-- Non-GAAP EPS 55 Cents, up 40 Cents Year-over-Year
SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intel Corporation today reported fourth-quarter revenue of $10.6 billion. The company reported operating income of $2.5 billion, net income of $2.3 billion and EPS of 40 cents.
For 2009 Intel posted revenue of $35.1 billion. The company reported full-year operating income of $5.7 billion, net income of $4.4 billion and EPS of 77 cents. The company generated more than $11 billion in cash from operations and paid cash dividends of $3.1 billion.
"Intel's strong 2009 results reflect our investment in industry-leading manufacturing and product innovation," said Paul Otellini, Intel president and CEO. "This strategy has enabled us to generate unprecedented operating efficiencies while growing our traditional businesses and creating exciting new market opportunities, even in difficult economic times. Our ability to weather this business cycle demonstrates that microprocessors are indispensable in our modern world. Looking forward, we plan to deliver the benefits of computing to an expanding set of products, markets and customers."
GAAP Financial Comparison
Quarterly Results
Q4 2009 vs. Q3 2009 vs. Q4 2008
Revenue $10.6 billion up 13% up 28%
Operating Income $2.5 billion down 3% up 62%
Net Income $2.3 billion up 23% up 875%
Earnings Per Share 40 cents up 7 cents up 36 cents
Annual Results
2009 vs. 2008
Revenue $35.1 billion down 7%
Operating Income $5.7 billion down 36%
Net Income $4.4 billion down 17%
Earnings Per Share 77 cents down 15 cents
Non-GAAP Financial Comparison
Quarterly Results
Q4 2009 vs. Q3 2009 vs. Q4 2008
Revenue $10.6 billion up 13% up 28%
Operating Income $3.7 billion up 45% up 143%
Net Income $3.1 billion up 67% up 267%
Earnings Per Share 55 cents up 22 cents up 40 cents
Q4 2009 Non-GAAP results exclude the settlement agreement with AMD of $1.25
billion and the related tax impacts of this charge. Q4 2008 Non-GAAP results
exclude a $938 million impairment of our investments in Clearwire Corp. and
the related tax impacts of this charge.
Annual Results
2009 vs. 2008
Revenue $35.1 billion down 7%
Operating Income $8.4 billion down 6%
Net Income $6.6 billion up 12%
Earnings Per Share $1.17 up 14 cents
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. Results for 2008 exclude a $938 million impairment of
our investments in Clearwire Corp. and the related tax impacts of this charge.
Q4 2009 Key Financial Information
-- PC Client Group revenue up 10 percent, Data Center Group revenue up 21
percent, and Other Intel Architecture group revenue up 22 percent, Intel
(R) Atom(TM) microprocessor and chipset revenue up 6 percent, all
sequentially.
-- The average selling price (ASP) for microprocessors was up sequentially.
-- R&D plus MG&A spending of $3.1 billion (excluding the $1.25 billion
settlement agreement with AMD) was higher than the company's
expectation.
-- The net gain of $96 million from equity investments and interest and
other was better than the company's expectation.
-- The effective tax rate was 12 percent, versus the company's revised
expectation of 20 percent.
Full-Year 2009 Key Financial Information
-- PC Client Group revenue down 6 percent, Data Center Group revenue down 2
percent, and Other Intel Architecture group revenue down 21 percent,
Intel Atom microprocessor and chipset revenue up 167 percent.
-- Gross margin of 55.7 percent, flat to 2008.
-- EC fine of $1.45 billion and AMD settlement agreement of $1.25 billion.
-- Full-year capital spending $4.5 billion, consistent with the company's
expectation.
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 2010
-- Revenue: $9.7 billion, plus or minus $400 million.
-- Gross margin percentage: 61 percent, plus or minus 2 percentage points.
-- R&D plus MG&A spending: Approximately $3 billion.
-- Amortization of acquisition-related intangibles and costs associated
with the Wind River acquisition: Approximately $20 million.
-- Impact of equity investments and interest and other: Gain of
approximately $20 million.
-- Depreciation: Approximately $1.1 billion.
Full-Year 2010
-- Gross margin percentage: 61 percent, plus or minus 3 percentage points.
-- Spending (R&D plus MG&A): $11.8 billion, plus or minus $100 million.
-- R&D spending: Approximately $6.2 billion.
-- Tax rate: Approximately 30 percent.
-- Depreciation: Approximately $4.4 billion, plus or minus $100 million.
-- Capital spending: Expected to be $4.8 billion, plus or minus $100
million.
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 Feb. 26 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 corporation'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. Additionally, Intel is in the process of
transitioning to its next generation of products on 32nm process
technology, and there could be execution issues associated with these
changes, including product defects and errata along with lower than
anticipated manufacturing yields.Revenue and the gross margin percentage
are affected by the timing of new 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; defects or disruptions in the supply of materials or resources;
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 changes in revenue levels; product mix and pricing; start-up
costs, including costs associated with the new 32nm process technology;
variations in inventory valuation, including variations related to the
timing of qualifying products for sale; excess or obsolete inventory;
manufacturing yields; changes in unit costs; impairments of long-lived
assets, including manufacturing, assembly/test and intangible assets;
the timing and execution of the manufacturing ramp and associated costs;
and capacity utilization.
-- 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 realized on the sale or
exchange of securities; gains or losses from equity method investments;
impairment charges related to debt securities as well as equity and
other investments; interest rates; cash balances; and changes in fair
value of derivative instruments.
-- The majority of our 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 our 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 our ability to
design our 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. 26, 2009.
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 2010 on Tuesday, April 13, 2010. Following the earnings report, the company plans to publish a commentary by Stacy J. Smith, vice president and chief financial officer, at approximately 1:30 p.m. PST 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, Intel Xeon, Intel Core, 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 OPERATIONS DATA
(In millions, except per share amounts)
Three Months Ended Twelve Months Ended
Dec. 26, Dec. 27, Dec. 26, Dec. 27,
2009 2008 2009 2008
NET REVENUE $ 10,569 $ 8,226 $ 35,127 $ 37,586
Cost of sales 3,729 3,857 15,566 16,742
GROSS MARGIN 6,840 4,369 19,561 20,844
Research and development 1,603 1,316 5,653 5,722
Marketing, general and administrative 1,468 1,261 5,234 5,452
R&D AND MG&A 3,071 2,577 10,887 11,174
AMD settlement 1,250 - 1,250 -
European Commission fine - - 1,447 -
Restructuring and asset impairment 3 251 231 710
charges
Amortization of acquisition-related 19 2 35 6
intangibles and costs
OPERATING EXPENSES 4,343 2,830 13,850 11,890
OPERATING INCOME 2,497 1,539 5,711 8,954
Gains (losses) on equity investments, 91 (1,192) (170) (1,756)
net
Interest and other, net 5 22 163 488
INCOME BEFORE TAXES 2,593 369 5,704 7,686
Provision for taxes 311 135 1,335 2,394
NET INCOME $ 2,282 $ 234 $ 4,369 $ 5,292
BASIC EARNINGS PER COMMON SHARE $ 0.41 $ 0.04 $ 0.79 $ 0.93
DILUTED EARNINGS PER COMMON SHARE $ 0.40 $ 0.04 $ 0.77 $ 0.92
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
BASIC 5,522 5,562 5,557 5,663
DILUTED 5,650 5,623 5,645 5,748
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
Dec. 26, Sep. 26, Dec. 27,
2009 2009 20081
CURRENT ASSETS
Cash and cash equivalents $ 3,987 $ 4,109 $ 3,350
Short-term investments 5,285 5,150 5,331
Trading assets 4,648 3,671 3,162
Accounts receivable, net 2,273 2,025 1,712
Inventories:
Raw materials 437 398 608
Work in process 1,469 1,072 1,577
Finished goods 1,029 1,020 1,559
2,935 2,490 3,744
Deferred tax assets 1,216 1,260 1,390
Other current assets 813 542 1,182
TOTAL CURRENT ASSETS 21,157 19,247 19,871
Property, plant and equipment, net 17,225 17,354 17,574
Marketable equity securities 773 766 352
Other long-term investments 4,179 3,611 2,924
Goodwill 4,421 4,421 3,932
Other long-term assets 5,340 5,597 5,819
TOTAL ASSETS $ 53,095 $ 50,996 $ 50,472
CURRENT LIABILITIES
Short-term debt $ 172 $ 23 $ 102
Accounts payable 1,883 1,907 2,390
Accrued compensation and benefits 2,448 1,758 2,015
Accrued advertising 773 763 807
Deferred income on shipments to distributors 593 602 463
Other accrued liabilities 1,636 2,225 1,901
Income taxes payable 86 471 140
TOTAL CURRENT LIABILITIES 7,591 7,749 7,818
Long-term income taxes payable 193 386 736
Long-term debt 2,049 2,201 1,185
Other long-term liabilities 1,558 1,627 1,187
Stockholders' equity:
Preferred stock - - -
Common stock and capital in excess of par value 14,993 14,763 13,402
Accumulated other comprehensive income (loss) 393 233 (393)
Retained earnings 26,318 24,037 26,537
TOTAL STOCKHOLDERS' EQUITY 41,704 39,033 39,546
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 53,095 $ 50,996 $ 50,472
1 As adjusted due to changes to the accounting for convertible debt
instruments in the first quarter of 2009.
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q4 2009 Q3 2009 Q4 2008
GEOGRAPHIC REVENUE:
Asia-Pacific $5,964 $5,322 $4,062
57 % 57 % 49 %
Americas $2,088 $1,822 $1,555
20 % 19 % 19 %
Europe $1,524 $1,328 $1,629
14 % 14 % 20 %
Japan $993 $917 $980
9 % 10 % 12 %
CASH INVESTMENTS:
Cash and short-term investments $9,272 $9,259 $8,681
Trading assets - marketable debt securities (1) 4,648 3,671 2,863
Total cash investments $13,920 $12,930 $11,544
TRADING ASSETS:
Trading assets - equity securities
offsetting deferred compensation (2) - - $299
Total trading assets - sum of 1+2 $4,648 $3,671 $3,162
SELECTED CASH FLOW INFORMATION:
Depreciation $1,172 $1,153 $1,157
Share-based compensation $200 $218 $192
Amortization of intangibles $89 $82 $62
Capital spending ($1,081 ) ($944 ) ($1,765 )
Investments in non-marketable equity instruments ($85 ) ($41 ) ($1,127 )
Stock repurchase program - ($1,671 ) -
Proceeds from sales of shares to employees, tax $36 $125 $2
benefit & other
Dividends paid ($774 ) ($771 ) ($778 )
Net cash received/(used) for - ($853 ) $3
divestitures/acquisitions
EARNINGS PER COMMON SHARE INFORMATION:
Weighted average common shares outstanding - 5,522 5,537 5,562
basic
Dilutive effect of employee equity incentive 77 28 10
plans
Dilutive effect of convertible debt 51 51 51
Weighted average common shares outstanding - 5,650 5,616 5,623
diluted
STOCK BUYBACK:
Shares repurchased - 88 -
Cumulative shares repurchased (in billions) 3.4 3.4 3.3
Remaining dollars authorized for buyback (in $5.7 $5.7 $7.4
billions)
OTHER INFORMATION:
Employees (in thousands) 79.8 80.8 83.9
INTEL CORPORATION
SUPPLEMENTAL OPERATING GROUP RESULTS
($ in millions)
Three Months Ended Twelve Months Ended
Q4 2009 Q3 2009 Q4 2008 Q4 2009 Q4 2008
Net Revenue
PC Client Group
Microprocessor $ 5,881 $ 5,217 $ 4,844 $ 19,914 $ 21,516
revenue
Chipset, motherboard 1,877 1,839 1,305 6,262 6,451
and other revenue
7,758 7,056 6,149 26,176 27,967
Data Center Group
Microprocessor 1,703 1,378 1,197 5,301 5,126
revenue
Chipset, motherboard 321 298 294 1,147 1,464
and other revenue
2,024 1,676 1,491 6,448 6,590
Other Intel 412 338 371 1,402 1,763
Architecture groups
Intel Architecture 10,194 9,070 8,011 34,026 36,320
group revenue
Other operating groups 366 282 138 969 578
Corporate 9 37 77 132 688
TOTAL NET REVENUE $ 10,569 $ 9,389 $ 8,226 $ 35,127 $ 37,586
Operating income
(loss)
PC Client Group $ 3,340 $ 2,246 $ 1,733 $ 7,587 $ 9,419
Data Center Group 972 627 443 2,299 2,135
Other Intel 11 (54 ) (69 ) (181 ) (63 )
Architecture groups
Intel Architecture 4,323 2,819 2,107 9,705 11,491
group operating income
Other operating groups (22 ) (74 ) (296 ) (284 ) (1,041 )
Corporate (1,804 ) (166 ) (272 ) (3,710 ) (1,496 )
TOTAL OPERATING INCOME $ 2,497 $ 2,579 $ 1,539 $ 5,711 $ 8,954
At the end of 2009, we reorganized our business to better align our major
product groups around the core competencies of Intel architecture and our
manufacturing operations. Our operating groups shown above are comprised of the
following:
-- PC Client Group: Microprocessors and related chipsets and motherboards
designed for the desktop, notebook, and netbook market segments, and wireless
connectivity products.
-- Data Center Group: Microprocessors and related chipsets and motherboards
designed for the server, workstation, and storage computing market segments, and
wired network connectivity products.
-- Other Intel Architecture Groups consists of the following groups, whose
product lines are based on Intel architecture:
-- Embedded and Communications Group:Intel architecture-based products as
solutions for embedded applications.
-- Digital Home Group: Intel architecture-based products for
next-generation consumer electronics.
-- Ultra-Mobility Group: Low power Intel architecture-based products for the
next-generation handheld market segment.
-- Other Operating Groups: NAND Solutions Group, Wind River Software Group,
Software and Services Group, and Digital Health Group.
Corporate:Revenue, expenses and
charges such as:
-- Results related to our NOR flash memory and cellular and handheld
businesses, which have been divested.
-- Charges of $1.45 billion (EUR1.06 billion) as result of the fine from the
European Commission and $1.25 billion as a result of our settlement agreement
with AMD.
-- Amounts included within restructuring and asset impairment charges.
-- A portion of profit-dependent compensation and other expenses not allocated
to the operating groups.
-- Results of operations of seed businesses that support our initiatives and
acquisition-related costs, including amortization and any impairment of
acquisition-related intangibles and goodwill.
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, 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, and a charge incurred
during the fourth quarter of 2008 as a result of an impairment of our
investments in Clearwire Corp. in the amount of $938 million. These non-GAAP
measures also exclude the associated impacts of the AMD settlement and the
Clearwire impairments 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. 26, Dec. 27, Dec. 26, Dec. 27,
2009 2008 2009 2008
GAAP OPERATING INCOME $ 2,497 $ 1,539 $ 5,711 $ 8,954
Adjustment for:
AMD settlement 1,250 - 1,250 -
EC fine - - 1,447 -
OPERATING INCOME EXCLUDING ADJUSTMENTS $ 3,747 $ 1,539 $ 8,408 $ 8,954
GAAP NET INCOME $ 2,282 $ 234 $ 4,369 $ 5,292
Adjustment for:
AMD settlement 1,250 - 1,250 -
EC fine - - 1,447 -
2008 Impairment of investments in - 938 - 938
Clearwire
Income tax impacts (438) (328) (438) (328)
NET INCOME EXCLUDING ADJUSTMENTS $ 3,094 $ 844 $ 6,628 $ 5,902
GAAP DILUTED EARNINGS PER COMMON SHARE $ 0.40 $ 0.04 $ 0.77 $ 0.92
Adjustment for:
AMD settlement 0.22 - 0.22 -
EC fine - - 0.26 -
2008 Impairment of investments in - 0.17 - 0.17
Clearwire
Income tax impacts (0.07) (0.06) (0.08) (0.06)
DILUTED EARNINGS PER COMMON SHARE $ 0.55 $ 0.15 $ 1.17 $ 1.03
EXCLUDING ADJUSTMENTS
Source: Intel Corporation
Released Jan 14, 2010 • 4:15 PM EST