|
Intel Corporation today reported quarterly revenue of $13.5 billion,
operating income of $3.8 billion, net income of $2.8 billion and EPS of
$0.54. The company generated approximately $4.7 billion in cash from
operations, paid dividends of $1.1 billion and used $1.1 billion to
repurchase stock.
"The second quarter was highlighted by solid execution with continued
strength in the data center and multiple product introductions in
Ultrabooks and smartphones," said Paul Otellini, Intel president and
CEO. "As we enter the third quarter, our growth will be slower than we
anticipated due to a more challenging macroeconomic environment. With a
rich mix of Ultrabook and Intel-based tablet and phone introductions in
the second half, combined with the long-term investments we’re making
in our product and manufacturing areas, we are well positioned for this
year and beyond."
Business Outlook
Intel’s Business Outlook does not include the potential impact of any
business combinations, asset acquisitions, divestitures or other
investments that may be completed after July 17.
Q3 2012 (GAAP, unless otherwise stated)
--
Revenue: $14.3 billion, plus or minus $500 million.
--
Gross margin percentage: 63 percent and 64 percent Non-GAAP (excluding
amortization of acquisition-related intangibles), both plus or minus a
couple of percentage points.
--
R&D plus MG&A spending: approximately $4.6 billion.
--
Amortization of acquisition-related intangibles: approximately $80
million.
--
Impact of equity investments and interest and other: approximately
zero.
--
Depreciation: approximately $1.6 billion.
Full-Year 2012 (GAAP, unless otherwise stated)
--
Revenue up between 3 percent and 5 percent year over year, down from
the prior expectation for high single-digit growth.
--
Gross margin percentage: 64 percent and 65 percent Non-GAAP (excluding
amortization of acquisition-related intangibles), both plus or minus a
couple points.
--
Spending (R&D plus MG&A): $18.2 billion, plus or minus $200 million,
down $100 million from prior expectations.
--
Amortization of acquisition-related intangibles: approximately $300
million, unchanged.
--
Depreciation: $6.3 billion, plus or minus $100 million, down $100
million from prior expectations.
--
Tax Rate: approximately 28 percent, unchanged.
--
Full-year capital spending: $12.5 billion, plus or minus $400 million,
unchanged.
For additional information regarding Intel’s results and Business
Outlook, please see the CFO commentary at: www.intc.com/results.cfm.
Status of Business Outlook
Intel’s Business Outlook is posted on intc.com and may be reiterated in
public or private meetings with investors and others. The Business
Outlook will be effective through the close of business Sept. 14 unless
earlier updated; except that the Business Outlook for amortization of
acquisition-related intangibles, impact of equity investments and
interest and other, and tax rate, will be effective only through the
close of business on July 24. Intel’s Quiet Period will start from the
close of business on Sept. 14 until publication of the company’s
third-quarter earnings release, scheduled for Oct. 16. During the Quiet
Period, all of the Business Outlook and other forward-looking statements
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.
GAAP Financial Comparison
-------------------------------------------------------------------
Quarterly
-------------------------------------------------------------------
Q2 2012 Q1 2012 vs. Q1 2012
------------- ------------- -------------
Revenue $13.5 billion $12.9 billion up 5%
------------------ ------------- ------------- -------------
Gross Margin 63.4% 64.0% down 0.7 pts.
------------------ ------------- ------------- -------------
Operating Income $3.8 billion $3.8 billion up 1%
------------------ ------------- ------------- -------------
Net Income $2.8 billion $2.7 billion up 3%
------------------ ------------- ------------- -------------
Earnings Per Share 54 cents 53 cents up 2%
------------------ ------------- ------------- -------------
Non-GAAP Financial Comparison
----------------------------------------------------------------------
Quarterly
----------------------------------------------------------------------
Q2 2012 Q1 2012 vs. Q1 2012
---------------- ---------------- ----------------
Gross Margin 64.4% 65.1% down 0.7 pts.
------------------ ---------------- ---------------- ----------------
Operating Income $4.1 billion $4.0 billion up 1%
------------------ ---------------- ---------------- ----------------
Net Income $3.0 billion $2.9 billion up 3%
------------------ ---------------- ---------------- ----------------
Earnings Per Share 57 cents 56 cents up 2%
------------------ ---------------- ---------------- ----------------
Non-GAAP results exclude the amortization of acquisition-related
intangible
assets and the related income tax effect of these charges.
------------------------------------------------------------------
Q2 Key Financial Information (GAAP)
--
PC Client Group revenue of $8.7 billion, up 3 percent sequentially.
--
Data Center Group revenue of $2.8 billion, up 14 percent sequentially.
--
Other Intel(R) architecture group revenue of $1.1 billion, up 3 percent
sequentially.
Risk Factors
The above statements and any others in this document that refer to plans
and expectations for the third quarter, the year and the future are
forward-looking statements that involve a number of risks and
uncertainties. Words such as "anticipates," "expects," "intends,"
"plans," "believes," "seeks," "estimates," "may," "will," "should" and
their variations identify forward-looking statements. Statements that
refer to or are based on projections, uncertain events or assumptions
also identify forward-looking statements. 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, including
supply constraints and other disruptions affecting customers; 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. Uncertainty in global economic and
financial conditions poses a risk that consumers and businesses may
defer purchases in response to negative financial events, which could
negatively affect product demand and other related matters.
--
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; segment product mix; 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.
--
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.
--
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 military
conflict and other security risks, natural disasters, infrastructure
disruptions, health concerns and fluctuations in currency exchange
rates.
--
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.
--
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, disclosure 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 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.
A detailed discussion of these and other factors that could affect
Intel’s results is included in Intel’s SEC filings, including the
company’s most recent Form 10-Q and Form 10-K.
Earnings Webcast
Intel will hold a public webcast at 2 p.m. PDT today on its Investor
Relations website at www.intc.com.
A webcast replay and MP3 download will also be available on the site.
Intel plans to report its earnings for the third quarter of 2012 on Oct.
16. Immediately following the earnings report, the company plans to
publish a commentary by Stacy J. Smith, senior 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
p.m. PDT at www.intc.com.
Intel and the Intel logo 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 Six Months Ended
------------------------ ------------------------
June 30, July 2, June 30, July 2,
2012 2011 2012 2011
------------ ----------- ------------ -----------
NET REVENUE $ 13,501 $ 13,032 $ 26,407 $ 25,879
Cost of sales 4,947 5,130 9,588 10,092
------ ------ ------ ------
GROSS MARGIN 8,554 7,902 16,819 15,787
------ ------ ------ ------
Research and development 2,513 1,986 4,914 3,902
Marketing, general and administrative 2,131 1,905 4,104 3,680
------ ------ ------ ------
R&D AND MG&A 4,644 3,891 9,018 7,582
Amortization of acquisition-related intangibles 78 76 159 112
------ ------ ------ ------
OPERATING EXPENSES 4,722 3,967 9,177 7,694
------ ------ ------ ------
OPERATING INCOME 3,832 3,935 7,642 8,093
Gains (losses) on equity investments, net 47 (25) 28 3
Interest and other, net 55 21 78 206
------ ------ ------ ------
INCOME BEFORE TAXES 3,934 3,931 7,748 8,302
Provision for taxes 1,107 977 2,183 2,188
------ ------ ------ ------
NET INCOME $ 2,827 $ 2,954 $ 5,565 $ 6,114
==== ====== === ====== ==== ====== === ======
BASIC EARNINGS PER COMMON SHARE $ 0.56 $ 0.56 $ 1.11 $ 1.14
==== ====== === ====== ==== ====== === ======
DILUTED EARNINGS PER COMMON SHARE $ 0.54 $ 0.54 $ 1.07 $ 1.11
==== ====== === ====== ==== ====== === ======
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 5,022 5,294 5,010 5,376
DILUTED 5,199 5,441 5,196 5,527
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
June 30, March 31, Dec. 31,
2012 2012 2011
-------------------- -------------------- --------------------
CURRENT ASSETS
Cash and cash equivalents $ 5,223 $ 4,429 $ 5,065
Short-term investments 3,981 5,012 5,181
Trading assets 4,444 4,312 4,591
Accounts receivable, net 3,544 4,037 3,650
Inventories:
Raw materials 655 646 644
Work in process 2,068 2,048 1,680
Finished goods 2,181 1,795 1,772
-------------- -------------- --------------
4,904 4,489 4,096
Deferred tax assets 1,517 1,794 1,700
Other current assets 2,172 1,348 1,589
-------------- -------------- --------------
TOTAL CURRENT ASSETS 25,785 25,421 25,872
-------------- -------------- --------------
Property, plant and equipment, net 25,976 25,027 23,627
Marketable equity securities 599 819 562
Other long-term investments 568 498 889
Goodwill 9,442 9,388 9,254
Identified intangible assets, net 5,974 6,064 6,267
Other long-term assets 4,008 4,600 4,648
-------------- -------------- --------------
TOTAL ASSETS $ 72,352 $ 71,817 $ 71,119
==== ============== ==== ============== ==== ==============
CURRENT LIABILITIES
Short-term debt $ 92 $ 362 $ 247
Accounts payable 3,269 2,993 2,956
Accrued compensation and benefits 2,020 1,498 2,948
Accrued advertising 1,060 1,095 1,134
Deferred income 1,915 2,001 1,929
Other accrued liabilities 2,182 3,992 2,814
-------------- -------------- --------------
TOTAL CURRENT LIABILITIES 10,538 11,941 12,028
-------------- -------------- --------------
Long-term debt 7,093 7,088 7,084
Long-term deferred tax liabilities 2,775 2,793 2,617
Other long-term liabilities 3,167 3,235 3,479
Stockholders’ equity:
Preferred stock -- -- --
Common stock and capital in excess of par value 18,883 18,381 17,036
Accumulated other comprehensive income (loss) (857) (604) (781)
Retained earnings 30,753 28,983 29,656
-------------- -------------- --------------
TOTAL STOCKHOLDERS’ EQUITY 48,779 46,760 45,911
-------------- -------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 72,352 $ 71,817 $ 71,119
==== ============== ==== ============== ==== ==============
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q2 2012 Q1 2012 Q2 2011
------------------- ------------------- ------------
GEOGRAPHIC REVENUE:
Asia-Pacific $7,773 $7,368 $7,391
58% 57% 57%
Americas $2,883 $2,553 $2,909
21% 20% 22%
Europe $1,652 $1,778 $1,564
12% 14% 12%
Japan $1,193 $1,207 $1,168
9% 9% 9%
CASH INVESTMENTS:
Cash and short-term investments $9,204 $9,441 $7,741
Trading assets - marketable debt securities (1) 4,444 4,312 3,796
-------------- -------------- -------
Total cash investments $13,648 $13,753 $11,537
TRADING ASSETS:
Trading assets - equity securities (2) -- -- $10
Total trading assets - sum of 1+2 $4,444 $4,312 $3,806
CURRENT DEFERRED INCOME:
Deferred income on shipments of components to distributors $765 $814 $759
Deferred income from software and services group 1,150 1,187 1,065
-------------- -------------- -------
Total current deferred income $1,915 $2,001 $1,824
SELECTED CASH FLOW INFORMATION:
Depreciation $1,572 $1,519 $1,248
Share-based compensation $280 $274 $262
Amortization of intangibles $267 $266 $256
Capital spending ($2,662 ) ($2,974 ) ($2,484 )
Investments in non-marketable equity instruments ($79 ) ($116 ) ($148 )
Stock repurchase program ($1,100 ) ($1,500 ) ($2,000 )
Proceeds from sales of shares to employees & excess tax benefit $552 $1,263 $373
Dividends paid ($1,057 ) ($1,049 ) ($961 )
Net cash received/(used) for divestitures/acquisitions ($282 ) ($176 ) ($75 )
EARNINGS PER COMMON SHARE INFORMATION:
Weighted average common shares outstanding - basic 5,022 4,999 5,294
Dilutive effect of employee equity incentive plans 108 126 94
Dilutive effect of convertible debt 69 67 53
-------------- -------------- -------
Weighted average common shares outstanding - diluted 5,199 5,192 5,441
STOCK BUYBACK:
Shares repurchased 41 57 93
Cumulative shares repurchased (in billions) 4.2 4.1 3.7
Remaining dollars authorized for buyback (in billions) $7.5 $8.6 $8.2
OTHER INFORMATION:
Employees (in thousands) 102.8 100.8 96.5
INTEL CORPORATION
SUPPLEMENTAL OPERATING GROUP RESULTS
(In millions)
Three Months Ended Six Months Ended
----------------------- -----------------------
June 30, July 2, June 30, July 2,
2012 2011 2012 2011
-------- ------- -------- -------
Net Revenue
PC Client Group $ 8,684 $ 8,321 $ 17,135 $ 16,942
Data Center Group 2,804 2,436 5,257 4,900
Other Intel Architecture Group 1,108 1,389 2,183 2,538
-------- ------- -------- -------
Intel Architecture Group 12,596 12,146 24,575 24,380
-------- ------- -------- -------
Software and Services Group 586 511 1,157 751
All other 319 375 675 748
-------- ------- -------- -------
TOTAL NET REVENUE $ 13,501 $ 13,032 $ 26,407 $ 25,879
==== ======== ==== ======= ==== ======== ==== =======
Operating income (loss)
PC Client Group $ 3,416 $ 3,284 $ 6,899 $ 6,827
Data Center Group 1,389 1,204 2,532 2,426
Other Intel Architecture Group (335) (33) (647) (69)
-------- ------- -------- -------
Intel Architecture Group $ 4,470 $ 4,455 8,784 9,184
---- -------- ---- ------- -------- -------
Software and Services Group 14 (14) 21 (66)
All other (652) (506) (1,163) (1,025)
-------- ------- -------- -------
TOTAL OPERATING INCOME $ 3,832 $ 3,935 $ 7,642 $ 8,093
==== ======== ==== ======= ==== ======== ==== =======
In the second quarter of 2012, we reorganized our smartphone,
tablet, and mobile communication businesses within the other Intel
architecture operating group to enable us to move faster and with
greater collaboration and synergies in the market segment for
mobile devices. As part of the reorganization, the former Netbook
and Tablet Group has been separated into the following new
operating groups: Netbook Group, Tablet Group, and Service
Provider Group. Additionally, the former Ultra-Mobility Group is
now the Phone Group. The other Intel architecture operating group
continues to include the Intelligent Systems Group and Intel
Mobile Communications. The other Intel architecture operating
group aggregation has not changed. Our operating groups shown
above are comprised of the following:
- PC Client Group: Delivering platforms designed for the
notebook and desktop (including high-end enthusiast PCs) market
segments; and wireless connectivity products.
- Data Center Group: Delivering platforms designed for the
server, workstation, and storage computing market segments; and
wired network connectivity products.
- Other Intel Architecture Group consist of the following:
- Intelligent Systems Group (formerly Embedded and Communications
Group): Delivering platforms designed for embedded applications.
- Netbook Group: Delivering platforms designed for the
netbook market segment.
- Intel Mobile Communications: Delivering mobile phone
components such as baseband processors, radio frequency
transceivers, and power management chips.
- Tablet Group: Delivering platforms designed for the tablet
market segment.
- Phone Group: Delivering platforms designed for the
smartphone market segment.
- Service Provider Group: Delivering gateway and set top box
components.
- Software and Services Group consists of the following:
- McAfee: A wholly owned subsidiary delivering software
products for endpoint security, network and content security, risk
and compliance, and consumer and mobile security.
- Wind River Software Group: A wholly owned subsidiary
delivering software optimized products for the embedded and mobile
market segments.
- Software and Services Group: Delivering software products
and services that promote Intel Architecture as the platform of
choice for software development.
All Other consists of the following:
- Non-Volatile Memory Solutions Group: Delivering NAND flash
memory products for use in a variety of devices.
- Corporate: Revenue, expenses and charges such as:
- A portion of profit-dependent compensation and other expenses not
allocated to the operating groups.
- Divested businesses and results of seed businesses that support
our initiatives.
- Acquisition-related costs, including amortization and any
impairment of acquisition-related intangibles and goodwill.
INTEL CORPORATION
SUPPLEMENTAL PLATFORM REVENUE INFORMATION
Q2 2012 Q2 2012
compared to Q1 2012 compared to Q2 2011
------------------- -------------------
PC Client Platform
Unit Volumes 3% 7%
Average Selling Prices (2%) (2%)
Data Center Platform
Unit Volumes 11% 4%
Average Selling Prices 3% 12%
INTEL CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
In addition to disclosing financial results in accordance with
United States (U.S.) generally accepted accounting principles
(GAAP), this document contains non-GAAP financial measures that we
believe are helpful in understanding and comparing our past
financial performance and our expectations for future results. The
non-GAAP financial measures disclosed by the company exclude the
amortization of acquisition-related intangible assets, as well as
the related income tax effect. Amortization of acquisition-related
intangible assets consists of the amortization of developed
technology, trade names, and customer relationships acquired in
connection with business combinations. We record charges relating to
the amortization of these intangibles 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 adjustment excludes these charges to
facilitate an evaluation of our current operating performance and
comparisons to our past operating performance.
Set forth below are reconciliations of the non-GAAP financial
measures to the most directly comparable GAAP financial measures.
The non-GAAP financial measures disclosed by the company have
limitations and should not be considered a substitute for, or
superior to, financial measures prepared in accordance with GAAP,
and the financial results prepared in accordance with GAAP and
reconciliations from these results should be carefully evaluated.
Management believes the non-GAAP financial measures are appropriate
for period to period comparisons in our budget, planning and
evaluation processes, and to show the reader how our performance
compares to other periods.
(In millions, except per share amounts)
Three Months Ended Six Months Ended
----------------------------- -------------------------------
June 30, July 2, June 30, July 2,
2012 2011 2012 2011
---------- ---------- ----------- -----------
GAAP GROSS MARGIN $ 8,554 $ 7,902 $ 16,819 $ 15,787
Adjustment for the amortization of acquisition-related intangibles 142 136 279 210
----- ----- ------ ------
NON-GAAP GROSS MARGIN $ 8,696 $ 8,038 $ 17,098 $ 15,997
GAAP GROSS MARGIN PERCENTAGE 63.4 % 60.6 % 63.7 % 61.0 %
Adjustment for the amortization of acquisition-related intangibles 1.0 % 1.1 % 1.0 % 0.8 %
----- --- ----- --- ------ --- ------ ---
NON-GAAP GROSS MARGIN PERCENTAGE 64.4 % 61.7 % 64.7 % 61.8 %
GAAP OPERATING INCOME $ 3,832 $ 3,935 $ 7,642 $ 8,093
Adjustment for the amortization of acquisition-related intangibles 220 212 438 322
----- ----- ------ ------
NON-GAAP OPERATING INCOME $ 4,052 $ 4,147 $ 8,080 $ 8,415
GAAP NET INCOME $ 2,827 $ 2,954 $ 5,565 $ 6,114
Adjustment for:
Amortization of acquisition-related intangibles 220 212 438 322
Income tax effect (74 ) (38 ) (147 ) (69 )
----- --- ----- --- ------ --- ------ ---
NON-GAAP NET INCOME $ 2,973 $ 3,128 $ 5,856 $ 6,367
GAAP DILUTED EARNINGS PER COMMON SHARE $ 0.54 $ 0.54 $ 1.07 $ 1.11
Adjustment for:
Amortization of acquisition-related intangibles 0.04 0.04 0.09 0.06
Income tax effect (0.01 ) (0.01 ) (0.03 ) (0.02 )
----- --- ----- --- ------ --- ------ ---
NON-GAAP DILUTED EARNINGS PER COMMON SHARE $ 0.57 $ 0.57 $ 1.13 $ 1.15
INTEL CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP 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 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
financial outlook prepared in accordance with GAAP and the
reconciliations from this outlook should be carefully evaluated.
Please refer to "Supplemental Reconciliations of GAAP to non-GAAP
Results" 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.
Q3 2012 Outlook 2012 Outlook
---------------------------------------------- ----------------------------------------------
GAAP GROSS MARGIN PERCENTAGE 63% +/- a couple percentage points 64% +/- a couple percentage points
Adjustment for the amortization of acquisition-related intangibles 1% 1%
------ ------
NON-GAAP GROSS MARGIN PERCENTAGE 64% +/- a couple percentage points 65% +/- a couple percentage points
SOURCE: Intel Corporation
Intel Corporation
Reuben Gallegos, 408-765-5374 (Investor Relations)
reuben.m.gallegos@intel.com
Jon Carvill, 503-696-5069 (Media Relations)
jon.carvill@intel.com
|
