Intel (INTC) 10-Q 3 May 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information
Share data in Millions	3 Months Ended Mar. 27, 2010	Apr. 23, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	Intel Corporation
Entity Central Index Key	0000050863
Document Type	10-Q
Document Period End Date	2010-03-27
Amendment Flag	false
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Company Fiscal Year End Date	--12-25
Entity Filer Category	Large Accelerated Filer
Entity Common Stock Shares Outstanding		5,564

Consolidated Condensed Statemen

Consolidated Condensed Statements of Operations (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 27, 2010	3 Months Ended Mar. 28, 2009
Consolidated Condensed Statements of Operations (Unaudited) [Abstract]
Net revenue	$10,299	$7,145
Cost of sales	3,770	3,907
Gross margin	6,529	3,238
Research and development	1,564	1,317
Marketing, general and administrative	1,514	1,198
Restructuring and asset impairment charges	0	74
Amortization of acquisition-related intangibles	3	2
Operating expenses	3,081	2,591
Operating income	3,448	647
Gains (losses) on equity method investments, net	(39)	(72)
Gains (losses) on other equity investments, net	8	(41)
Interest and other, net	29	95
Income before taxes	3,446	629
Provision for taxes	1,004	0
Net income	$2,442	$629
Basic earnings per common share (in dollars per share)	0.44	0.11
Diluted earnings per common share (in dollars per share)	0.43	0.11
Cash dividends declared per common share (in dollars per share)	0.315	0.28
Weighted average common shares outstanding:
Basic (shares)	5,529	5,573
Diluted (shares)	5,681	5,634

Consolidated Condensed Balance

Consolidated Condensed Balance Sheets (Unaudited) (USD $)
In Millions	3 Months Ended Mar. 27, 2010	12 Months Ended Dec. 26, 2009
Current assets:
Cash and cash equivalents	$4,988	$3,987
Short-term investments	5,927	5,285
Trading assets	5,427	4,648
Accounts receivable, net	2,192	2,273
Inventories	2,986	2,935
Deferred tax assets	1,423	1,216
Other current assets	781	813
Total current assets	23,724	21,157
Property, plant and equipment, net of accumulated depreciation of $30,935 ($30,597 as of December 26, 2009)	17,028	17,225
Marketable equity securities	926	773
Other long-term investments	4,326	4,179
Goodwill	4,452	4,421
Other long-term assets	5,317	5,340
Total assets	55,773	53,095
Current liabilities:
Short-term debt	330	172
Accounts payable	1,912	1,883
Accrued compensation and benefits	1,377	2,448
Accrued advertising	843	773
Deferred income on shipments to distributors	653	593
Income taxes payable	916	86
Other accrued liabilities	2,881	1,636
Total current liabilities	8,912	7,591
Long-term income taxes payable	174	193
Long-term debt	2,052	2,049
Long-term deferred tax liabilities	707	555
Other long-term liabilities	1,028	1,003
Contingencies (Note 21)
Stockholders' equity:
Preferred stock	0	0
Common stock and capital in excess of par value, 5,537 shares issued and outstanding (5,523 as of December 26, 2009)	15,466	14,993
Accumulated other comprehensive income (loss)	414	393
Retained earnings	27,020	26,318
Total stockholders' equity	42,900	41,704
Total liabilities and stockholders' equity	$55,773	$53,095

1_Consolidated Condensed Balanc

Consolidated Condensed Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Millions	Mar. 27, 2010	Dec. 26, 2009
Assets
Accumulated depreciation	$30,935	$30,597
Stockholders' equity:
Common stock, shares issued	5,537	5,523
Common stock, shares outstanding	5,537	5,523

2_Consolidated Condensed Statem

Consolidated Condensed Statements of Cash Flows (Unaudited) (USD $)
In Millions	3 Months Ended Mar. 27, 2010	3 Months Ended Mar. 28, 2009
Consolidated Condensed Statements of Cash Flows (Unaudited) [Abstract]
Cash and cash equivalents, beginning of period	$3,987	$3,350
Cash flows provided by (used for) operating activities:
Net income	2,442	629
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	1,080	1,208
Share-based compensation	248	213
Restructuring, asset impairment, and net loss on retirement of assets	33	96
Excess tax benefit from share-based payment arrangements	(2)	0
Amortization of intangibles	61	62
(Gains) losses on equity method investments, net	39	72
(Gains) losses on other equity investments, net	(8)	41
Deferred taxes	(6)	50
Changes in assets and liabilities:
Trading assets	0	13
Accounts receivable	88	(374)
Inventories	(51)	686
Accounts payable	29	(721)
Accrued compensation and benefits	(1,095)	(921)
Income taxes payable and receivable	916	(230)
Other assets and liabilities	305	(446)
Total adjustments	1,637	(251)
Net cash provided by operating activities	4,079	378
Cash flows provided by (used for) investing activities:
Additions to property, plant and equipment	(928)	(1,509)
Acquisitions, net of cash acquired	(37)	0
Purchases of available-for-sale investments	(3,235)	(601)
Maturities and sales of available-for-sale investments	2,615	2,078
Purchases of trading assets	(2,397)	(304)
Maturities and sales of trading assets	1,554	651
Loans receivable	(249)	0
Investments in non-marketable equity investments	(69)	(41)
Return of equity method investments	70	118
Other investing activities	4	17
Net cash provided by (used for) investing activities	(2,672)	409
Cash flows provided by (used for) financing activities:
Increase (decrease) in short-term debt, net	158	(69)
Proceeds from government grants	79	0
Excess tax benefit from share-based payment arrangements	2	0
Proceeds from sales of shares through employee equity incentive plans	228	247
Repurchase and retirement of common stock	(3)	0
Payment of dividends to stockholders	(870)	(779)
Net cash used for financing activities	(406)	(601)
Net increase (decrease) in cash and cash equivalents	1,001	186
Cash and cash equivalents, end of period	4,988	3,536
Cash paid during the period for:
Interest, net of capitalized interest	0	3
Income taxes, net of refunds	$127	$184

Basis of Presentation

Basis of Presentation
	3 Months Ended Mar. 27, 2010
Basis of Presentation [Abstract]
Basis of Presentation	Note 1: Basis of Presentation We prepared our interim consolidated condensed financial statements that accompany these notes in conformity with U.S. generally accepted accounting principles, consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended December26, 2009. We have made estimates and judgments affecting the amounts reported in our consolidated condensed financial statements and the accompanying notes. The actual results that we experience may differ materially from our estimates. The accounting estimates that require our most significant, difficult, and subjective judgments include: the valuation of non-marketable equity investments and the determination of other-than-temporary impairments; the assessment of recoverability of long-lived assets; the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax positions); and the valuation of inventory. The interim financial information is unaudited, but reflects all normal adjustments that are, in our opinion, necessary to provide a fair statement of results for the interim periods presented. This interim information should be read in conjunction with the consolidated financial statements in our Annual Report on Form 10-K for the year ended December26, 2009.

Accounting Changes

Accounting Changes
	3 Months Ended Mar. 27, 2010
Accounting Changes [Abstract]
Accounting Changes	Note 2: Accounting Changes In the first quarter of 2010, we adopted new standards that changed the accounting for transfers of financial assets. These new standards eliminate the concept of a qualifying special-purpose entity; remove the scope exception from applying the accounting standards that address the consolidation of variable interest entities to qualifying special-purpose entities; change the standards for de-recognizing financial assets; and require enhanced disclosure. The adoption of these new standards did not impact our consolidated statements of operations or balance sheets. In the first quarter of 2010, we adopted new standards for determining whether to consolidate a variable interest entity. These new standards eliminated a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. The adoption of these new standards did not impact our consolidated statements of operations or balance sheets.

Recent Accounting Standards

Recent Accounting Standards
	3 Months Ended Mar. 27, 2010
Recent Accounting Standards [Abstract]
Recent Accounting Standards	Note 3: Recent Accounting Standards In October2009, the Financial Accounting Standards Board (FASB) issued new standards for revenue recognition with multiple deliverables. These new standards impact the determination of when the individual deliverables included in a multiple-element arrangement may be treated as separate units for accounting purposes. Additionally, these new standards modify the manner in which the transaction consideration is allocated across the separately identified deliverables by no longer permitting the residual method of allocating arrangement consideration. These new standards are required to be adopted in the first quarter of 2011; however, early adoption is permitted. We do not expect these new standards to significantly impact our consolidated financial statements. In October2009, the FASB issued new standards for the accounting for certain revenue arrangements that include software elements. These new standards amend the scope of pre-existing software revenue guidance by removing from the guidance non-software components of tangible products and certain software components of tangible products. These new standards are required to be adopted in the first quarter of 2011; however, early adoption is permitted. We do not expect these new standards to significantly impact our consolidated financial statements. In January2010, the FASB issued amended standards that require additional fair value disclosures. These disclosure requirements are effective in two phases. In the first quarter of 2010, we adopted the requirements for disclosures about inputs and valuation techniques used to measure fair value as well as disclosures about significant transfers. Beginning in the first quarter of 2011, these amended standards will require presentation of disaggregated activity within the reconciliation for fair value measurements using significant unobservable inputs (Level 3). These amended standards do not significantly impact our consolidated financial statements.

Fair Value

Fair Value
	3 Months Ended Mar. 27, 2010
Fair Value [Abstract]
Fair Value	Note 4: Fair Value Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, we consider the principal or most advantageous market in which we would transact, and we consider assumptions that market participants would use when pricing the asset or liability. Our financial instruments are measured and recorded at fair value, except for equity method investments, cost method investments, cost method loans receivable, accounts receivable, and most of our liabilities. Fair Value Hierarchy The three levels of inputs that may be used to measure fair value are as follows: Level 1. Quoted prices in active markets for identical assets or liabilities. Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. Level 2 inputs also include non-binding market consensus prices that can be corroborated with observable market data, as well as quoted prices that were adjusted for security-specific restrictions. Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. Level 3 inputs also include non-binding market consensus prices or non-binding broker quotes that we were unable to corroborate with observable market data. Marketable Debt Instruments Marketable debt instruments include commercial paper, corporate bonds, government bonds, bank deposits, asset-backed securities, municipal bonds, and money market fund deposits. When we use observable market prices for identical securities that are traded in less active markets, we classify our marketable debt instruments as Level 2. When observable market prices for identical securities are not available, we price our marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical and/or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. We corroborate non-binding market consensus prices with observable market data using statistical models when observable market data exists. The discounted cash flow model uses observable market inputs, such as LIBOR-based yield curves, currency spot an

Trading Assets

Trading Assets
	3 Months Ended Mar. 27, 2010
Trading Assets [Abstract]
Trading Assets	Note 5: Trading Assets As of March27, 2010 and December26, 2009, trading assets were comprised of marketable debt instruments. Net losses related to trading assets still held at the reporting date were $85million in the first quarter of 2010 (losses of $22million in the first quarter of 2009). Net gains on the related derivatives were $75million in the first quarter of 2010 (gains of $11 million in the first quarter of 2009).

Available-for-Sale Investments

Available-for-Sale Investments
	3 Months Ended Mar. 27, 2010
Available-for-Sale Investments [Abstract]
Available-for-Sale Investments	Note 6: Available-for-Sale Investments Available-for-sale investments as of March27, 2010 and December26, 2009 were as follows: March 27, 2010 December 26, 2009 Gross Gross Gross Gross Adjusted Unrealized Unrealized Adjusted Unrealized Unrealized (In Millions) Cost Gains Losses Fair Value Cost Gains Losses Fair Value Commercial paper $ 7,311 $ $ (1 ) $ 7,310 $ 5,444 $ $ $ 5,444 Government bonds 3,141 11 (2 ) 3,150 2,205 11 (1 ) 2,215 Corporate bonds 3,032 10 (10 ) 3,032 3,688 38 (14 ) 3,712 Bank deposits 1,467 2 1,469 1,317 1 1,318 Marketable equity securities 426 508 (8 ) 926 387 386 773 Asset-backed securities 105 (13 ) 92 154 (18 ) 136 Money market fund deposits 3 3 65 65 Total available-for-sale investments $ 15,485 $ 531 $ (34 ) $ 15,982 $ 13,260 $ 436 $ (33 ) $ 13,663 Government bonds includes bonds issued or deemed to be guaranteed by non-U.S. governments, FDIC-insured corporate bonds, U.S. agency securities, and U.S. Treasury securities. Bank deposits were primarily issued by institutions outside the U.S. as of March27, 2010 and December26, 2009. As of March27, 2010, $19million of the above gross unrealized losses related to individual securities that had been in a continuous loss position for 12months or more ($26million as of December26, 2009). The amortized cost and fair value of available-for-sale debt investments as of March27, 2010, by contractual maturity, were as follows: (In Millions) Cost Fair Value Due in 1year or less $ 10,675 $ 10,679 Due in 1-2years 1,934 1,935 Due in 2-5years 2,317 2,322 Instruments not due at a single maturity date 133 120 Total $ 15,059 $ 15,056 Instruments not due at a single maturity date in the table above includes asset-backed securities, money market fund deposits, and certain bank deposits. We sold available-for-sale investments for proceeds of $293million in the first quarter of 2010 ($30million in the first quarter of 2009). The gross realized gains on sales of available-for-sale investments were $67million in the first quarter of 2010 (insignificant in the first quarter of 2009) and were related to our sales of marketable equity securities. We determine the cost of the investment sold on an average cost basis. Impairment charges recognized on available-for-sale investments as well as gross realized losses were insignificant in the first quarter of 2010 and 2009. The before-tax net unrealized holding gains (losses)on available-for-sale investments that have been i

Inventories

Inventories
	3 Months Ended Mar. 27, 2010
Inventories [Abstract]
Inventories	Note 7: Inventories Inventories at the end of each period were as follows: March 27, Dec. 26, (In Millions) 2010 2009 Raw materials $ 464 $ 437 Work in process 1,473 1,469 Finished goods 1,049 1,029 Total inventories $ 2,986 $ 2,935

Derivative Financial Instrument

Derivative Financial Instruments
	3 Months Ended Mar. 27, 2010
Derivative Financial Instruments [Abstract]
Derivative Financial Instruments	Note 8: Derivative Financial Instruments Our primary objective for holding derivative financial instruments is to manage currency exchange rate risk and interest rate risk, and to a lesser extent, equity market risk and commodity price risk. We currently do not hold derivative instruments for the purpose of managing credit risk since we limit the amount of credit exposure to any one counterparty and generally enter into derivative transactions with high-credit-quality counterparties. We also enter into master netting arrangements with counterparties when possible to mitigate credit risk in derivative transactions. A master netting arrangement may allow counterparties to net settle amounts owed to each other as a result of multiple, separate derivative transactions. For presentation on our consolidated condensed balance sheets, we do not offset fair value amounts recognized for derivative instruments under master netting arrangements. Currency Exchange Rate Risk We are exposed to currency exchange rate risk on our non-U.S.-dollar-denominated investments in debt instruments and loans receivable, which are generally hedged with offsetting currency forward contracts, currency options, or currency interest rate swaps. Substantially all of our revenue and a majority of our expense and capital purchasing activities are transacted in U.S. dollars. However, certain operating expenditures and capital purchases are incurred in or exposed to other currencies, primarily the Japanese yen, the euro, and the Israeli shekel. We have established balance sheet and forecasted transaction currency risk management programs to protect against fluctuations in fair value and the volatility of future cash flows caused by changes in exchange rates. These programs reduce, but do not always entirely eliminate, the impact of currency exchange movements. Our currency risk management programs include: Currency derivatives with cash flow hedge accounting designation that utilize currency forward contracts and currency options to hedge exposures to the variability in the U.S.-dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. These instruments generally mature within 12months. For these derivatives, we report the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive income (loss)and reclassify it into earnings in the same period or periods in which the hedged transaction affects earnings, and within the same line item on the consolidated condensed statements of operations as the impact of the hedged transaction. Currency derivatives without hedge accounting designation that utilize currency forward contracts, currency options, or currency interest rate swaps to economically hedge the functional currency equivalent cash flows of recognized monetary assets and liabilities and non-U.S.-dollar-denominated debt instruments classified as trading assets. The maturity of these instruments generally occurs within 12months, except for derivatives associated with certain long-term equity-related investments and our loans receivable that generally mature within five years. Ch

Other Long-Term Assets

Other Long-Term Assets
	3 Months Ended Mar. 27, 2010
Other Long-Term Assets [Abstract]
Other Long-Term Assets	Note 9: Other Long-Term Assets Other long-term assets at the end of each period were as follows: March 27, Dec. 26, (In Millions) 2010 2009 Non-marketable equity method investments $ 2,421 $ 2,472 Non-marketable cost method investments 843 939 Identified intangible assets 845 883 Non-current deferred tax assets 268 278 Loans receivable 490 249 Other 450 519 Total other long-term assets $ 5,317 $ 5,340

Non-Marketable Equity Investmen

Non-Marketable Equity Investments
	3 Months Ended Mar. 27, 2010
Non-Marketable Equity Investments [Abstract]
Non-Marketable Equity Investments	Note 10: Non-Marketable Equity Investments IMFT/IMFS Micron and Intel formed IM Flash Technologies, LLC (IMFT)in January2006 and IM Flash Singapore, LLP (IMFS)in February2007. We established these joint ventures to manufacture NAND flash memory products for Micron and Intel. As of March27, 2010, we own a 49% interest in IMFT and a 47% interest in IMFS. Our investment in IMFT/IMFS was $1.6billion as of March27, 2010 and December 26, 2009. The IMFS fabrication facility is in startup phase with initial production expected in 2011. Intel has made limited additional investments in the first quarter of 2010 and will assess any additional investments in IMFS based on market conditions. IMFT and IMFS are each governed by a Board of Managers, with Micron and Intel initially appointing an equal number of managers to each of the boards. The number of managers appointed by each party adjusts depending on the parties ownership interests. These ventures will operate until 2016 but are subject to prior termination under certain terms and conditions. These joint ventures are variable interest entities. All costs of the joint ventures will be passed on to Micron and Intel through our purchase agreements. IMFT and IMFS are dependent upon Micron and Intel for any additional cash requirements. Our known maximum exposure to loss approximated our investment balance in IMFT/IMFS as of March27, 2010. Our investment in these ventures is classified within other long-term assets. As of March27, 2010, except for the amount due to IMFT/IMFS for product purchases and services, we did not incur any additional liabilities in connection with our interests in these joint ventures. In addition to the potential loss of our existing investment, our actual losses could be higher, as Intel and Micron are liable for other future operating costs and/or obligations of IMFT/IMFS. In addition, future cash calls could increase our investment balance and the related exposure to loss. Finally, as we are currently committed to purchasing 49% of IMFT/IMFSs production output and production-related services, we may be required to purchase products at a cost in excess of realizable value. Our portion of IMFT costs, primarily related to product purchases and production-related services, was approximately $185million during the first quarter of 2010 (approximately $210million during the first quarter of 2009). The amount due to IMFT for product purchases and services provided was approximately $70million as of March27, 2010 (approximately $75million as of December26, 2009). During the first quarter of 2010, $68million was returned to Intel by IMFT, which is reflected as a return of equity method investment within investing activities on the consolidated condensed statements of cash flows ($105million during the first quarter of 2009). Under the accounting standards for consolidating variable interest entities, the consolidating investor is the entity that has the power to direct the activities of the venture that most significantly impacts the ventures economic performance and has the obligation to absorb losses or the right to receive benefits from the venture that could

Gains

Gains (Losses) on Equity Method Investments, Net
	3 Months Ended Mar. 27, 2010
Gains (Losses) on Equity Method Investments, Net [Abstract]
Gains (Losses) on Equity Method Investments, Net	Note 11: Gains (Losses) on Equity Method Investments, Net Gains (losses)on equity method investments, net included: Three Months Ended March 27, March 28, (In Millions) 2010 2009 Equity method losses, net $ (35 ) $ (62 ) Impairment charges (4 ) (10 ) Total gains (losses)on equity method investments, net $ (39 ) $ (72 )

3_Gains

Gains (Losses) on Other Equity Investments, Net
	3 Months Ended Mar. 27, 2010
Gains (Losses) on Other Equity Investments, Net [Abstract]
Gains (Losses) on Other Equity Investments, Net	Note 12: Gains (Losses) on Other Equity Investments, Net Gains (losses)on other equity investments, net included: Three Months Ended March 27, March 28, (In Millions) 2010 2009 Impairment charges $ (42 ) $ (69 ) Gains on sales, net 83 1 Other, net (33 ) 27 Total gains (losses)on other equity investments, net $ 8 $ (41 )

Interest and Other, Net

Interest and Other, Net
	3 Months Ended Mar. 27, 2010
Interest and Other, Net [Abstract]
Interest and Other, Net	Note 13: Interest and Other, Net The components of interest and other, net were as follows: Three Months Ended March 27, March 28, (In Millions) 2010 2009 Interest income $ 26 $ 72 Other, net 3 23 Total interest and other, net $ 29 $ 95

Goodwill

Goodwill
	3 Months Ended Mar. 27, 2010
Goodwill [Abstract]
Goodwill	Note 14: Goodwill Net goodwill activity for the first quarter of 2010 was as follows: Other Intel Architecture Other PC Client Data Center Operating Operating (In Millions) Group Group Segments Segments Total Goodwill December26, 2009 $ 2,220 $ 1,459 $ 507 $ 235 $ 4,421 Additions due to business combinations 10 21 31 March27, 2010 $ 2,220 $ 1,459 $ 517 $ 256 $ 4,452 During the first quarter of 2010, we completed one acquisition. The majority of the goodwill recognized from this acquisition was assigned to our Software and Services Group and is reflected under the other operating segments category in the table above. The remaining goodwill recognized from this acquisition was assigned to our Embedded and Communications Group and is reflected under the other Intel architecture operating segments category in the table above. No goodwill was impaired during the first quarter of 2010 and 2009, and the accumulated impairment losses as of December26, 2009 and March27, 2010 were $713million: $355million associated with our PC Client Group, $279million associated with our Data Center Group, and $79million associated with other Intel architecture operating segments.

Identified Intangible Assets

Identified Intangible Assets
	3 Months Ended Mar. 27, 2010
Identified Intangible Assets [Abstract]
Identified Intangible Assets	Note 15: Identified Intangible Assets We classify identified intangible assets within other long-term assets on the consolidated condensed balance sheets. Identified intangible assets consisted of the following as of March27, 2010: Gross Accumulated (In Millions) Assets Amortization Net Intellectual property assets $ 1,203 $ (654 ) $ 549 Acquisition-related developed technology 168 (48 ) 120 Other intangible assets 217 (41 ) 176 Total identified intangible assets $ 1,588 $ (743 ) $ 845 Identified intangible assets consisted of the following as of December26, 2009: Gross Accumulated (In Millions) Assets Amortization Net Intellectual property assets $ 1,190 $ (616 ) $ 574 Acquisition-related developed technology 166 (34 ) 132 Other intangible assets 509 (332 ) 177 Total identified intangible assets $ 1,865 $ (982 ) $ 883 We recorded the amortization of identified intangible assets on the consolidated condensed statements of operations as cost of sales, amortization of acquisition-related intangibles, or a reduction of revenue. The amortization expense was as follows: Three Months Ended March 27, March 28, (In Millions) 2010 2009 Intellectual property assets $ 38 $ 36 Acquisition-related developed technology $ 14 $ 2 Other intangible assets $ 9 $ 24 Based on identified intangible assets recorded as of March27, 2010, subject to amortization, and assuming the underlying assets will not be impaired in the future, we expect future amortization expense to be as follows: Remainder (In Millions) of 2010 2011 2012 2013 2014 Intellectual property assets $ 110 $ 96 $ 85 $ 68 $ 57 Acquisition-related developed technology $ 41 $ 46 $ 24 $ 9 $ Other intangible assets $ 22 $ 26 $ 30 $ 29 $ 20

Restructuring and Asset Impairm

Restructuring and Asset Impairment Charges
	3 Months Ended Mar. 27, 2010
Restructuring and Asset Impairment Charges [Abstract]
Restructuring and Asset Impairment Charges	Note 16: Restructuring and Asset Impairment Charges The following table summarizes restructuring and asset impairment charges by plan: Three Months Ended March 27, March 28, (In Millions) 2010 2009 2009 restructuring program $ $ 61 2006 efficiency program 13 Total restructuring and asset impairment charges $ $ 74 The 2006 efficiency program was completed in 2009. 2009 Restructuring Program In the first quarter of 2009, management approved plans to restructure some of our manufacturing and assembly and test operations. These plans included closing two assembly and test facilities in Malaysia, one facility in the Philippines, and one facility in China; stopping production at a 200mm wafer fabrication facility in Oregon; and ending production at our 200mm wafer fabrication facility in California. We do not expect future charges related to the 2009 restructuring program. Restructuring and asset impairment charges were as follows: Three Months Ended March 27, March 28, (In Millions) 2010 2009 Employee severance and benefit arrangements $ $ 54 Asset impairments 7 Total restructuring and asset impairment charges $ $ 61 The following table summarizes the restructuring activity for the 2009 restructuring program during the first three months of 2010: Employee Severance and (In Millions) Benefits Accrued restructuring balance as of December26, 2009 $ 26 Additional accruals Adjustments Cash payments (15 ) Non-cash settlements Accrued restructuring balance as of March27, 2010 $ 11 The remaining accrual as of March27, 2010 was related to severance benefits that are recorded within accrued compensation and benefits. Under the 2009 restructuring program, we incurred $208 million related to employee severance and benefit arrangements for approximately 6,500 employees.

Employee Equity Incentive Plans

Employee Equity Incentive Plans
	3 Months Ended Mar. 27, 2010
Employee Equity Incentive Plans [Abstract]
Employee Equity Incentive Plans	Note 17: Employee Equity Incentive Plans Our equity incentive plans are broad-based, long-term programs intended to attract and retain talented employees and align stockholder and employee interests. Under the 2006 Equity Incentive Plan (2006 Plan), 428million shares of common stock have been made available for issuance as equity awards to employees and non-employee directors. A maximum of 253million of these shares can be awarded as non-vested shares (restricted stock) or non-vested share units (restricted stock units). As of March27, 2010, 232million shares remained available for future grant under the 2006 Plan. The 2006 Stock Purchase Plan allows eligible employees to purchase shares of our common stock at 85% of the value of our common stock on specific dates. Rights to purchase shares are granted during the first and third quarters of each year. Under the 2006 Stock Purchase Plan, we made 240 million shares of common stock available for issuance through August2011. As of March27, 2010, 147million shares were available for issuance under the 2006 Stock Purchase Plan. Restricted Stock Unit Awards Activity with respect to outstanding restricted stock units for the first quarter of 2010 was as follows: Weighted Average Grant- Number of Date Fair (In Millions, Except Per Share Amounts) Shares Value December26, 2009 105.4 $ 17.03 Granted 2.1 $ 24.87 Vested (0.5 ) $ 15.87 Forfeited (1.0 ) $ 16.98 March27, 2010 106.0 $ 17.19 As of March27, 2010, three million of the outstanding restricted stock units were market-based restricted stock units. Stock Option Awards Activity with respect to outstanding stock options for the first quarter of 2010 was as follows: Weighted Number of Average (In Millions, Except Per Share Amounts) Shares Exercise Price December26, 2009 451.3 $ 25.08 Grants 3.9 $ 20.30 Exercises (3.8 ) $ 17.74 Cancellations and forfeitures (3.9 ) $ 26.81 Expirations (4.1 ) $ 51.76 March27, 2010 443.4 $ 24.84 Options exercisable as of: December26, 2009 297.7 $ 28.44 March27, 2010 288.5 $ 28.18 Stock Purchase Plan Employees purchased 9.8million shares in the first quarter of 2010 (22.3million shares in the first quarter of 2009) for $161million ($247million in the first quarter of 2009) under the 2006 Stock Purchase Plan.

Earnings Per Share

Earnings Per Share
	3 Months Ended Mar. 27, 2010
Earnings Per Share [Abstract]
Earnings Per Share	Note 18: Earnings Per Share We computed our basic and diluted earnings per common share as follows: Three Months Ended March 27, March 28, (In Millions, Except Per Share Amounts) 2010 2009 Net income available to common stockholders $ 2,442 $ 629 Weighted average common shares outstanding basic 5,529 5,573 Dilutive effect of employee equity incentive plans 101 10 Dilutive effect of convertible debt 51 51 Weighted average common shares outstanding diluted 5,681 5,634 Basic earnings per common share $ 0.44 $ 0.11 Diluted earnings per common share $ 0.43 $ 0.11 We computed our basic earnings per common share using net income available to common stockholders and the weighted average number of common shares outstanding during the period. We computed diluted earnings per common share using net income available to common stockholders and the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period. Net income available to participating securities was insignificant for the first quarter of 2010. Potentially dilutive common shares from employee incentive plans are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, the assumed vesting of outstanding restricted stock units, and the assumed issuance of common stock under the stock purchase plan. Potentially dilutive common shares are determined by applying the if-converted method for the 2005 debentures. However, as our 2009 debentures require settlement of the principal amount of the debt in cash upon conversion, with the conversion premium paid in cash or stock at our option, potentially dilutive common shares are determined by applying the treasury stock method for these debentures. For the first quarter of 2010, we excluded 185million outstanding weighted average stock options (601million for the first quarter of 2009) from the calculation of diluted earnings per common share because the exercise prices of these stock options were greater than or equal to the average market value of the common shares. These options could be included in the calculation in the future if the average market value of the common shares increases and is greater than the exercise price of these options. We also excluded our 2009 debentures from the calculation of diluted earnings per common share because the conversion option of these debentures was anti-dilutive. In the future, we could have potentially dilutive shares if the average market price is above the conversion price.

Comprehensive Income

Comprehensive Income
	3 Months Ended Mar. 27, 2010
Comprehensive Income [Abstract]
Comprehensive Income	Note 19: Comprehensive Income The components of total comprehensive income were as follows: Three Months Ended March 27, March 28, (In Millions) 2010 2009 Net income $ 2,442 $ 629 Change in net unrealized holding gain (loss)on available-for-sale investments 54 46 Change in deferred tax asset valuation allowance 34 11 Change in net unrealized holding gain (loss)on derivatives (65 ) (54 ) Change in actuarial loss (2 ) Total comprehensive income $ 2,463 $ 632 The change in deferred tax asset valuation allowance was attributed to changes in unrealized holding gains on our available-for-sale investments. This amount will be relieved as these investments are sold or mature. The components of accumulated other comprehensive income (loss), net of tax, at the end of each period were as follows: March 27, Dec. 26, (In Millions) 2010 2009 Accumulated net unrealized holding gain (loss)on available-for-sale investments $ 315 $ 261 Accumulated net change in deferred tax asset valuation allowance 180 146 Accumulated net unrealized holding gain (loss)on derivatives 75 140 Accumulated net prior service costs 3 3 Accumulated net actuarial losses (158 ) (156 ) Accumulated transition obligation (1 ) (1 ) Total accumulated other comprehensive income (loss) $ 414 $ 393 As of March27, 2010 and December26, 2009, accumulated unrealized non-credit-related other-than-temporary impairment losses on available-for-sale debt instruments were insignificant.

Taxes

Taxes
	3 Months Ended Mar. 27, 2010
Taxes [Abstract]
Taxes	Note 20: Taxes Our effective income tax rate was 29.1% in the first quarter of 2010 and zero in the first quarter of 2009. The impact of discrete items significantly reduced our effective tax rate in the first quarter of 2009, primarily due to the settlement of various federal and state tax matters related to prior years. In addition, our estimated annual effective tax rate in the first quarter of 2009 was significantly reduced as a result of a high percentage of profits in lower tax jurisdictions.

Contingencies

Contingencies
	3 Months Ended Mar. 27, 2010
Contingencies [Abstract]
Contingencies	Note 21: Contingencies Legal Proceedings We are currently a party to various legal proceedings, including those noted in this section. While management presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm the companys financial position, cash flows, or overall trends in results of operations, legal proceedings and related government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable rulings could include substantial money damages, and in matters for which injunctive relief or other conduct remedies are sought, an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices, or requiring other remedies such as compulsory licensing of intellectual property. Were unfavorable final outcomes to occur, there exists the possibility of a material adverse impact on our business, results of operations, financial position, and overall trends. It is also possible that we could conclude it is in the best interests of our stockholders, employees, and customers to settle one or more such matters, and any such settlement could include substantial payments; however we have not reached this conclusion with respect to any particular matter at this time. Except as may be otherwise indicated, the outcomes in these matters are not reasonably estimable. A number of proceedings generally have challenged and continue to challenge certain of our competitive practices. The allegations in these proceedings vary and are described in more detail in the following paragraphs, but in general contend that we improperly condition price rebates and other discounts on our microprocessors on exclusive or near-exclusive dealing by some of our customers; claim that our software compiler business unfairly prefers Intel microprocessors over competing microprocessors and that, through the use of our compilers and other means, we have caused inaccurate and misleading benchmark results concerning our microprocessors to be disseminated; allege that we unfairly controlled the content and timing of release of various standard computer interfaces developed by Intel in cooperation with other industry participants; and accuse us of engaging in various acts of improper competitive activity in competing against what is referred to as general purpose graphics processing units, including certain licensing practices and our actions in connection with developing and disclosing potential competitive technology. We believe that we compete lawfully and that our marketing, business, intellectual property, and other challenged practices benefit our customers and our stockholders, and we will continue to vigorously defend ourselves in these proceedings. While we have settled some of these matters, the distractions caused by challenges to these practices from the remaining matters are undesirable, and the legal and other costs associated with defending and resolving our position have been and continue to be significant. We assume that these challenges could continue

Operating Segment Information

Operating Segment Information
	3 Months Ended Mar. 27, 2010
Operating Segment Information [Abstract]
Operating Segment Information	Note 22: Operating Segment Information 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. After the reorganization, our operating segments include the PC Client Group, Data Center Group, Embedded and Communications Group, Digital Home Group, Ultra-Mobility Group, NAND Solutions Group, Wind River Software Group, Software and Services Group, and Digital Health Group. Prior-period amounts have been adjusted retrospectively to reflect the new organizational structure. The Chief Operating Decision Maker (CODM)is our President and Chief Executive Officer. The CODM allocates resources to and assesses the performance of each operating segment using information about its revenue and operating income (loss). Our PC Client Group and our Data Center Group are reportable operating segments. We also aggregate and disclose the financial results of the following non-reportable operating segments, whose product lines are based on Intel architecture: Embedded and Communications Group, Digital Home Group, and Ultra-Mobility Group. These non-reportable operating segments are aggregated, as they have similar economic characteristics and their operations are similar in nature. These aggregated operating segments do not meet the quantitative thresholds to qualify as reportable operating segments; however, we have chosen to disclose the aggregation of these non-reportable operating segments into the other Intel architecture operating segments category. Revenue for our reportable and aggregated non-reportable operating segments is primarily related to the following product lines: PC Client Group. Includes microprocessors and related chipsets and motherboards designed for the desktop (including high-end enthusiast PCs), notebook, and netbook market segments; and wireless connectivity products. Data Center Group. Includes microprocessors and related chipsets and motherboards designed for the server, workstation, and storage computing market segments; and wired network connectivity products. Other Intel architecture operating segments. Includes microprocessors and related chipsets for embedded applications and products designed for the ultra-mobile market segment, which includes various handheld devices; and products for the consumer electronics market segments. Our NAND Solutions Group, Wind River Software Group, Software and Services Group, and Digital Health Group operating segments do not meet the quantitative thresholds to qualify as reportable segments and are included within the other operating segments category. We have sales and marketing, manufacturing, finance, and administration groups. Expenses for these groups are generally allocated to the operating segments, and the allocated expenses are included in the operating results reported below. The corporate category includes expenses and charges such as: amounts included within restructuring and asset impairment charges; a portion of profit-dependent compensation and other expenses not allocated to the operating segments;