Exhibit 99.1
Intel Reports Record Year
$54 Billion in Annual Revenue Up 24 Percent, $2.39 in Annual EPS Up 19 Percent
$18 Billion in Dividends, Buybacks Returned to Stockholders
SANTA CLARA, Calif.--(BUSINESS WIRE)--January 19, 2012--Intel Corporation today reported full-year revenue of $54 billion, operating income of $17.5 billion, net income of $12.9 billion and EPS of $2.39 -- all records. The company generated approximately $21 billion in cash from operations, paid dividends of $4.1 billion and used $14.1 billion to repurchase 642 million shares of stock.
For the fourth quarter, Intel posted revenue of $13.9 billion, operating income of $4.6 billion, net income of $3.4 billion and EPS of 64 cents. The company generated approximately $6.6 billion in cash from operations, paid dividends of $1.1 billion and used $4.1 billion to repurchase 174 million shares of stock.
“2011 was an exceptional year for Intel,” said Paul Otellini, Intel president and CEO. “With outstanding execution the company performed superbly, growing revenue by more than $10 billion and eclipsing all annual revenue and earnings records. With a tremendous product and technology pipeline for 2012, we’re excited about the global growth opportunities presented by Ultrabook systems, the data center, security and the introduction of Intel-powered smartphones and tablets.”
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. 19.
Q1 2012 (GAAP, unless otherwise stated)
- Revenue: $12.8 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 percentage points.
- R&D plus MG&A spending: approximately $4.4 billion.
- Amortization of acquisition-related intangibles: approximately $75 million.
- Impact of equity investments and interest and other: approximately zero.
- Depreciation: approximately $1.5 billion.
Full-Year 2012 (GAAP, unless otherwise stated)
- Gross margin percentage: 64 percent and 65 percent Non-GAAP (excluding amortization of acquisition-related intangibles), both plus or minus a few percentage points.
- Spending (R&D plus MG&A): $18.3 billion, plus or minus $200 million.
- R&D spending: approximately $10.1 billion.
- Amortization of acquisition-related intangibles: approximately $300 million.
- Depreciation: $6.5 billion, plus or minus $100 million.
- Tax Rate: approximately 29 percent.
- Full-year capital spending: $12.5 billion, plus or minus $400 million.
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 March 16 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 Jan. 26. Intel’s Quiet Period will start from the close of business on March 16 until publication of the company’s first-quarter earnings release, scheduled for April 17. 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.
| Non-GAAP Financial Comparison | |||
| Annual | |||
| 2011 | 2010 | vs. 2010 | |
| Revenue | $54.2 billion | $43.6 billion | up 24% |
| Gross Margin | 63.6% | 65.5% | down 1.9 pts. |
| Operating Income | $18.4 billion | $15.7 billion | up 18% |
| Net Income | $13.7 billion | $11.5 billion | up 19% |
| Earnings Per Share | $2.53 | $2.02 | up 25% |
Non-GAAP results exclude certain acquisition accounting impacts and expenses related to acquisitions and | |||
| GAAP Financial Comparison | |||||||||||||
| Annual | |||||||||||||
| 2011 | 2010 | vs. 2010 | |||||||||||
| Revenue | $54.0 billion | $43.6 billion | up 24% | ||||||||||
| Gross Margin | 62.5% | 65.3% | down 2.8 pts. | ||||||||||
| Operating Income | $17.5 billion | $15.6 billion | up 12% | ||||||||||
| Net Income | $12.9 billion | $11.5 billion | up 13% | ||||||||||
| Earnings Per Share | $2.39 | $2.01 | up 19% | ||||||||||
| Non-GAAP Financial Comparison | |||
| Quarterly | |||
| Q4 2011 | Q4 2010 | vs. Q4 2010 | |
| Revenue | $13.9 billion | $11.5 billion | up 22% |
| Gross Margin | 65.5% | 64.8% | up 0.7 pts. |
| Operating Income | $4.8 billion | $4.0 billion | up 20% |
| Net Income | $3.5 billion | $3.2 billion | up 11% |
| Earnings Per Share | 68 cents | 56 cents | up 21% |
Non-GAAP results exclude certain acquisition accounting impacts and expenses related to | |||
| GAAP Financial Comparison | |||||||||||||
| Quarterly | |||||||||||||
| Q4 2011 | Q4 2010 | vs. Q4 2010 | |||||||||||
| Revenue | $13.9 billion | $11.5 billion | up 21% | ||||||||||
| Gross Margin | 64.5% | 64.6% | down 0.1 pts. | ||||||||||
| Operating Income | $4.6 billion | $4.0 billion | up 14% | ||||||||||
| Net Income | $3.4 billion | $3.2 billion | up 6% | ||||||||||
| Earnings Per Share | 64 cents | 56 cents | up 14% | ||||||||||
Q4 and 2011 Key Financial Information (GAAP)
Q4 Business unit revenue:
- PC Client Group revenue of $9 billion, up 17 percent year-over-year.
- Data Center Group revenue of $2.7 billion, up 8 percent year-over-year.
- Other Intel® architecture group revenue of $1.1 billion, up 35 percent year-over-year.
- Intel® Atom™ microprocessor and chipset revenue of $167 million, down 57 percent year-over-year.
- McAfee Inc. and Intel Mobile Communications contributed revenue of approximately $1 billion.
Full Year Business unit revenue:
- PC Client Group had revenue of $35.4 billion, up 17% from 2010.
- Data Center Group had revenue of $10.1 billion, up 17% from 2010.
- Other Intel architecture group had revenue of $5.0 billion, up 64% from 2010.
- Intel Atom microprocessor and chipset revenue of $1.2 billion, down 25% from 2010.
- McAfee Inc. and Intel Mobile Communications contributed revenue of $3.6 billion.
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. 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.
- Intel is in the process of transitioning to its next generation of products on 22nm process technology, and there could be execution and timing issues associated with these changes, including products defects and errata and lower than anticipated manufacturing yields.
- The gross margin percentage could vary significantly from expectations based on capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; changes in revenue levels; product mix and pricing; the timing and execution of the manufacturing ramp and associated costs; start-up costs; excess or obsolete inventory; changes in unit costs; defects or disruptions in the supply of materials or resources; product manufacturing quality/yields; and impairments of long-lived assets, including manufacturing, assembly/test and intangible assets.
- The tax rate expectation is based on current tax law and current expected income. The tax rate may be affected by the jurisdictions in which profits are determined to be earned and taxed; changes in the estimates of credits, benefits and deductions; the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties; and the ability to realize deferred tax assets.
- Gains or losses from equity securities and interest and other could vary from expectations depending on gains or losses on the sale, exchange, change in the fair value or impairments of debt and equity investments; interest rates; cash balances; and changes in fair value of derivative instruments.
- The majority of Intel’s non-marketable equity investment portfolio balance is concentrated in companies in the flash memory market segment, and declines in this market segment or changes in management’s plans with respect to Intel’s investments in this market segment could result in significant impairment charges, impacting restructuring charges as well as gains/losses on equity investments and interest and other.
- Intel's results could be 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 and other issues, such as the litigation and regulatory matters described in Intel's SEC reports. An unfavorable ruling could include monetary damages or an injunction prohibiting us from manufacturing or selling one or more products, precluding particular business practices, impacting Intel’s ability to design its products, or requiring other remedies such as compulsory licensing of intellectual property.
A detailed discussion of these and other factors that could affect Intel’s results is included in Intel’s SEC filings, including the report on Form 10-Q for the quarter ended Oct. 1, 2011.
Earnings Webcast
Intel will hold a public webcast at 2:30 p.m. PST today on its Investor Relations website 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 2012 on April 17. 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 2:30 p.m. PST at www.intc.com.
About Intel
Intel (NASDAQ: INTC) is a world leader in computing innovation. The company designs and builds the essential technologies that serve as the foundation for the world’s computing devices. Additional information about Intel is available at newsroom.intel.com and blogs.intel.com.
Intel, the Intel logo, Intel Atom and Ultrabook are trademarks of Intel Corporation in the United States and other countries.
*Other names and brands may be claimed as the property of others.
| INTEL CORPORATION | ||||||||||||
| CONSOLIDATED SUMMARY STATEMENT OF INCOME DATA | ||||||||||||
| (In millions, except per share amounts) | ||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||
| Dec. 31, | Dec. 25, | Dec. 31, | Dec. 25, | |||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| NET REVENUE | $ | 13,887 | $ | 11,457 | $ | 53,999 | $ | 43,623 | ||||
| Cost of sales | 4,935 | 4,051 | 20,242 | 15,132 | ||||||||
| GROSS MARGIN | 8,952 | 7,406 | 33,757 | 28,491 | ||||||||
| Research and development | 2,308 | 1,671 | 8,350 | 6,576 | ||||||||
| Marketing, general and administrative | 1,973 | 1,705 | 7,670 | 6,309 | ||||||||
| R&D AND MG&A | 4,281 | 3,376 | 16,020 | 12,885 | ||||||||
| Amortization of acquisition-related intangibles | 72 | 7 | 260 | 18 | ||||||||
| OPERATING EXPENSES | 4,353 | 3,383 | 16,280 | 12,903 | ||||||||
| OPERATING INCOME | 4,599 | 4,023 | 17,477 | 15,588 | ||||||||
| Gains (losses) on equity investments, net | 17 | 109 | 112 | 348 | ||||||||
| Interest and other, net | (29) | 31 | 192 | 109 | ||||||||
| INCOME BEFORE TAXES | 4,587 | 4,163 | 17,781 | 16,045 | ||||||||
| Provision for taxes | 1,227 | 983 | 4,839 | 4,581 | ||||||||
| NET INCOME | $ | 3,360 | $ | 3,180 | $ | 12,942 | $ | 11,464 | ||||
| BASIC EARNINGS PER COMMON SHARE | $ | 0.66 | $ | 0.57 | $ | 2.46 | $ | 2.06 | ||||
| DILUTED EARNINGS PER COMMON SHARE | $ | 0.64 | $ | 0.56 | $ | 2.39 | $ | 2.01 | ||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||
| BASIC | 5,069 | 5,554 | 5,256 | 5,555 | ||||||||
| DILUTED | 5,242 | 5,698 | 5,411 | 5,696 | ||||||||
| INTEL CORPORATION | ||||||||||||
| CONSOLIDATED SUMMARY BALANCE SHEET DATA | ||||||||||||
| (In millions) | ||||||||||||
| Dec. 31, | Oct. 1, | Dec. 25, | ||||||||||
| 2011 | 2011 | 2010 | ||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 5,065 | $ | 7,057 | $ | 5,498 | ||||||
| Short-term investments | 5,181 | 3,876 | 11,294 | |||||||||
| Trading assets | 4,591 | 4,265 | 5,093 | |||||||||
| Accounts receivable, net | 3,650 | 3,821 | 2,867 | |||||||||
| Inventories: | ||||||||||||
| Raw materials | 644 | 614 | 471 | |||||||||
| Work in process | 1,680 | 1,494 | 1,887 | |||||||||
| Finished goods | 1,772 | 1,851 | 1,399 | |||||||||
| 4,096 | 3,959 | 3,757 | ||||||||||
| Deferred tax assets | 1,700 | 2,011 | 1,488 | |||||||||
| Other current assets | 1,589 | 1,709 | 1,614 | |||||||||
| TOTAL CURRENT ASSETS | 25,872 | 26,698 | 31,611 | |||||||||
| Property, plant and equipment, net | 23,627 | 22,157 | 17,899 | |||||||||
| Marketable equity securities | 562 | 516 | 1,008 | |||||||||
| Other long-term investments | 889 | 858 | 3,026 | |||||||||
| Goodwill | 9,254 | 9,138 | 4,531 | |||||||||
| Identified intangible assets, net | 6,267 | 6,445 | 860 | |||||||||
| Other long-term assets | 4,648 | 4,739 | 4,251 | |||||||||
| TOTAL ASSETS | $ | 71,119 | $ | 70,551 | $ | 63,186 | ||||||
| CURRENT LIABILITIES | ||||||||||||
| Short-term debt | $ | 247 | $ | 66 | $ | 38 | ||||||
| Accounts payable | 2,956 | 2,999 | 2,290 | |||||||||
| Accrued compensation and benefits | 2,948 | 2,270 | 2,888 | |||||||||
| Accrued advertising | 1,134 | 1,215 | 1,007 | |||||||||
| Deferred income | 1,929 | 1,917 | 747 | |||||||||
| Other accrued liabilities | 2,814 | 3,442 | 2,357 | |||||||||
| TOTAL CURRENT LIABILITIES | 12,028 | 11,909 | 9,327 | |||||||||
| Long-term debt | 7,084 | 7,076 | 2,077 | |||||||||
| Long-term deferred tax liabilities | 2,617 | 2,762 | 926 | |||||||||
| Other long-term liabilities | 3,479 | 2,687 | 1,426 | |||||||||
| Stockholders' equity: | ||||||||||||
| Preferred stock | — | — | — | |||||||||
| Common stock and capital in excess of par value | 17,036 | 16,247 | 16,178 | |||||||||
| Accumulated other comprehensive income (loss) | (781) | (32) | 333 | |||||||||
| Retained earnings | 29,656 | 29,902 | 32,919 | |||||||||
| TOTAL STOCKHOLDERS' EQUITY | 45,911 | 46,117 | 49,430 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 71,119 | $ | 70,551 | $ | 63,186 | ||||||
INTEL CORPORATION | |||||||||
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION | |||||||||
(In millions) | |||||||||
Q4 2011 | Q3 2011 | Q4 2010 | |||||||
| GEOGRAPHIC REVENUE: | |||||||||
| Asia-Pacific | $8,019 | $8,050 | $6,514 | ||||||
| 58% | 57% | 57% | |||||||
| Americas | $2,657 | $3,017 | $2,296 | ||||||
| 19% | 21% | 20% | |||||||
| Europe | $1,932 | $1,814 | $1,582 | ||||||
| 14% | 13% | 14% | |||||||
| Japan | $1,279 | $1,352 | $1,065 | ||||||
| 9% | 9% | 9% | |||||||
| CASH INVESTMENTS: | |||||||||
| Cash and short-term investments | $10,246 | $10,933 | $16,792 | ||||||
| Trading assets - marketable debt securities (1) | 4,591 | 4,259 | 4,705 | ||||||
| Total cash investments | $14,837 | $15,192 | $21,497 | ||||||
| TRADING ASSETS: | |||||||||
| Trading assets - equity securities (2) | — | $6 | $388 | ||||||
| Total trading assets - sum of 1+2 | $4,591 | $4,265 | $5,093 | ||||||
| CURRENT DEFERRED INCOME: | |||||||||
| Deferred income on shipments of components to distributors | $751 | $833 | $622 | ||||||
| Deferred income from software and services group | 1,178 | 1,084 | 125 | ||||||
| Total current deferred income | $1,929 | $1,917 | $747 | ||||||
| SELECTED CASH FLOW INFORMATION: | |||||||||
| Depreciation | $1,333 | $1,273 | $1,146 | ||||||
| Share-based compensation | $241 | $250 | $213 | ||||||
| Amortization of intangibles | $256 | $256 | $60 | ||||||
| Capital spending | ($2,844) | ($2,713) | ($1,869) | ||||||
| Investments in non-marketable equity instruments | ($124) | ($274) | ($151) | ||||||
| Stock repurchase program | ($4,133) | ($4,000) | ($1,500) | ||||||
| Proceeds from sales of shares to employees & excess tax benefit | $1,129 | $340 | $54 | ||||||
| Dividends paid | ($1,070) | ($1,102) | ($879) | ||||||
| Net cash received/(used) for divestitures/acquisitions | ($244) | ($186) | ($148) | ||||||
| EARNINGS PER COMMON SHARE INFORMATION: | |||||||||
| Weighted average common shares outstanding - basic | 5,069 | 5,194 | 5,554 | ||||||
| Dilutive effect of employee equity incentive plans | 115 | 93 | 92 | ||||||
| Dilutive effect of convertible debt | 58 | 53 | 52 | ||||||
| Weighted average common shares outstanding - diluted | 5,242 | 5,340 | 5,698 | ||||||
| STOCK BUYBACK: | |||||||||
| Shares repurchased | 174 | 186 | 70 | ||||||
| Cumulative shares repurchased (in billions) | 4.1 | 3.9 | 3.4 | ||||||
| Remaining dollars authorized for buyback (in billions) | $10.1 | $14.2 | $4.2 | ||||||
| OTHER INFORMATION: | |||||||||
| Employees (in thousands) | 100.1 | 99.9 | 82.5 | ||||||
INTEL CORPORATION | |||||||||||||
| SUPPLEMENTAL OPERATING GROUP RESULTS | |||||||||||||
| ($ in millions) | |||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||
| Dec. 31, | Dec. 25, | Dec. 31, | Dec. 25, | ||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||
| Net Revenue | |||||||||||||
| PC Client Group | $ | 9,047 | $ | 7,713 | $ | 35,406 | $ | 30,327 | |||||
| Data Center Group | 2,717 | 2,522 | 10,129 | 8,693 | |||||||||
| Other Intel Architecture Group | 1,099 | 814 | 5,005 | 3,055 | |||||||||
| Intel Architecture Group | 12,863 | 11,049 | 50,540 | 42,075 | |||||||||
| Software and Services Group | 578 | 75 | 1,870 | 264 | |||||||||
| All other | 446 | 333 | 1,589 | 1,284 | |||||||||
| TOTAL NET REVENUE | $ | 13,887 | $ | 11,457 | $ | 53,999 | $ | 43,623 | |||||
| Operating income (loss) | |||||||||||||
| PC Client Group | $ | 3,952 | $ | 3,206 | $ | 14,793 | $ | 12,971 | |||||
| Data Center Group | 1,453 | 1,426 | 5,100 | 4,388 | |||||||||
| Other Intel Architecture Group | (368) | 76 | (577) | 270 | |||||||||
| Intel Architecture Group | 5,037 | 4,708 | 19,316 | 17,629 | |||||||||
| Software and Services Group | 16 | (47) | (32) | (175) | |||||||||
| All other | (454) | (638) | (1,807) | (1,866) | |||||||||
| TOTAL OPERATING INCOME | $ | 4,599 | $ | 4,023 | $ | 17,477 | $ | 15,588 | |||||
| Our operating groups shown above are comprised of the following: | |||||||||||||
• PC Client Group: Delivering platforms for the notebook and desktop (including high-end enthusiast PCs) | |||||||||||||
• Data Center Group: Delivering platforms designed for the server, workstation, and storage computing | |||||||||||||
| • Other Intel Architecture Group consist of the following: | |||||||||||||
• Intel Mobile Communications: Delivering mobile phone components such as baseband processors, radio | |||||||||||||
• Intelligent Systems Group (formerly Embedded and Communications Group): Delivering platforms for | |||||||||||||
| • Netbook and Tablet Group: Delivering platforms for the netbook and tablet market segments. | |||||||||||||
• Ultra-Mobility Group: Delivering low-power Intel Architecture-based products in the next-generation | |||||||||||||
| • Software and Services Group consists of the following: | |||||||||||||
• McAfee: A wholly owned subsidiary delivering software products for endpoint security, system security, | |||||||||||||
•Wind River Software Group: A wholly owned subsidiary delivering device software optimization products | |||||||||||||
• Software and Services Group: Delivering software products and services that promote Intel Architecture | |||||||||||||
| All Other consists of the following: | |||||||||||||
• Non-Volatile Memory Solutions Group: Delivering advanced NAND flash memory products for use in | |||||||||||||
| • 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 | |
EXPLANATION OF NON-GAAP MEASURES | |
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 future results. The non-GAAP financial measures disclosed by the company exclude certain business combination accounting adjustments and certain expenses related to acquisitions. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. 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. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects: | |
Deferred revenue write-down and associated costs: Business combination accounting principles require us to write down to fair values the software license updates; software product and hardware systems support contracts; product support contracts and hardware systems support contracts assumed in our acquisitions. The revenue for these support contracts is deferred and typically recognized over the contract period, so our GAAP revenues for the contract period after the acquisition does not reflect the full amount of revenues that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP adjustments eliminate the effect of the deferred revenue write-down and include the costs associated with the revenue adjustment. We believe these adjustments to the revenue from these support contracts and to the associated costs are useful to investors as an additional means to reflect revenue trends of our business. | |
Amortization of acquisition-related intangible assets: Amortization of acquisition-related intangible assets consists of 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 adjustments exclude these charges to facilitate an evaluation of our current operating performance and comparisons to our past operating performance. | |
Inventory valuation adjustment: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustment to our cost of sales excludes the expected profit margin component that is recorded under business combination accounting principles. We believe the adjustment is useful to investors as an additional means to reflect cost of sales and gross margin trends of our business. | |
| INTEL CORPORATION | ||||||||||||||
| SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS | ||||||||||||||
| 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. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to comparable GAAP measures, the ways management uses these non-GAAP measures, and the reasons why management believes these non-GAAP measures provide useful information for investors. | ||||||||||||||
| (In millions, except per share amounts) | ||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||
| Dec. 31, | Dec. 25, | Dec. 31, | Dec. 25, | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||
| GAAP NET REVENUE | $ | 13,887 | $ | 11,457 | $ | 53,999 | $ | 43,623 | ||||||
| Adjustment for deferred revenue write-down | 35 | - | 204 | - | ||||||||||
| NON-GAAP NET REVENUE | $ | 13,922 | $ | 11,457 | $ | 54,203 | $ | 43,623 | ||||||
| GAAP GROSS MARGIN | $ | 8,952 | $ | 7,406 | $ | 33,757 | $ | 28,491 | ||||||
| Adjustment for: | ||||||||||||||
| Deferred revenue write-down and associated costs | 32 | - | 190 | - | ||||||||||
| Amortization of acquisition-related intangibles | 137 | 17 | 482 | 65 | ||||||||||
| Inventory valuation | - | - | 33 | - | ||||||||||
| NON-GAAP GROSS MARGIN | $ | 9,121 | $ | 7,423 | $ | 34,462 | $ | 28,556 | ||||||
| GAAP GROSS MARGIN PERCENTAGE | 64.5% | 64.6% | 62.5% | 65.3% | ||||||||||
| Adjustment for: | ||||||||||||||
| Deferred revenue write-down and associated costs | - | - | 0.1% | - | ||||||||||
| Amortization of acquisition-related intangibles | 1.0% | 0.2% | 0.9% | 0.2% | ||||||||||
| Inventory valuation | - | - | 0.1% | - | ||||||||||
| NON-GAAP GROSS MARGIN PERCENTAGE | 65.5% | 64.8% | 63.6% | 65.5% | ||||||||||
| GAAP OPERATING INCOME | $ | 4,599 | $ | 4,023 | $ | 17,477 | $ | 15,588 | ||||||
| Adjustment for: | ||||||||||||||
| Deferred revenue write-down and associated costs | 32 | - | 190 | - | ||||||||||
| Amortization of acquisition-related intangibles | 209 | 24 | 742 | 83 | ||||||||||
| Inventory valuation | - | - | 33 | - | ||||||||||
| NON-GAAP OPERATING INCOME | $ | 4,840 | $ | 4,047 | $ | 18,442 | $ | 15,671 | ||||||
| GAAP NET INCOME | $ | 3,360 | $ | 3,180 | $ | 12,942 | $ | 11,464 | ||||||
| Adjustment for: | ||||||||||||||
| Deferred revenue write-down and associated costs | 32 | - | 190 | - | ||||||||||
| Amortization of acquisition-related intangibles | 209 | 24 | 742 | 83 | ||||||||||
| Inventory valuation | - | - | 33 | - | ||||||||||
| Income tax effect | (56) | (8) | (215) | (29) | ||||||||||
| NON-GAAP NET INCOME | $ | 3,545 | $ | 3,196 | $ | 13,692 | $ | 11,518 | ||||||
| GAAP DILUTED EARNINGS PER COMMON SHARE | $ | 0.64 | $ | 0.56 | $ | 2.39 | $ | 2.01 | ||||||
| Adjustment for: | ||||||||||||||
| Deferred revenue write-down and associated costs | 0.01 | - | 0.03 | - | ||||||||||
| Amortization of acquisition-related intangibles | 0.04 | - | 0.14 | 0.01 | ||||||||||
| Inventory valuation | - | - | 0.01 | - | ||||||||||
| Income tax effect | (0.01) | - | (0.04) | - | ||||||||||
| NON-GAAP DILUTED EARNINGS PER COMMON SHARE | $ | 0.68 | $ | 0.56 | $ | 2.53 | $ | 2.02 | ||||||
| INTEL CORPORATION | ||||||||
| SUPPLEMENTAL RECONCILIATION 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 "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustment made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors. | ||||||||
| Q1 2012 Outlook | 2012 Outlook | |||||||
| GAAP GROSS MARGIN PERCENTAGE | 63% | +/- a couple percentage points | 64% | +/- a few percentage points | ||||
| Adjustment for amortization of acquisition-related intangibles | 1% | 1% | ||||||
| NON-GAAP GROSS MARGIN PERCENTAGE | 64% | +/- a couple percentage points | 65% | +/- a few percentage points | ||||