Exhibit 99.1
Intel Announces Record Quarterly and Annual Revenue;
Fourth-Quarter Earnings Per Share 33 Cents
SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 11, 2005--Intel Corporation
today announced record quarterly revenue of $9.6 billion, up 13 percent from the
third quarter and up 10 percent year-over-year. For the year, Intel achieved
revenue of $34.2 billion, up 13.5 percent from 2003 and higher than the previous
record of $33.7 billion set in 2000.
Fourth-quarter net income was $2.1 billion, up 11 percent sequentially and
down 2 percent year-over-year. Earnings per share were 33 cents, up 10 percent
sequentially and flat with the fourth quarter of 2003. Results for the third
quarter of 2004 included tax-related items that increased earnings by
approximately 3 cents per share.
"We ended 2004 with record revenues and robust demand for Intel
architecture products across all geographies and channels," said Intel CEO Craig
R. Barrett. "Our investments in manufacturing capacity, innovative new products
and global presence have allowed us to post double-digit gains in both revenue
and profits two years in a row. In 2005, we look forward to continued growth as
we ramp our 65nm process technology and introduce our first dual-core
microprocessors across a range of new platforms."
For the year, net income of $7.5 billion was up 33 percent from $5.6
billion in 2003. Earnings per share were $1.16, up 36 percent from 85 cents in
2003. Intel paid record cash dividends of $1 billion, announced two doublings of
the company's cash dividend and used a record $7.5 billion to repurchase 300.5
million shares of common stock.
BUSINESS OUTLOOK
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ materially. Please
see the Risk Factors Regarding Forward-Looking Statements in this release for a
description of certain important risk factors that could cause actual results to
differ, and refer to Intel's annual and quarterly reports on file with the
Securities and Exchange Commission (SEC) for a more complete description of the
risks. These statements do not include the potential impact of any mergers,
acquisitions, divestitures or other business combinations that may be completed
after Jan. 10, 2005. These statements also do not include any impact related to
the expensing of stock options under the Financial Accounting Standards Board's
Statement 123R, which is effective for quarters beginning after June 15, 2005.
Expensing of stock options would decrease gross margin, increase expenses
(including R&D expenses) and affect the tax rate.
-- Revenue in the first quarter is expected to be between $8.8 billion
and $9.4 billion.
-- Gross margin percentage for the first quarter is expected to be
approximately 55 percent, plus or minus a couple of points, as
compared to 56 percent in the fourth quarter of 2004. The gross margin
percentage could vary from expectations based on changes in revenue
levels, product mix and pricing, manufacturing yields, changes in unit
costs, capacity utilization and the existence of excess capacity, and
the timing and execution of the manufacturing ramp and associated
costs, including start-up costs.
-- Gross margin percentage for 2005 is expected to be approximately 58
percent, plus or minus a few points, as compared to 57.7 percent in
2004.
-- Expenses (R&D plus MG&A) in the first quarter are expected to be
between $2.5 billion and $2.6 billion. Expenses, particularly certain
marketing and compensation expenses, could vary from expectations
depending on the level of demand for Intel's products and the level of
revenue and profits.
-- R&D spending for 2005 is expected to be approximately $5.2 billion, as
compared to $4.8 billion in 2004.
-- Capital spending for 2005 is expected to be between $4.9 billion and
$5.3 billion, as compared to $3.8 billion in 2004. The expected
increase is primarily driven by investments in 300mm, 65nm production
equipment that will enable cost-effective production of dual-core
microprocessors and other products.
-- Gains from equity investments and interest and other in the first
quarter are expected to be approximately $100 million.
-- The tax rate for 2005 is expected to be approximately 31 percent. The
tax rate expectation is based on current tax law and current expected
income, assumes Intel continues to receive tax benefits for export
sales, and does not reflect the impact of any potential repatriation
of cash under the American Jobs Creation Act. The tax rate may be
affected by the closing of acquisitions or divestitures, the
jurisdiction in which profits are determined to be earned and taxed,
changes in estimates of credits and deductions, the resolution of
issues arising from tax audits with various tax authorities and the
ability to realize deferred tax assets.
-- Depreciation for the first quarter is expected to be approximately
$1.2 billion, plus or minus $100 million. Depreciation for the full
year is expected to be approximately $4.4 billion, plus or minus $100
million.
-- Amortization of acquisition-related intangibles and costs is expected
to be approximately $40 million in the first quarter and approximately
$120 million for the full year.
FOURTH-QUARTER REVIEW AND RECENT HIGHLIGHTS
Financial Review
-- Gains from equity investments and interest and other were $127
million, above the previous expectation of approximately $65 million.
-- The effective tax rate for the quarter was 29.9 percent, below the
previous expectation of 30.5 percent.
-- Intel used $2 billion in cash to repurchase 89 million shares of its
common stock during the quarter under an ongoing program.
-- The company's board of directors approved a doubling of the company's
cash dividend to 8 cents per share beginning with the first-quarter
2005 dividend declaration. The board also authorized the repurchase of
an additional 500 million shares of common stock under the company's
ongoing stock repurchase program.
Key Product Trends (Sequential)
-- Intel Architecture microprocessor units set a record with record unit
shipments of enterprise and mobile processors. The average selling
price was approximately flat.
-- Chipset units set a record.
-- Motherboard units set a record.
-- Flash memory units were higher.
-- Wireless connectivity units set a record. Wired connectivity units
were higher.
Intel Architecture Business
Intel had record shipments of microprocessors, chipsets and motherboards
during the quarter and demonstrated three upcoming dual-core processors for the
enterprise, desktop and notebook market segments.
For the enterprise, Intel had ongoing strong demand for the company's
64-bit Intel(R) Xeon(TM) processor, which surpassed 1 million units in the first
two quarters of shipments. Intel also enhanced its Itanium(R) 2 processor
line-up with six new processors for multiprocessor, dual-processor and
low-voltage system designs. The company announced it would hire HP's
Colorado-based Itanium processor design team while HP announced plans to invest
more than $3 billion over the next three years to drive the development and
sales of its Itanium-based systems. According to the latest Top500* ranking,
Intel processors power 64 percent of the world's fastest supercomputers, a
15-fold increase over the past three years. Itanium-based systems make up 83
supercomputers on the Top500 list, including NASA's Project Columbia system,
listed as the second fastest in the world.
In mobile, Intel introduced the Pentium(R) M processor 765 for
thin-and-light notebook PCs along with the Mobile Intel Pentium(R) 4 processor
552 for desktop-equivalent multimedia notebooks. The company also previewed a
next-generation notebook PC platform code-named Sonoma, which began shipping for
revenue during the quarter. The new platform combines the mobility associated
with Intel Centrino(TM) Mobile Technology with support for advanced audio,
video, 3D gaming and TV-out capabilities traditionally found in desktop PCs and
full-size notebooks.
For the digital home, entertainment PC products from major OEM
manufacturers began shipping during the holiday buying season. Based on the
Pentium(R) 4 processor with HT Technology and the Intel 915 Express Chipset, the
entertainment PCs combine many of the capabilities found in consumer electronics
devices such as CD/DVD players, gaming stations and personal video recorders
into a single platform that also supports Web content browsing and home
networking. Intel Capital invested in three additional companies developing
enabling technologies for the digital home while Intel and Linksys announced a
digital media adapter that enables consumers to enjoy movies and music on
multiple networked digital devices in the home. The Linksys adapter supports
technology called DCTP/IP that allows protected premium content to be
experienced in the digital home.
For the desktop, Intel introduced a new PC platform aimed at power users
and gaming enthusiasts. The platform includes the Pentium 4 Processor Extreme
Edition at 3.46 GHz and the Intel 925XE Express chipset, which supports a 1.066
GHz front side bus, PCI Express* graphics and Intel High Definition Audio.
Intel Communications Group
In flash, the company saw continued strong growth in demand for its Intel
StrataFlash(R) Wireless Memory, which helped Intel regain its market segment
share leadership in NOR flash memory. The company also released software tools
that make it easier for developers to create advanced applications for
next-generation multimedia phones that use Intel StrataFlash memories and Intel
Wireless Flash memories.
In wireless networking, Intel shipped a record number of WiFi connections
during the quarter and announced plans to work with Clearwire, a wireless
broadband services company, to accelerate the deployment of WiMAX networks
worldwide. Clearwire received an investment from Intel Capital and plans to
deploy equipment that uses Intel WiMAX silicon. In cellular, Intel, IBM and NTT
Docomo released the Trusted Mobile Platform, a security specification for cell
phones and other handheld devices designed to help make online purchases more
secure and protect against viruses.
In network processing, Intel announced new product lines for communications
and embedded networking applications. The Intel IXP2325 and IXP2350 network
processors are Intel's first built on 90nm process technology and are targeted
at network access and edge applications. The Intel IXP460 and IXP465 network
processors provide designers of embedded systems with a higher performing Intel
XScale(R) core, expanded connectivity options, and system reliability and
security enhancements.
In storage area networking, Intel introduced a low-voltage 64-bit Intel
Xeon processor offering greater memory addressability for storage-intensive
applications such as large databases. Emulex announced plans to use Intel's
2-Gbps optical transceiver in a new Fibre Channel adaptor for storage area
networks.
Technology and Manufacturing Group
Intel exited the year with more than 80 percent of its processor shipments
to the computing industry based on 300mm, 90nm technology. The company also made
significant progress in its 65nm technology development, including the
demonstration of commercial software running on a forthcoming dual-core
microprocessor for notebook PCs code-named Yonah. Intel also began installing
equipment at its Fab 12 facility in Arizona -- the company's fifth 300mm fab --
which is on schedule to produce 65nm processors in late 2005, with volume
ramping in 2006.
EARNINGS WEBCAST
Intel will hold a public webcast at 2:30 p.m. PST today on its Investor
Relations Web site at www.intc.com. A replay of the webcast will be available
until April 19.
STATUS OF BUSINESS OUTLOOK AND MID-QUARTER BUSINESS UPDATE
During the quarter, Intel's corporate representatives may reiterate the
Business Outlook during private meetings with investors, investment analysts,
the media and others. Intel intends to publish a Mid-Quarter Business Update on
March 10. From the close of business on March 4 until publication of the Update,
Intel will observe a "Quiet Period" during which the Business Outlook disclosed
in the company's press releases and filings with the SEC on Forms 10-K and 10-Q
should be considered to be historical, speaking as of prior to the Quiet Period
only and not subject to update by the company. For more information about the
Business Outlook, Update and related Quiet Periods, please refer to the Business
Outlook section of Intel's Web site at www.intc.com.
RISK FACTORS REGARDING FORWARD-LOOKING STATEMENTS
The statements in this document that refer to plans and expectations for
the first quarter, the year and the future are forward-looking statements that
involve a number of risks and uncertainties. Many factors could affect Intel's
actual results, and variances from Intel's current expectations regarding such
factors could cause actual results to differ materially from those expressed in
these forward looking statements. Intel presently considers the factors
accompanying certain of such statements above and set forth below to be the
important factors that could cause actual results to differ materially from
Intel's published expectations. A more detailed discussion of these factors, as
well as other factors that could affect Intel's results, is contained in Intel's
SEC filings, including the report on Form 10-Q for the quarter ended Sept. 25,
2004.
-- Intel operates in intensely competitive industries. Revenue and the
gross margin percentage are affected by the demand for and market
acceptance of Intel's products, pricing pressures and actions taken by
Intel's competitors, the timing of new product introductions and the
availability of sufficient inventory to meet demand. Factors that
could cause demand to be different from Intel's expectations include
changes in business and economic conditions, and changes in customer
order patterns and the level of inventory at customers.
-- The gross margin percentage could also be affected by excess or
obsolete inventory, variations in inventory valuation and impairment
of manufacturing or assembly and test assets.
-- Dividend declarations and the dividend rate are at the discretion of
Intel's Board of Directors, and plans for future dividends may be
revised by the Board. Intel's dividend and stock repurchase programs
could be affected by changes in its capital spending programs, changes
in its cash flows and changes in tax laws, as well as by the level and
timing of acquisition and investment activity.
-- The expectation regarding gains or losses from equity securities and
interest and other could vary from expectations depending on equity
market levels and volatility, gains or losses realized on the sale or
exchange of securities, impairment charges related to non-marketable
and other investments, interest rates, cash balances, and changes in
fair value of derivative instruments.
-- Intel's results could be impacted by unexpected economic, social and
political conditions in the countries in which Intel, its customers or
its suppliers operate, including security risks, possible
infrastructure disruptions and fluctuations in foreign currency
exchange rates.
-- Intel's results could also 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.
Intel, the world's largest chip maker, is also a leading manufacturer of
computer, networking and communications products. Additional information about
Intel is available at www.intel.com/pressroom.
Intel, Intel Xeon, Itanium, Pentium, Intel Centrino, Intel StrataFlash and
Intel XScale are marks or registered trademarks of Intel Corporation or its
subsidiaries in the United States and other countries.
*Other names and brands may be claimed as the property of others.
INTEL CORPORATION
CONSOLIDATED SUMMARY INCOME STATEMENT DATA
(In millions, except per share amounts)
Three Months Twelve Months
Ended Ended
----------------- -----------------
Dec. 25, Dec. 27, Dec. 25, Dec. 27,
2004 2003 2004 2003
-------- -------- -------- --------
NET REVENUE $9,598 $8,741 $34,209 $30,141
Cost of sales 4,221 3,185 14,463 13,047
-------- -------- -------- --------
GROSS MARGIN 5,377 5,556 19,746 17,094
-------- -------- -------- --------
Research and development 1,214 1,177 4,778 4,360
Marketing, general and
administrative 1,225 1,141 4,659 4,278
Impairment of goodwill - 611 - 617
Amortization of acquisition-related
intangibles and costs 38 65 179 301
Purchased in-process research and
development - - - 5
-------- -------- -------- --------
OPERATING EXPENSES 2,477 2,994 9,616 9,561
-------- -------- -------- --------
OPERATING INCOME 2,900 2,562 10,130 7,533
Losses on equity securities, net (3) (35) (2) (283)
Interest and other, net 130 53 289 192
-------- -------- -------- --------
INCOME BEFORE TAXES 3,027 2,580 10,417 7,442
Income taxes 904 407 2,901 1,801
-------- -------- -------- --------
NET INCOME $2,123 $2,173 $ 7,516 $ 5,641
======== ======== ======== ========
BASIC EARNINGS PER SHARE $ 0.34 $ 0.33 $ 1.17 $ 0.86
======== ======== ======== ========
DILUTED EARNINGS PER SHARE $ 0.33 $ 0.33 $ 1.16 $ 0.85
======== ======== ======== ========
COMMON SHARES OUTSTANDING 6,294 6,512 6,400 6,527
COMMON SHARES ASSUMING DILUTION 6,352 6,671 6,494 6,621
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
Dec. 25, Sept. 25, Dec. 27,
2004 2004 2003
-------- -------- --------
CURRENT ASSETS
Cash and short-term investments $14,061 $13,647 $13,539
Trading assets 3,111 2,510 2,625
Accounts receivable 2,999 3,266 2,960
Inventories:
Raw materials 388 434 333
Work in process 1,418 1,750 1,490
Finished goods 815 996 696
-------- -------- --------
2,621 3,180 2,519
Deferred tax assets and other 1,540 1,387 1,239
-------- -------- --------
Total current assets 24,332 23,990 22,882
Property, plant and equipment, net 15,768 15,924 16,661
Marketable strategic equity securities 656 461 514
Other long-term investments 2,563 2,365 1,866
Goodwill 3,719 3,734 3,705
Other assets 1,379 1,326 1,515
-------- -------- --------
TOTAL ASSETS $48,417 $47,800 $47,143
======== ======== ========
CURRENT LIABILITIES
Short-term debt $ 201 $ 213 $ 224
Accounts payable and accrued liabilities 6,049 5,514 5,237
Deferred income on shipments to
distributors 592 652 633
Income taxes payable 1,265 1,431 785
-------- -------- --------
Total current liabilities 8,107 7,810 6,879
LONG-TERM DEBT 703 882 936
DEFERRED TAX LIABILITIES 1,028 913 1,482
STOCKHOLDERS' EQUITY 38,579 38,195 37,846
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $48,417 $47,800 $47,143
======== ======== ========
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q4 2004 Q3 2004 Q4 2003
---------------------------
GEOGRAPHIC REVENUE:
Americas $2,047 $1,799 $2,356
21% 21% 27%
Asia-Pacific $4,421 $4,014 $3,475
46% 48% 40%
Europe $2,277 $1,886 $2,126
24% 22% 24%
Japan $853 $772 $784
9% 9% 9%
ADDITIONAL REVENUE-RELATED INFORMATION:
Intel Architecture business microprocessor
revenue $6,804 $5,928 $6,514
Intel Architecture business chipset,
motherboard and other revenue $1,426 $1,210 $1,183
Flash revenue $643 $638 $399
CASH INVESTMENTS:
Cash and short-term investments $14,061 $13,647 $13,539
Trading assets - fixed income (1) 2,772 2,192 2,321
---------------------------
Total cash investments $16,833 $15,839 $15,860
INTEL CAPITAL PORTFOLIO:
Marketable strategic equity securities $656 $461 $514
Other strategic investments 513 631 752
---------------------------
Total Intel Capital portfolio $1,169 $1,092 $1,266
TRADING ASSETS:
Trading assets - equity securities
offsetting deferred compensation (2) $339 $318 $304
Total trading assets - sum of 1+2 $3,111 $2,510 $2,625
SELECTED CASH FLOW INFORMATION:
Depreciation $1,144 $1,155 $1,177
Impairment of goodwill - - $611
Amortization of acquisition-related
intangibles & costs $38 $40 $65
Capital spending ($1,031) ($1,106) ($707)
Stock repurchase program ($2,000) ($2,500) ($2,003)
Proceeds from sales of shares to
employees, tax benefit & other $168 $322 $324
Dividends paid ($252) ($253) ($131)
Net cash used for acquisitions - ($20) ($40)
SHARE INFORMATION:
Average common shares outstanding 6,294 6,375 6,512
Dilutive effect of stock options 58 67 159
Common shares assuming dilution 6,352 6,442 6,671
STOCK BUYBACK:
Shares repurchased 89.0 106.3 61.4
Shares authorized for buyback 2,300.0 2,300.0 2,300.0
Increase in authorization 500.0 - -
Cumulative shares repurchased (2,186.5)(2,097.5)(1,886.0)
Shares available for buyback 613.5 202.5 414.0
OTHER INFORMATION:
Employees (in thousands) 85.0 84.2 79.7
Days sales outstanding 34 35 36
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
($ in millions)
YTD YTD
Q4 2004 Q3 2004 2004 Q4 2003 2003
- ----------------------------------------------------------------------
OPERATING SEGMENT
INFORMATION:
Intel Architecture Business
Revenue 8,230 7,138 29,167 7,697 26,178
Operating income 3,484 2,789 12,067 3,721 10,354
- ----------------------------------------------------------------------
Intel Communications Group
Revenue 1,364 1,327 5,027 1,035 3,928
Operating loss (196) (250) (791) (143) (824)
- ----------------------------------------------------------------------
All Other
Revenue 4 6 15 9 35
Operating loss (388) (166) (1,146)(1,016) (1,997)
- ----------------------------------------------------------------------
Total
Revenue 9,598 8,471 34,209 8,741 30,141
Operating income 2,900 2,373 10,130 2,562 7,533
- ----------------------------------------------------------------------
Beginning in 2004, the company combined its communications-related
businesses into a single organization, the Intel Communications Group
(ICG). Previously, these communications businesses were in two
separate product line operating segments: the former Intel
Communications Group and the Wireless Communications and Computing
Group. The company now consists of two reportable product-line
operating segments: the Intel Architecture business, which is composed
of the Desktop Platforms Group, the Mobile Platforms Group and the
Enterprise Platforms Group; and ICG. All prior period amounts have
been restated to reflect the new presentation as well as certain minor
reorganizations effected during 2004.
The Intel Architecture operating segment's products include
microprocessors and related chipsets and motherboards. ICG's products
include flash memory; wired and wireless connectivity products;
communications infrastructure components such as network and embedded
processors and optical components; microcontrollers; application and
cellular processors used in cellular handsets and handheld computing
devices; and cellular baseband chipsets.
The "all other" category includes acquisition-related costs, including
amortization and any impairments of acquisition-related intangibles
and goodwill. "All other" also includes the results of operations of
seed businesses that support the company's initiatives. Finally, "all
other" includes certain corporate-level operating expenses, including
a portion of profit-dependent bonus and other expenses not allocated
to the operating segments.