Exhibit 99.1
Intel First-Quarter Revenue $8.9 Billion
SANTA CLARA, Calif.--(BUSINESS WIRE)--April 19, 2006--Intel
Corporation:
-- Operating income $1.7 billion ($2.1 billion excluding
share-based compensation)
-- EPS 23 cents (27 cents excluding share-based compensation)
-- $585 million in cash dividends
-- $2.9 billion used to repurchase 138.5 million shares
Intel Corporation today announced first-quarter revenue of $8.9
billion, operating income of $1.7 billion, net income of $1.3 billion
and earnings per share (EPS) of 23 cents. Excluding the effects of
share-based compensation, the company posted operating income of $2.1
billion, net income of $1.6 billion and EPS of 27 cents.
"We believe PC growth rates have moderated over the course of the
past few quarters, leading to slower chip-level inventory reductions
at our customers and affecting our revenue in the first half of the
year," said Intel President and CEO Paul Otellini. "We made excellent
operational progress during the quarter, shipping millions of 65nm
dual-core processors, and saw strong market acceptance of the
Centrino(TM) Duo mobile platform as well as the Viiv(TM) platform for
the digital home. We plan to launch new processors based on the
Intel(R) Core(TM) microarchitecture in the third quarter, giving Intel
performance leadership across the server, desktop and mobile segments
and setting the stage for a strong second half."
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GAAP Results (including the effects of share-based compensation)
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Q1 2006 vs. Q1 2005 vs. Q4 2005
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Revenue $8.9 billion -5% -12%
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Operating Income $1.7 billion -44% -49%
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Net Income $1.3 billion -38% -45%
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EPS 23 cents -34% -43%
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Note: GAAP results for 2005 periods do not include the effects of
share-based compensation. The first quarter of 2005 included an extra
week of business.
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Non-GAAP Results (excluding the effects of share-based compensation)
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Q1 2006 vs. Q1 2005 vs. Q4 2005
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Operating Income $2.1 billion -31.5% -37%
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Net Income $1.6 billion -26% -34%
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EPS 27 cents -23% -33%
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Financial Review
First-quarter gross margin was 55.1 percent, versus a January
expectation of 59 percent, plus or minus a couple of points. Gross
margin was impacted by lower microprocessor revenue and higher
inventory write-downs. Expenses (R&D plus MG&A) were $3.2 billion,
versus a January expectation of $3.3 billion due to lower revenue- and
profit-related spending. The effective tax rate was 27.5 percent,
versus a January expectation of approximately 32 percent. The decrease
was primarily driven by a higher percentage of profits in low-tax
jurisdictions and an increase in non-U.S. R&D tax credits that
together increased earnings by approximately 1.4 cents per share.
Key Product Trends (Sequential)
-- Total microprocessor units were lower. The average selling
price (ASP) was slightly lower.
-- Chipset, motherboard and flash memory units were lower.
-- Application processor units for products such as cellular
phones and PDAs were lower.
Sales Patterns
Sequential revenue in the Asia-Pacific, Americas and Europe
regions was below the company's expectations while the Japan region
achieved its first billion-dollar quarter driven primarily by ongoing
strength in the notebook market segment.
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Q1 2006 vs. Q1 2005 vs. Q4 2005
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Asia-Pacific $4.3 billion -2% -16%
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Americas $1.9 billion -3% +4%
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Europe $1.7 billion -19% -26%
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Japan $1 billion +8% +10%
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Recent Highlights
-- Intel ramped its 65nm process technology into high volume,
shipping millions of dual-core, 65nm processors into the
mobile, desktop and server market segments. The company also
began delivering a new server platform, code-named Bensley,
that will enable customers to ship servers based on new
dual-core processors code-named Dempsey and Woodcrest.
-- The company discussed details of the Intel Core
microarchitecture, a processor technology that will be used to
bring industry-leading, energy-efficient performance to
server, desktop and mobile platforms in the third quarter.
-- Intel demonstrated a new mobile platform technology code-named
Robson that works with NAND flash memories to help reduce
mobile PC boot-up time, increase application performance and
prolong battery life. Intel also began shipping NAND flash
memories for revenue and delivered customer samples of the
industry's first NOR flash memories made using 65nm process
technology.
-- Intel produced the industry's first fully functional SRAM
memories using 45nm process technology, demonstrating that the
company is on track to be the first chipmaker to produce
microprocessors on 45nm technology in 2007.
-- The company launched its Discover the PC initiative which is
helping to make uncompromised PC technology affordable to
first-time computer users in emerging markets. Intel also
announced plans to train an additional 10 million teachers in
developing nations over the next five years, and made new
investments designed to expand the company's business
opportunities in emerging markets around the world.
Business Outlook and Risk Factors Regarding Forward-Looking
Statements
The following expectations do not include the potential impact of
any mergers, acquisitions, divestitures or other business combinations
that may be completed after April 18.
Q2 2006 Outlook
-- Revenue: Expected to be between $8.0 billion and $8.6 billion,
below normal seasonal patterns. The company believes PC growth
rates have moderated in recent quarters, resulting in
above-normal customer inventory levels that are limiting
demand in the short term.
-- Gross margin: 49 percent, plus or minus a couple of points (50
percent, plus or minus a couple of points, excluding
share-based compensation effects of approximately 1 percent).
The expected reduction in the gross margin percentage from
first-quarter levels is primarily due to a higher proportion
of lower-margin product in the overall mix along with higher
microprocessor unit costs and lower microprocessor ASPs.
-- Expenses (R&D plus MG&A): Between $3 billion and $3.1 billion
(between $2.7 billion and $2.8 billion excluding share-based
compensation effects of approximately $300 million).
-- Gains from equity investments and interest and other:
Approximately $175 million.
-- Tax rate: Approximately 30.5 percent.
-- Depreciation: Between $1.1 billion and $1.2 billion.
-- Amortization of acquisition-related intangibles and costs:
Approximately $10 million.
-- In accordance with internal cash management policies, the
company expects to significantly reduce the rate of share
repurchases in upcoming quarters relative to the first-quarter
rate.
Revised 2006 Outlook
The previous Business Outlook for 2006 can be found in the
company's fourth-quarter 2005 earnings release, available at
www.intc.com.
-- 2006 Revenue: Expected to be approximately 3 percent lower
than prior-year revenue of $38.8 billion, subject to a wide
range of potential variability.
-- Gross margin: 53 percent, plus or minus a few points (54
percent, plus or minus a few points, excluding share-based
compensation effects of approximately 1 percent).
-- R&D: Approximately $6.1 billion (approximately $5.6 billion
excluding share-based compensation effects of approximately
$500 million).
-- MG&A: Approximately $6 billion (approximately $5.4 billion
excluding share-based compensation effects of approximately
$600 million).
-- Capital spending: $6.6 billion plus or minus $200 million.
-- Tax rate: Approximately 30.5 percent for the third and fourth
quarters.
-- Depreciation: $4.7 billion plus or minus $100 million,
unchanged.
-- Amortization of acquisition-related intangibles and costs:
Approximately $45 million.
The above statements and any others in this document that refer to
plans and expectations for the second quarter, the year and the future
involve a number of risks and uncertainties. Many factors could cause
Intel's actual results to differ materially from current expectations,
including the following:
-- 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 by product demand
that is highly variable and difficult to forecast. Revenue and
the gross margin percentage are affected by the timing of new
Intel product introductions and the demand for and market
acceptance of Intel's products; actions taken by Intel's
competitors, including product offerings, marketing programs
and pricing pressures; Intel's ability to respond quickly to
technological developments and to incorporate new features
into its products; and the availability of sufficient
inventory of Intel products and related components from other
suppliers to meet demand. Factors that could cause demand to
be different from Intel's expectations include customer
acceptance of Intel and competitors' products; changes in
customer order patterns, including order cancellations;
changes in the level of inventory at customers; and changes in
business and economic conditions.
-- The gross margin percentage could vary from expectations based
on changes in revenue levels; product mix and pricing;
variations in inventory valuation, including variations
related to the timing of qualifying products for sale; excess
or obsolete inventory; manufacturing yields; changes in unit
costs; capacity utilization; impairments of long-lived assets,
including manufacturing, assembly/test and intangible assets;
and the timing and execution of the manufacturing ramp and
associated costs, including start-up costs.
-- Expenses, particularly certain marketing and compensation
expenses, vary depending on the level of demand for Intel's
products and the level of revenue and profits.
-- The tax rate expectation is based on current tax law and
current expected income and assumes Intel continues to receive
tax benefits for export sales. The tax rate may be affected by
the closing of acquisitions or divestitures; 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; and the ability to realize deferred tax
assets.
-- 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
marketable, non-marketable and other investments; interest
rates; cash balances; and changes in fair value of derivative
instruments.
-- 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 buyback programs could be affected by changes in its
capital spending programs, changes in its cash flows and
changes in the tax laws, as well as by the level and timing of
acquisition and investment activity.
-- 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, health
concerns, natural disasters and fluctuations in foreign
currency exchange rates.
-- 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.
-- Intel's results could be affected by the amount, type, and
valuation of share-based awards granted as well as the amount
of awards cancelled due to employee turnover and the timing of
award exercises by employees.
A more detailed discussion of these and other factors that could
affect results is included in Intel's SEC filings, including the
report on Form 10-K for the year ended Dec. 31, 2005.
Status of Business Outlook
During the quarter, Intel's corporate representatives may
reiterate the Business Outlook during private meetings with investors,
investment analysts, the media and others. From the close of business
on June 2 until publication of the company's second-quarter 2006
earnings release on July 19, Intel will observe a "Quiet Period"
during which the Business Outlook disclosed in the company's press
releases and filings with the SEC on Form 10-K should be considered to
be historical, speaking as of prior to the Quiet Period only and not
subject to update by the company.
Earnings Webcast
Intel will hold a public webcast at 2:30 p.m. PDT today on its
Investor Relations Web site at www.intc.com, with a replay available
until July 19.
Intel, the world leader in silicon innovation, develops
technologies, products and initiatives to continually advance how
people work and live. Additional information about Intel is available
at www.intel.com/pressroom.
Intel, the Intel logo, Intel Centrino, Intel Viiv and Intel Core
are trademarks 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 Ended
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April 1, April 2,
2006 2005
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NET REVENUE $ 8,940 $ 9,434
Cost of sales 4,012 3,836
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GROSS MARGIN 4,928 5,598
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Research and development 1,562 1,266
Marketing, general and
administrative 1,644 1,262
Amortization of
acquisition-related
intangibles and costs 19 38
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OPERATING EXPENSES 3,225 2,566
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OPERATING INCOME 1,703 3,032
Gains on equity securities, net 2 4
Interest and other, net 154 115
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INCOME BEFORE TAXES 1,859 3,151
Income taxes 512 973
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NET INCOME $ 1,347 $ 2,178
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BASIC EARNINGS PER SHARE $ 0.23 $ 0.35
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DILUTED EARNINGS PER SHARE $ 0.23 $ 0.35
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COMMON SHARES OUTSTANDING 5,854 6,211
COMMON SHARES ASSUMING DILUTION 5,954 6,273
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
April 1, Dec. 31,
2006 2005
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CURRENT ASSETS
Cash and short-term investments $ 7,854 $ 11,314
Trading assets 1,265 1,458
Accounts receivable 3,912 3,914
Inventories:
Raw materials 416 409
Work in process 1,937 1,662
Finished goods 1,199 1,055
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3,552 3,126
Deferred tax assets and other
current assets 1,429 1,382
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Total current assets 18,012 21,194
Property, plant and equipment, net 17,618 17,111
Marketable strategic equity securities 588 537
Other long-term investments 3,927 4,135
Goodwill 3,873 3,873
Other long-term assets 3,161 1,464
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TOTAL ASSETS $ 47,179 $ 48,314
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CURRENT LIABILITIES
Short-term debt $ 224 $ 313
Accounts payable and accrued liabilities 7,096 6,329
Deferred income on shipments to
distributors 669 632
Income taxes payable 1,849 1,960
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Total current liabilities 9,838 9,234
LONG-TERM DEBT 2,040 2,106
DEFERRED TAX LIABILITIES 607 703
OTHER LONG-TERM LIABILITIES 346 89
STOCKHOLDERS' EQUITY 34,348 36,182
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 47,179 $ 48,314
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In addition to disclosing financial results calculated in
accordance with U.S. generally accepted accounting principles (GAAP),
the company's earnings release contains non-GAAP financial measures
that exclude the effects of share-based compensation and the
requirements of SFAS No. 123R, "Share-based Payment" ("123R"). The
non-GAAP financial measures used by management and disclosed by the
company exclude the income statement effects of all forms of
share-based compensation and the effects of 123R upon the number of
diluted shares used in calculating non-GAAP earnings per share. The
non-GAAP financial measures disclosed by the company should not be
considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results
calculated in accordance with GAAP and reconciliations to those
financial statements should be carefully evaluated. The non-GAAP
financial measures used by the company may be calculated differently
from, and therefore may not be comparable to, similarly titled
measures used by other companies. Set forth below are reconciliations
of the non-GAAP financial measures to the most directly comparable
GAAP financial measures. For additional information regarding these
non-GAAP financial measures, see the Form 8-K dated April 19, 2006
that Intel has filed with the Securities and Exchange Commission.
INTEL CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS
(In millions, except per-share amounts and percentages)
Three Months Ended
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April 1, Dec. 31, April 2,
2006 2005 2005
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GAAP SPENDING $3,206 $2,968 $2,528
Adjustment for share-based compensation (288) - -
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SPENDING EXCLUDING SHARE-BASED
COMPENSATION(1) $2,918 $2,968 $2,528
GAAP OPERATING INCOME $1,703 $3,309 $3,032
Adjustment for share-based
compensation within:
Cost of sales 86 - -
Research and development 135 - -
Marketing, general and administrative 153 - -
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OPERATING INCOME EXCLUDING SHARE-BASED
COMPENSATION(1) $2,077 $3,309 $3,032
GAAP NET INCOME $1,347 $2,453 $2,178
Adjustment for share-based
compensation within:
Cost of sales 86 - -
Research and development 135 - -
Marketing, general and administrative 153 - -
Income taxes (110) - -
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NET INCOME EXCLUDING SHARE-BASED
COMPENSATION(1) $1,611 $2,453 $2,178
GAAP DILUTED EARNINGS PER SHARE $ 0.23 $ 0.40 $ 0.35
Adjustment for share-based compensation 0.04 - -
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DILUTED EARNINGS PER SHARE EXCLUDING
SHARE-BASED COMPENSATION(1) $ 0.27 $ 0.40 $ 0.35
GAAP COMMON SHARES ASSUMING DILUTION 5,954 6,081 6,273
Adjustment for share-based compensation (17) - -
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COMMON SHARES ASSUMING DILUTION EXCLUDING
SHARE-BASED COMPENSATION(1) 5,937 6,081 6,273
GAAP GROSS MARGIN PERCENTAGE 55.1% 61.8% 59.3%
Adjustment for share-based compensation 1.0% - -
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GROSS MARGIN PERCENTAGE EXCLUDING
SHARE-BASED COMPENSATION(1) 56.1% 61.8% 59.3%
(1) See Item 2.02 in this 8-K filing for further discussion on this
non-GAAP measure.
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q1 2006 Q4 2005 Q1 2005
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GEOGRAPHIC REVENUE:
Asia-Pacific $ 4,293 $ 5,132 $ 4,395
48% 50% 47%
Americas $ 1,905 $ 1,836 $ 1,972
21% 18% 21%
Europe $ 1,701 $ 2,288 $ 2,106
19% 23% 22%
Japan $ 1,041 $ 945 $ 961
12% 9% 10%
CASH INVESTMENTS:
Cash and short-term investments $ 7,854 $ 11,314 $ 13,673
Trading assets - fixed income (1) 887 1,095 2,108
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Total cash investments $ 8,741 $ 12,409 $ 15,781
STRATEGIC EQUITY INVESTMENTS:
Marketable strategic equity securities $ 588 $ 537 $ 586
Other strategic investments $ 1,834 $ 598 $ 519
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Total strategic equity investments $ 2,422 $ 1,135 $ 1,105
TRADING ASSETS:
Trading assets - equity securities
offsetting deferred compensation (2) $ 378 $ 363 $ 335
Total trading assets - sum of 1+2 $ 1,265 $ 1,458 $ 2,443
SELECTED CASH FLOW INFORMATION:
Depreciation $ 1,139 $ 1,050 $ 1,189
Share-based compensation $ 374 - -
Amortization of acquisition-related
intangibles & costs $ 75 $ 58 $ 67
Capital spending ($1,758) ($1,359) ($1,788)
Stock repurchase program ($2,943) ($3,137) ($2,500)
Proceeds from sales of shares to
employees, tax benefit & other $ 504 $ 211 $ 511
Dividends paid ($585) ($482) ($497)
Net cash used for acquisitions - ($88) -
EARNINGS PER SHARE INFORMATION:
Average common shares outstanding 5,854 6,008 6,211
Dilutive effect of stock options 49 64 62
Dilutive effect of convertible debt 51 9 N/A
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Common shares assuming dilution 5,954 6,081 6,273
STOCK BUYBACK:
Shares repurchased 138.5 118.0 107.9
Cumulative shares repurchased 2,743.4 2,604.9 2,294.4
Remaining dollars authorized for
buyback (in billions) $ 18.9 $ 21.9 N/A
OTHER INFORMATION:
Employees (in thousands) 103.3 99.9 87.1
INTEL CORPORATION
SUPPLEMENTAL OPERATING RESULTS AND OTHER INFORMATION
($ in millions)
OPERATING SEGMENT INFORMATION: Q1 2006 Q4 2005 Q1 2005
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Digital Enterprise Group
Microprocessor revenue 3,892 4,929 4,944
Chipset, motherboard
and other revenue 1,255 1,476 1,417
Net revenue 5,147 6,405 6,361
Operating income 1,360 2,448 2,383
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Mobility Group
Microprocessor revenue 2,347 2,400 1,917
Chipset and other revenue 632 705 517
Net revenue 2,979 3,105 2,434
Operating income 1,155 1,547 1,131
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Flash Memory Group
Net revenue 544 600 578
Operating loss (104) (12) (32)
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All Other
Net revenue 270 91 61
Operating loss (708) (674) (450)
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Total
Net revenue 8,940 10,201 9,434
Operating income 1,703 3,309 3,032
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The company's operating segments include the Digital Enterprise
Group, the Mobility Group, the Flash Memory Group, the Digital Home
Group, the Digital Health Group and the Channel Platforms Group. The
prior period amounts have been adjusted retrospectively to reflect
certain minor reorganizations.
The Digital Enterprise Group operating segment's products include
microprocessors and related chipsets and motherboards designed for the
desktop (including consumer desktop) and enterprise computing market
segments, communications infrastructure components such as network
processors and embedded microprocessors, wired connectivity devices,
and products for network and server storage. The Mobility Group
operating segment's products include microprocessors and related
chipsets designed for the notebook computing market segment, wireless
connectivity products, and application and cellular baseband
processors used in cellular handsets and handheld computing devices.
The Flash Memory Group operating segment's products include NOR flash
memory products designed for cellular phones and embedded form factors
as well as NAND flash memory products designed primarily for digital
audio players.
Results for the Digital Home Group, Digital Health Group and
Channel Platforms Group operating segments are included within the
"all other" category. Revenue for the "all other" category primarily
consists of microprocessors and related chipsets sold by the Digital
Home Group. The "all other" category includes certain corporate-level
operating expenses, including a portion of profit-dependent bonus and
other expenses not allocated to the operating segments. "All other"
also includes the results of operations of seed businesses that
support the company's initiatives. Additionally, "all other" includes
acquisition-related costs, including amortization and any impairments
of acquisition-related intangibles and goodwill, and charges for
purchased in-process research and development. Beginning in the first
quarter of 2006, "all other" includes share-based compensation
resulting from the adoption of SFAS No. 123R.