UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report: July 14, 1998
(Date of earliest event reported)
INTEL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-6217 94-1672743
-------- ------ ----------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) file number) Identification No.)
2200 Mission College Boulevard, Santa Clara, California 95052-8119
- ------------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(408) 765-8080
--------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
5.1 Attached hereto as Exhibit 99.1 and incorporated by reference
herein is financial information for Intel Corporation for the
quarter ended June 27, 1998 and forward-looking statements
relating to 1998, the 3rd Quarter of 1998 and the 2nd Half
of 1998, as presented in a press release of July 14, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(c) Exhibits
99.1 Financial information for Intel Corporation for the quarter
ended June 27, 1998 and forward-looking statements relating to
1998, the 3rd Quarter of 1998 and the 2nd Half of 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTEL CORPORATION
(Registrant)
Date: July 14, 1998 By: /s/ Andy D. Bryant
------------------
Andy D. Bryant
Vice President, Chief Financial
Officer and Principal Accounting
Officer
<PAGE>
EXHIBIT 99.1
Q2 REVENUE $5.9 BILLION, Q2 EARNINGS PER SHARE $0.66
$1.7 billion stock buyback in Q2
SANTA CLARA, Calif., July 14, 1998 - Intel Corporation announced second quarter
revenue of $5.9 billion and earnings of $1.2 billion or $0.66 per share.
Second quarter revenue was essentially flat with second quarter 1997 revenue of
$6.0 billion and with first quarter 1998 revenue of $6.0 billion. Revenue in
the Americas and Japan was higher sequentially and Asia-Pacific was relatively
flat with the first quarter of 1998, while Europe was lower in the second
quarter.
Net income in the second quarter was $1.2 billion, down 29 percent
from second quarter 1997 net income of $1.6 billion, and down 8 percent from
first quarter 1998 net income of $1.3 billion. Net income in the first
quarter of 1998 included a non-deductible charge of approximately $165
million, or $0.09 per share, for in-process research and development
associated with the acquisition of Chips and Technologies, Inc.
Earnings per share in the second quarter declined to $0.66 from
$0.92 in the second quarter of 1997, a decrease of 28 percent. Earnings per
share in the second quarter were down 8 percent from $0.72 in the first quarter
of 1998, after the charge associated with the acquisition of Chips and
Technologies, Inc.
"Despite a difficult environment for the computing industry, Intel has
made significant strides toward increased productivity, just as we have worked
to renew growth," said Dr. Craig R. Barrett, President and Chief Executive
Officer. "We have cut costs, extended our product line, and are ahead of
schedule in using new manufacturing processes. As a result, we have increased
Intel's competitiveness substantially."
"In addition, the gains from our segmentation strategy are becoming
clear," continued Barrett. "With the recent launch of two new brands, the
Intel(R) Celeron(TM) processor and the Pentium(R) II Xeon(TM) processor, and
the acquisition of the StrongARM(TM) products, Intel has rapidly expanded its
product line to all segments."
During the quarter, the company paid its regular quarterly cash dividend
of $0.03 per share. The dividend was paid on June 1, 1998 to stockholders of
record on May 1, 1998. Intel has paid a regular quarterly cash dividend for
over five years.
In the second quarter, the company repurchased a total of 22.2 million
shares of common stock at a cost of $1.7 billion under an ongoing program.
Since the program began in 1990, the company has repurchased 257.7 million
shares at a total cost of $10.4 billion.
BUSINESS OUTLOOK
----------------
The following statements are based on current expectations. These statements
are forward-looking, and actual results may differ materially. These
statements do not reflect the potential impact of any mergers or acquisitions
that may be completed after the date of this release.
** The company expects revenue for the third quarter of 1998 to be flat to
slightly up from second quarter revenue of $5.9 billion. Consistent with the
company's earlier expectations, second half revenue is expected to be greater
than the first half revenue.
** Gross margin percentage in the third quarter of 1998 is expected to be up
a couple of points from 49 percent in the second quarter. Intel's gross margin
expectation for the full year 1998 is unchanged at 52 percent, plus or minus a
few points. In the short-term, Intel's gross margin percentage varies
primarily with revenue levels and product mix.
** The company believes that over the long-term, the gross margin percentage
will be 50 percent plus or minus a few points. Intel's long-term gross margin
percentage will vary depending on product mix.
** Expenses (R&D plus MG&A) in the third quarter of 1998 are expected to be
approximately 3 to 5 percent higher than second quarter expenses of $1.3
billion. Expenses are dependent in part on the level of revenue.
<PAGE>
** The company has made progress in the second quarter in reducing headcount.
The timeframe to complete the reduction by approximately 3,000 employees,
primarily through attrition, has been extended by one quarter to the end of
the year. The company reduced headcount by approximately 750 people,
excluding approximately 1,800 people added as the result of the acquisition
of Digital Equipment Corporation's semiconductor manufacturing operations.
** R & D spending is expected to be approximately $2.8 billion for 1998,
including the approximately $165 million for in-process R&D associated with
the acquisition of Chips and Technologies, Inc. in the first quarter.
** The company expects interest and other income for the third quarter of 1998
to be approximately $145 million assuming no significant changes in interest
rates or expected cash balances, and no unanticipated items.
** The tax rate for the remaining quarters of 1998 is expected to be 33.0
percent.
** Capital spending for 1998 is now expected to be approximately $4.5 to $4.7
billion, flat to slightly up from $4.5 billion in 1997, but down from the
previous guidance for the year of approximately $5.0 billion. The acceleration
of 0.18 micron manufacturing process technology in 1999 allows the company to
reduce spending on current generation technology. The current estimate
includes the acquisition of the capital assets of Digital Equipment
Corporation's semiconductor manufacturing operations.
** Depreciation is expected to be approximately $2.9 billion for 1998.
Depreciation in the third quarter of 1998 is expected to be approximately
$760 million.
The above statements contained in this outlook are forward-looking
statements that involve a number of risks and uncertainties. In addition to
factors discussed above, among other factors that could cause actual results
to differ materially are the following: business and economic conditions, and
growth in the computing industry in various geographic regions; changes in
customer order patterns, including changes in customer and channel inventory
levels; changes in the mixes of microprocessor types and speeds, purchased
components and other products; competitive factors, such as rival chip
architectures and manufacturing technologies, competing software-compatible
microprocessors and acceptance of new products in specific market segments;
pricing pressures; excess or obsolete inventory and variations in inventory
valuation; timing of software industry product introductions; continued success
in technological advances, including development and implementation of new
processes and strategic products for specific market segments; execution of the
manufacturing ramp; costs or charges associated with excess manufacturing
capacity; the ability to successfully integrate and operate any acquired
businesses; unanticipated costs or other adverse effects associated with
processors and other products containing errata (deviations from published
specifications); litigation involving intellectual property, consumer and other
issues; and other risk factors listed from time to time in the company's SEC
reports, including but not limited to the report on Form 10-Q for the quarter
ended March 28, 1998 (Part I, Item 2, Outlook section).
<PAGE>
<TABLE>
INTEL CORPORATION
CONSOLIDATED SUMMARY FINANCIAL STATEMENTS
(In millions, except per share amounts)
INCOME Three Months Ended Six Months Ended
------------------------ ----------------------
June 27, June 28, June 27, June 28,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET REVENUE $ 5,927 $ 5,960 $ 11,928 $ 12,408
Cost of sales 3,027 2,343 5,776 4,650
Research and development 623 575 1,218 1,156
Marketing, general and administrative 671 704 1,382 1,397
Purchased in-process research
and development - - 165 -
-------- -------- -------- --------
Operating costs and expenses 4,321 3,622 8,541 7,203
-------- -------- -------- --------
OPERATING INCOME 1,606 2,338 3,387 5,205
Interest and other 144 212 344 420
-------- -------- -------- --------
INCOME BEFORE TAXES 1,750 2,550 3,731 5,625
Income taxes 578 905 1,286 1,997
-------- -------- -------- --------
NET INCOME $ 1,172 $ 1,645 $ 2,445 $ 3,628
======== ======== ======== ========
BASIC EARNINGS PER SHARE $ 0.69 $ 1.01 $ 1.47 $ 2.22
======== ======== ======== ========
DILUTED EARNINGS PER SHARE $ 0.66 $ 0.92 $ 1.38 $ 2.02
======== ======== ======== ========
COMMON SHARES OUTSTANDING 1,691 1,635 1,666 1,636
COMMON SHARES ASSUMING DILUTION 1,769 1,797 1,772 1,798
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
BALANCE SHEET At At At
June 27, March 28, Dec. 27,
1998 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 7,698 $ 10,609 $ 9,927
Accounts receivable 3,126 3,092 3,438
Inventories:
Raw materials 250 254 255
Work in process 988 1,035 928
Finished goods 465 532 514
--------- --------- ---------
1,703 1,821 1,697
--------- --------- ---------
Deferred tax assets and other 841 750 805
--------- --------- ---------
Total current assets 13,368 16,272 15,867
Property, plant and equipment, net 12,003 11,137 10,666
Long-term investments 2,040 2,082 1,839
Other assets 1,007 738 508
--------- --------- ---------
TOTAL ASSETS $ 28,418 $ 30,229 $ 28,880
========= ========= =========
CURRENT LIABILITIES
Short-term debt $ 242 $ 365 322
Accounts payable and accrued liabilities 3,445 3,454 4,017
Deferred income on shipments to distributors 391 516 516
Income taxes payable 176 1,519 1,165
--------- --------- ---------
Total current liabilities 4,254 5,854 6,020
LONG-TERM DEBT 472 441 448
DEFERRED TAX LIABILITIES 1,248 1,164 1,076
PUT WARRANTS 711 1,185 2,041
STOCKHOLDERS' EQUITY
Common Stock and
capital in excess of par value 4,853 4,955 3,311
Retained earnings 16,880 16,630 15,984
--------- --------- ---------
Total stockholders' equity 21,733 21,585 19,295
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 28,418 $ 30,229 $ 28,880
========= ========= =========
</TABLE>
