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: October 13, 1998
(Date of earliest event reported)
INTEL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-6217 94-1672743
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(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
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(Address of principal executive offices) (Zip Code)
(408) 765-8080
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(Registrant's telephone number, including area code)
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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 September 26, 1998 and forward-looking statements
relating to 1998, the 4th Quarter of 1998 and the 2nd Half of
1998, as presented in a press release of October 13, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(c) Exhibits
99.1 Financial information for Intel Corporation for the quarter
ended September 26, 1998 and forward-looking statements relating
to 1998, the 4th Quarter of 1998 and the 2nd Half of 1998.
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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: October 13, 1998 By: /s/ Andy D. Bryant
------------------
Andy D. Bryant
Vice President, Chief Financial
Officer and Principal Accounting
Officer
EXHIBIT 99.1
RECORD INTEL THIRD QUARTER REVENUE
Q3 Revenue $6.7 Billion; Q3 Earnings per Share $0.89;
Quarterly Cash Dividend Increased
SANTA CLARA, Calif., Oct.13, 1998 - Driven by strong worldwide demand for PC
products, Intel Corporation set a new record for quarterly revenue and unit
shipments of microprocessors, the company said today.
Third quarter revenue of $6.7 billion was the highest ever and was up 9
percent from third quarter 1997 revenue of $6.2 billion. Third quarter
revenue was up 14 percent from second quarter 1998 revenue of $5.9 billion.
Net income in the third quarter was $1.6 billion, essentially flat with
the third quarter of 1997. Net income in the third quarter was up 33 percent
from second quarter 1998 net income of $1.2 billion.
Earnings per share in the third quarter increased to $0.89 from $0.88 in
the third quarter of 1997 and rose 35 percent from $0.66 in the second quarter
of 1998.
"We are pleased with our overall performance in the last quarter," said
Dr. Craig R. Barrett, president and chief executive officer. "We had growth
across nearly all of our geographies and product lines, including strong
microprocessor sales. In the third quarter, the PC industry recovered from its
inventory problems and is benefiting from strong seasonal demand."
"In the product development area, we had successful introductions of new
products for each computing segment, ranging from new Pentium(R) II Xeon(TM)
processors for servers and workstations to the Intel(R) Celeron(TM) processors
333 MHz and 300A MHz for basic computers."
During the quarter, the company paid its regular quarterly cash dividend
of $0.03 per share. The dividend was paid on Sept. 1, 1998, to stockholders of
record on Aug. 7, 1998. Also during the quarter, the board of directors
declared a $0.04 per share quarterly dividend to be paid on Dec. 1, 1998, to
stockholders of record on Nov. 7, 1998. Intel has paid a regular quarterly
cash dividend for six years, and the dividend has been increased in each of the
past five years.
In the third quarter, the company repurchased a total of 20.1 million
shares of common stock at a cost of $1.7 billion. The company has repurchased
a total of 64.4 million shares at a cost of $5.2 billion year to date, and has
repurchased 277.8 million shares at a total cost of $12.1 billion since the
program began in 1990.
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 fourth quarter of 1998 to be up slightly
from third quarter revenue of $6.7 billion. Consistent with the company's
earlier expectations, second half revenue is expected to be greater than first
half revenue.
** Gross margin percentage in the fourth quarter of 1998 is expected to be flat
to slightly up from 53 percent in the third quarter. In the short-term,
Intel's gross margin percentage varies primarily with revenue levels and
product mix.
** Expenses (R&D plus MG&A) in the fourth quarter of 1998 are expected to be
approximately 3 to 5 percent higher than third quarter expenses of $1.4
billion. Expenses are dependent in part on the level of revenue.
** The company has reduced headcount by approximately 2,000 people since the
end of the first quarter, excluding approximately 1,800 people added as a
result of the acquisition of Digital Equipment Corporation's semiconductor
manufacturing operations. Intel is on track to complete the reduction of
approximately 3,000 employees by the end of the year.
** R&D spending for the fourth quarter of 1998 is expected to be approximately
$650 million.
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** The company expects interest and other income for the fourth quarter of 1998
to be approximately $160 million, assuming no significant changes in expected
interest rates or cash balances, and no unanticipated items.
** The tax rate for the fourth quarter of 1998 is expected to be 33.0 percent.
** Capital spending for 1998 is now expected to be approximately $4.2 billion.
This is less than the previous guidance for the year of $4.5 to $4.7 billion.
This change in guidance is primarily as a result of the facilities realignment
that the company mentioned in the third quarter pre-release in September and
the company's continued efforts to control costs. The current estimate
includes the acquisition of the capital assets of Digital Equipment
Corporation's semiconductor manufacturing operations.
** Depreciation for the fourth quarter of 1998 is expected to be approximately
$780 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 such as
the current global financial difficulties, 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; 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 associated with excess or shortage of manufacturing
capacity; unanticipated costs or other adverse effects associated with
processors and other products containing errata (deviations from published
specifications); impact on the Company's business due to internal systems or
systems of suppliers and other third parties adversely affected by year 2000
problems; litigation involving antitrust, 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 June 27, 1998 (Part I, Item 2, Outlook section).
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<TABLE>
INTEL CORPORATION
CONSOLIDATED SUMMARY FINANCIAL STATEMENTS
(In millions, except per share amounts)
INCOME Three Months Ended Nine Months Ended
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Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
NET REVENUE $ 6,731 $ 6,155 $ 18,659 $ 18,563
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Cost of sales 3,192 2,604 8,968 7,254
Research and development 617 586 1,835 1,742
Marketing, general and administrative 766 676 2,148 2,073
Purchased in-process research and development - - 165 -
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Operating costs and expenses 4,575 3,866 13,116 11,069
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OPERATING INCOME 2,156 2,289 5,543 7,494
Interest and other 170 151 514 571
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INCOME BEFORE TAXES 2,326 2,440 6,057 8,065
Income taxes 767 866 2,053 2,863
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NET INCOME $ 1,559 $ 1,574 $ 4,004 $ 5,202
======== ======== ======== ========
BASIC EARNINGS PER SHARE $ 0.93 $ 0.96 $ 2.40 $ 3.18
======== ======== ======== ========
DILUTED EARNINGS PER SHARE $ 0.89 $ 0.88 $ 2.27 $ 2.89
======== ======== ======== ========
COMMON SHARES OUTSTANDING 1,678 1,635 1,670 1,636
COMMON SHARES ASSUMING DILUTION 1,753 1,797 1,765 1,798
</TABLE>
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<TABLE>
BALANCE SHEET At At At
Sept. 26, June 27, Dec. 27,
1998 1998 1997
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<S> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 8,687 $ 7,698 $ 9,927
Accounts receivable 3,636 3,126 3,438
Inventories:
Raw materials 258 250 255
Work in process 879 988 928
Finished goods 441 465 514
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1,578 1,703 1,697
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Deferred tax assets and other 812 841 805
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Total current assets 14,713 13,368 15,867
Property, plant and equipment, net 11,863 12,003 10,666
Long-term investments 1,789 2,040 1,839
Other assets 1,023 1,007 508
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TOTAL ASSETS $ 29,388 $ 28,418 $ 28,880
======== ======== ========
CURRENT LIABILITIES
Short-term debt $ 192 $ 242 $ 322
Accounts payable and accrued liabilities 3,795 3,445 4,017
Deferred income on shipments to distributors 471 391 516
Income taxes payable 798 176 1,165
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Total current liabilities 5,256 4,254 6,020
LONG-TERM DEBT 583 472 448
DEFERRED TAX LIABILITIES 1,162 1,248 1,076
PUT WARRANTS 588 711 2,041
STOCKHOLDERS' EQUITY
Common Stock and
capital in excess of par value 4,775 4,853 3,311
Retained earnings 17,024 16,880 15,984
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Total stockholders' equity 21,799 21,733 19,295
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 29,388 $ 28,418 $ 28,880
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