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 12, 1999
(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 of incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
2200 Mission College Boulevard, Santa Clara, 95052-8119
California
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(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 September 25, 1999
and forward-looking statements relating to 1999 and the
fourth quarter of 1999 as presented in a press release
of October 12, 1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(c) Exhibits
99.1 Financial information for Intel Corporation
for the quarter ended September 25, 1999 and forward-
looking statements relating to 1999 and the fourth
quarter of 1999.
<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: October 12, 1999 By: /s/ANDY D. BRYANT
-------------------------
Andy D. Bryant
Senior Vice President,
Chief Financial Officer
and Principal Accounting
Officer
<PAGE>
EXHIBIT 99.1
INTEL THIRD QUARTER REVENUE $7.3 BILLION, up 9%
Earnings excluding acquisition-related costs* $0.55 per share, up
22%
EPS $0.42, down 5%
SANTA CLARA, Calif., October 12, 1999 - Intel Corporation
announced third quarter revenue of $7.3 billion, up 9 percent
from third quarter 1998 revenue of $6.7 billion. Third quarter
revenue includes post-acquisition revenue of companies acquired
in the third quarter. Third quarter revenue was up 9 percent
from second quarter 1999 revenue which was also $6.7 billion.
The company said that shipments of microprocessors, chipsets, and
flash memory all grew substantially to new records during the
quarter.
*Acquisition-related costs consist of one-time write-offs of
purchased in-process research and development and the ongoing
amortization of goodwill and other acquisition-related
intangibles. Other acquisition-related intangibles include, for
example, the value of the acquired companies' developed
technology, trademarks and workforce-in-place. Earnings excluding
acquisition-related costs differ from earnings presented
according to generally accepted accounting principles because
they exclude these costs.
<PAGE>
Net income excluding acquisition-related costs was $1.9
billion in the third quarter, up 21 percent from the third
quarter of 1998 and up 7 percent sequentially. Third quarter
earnings excluding acquisition-related costs were $0.55 per
share, an increase of 22 percent from $0.45 in the third quarter
of 1998, and up 6 percent sequentially.
Including acquisition-related costs in accordance with
generally accepted accounting principles, net income was $1.5
billion, down 6 percent from third quarter 1998 and down 17
percent sequentially. Earnings per share were $0.42, down 5
percent from $0.44 in the third quarter of 1998 and down 18
percent sequentially.
Acquisition-related costs in the third quarter consisted of
$333 million in one-time charges for purchased in-process
research and development and $121 million of amortization of
goodwill and other acquisition-related intangibles. Effective
with this earnings release, the amortization of goodwill and
other acquisition-related intangibles is shown separately and
prior periods' amounts are reclassified to be consistent with the
current basis of presentation. These costs were formerly included
in cost of sales.
"Our microprocessor business was solid during the quarter,"
said Craig R. Barrett, president and chief executive officer.
"Revenues were up, units grew substantially to a new record, and
we introduced a large number of new products across all market
segments."
"We look forward to seasonally strong business in the fourth
quarter," Barrett continued. "We will aggressively ramp our high
performance family of Pentium(R)III microprocessors on 0.18
micron process technology. At the same time, we are accelerating
our new business activities in networking, communications
products, and online services, as illustrated by the number of
acquisitions made in the third quarter."
During the quarter Intel acquired four companies; Dialogic
Corporation, Level One Communications, Softcom Microsystems, Inc.
and NetBoost Corporation. These acquisitions were valued at over
$3 billion in total and significantly strengthen Intel's
networking and communications product offerings. Substantially
all of acquisition-related costs for the third quarter are
related to these four acquisitions.
During the quarter, the company paid its quarterly cash
dividend of $0.03 per share. The dividend was paid on September
1, 1999, to stockholders of record on August 7, 1999. Intel has
<PAGE>
paid a regular quarterly cash dividend for seven years.
During the quarter, the company repurchased a total of 12.8
million shares of common stock, at a cost of $911 million, under
an ongoing program. Since the program began in 1990, the company
has repurchased 647.4 million shares at a total cost of $17.3
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 include the potential
impact of any mergers or acquisitions that may be completed after
September 25, 1999.
** The company expects revenue for the fourth quarter of 1999 to
be up from third quarter revenue of $7.3 billion.
** Gross margin percentage in the fourth quarter of 1999 is
expected to be up a couple points from the third quarter. In the
short term, Intel's gross margin percentage varies primarily with
revenue levels and product mix as well as changes in unit costs.
** Expenses (R&D, excluding in-process R&D, plus MG&A) in the
fourth quarter of 1999 are expected to be approximately 9 to 12
percent higher than third quarter expenses of $1.8 billion,
primarily due to higher seasonal spending on advertising and
marketing and a full quarter of expenses from companies acquired
during the third quarter. Expenses are dependent in part on the
level of revenue.
** R&D spending, excluding in-process R&D, is expected to be
approximately $3.1 billion for the full year 1999, up slightly
from previous guidance of $3.0 billion primarily due to R&D
spending of companies Intel acquired during the quarter.
** The company expects interest and other income for the fourth
quarter of 1999 to be approximately $280 million, depending on
interest rates, cash balances, the company's ability to realize
expected gains, and assuming no unanticipated items.
** The tax rate for the fourth quarter is expected to be
approximately 33 percent, excluding the impact of acquisition-
related costs from both prior and potential future mergers or
acquisitions.
** Capital spending for 1999 is now expected to be approximately
$3.3 billion, up from previous guidance of $3.0 billion, due
primarily to capital spending of the companies Intel
<PAGE>
acquired during the third quarter and the earlier than expected
capital ramp of Intel Online Services.
** Depreciation for the fourth quarter of 1999 is expected to be
approximately $830 million.
** Amortization of goodwill and other acquisition-related
intangibles is expected to be approximately $185 million in the
fourth quarter.
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: the impact of the recent earthquake
in Taiwan, primarily on the availability of components to PC
manufacturers; 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 and changes due to year 2000 issues;
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;
development and timing of introduction of compelling software
applications; insufficient, 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, including the
transitions to the Pentium III processor and to the 0.18 micron
process technology; excess or shortage of manufacturing capacity;
the ability to grow new businesses and 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);
impact on the company's business due to internal systems or
systems of suppliers, infrastructure providers and other third
parties adversely affected by year 2000 problems; claims due to
year 2000 issues allegedly related to the company's products or
year 2000 remediation efforts; 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 26, 1999 (Part I, Item 2, Outlook section).
<PAGE>
<TABLE>
INTEL CORPORATION
CONSOLIDATED SUMMARY INCOME STATEMENT DATA
(In millions, except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
------------------ ------------------
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET REVENUE $7,328 $6,731 $21,177 $18,659
------ ------ ------- -------
Cost of Sales 3,026 3,176 8,660 8,928
Research and development 840 617 2,234 1,835
Marketing, general and administrative 952 766 2,767 2,148
Amortization of goodwill and other
acquisition-related intangibles 121 16 170 40
Purchased in-process research and development 333 - 333 165
------ ------ ------ ------
Operating costs and expenses 5,272 4,575 14,164 13,116
------ ------ ------ ------
OPERATING INCOME 2,056 2,156 7,013 5,543
Interest and other 316 170 953 514
------ ------ ------ ------
INCOME BEFORE TAXES 2,372 2,326 7,966 6,057
Income taxes 914 767 2,760 2,053
------ ------ ------ ------
NET INCOME $1,458 $1,559 $5,206 $4,004
====== ====== ====== ======
BASIC EARNINGS PER SHARE $0.44 $0.46 $1.57 $1.20
====== ====== ====== ======
DILUTED EARNINGS PER SHARE $0.42 $0.44 $1.50 $1.13
====== ====== ====== ======
COMMON SHARES OUTSTANDING 3,325 3,355 3,320 3,339
COMMON SHARES ASSUMING DILUTION 3,472 3,505 3,465 3,530
</TABLE>
Note: Certain prior period amounts have been reclassified to
conform with the current presentation.
- -----------------------------------------------------------------
PRO FORMA INFORMATION EXCLUDING ACQUISITION-RELATED COSTS
The following pro forma supplemental information excludes the
effect of amortization of goodwill and other acquisition-related
intangibles as well as in-process research and development. As
these acquisition-related costs are substantially all non-
deductible for income tax purposes, the only change to the tax
provision in arriving at the pro forma net income is a small
increase for the impact of deferred taxes related to the
amortization of identifiable intangibles. This pro forma
information is not prepared in accordance with generally accepted
accounting principles.
<TABLE>
Three Months Ended Nine Months Ended
------------------ ------------------
Sept. 25, Sept. 26, Sept. 25, Sept. 26,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
Pro forma operating costs and expenses $4,818 $4,559 $13,661 $12,911
Pro forma operating income $2,510 $2,172 $7,516 $5,748
Net income excluding acquisition-related costs $1,904 $1,575 $5,701 $4,209
Basic earnings per share excluding
acquisition-related costs $0.57 $0.47 $1.72 $1.26
Diluted earnings per share excluding
acquisition-related costs $0.55 $0.45 $1.65 $1.19
</TABLE>
<PAGE>
<TABLE>
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions, except per share amounts)
<CAPTION>
Sept. 25, June 26, Dec. 26,
1999 1999 1998
------ ------ ------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $11,891 $10,609 $7,626
Accounts receivable 3,494 3,265 3,527
Inventories:
Raw materials 204 222 206
Work in process 840 947 795
Finished goods 582 594 581
------ ------ ------
1,626 1,763 1,582
------ ------ ------
Deferred tax assets and other 905 836 740
------ ------ ------
Total current assets 17,916 16,473 13,475
Property, plant and equipment, net 11,594 11,412 11,609
Long-term investments 4,959 3,453 5,365
Goodwill and other acquisition-related intangibles 3,114 263 111
Other assets 1,355 1,200 911
------ ------ ------
TOTAL ASSETS $38,938 $32,801 $31,471
======= ======= =======
CURRENT LIABILITIES
Short-term debt $ 164 $ 135 $ 159
Accounts payable and accrued liabilities 4,459 3,840 4,081
Deferred income on shipments to distributors 596 499 606
Income taxes payable 1,170 643 958
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Total current liabilities 6,389 5,117 5,804
LONG-TERM DEBT 884 666 702
DEFERRED TAX LIABILITIES 2,222 1,546 1,387
PUT WARRANTS 261 - 201
STOCKHOLDERS' EQUITY
Common Stock and capital in excess of par value 7,215 4,819 4,822
Retained earnings 21,967 20,653 18,555
------ ------ ------
Total stockholders' equity 29,182 25,472 23,377
------ ------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $38,938 $32,801 $31,471
======= ======= =======
</TABLE>
Note: Certain prior period amounts have been reclassified to
conform with the current presentation.
