EXHIBIT 99.1
THIRD QUARTER REVENUE A RECORD $8.7 BILLION, UP 19 PERCENT
THIRD QUARTER EARNINGS EXCLUDING ACQUISITION-RELATED COSTS* $0.41 PER SHARE
THIRD QUARTER EARNINGS PER SHARE $0.36
*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 and costs. 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.
SANTA CLARA, Calif., Oct. 17, 2000 -- Intel Corporation today announced
third quarter revenue of $8.7 billion, a quarterly record, up 19 percent
from the third quarter of 1999 and up 5 percent sequentially.
For the third quarter, net income excluding acquisition-related
costs was $2.9 billion, up 52 percent from the third quarter of 1999 and
down 18 percent sequentially. Third quarter earnings excluding
acquisition-related costs were $0.41 per share, an increase of 52 percent
from $0.27 in
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the third quarter of 1999, and down 18 percent sequentially. All second
quarter net income and earnings per share amounts include the previously
reported charge to cost of sales for approximately $200 million to cover
costs associated with the MTH motherboard replacement program and $2.3
billion of interest and other income.
Including acquisition-related costs in accordance with generally
accepted accounting principles, third quarter net income was $2.5 billion,
up 72 percent from the third quarter of 1999 and down 20 percent
sequentially. Earnings per share were $0.36, up 71 percent from $0.21 in
the third quarter of 1999 and down 20 percent sequentially.
Acquisition-related costs in the third quarter consisted of $8
million in one-time charges for purchased in-process research and
development and $420 million of amortization of goodwill and other
acquisition-related intangibles and costs.
"We achieved record revenue with 19 percent growth in the third
quarter. It was a challenging quarter primarily because PC demand in
Europe was not as strong as we expected entering the period," said Craig R.
Barrett, president and chief executive officer.
"Looking ahead, we anticipate record revenue in the fourth
quarter, with growth across most of our product lines," added Barrett. "We
are especially pleased with the rapid growth in our server business, our
record flash business, and our networking silicon business which surpassed
our expectations in the third quarter. We are also excited by the industry
enthusiasm for the new low power mobile Pentium (R) III processors
announced last month, the Pentium (R) 4 processor launching this quarter,
the Itanium (TM) processor now shipping for pilot systems, and our recently
introduced Intel (R) XScale (TM) microarchitecture."
During the quarter, the company announced the acquisition of
Ziatech Corporation, and announced and closed the acquisitions of Trillium
Digital Systems, Inc. and DataKinetics Ltd. Background on each of these
acquisitions can be found in the Third Quarter Highlights section of this
release.
In September, the company said it had been notified that the
investigation by the Federal Trade Commission into Intel's business
practices has been closed. The investigation began in September 1997 and
covered all aspects of Intel's business. The FTC also closed its
investigation
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of whether Intel's acquisition of Chips and Technologies Inc. and equity in
Real3D had any anti-competitive effect on any markets for graphics
components or other computer hardware.
During the quarter, the company paid its quarterly cash dividend
of $0.02 per share. The dividend was paid on Sept. 1, 2000, to
stockholders of record on Aug. 7, 2000. Intel has paid a regular quarterly
cash dividend for eight years.
During the quarter, the company repurchased a total of 14.3
million shares of common stock at a cost of $1.0 billion, under an ongoing
program. Since the program began in 1990, the company has repurchased 1.4
billion shares at a total cost of $21.2 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,
acquisitions or other business combinations that may be completed after
Sept. 30, 2000.
** The company expects revenue for the fourth quarter of 2000 to be up 4 to
8 percent from third quarter revenue of $8.7 billion.
** The company expects gross margin percentage for the fourth quarter to be
approximately 63 percent plus or minus a point, versus 64 percent in the
third quarter, primarily due to start-up costs on upcoming 0.18-micron
fabs. In the short term, Intel's gross margin percentage varies with
revenue levels, product mix, changes in unit costs and timing of factory
ramps and associated costs.
** Expenses (R&D, excluding in-process R&D, plus MG&A) in the fourth
quarter of 2000 are expected to be up 6 to 8 percent from third quarter
expenses of $2.3 billion, primarily due to seasonally higher spending on
marketing programs and higher revenue dependent expenses. Expenses are
dependent in part on the level of revenue.
** R&D spending, excluding in-process R&D, is expected to be approximately
$1.0 billion in the fourth quarter.
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** The company expects gains on investments and interest and other income
for the fourth quarter of 2000 to be approximately $950 million, depending
on interest rates, cash balances, equity market levels and volatility, the
realization of expected gains on investments, including gains on
investments acquired by third parties, and assuming no unanticipated items.
** The tax rate for 2000 is expected to be approximately 31.8 percent,
excluding the impact of the previously announced agreement with the
Internal Revenue Service and acquisition-related costs.
** Capital spending for 2000 is expected to be approximately $6.0 billion.
** Depreciation is expected to be approximately $865 million in the fourth
quarter.
** Amortization of goodwill and other acquisition-related intangibles and
costs is expected to be approximately $440 million in the fourth quarter.
The statements by Craig R. Barrett and 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; 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 transition to the 0.18-micron process
technology; shortage of manufacturing capacity; the ability to grow new
networking, communications, wireless and other Internet-related businesses
and successfully integrate and operate any acquired businesses;
unanticipated costs or other adverse effects associated with processors and
other products containing errata
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(deviations from published specifications); 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 July 1, 2000 (Part
I, Item 2, Outlook section).
INTEL REVISES ITS OUTLOOK PUBLICATION PROCEDURES
In connection with the recent adoption of new SEC rules on
corporate disclosure, Intel is changing its procedures for publishing and
updating its Outlook forward-looking statements and risk factors
statements. Following the publication of Outlook in its quarterly Earnings
Release, Intel will continue its current practice of having corporate
representatives meet privately during the quarter with investors, the
media, investment analysts and others. At these meetings Intel may
reiterate the Outlook published in the Earnings Release. At the same time,
Intel will keep its Earnings Release and Outlook publicly available on its
Web site (www.intc.com). Prior to the start of the Quiet Period (described
below), the public can continue to rely on the Outlook on the Web site as
still being Intel's current expectations on matters covered, unless Intel
publishes a notice stating otherwise.
Towards the end of each fiscal quarter, Intel will have a "Quiet
Period" when it no longer publishes, or updates, Outlook as its current
expectations and Intel representatives will not comment concerning Outlook
or Intel's financial results or expectations. The Quiet Period will extend
until the day when Intel's next quarterly Earnings Release is published.
For the fourth quarter, the Quiet Period will be Dec. 16, 2000 through Jan.
16, 2001.
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INTEL CORPORATION
CONSOLIDATED SUMMARY INCOME STATEMENT DATA
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
------------------ -----------------
Sept. 30 Sept. 25 Sept. 30 Sept. 25
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET REVENUE $ 8,731 $ 7,328 $ 25,024 $ 21,177
-------- -------- -------- --------
Cost of sales 3,148 3,026 9,420 8,660
Research and development 977 840 2,899 2,234
Marketing, general and administrative 1,321 952 3,668 2,767
Amortization of goodwill and other
acquisition-related intangibles and costs 420 121 1,127 170
Purchased in-process research and
development 8 333 91 333
-------- -------- -------- --------
Operating costs and expenses 5,874 5,272 17,205 14,164
-------- -------- -------- --------
OPERATING INCOME 2,857 2,056 7,819 7,013
Gains on investments 716 195 3,309 556
Interest and other 250 121 638 397
-------- -------- -------- --------
INCOME BEFORE TAXES 3,823 2,372 11,766 7,966
Income taxes 1,314 914 3,424 2,760
-------- -------- -------- --------
NET INCOME $ 2,509 $ 1,458 $ 8,342 $ 5,206
======== ======== ======== ========
BASIC EARNINGS PER SHARE $ 0.37 $ 0.22 $ 1.24 $ 0.78
======== ======== ======== ========
DILUTED EARNINGS PER SHARE $ 0.36 $ 0.21 $ 1.19 $ 0.75
======== ======== ======== ========
COMMON SHARES OUTSTANDING 6,719 6,650 6,704 6,639
COMMON SHARES ASSUMING DILUTION 7,007 6,943 7,002 6,930
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Note: Certain prior period amounts have been reclassified to conform with
the current presentation.
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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 and
costs as well as in-process research and development. This pro forma
information is not prepared in accordance with generally accepted
accounting principles.
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Three Months Ended Nine Months Ended
------------------ ------------------
Sept. 30 Sept. 25 Sept. 30 Sept. 25
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Pro forma operating costs and expenses $ 5,446 $ 4,818 $ 15,987 $ 13,661
Pro forma operating income $ 3,285 $ 2,510 $ 9,037 $ 7,516
Net income excluding acquisition-related
costs $ 2,899 $ 1,904 $ 9,455 $ 5,701
Basic earnings per share excluding
acquisition-related costs $ 0.43 $ 0.29 $ 1.41 $ 0.86
Diluted earnings per share excluding
acquisition-related costs $ 0.41 $ 0.27 $ 1.35 $ 0.82
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INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
Sept. 30, July 1, Dec. 25,
2000 2000 1999
-------- -------- --------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 14,007 $ 13,644 $ 11,788
Accounts receivable 4,574 4,333 3,700
Inventories:
Raw materials 334 232 183
Work in process 926 863 755
Finished goods 676 512 540
-------- -------- --------
1,936 1,607 1,478
Deferred tax assets and other 993 966 853
-------- -------- --------
Total current assets 21,510 20,550 17,819
Property, plant and equipment, net 13,414 12,324 11,715
Marketable strategic equity securities 4,548 6,201 7,121
Other long-term investments 1,770 1,574 790
Goodwill and other acquisition-related
intangibles 6,163 6,240 4,934
Other assets 1,608 1,631 1,470
-------- -------- --------
TOTAL ASSETS $ 49,013 $ 48,520 $ 43,849
======== ======== ========
CURRENT LIABILITIES
Short-term debt $ 336 $ 385 $ 230
Accounts payable and accrued liabilities 6,087 5,602 4,565
Deferred income on shipments to
distributors 716 726 609
Income taxes payable 1,386 1,623 1,695
-------- -------- --------
Total current liabilities 8,525 8,336 7,099
LONG-TERM DEBT 610 870 955
DEFERRED TAX LIABILITIES 2,173 2,694 3,130
PUT WARRANTS - - 130
STOCKHOLDERS' EQUITY
Common stock and capital in excess
of par value 8,643 7,941 7,316
Other stockholders' equity 29,062 28,679 25,219
-------- -------- --------
Total stockholders' equity 37,705 36,620 32,535
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 49,013 $ 48,520 $ 43,849
======== ======== ========
Note: Certain prior period amounts have been reclassified to conform with the current
presentation.
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