EXHIBIT 99.1
Q2 REVENUE A RECORD $8.3 BILLION, UP 23 PERCENT
Q2 EARNINGS EXCLUDING ACQUISITION-RELATED COSTS* $0.50 PER SHARE
($1.00 PRE-SPLIT)
Q2 EARNINGS PER SHARE $0.45, POST SPLIT ($0.90 PRE-SPLIT)
All of the share and per share amounts in this release have been adjusted to
reflect the 2:1 stock split (to be effected as a special stock distribution)
payable July 30 to stockholders of record on July 2.
*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.
SANTA CLARA, Calif., July 18, 2000 -- Intel Corporation today announced
second quarter revenue of $8.3 billion, a new quarterly record, up 23 percent
from the second quarter of 1999 and 4 percent sequentially. The company also
had record unit shipments of microprocessors and flash memory in the second
quarter.
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For the second quarter, net income excluding acquisition-related costs
was $3.5 billion, up 98 percent from the second quarter of 1999 and up 16
percent sequentially. Second quarter earnings excluding acquisition-related
costs were $0.50 per share, an increase of 92 percent from $0.26 in the
second quarter of 1999, and up 16 percent sequentially.
Including acquisition-related costs in accordance with generally
accepted accounting principles, second quarter net income was $3.1 billion,
up 79 percent from the second quarter of 1999 and up 16 percent sequentially.
Earnings per share were $0.45, up 80 percent from $0.25 in the second quarter
of 1999 and up 15 percent sequentially.
Acquisition-related costs in the second quarter consisted of $21 million
in one-time charges for purchased in-process research and development and
$394 million of amortization of goodwill and other acquisition-related
intangibles.
All of the share and per share amounts in this release have been
adjusted to reflect the 2-for-1 stock split (to be effected as a special
stock distribution) payable July 30 to stockholders of record on July 2. The
company expects that its shares will begin to trade on a post-split basis on
July 31. All second quarter net income and earnings per share amounts include
the previously announced 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.
"We are very pleased with our record quarterly results in what is
normally a seasonally slow quarter," said Craig R. Barrett, president and
chief executive officer. "Strong worldwide PC and server demand and better
than expected manufacturing performance helped lead the company to greater
than 20 percent revenue growth versus the second quarter of last year. We
saw strong demand in all business groups, especially for microprocessors,
flash memory and networking silicon.
"Looking forward, we expect to see strong demand continue into the
second half. Our recent investments in 0.18-micron process technology will
allow us to substantially increase second half supply to help us meet this
anticipated strong demand."
In June, the company announced the Intel(R) Pentium(R) 4 processor brand
name for its new generation of desktop microprocessors. Scheduled to be
introduced in the second half of 2000, the new Pentium 4 processor is based
on revolutionary technology designed for consumers
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who want to take advantage of the latest Web technologies like broadband,
interactive 3-D and streaming audio and video.
Today, the company said that it would soon begin shipments of its
Intel(R) Itanium(TM) processor for systems used by IT end-users in pilot
installations, and that the company now expects to begin recording revenue
for Itanium processor shipments during the fourth quarter, rather than the
third. Pilot systems will be followed by release of generally available
system hardware, operating systems environments, and application solutions,
following industry practice for enterprise computing systems. Thousands of
Itanium processor based development systems have already been shipped to OEM
customers, operating systems vendors, independent software vendors, and IT
end-users using them for the qualification of systems and development of
software.
During the quarter, the company announced and closed the acquisition of
Picazo Communications and Kuck & Associates, Inc. and closed two previously
announced acquisitions, Basis Communications Corporation and Voice
Technologies Group, Inc. During the quarter, Intel also announced that
Visteon Corporation's Ford Microelectronics Inc. design team had joined the
company. Background on acquisitions can be found in the Second Quarter
Highlights section of this release.
During the quarter, the company paid its quarterly cash dividend of
$0.015 per share (as calculated on a post-split basis). The dividend was
paid on June 1, 2000, to stockholders of record on May 7, 2000. During the
quarter, Intel's Board of Directors approved an increase in the company's
quarterly cash dividend from $0.015 to $0.02, beginning with the dividend
payable on September 1, 2000, to stockholders of record on August 7, 2000.
Intel has paid a regular quarterly cash dividend for over seven years.
During the quarter, the company repurchased a total of 16.8 million
shares (as calculated on a post-split basis), 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 $20.2 billion.
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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 July 1, 2000.
** The company expects revenue for the third quarter of 2000 to be up from
second quarter revenue of $8.3 billion.
** The company expects gross margin percentage for the third quarter to be
approximately 63 to 64 percent. Based on first half results and current
expectations, gross margin percentage for 2000 is now expected to be 63
percent, plus or minus a few points, including the impact of all costs
associated with the MTH motherboard replacement program. 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 third quarter
of 2000 are expected to be up 7 to 9 percent from second quarter expenses of
$2.2 billion, primarily due to higher spending on marketing programs and R&D
initiatives in new business areas. Expenses are dependent in part on the
level of revenue.
** R&D spending, excluding in-process R&D, is expected to be approximately
$4.0 billion for 2000, up from previous guidance of $3.9 billion.
** The company expects interest and other income for the third quarter of
2000 to be approximately $800 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, up slightly from previous
guidance of 31.7 percent, due primarily to higher than expected realized
gains on the sale of equity investments.
** Capital spending for 2000 is expected to be approximately $6.0 billion.
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** Depreciation is expected to be approximately $790 million in the third
quarter and $3.4 billion for the full year 2000, down from previous guidance
of $3.5 billion.
** Amortization of goodwill and other acquisition-related intangibles is
expected to be approximately $400 million in the third quarter and $1.5
billion for the full year 2000, up from previous guidance of $1.4 billion.
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 (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 April 1, 2000 (Part I, Item 2, Outlook
section).
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INTEL CORPORATION
CONSOLIDATED SUMMARY INCOME STATEMENT DATA
(In millions, except per share amounts)
Three Months Ended Six Months Ended
------------------ ----------------
July 1, June 26, July 1, June 26,
2000 1999 2000 1999
-------- -------- -------- --------
NET REVENUE $ 8,300 $ 6,746 $ 16,293 $ 13,849
-------- -------- -------- --------
Cost of sales 3,283 2,740 6,272 5,634
Research and development 971 731 1,922 1,394
Marketing, general and administrative 1,223 924 2,347 1,815
Amortization of goodwill and other
acquisition-related intangibles 394 31 707 49
Purchased in-process research and
development 21 - 83 -
-------- -------- -------- --------
Operating costs and expenses 5,892 4,426 11,331 8,892
-------- -------- -------- --------
OPERATING INCOME 2,408 2,320 4,962 4,957
Interest and other 2,341 290 2,981 637
-------- -------- -------- --------
INCOME BEFORE TAXES 4,749 2,610 7,943 5,594
Income taxes 1,612 861 2,110 1,846
-------- -------- -------- --------
NET INCOME $ 3,137 $ 1,749 $ 5,833 $ 3,748
======== ======== ======== ========
BASIC EARNINGS PER SHARE $ 0.47 $ 0.26 $ 0.87 $ 0.56
======== ======== ======== ========
DILUTED EARNINGS PER SHARE $ 0.45 $ 0.25 $ 0.83 $ 0.54
======== ======== ======== ========
COMMON SHARES OUTSTANDING 6,710 6,620 6,697 6,634
COMMON SHARES ASSUMING DILUTION 7,005 6,892 7,000 6,924
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. This pro forma information is not
prepared in accordance with generally accepted accounting principles.
Three Months Ended Six Months Ended
------------------ ------------------
July 1, June 26, July 1, June 26,
2000 1999 2000 1999
------- -------- -------- --------
Pro forma operating costs and expenses $ 5,477 $ 4,395 $10,541 $ 8,843
Pro forma operating income $ 2,823 $ 2,351 $ 5,752 $ 5,006
Net income excluding acquisition-related
costs $ 3,518 $ 1,780 $ 6,556 $ 3,797
Basic earnings per share excluding
acquisition-related costs $ 0.52 $ 0.27 $ 0.98 $ 0.57
Diluted earnings per share excluding
acquisition-related costs $ 0.50 $ 0.26 $ 0.94 $ 0.55
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INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions, except per share amounts)
July 1, Apr. 1, Dec. 25,
2000 2000 1999
--------- --------- ---------
CURRENT ASSETS
Cash and short-term investments $ 13,644 $ 11,216 $ 11,788
Accounts receivable 4,333 3,678 3,700
Inventories:
Raw materials 232 224 183
Work in process 863 796 755
Finished goods 512 517 540
--------- --------- ---------
1,607 1,537 1,478
Deferred tax assets and other 966 977 853
--------- --------- ---------
Total current assets 20,550 17,408 17,819
Property, plant and equipment, net 12,324 11,879 11,715
Marketable strategic equity securities 6,201 9,809 7,121
Other long-term investments 1,574 1,163 790
Goodwill and other acquisition-related
intangibles 6,240 5,978 4,934
Other assets 1,631 1,574 1,470
--------- --------- ---------
TOTAL ASSETS $ 48,520 $ 47,811 $ 43,849
========= ========= =========
CURRENT LIABILITIES
Short-term debt $ 385 $ 373 $ 230
Accounts payable and accrued liabilities 5,602 4,638 4,565
Deferred income on shipments to
distributors 726 548 609
Income taxes payable 1,623 1,531 1,695
--------- --------- ---------
Total current liabilities 8,336 7,090 7,099
LONG-TERM DEBT 870 868 955
DEFERRED TAX LIABILITIES 2,694 3,750 3,130
PUT WARRANTS - - 130
STOCKHOLDERS' EQUITY
Common stock and capital in excess
of par value 7,941 7,748 7,316
Other stockholders' equity 28,679 28,355 25,219
--------- --------- ---------
Total stockholders' equity 36,620 36,103 32,535
--------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 48,520 $ 47,811 $ 43,849
========= ========= =========
