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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: January 13, 2000
(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 (Commission (IRS Employer
incorporation) File Number) Identification No.)
2200 Mission College Blvd., 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 and the year ended December 25, 1999 and forward-looking
statements relating to 2000 and the first quarter of 2000 as
presented in a press release of January 13, 2000.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(c) Exhibits
99.1 Financial information for Intel Corporation for the quarter
and the year ended December 25, 1999 and forward-looking
statements relating to 2000 and the first quarter of 2000.
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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: January 13, 2000 By: /s/ Andy D. Bryant
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Andy D. Bryant
Senior Vice President,
Chief Financial Officer and
Principal Accounting Officer
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EXHIBIT 99.1
INTEL REPORTS RECORD ANNUAL AND QUARTERLY REVENUE AND EPS
Q4 earnings excluding acquisition-related costs* $0.69 per share, up 15%
Q4 EPS $0.61, up 3%
SANTA CLARA, Calif., Jan.13, 2000 -- Intel Corporation announced fourth
quarter revenue of $8.2 billion, a new record, up 8 percent from the fourth
quarter of 1998 and up 12 percent sequentially. Revenue for 1999 was $29.4
billion, up 12 percent from 1998, and resulted in the company's thirteenth
consecutive year of revenue growth. In addition, seasonally strong demand led
to record unit shipments of microprocessors, chipsets, motherboards and flash
memory.
*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.
For 1999, net income excluding acquisition-related costs was $8.1
billion, up 29 percent from 1998 net income of $6.3 billion. 1999 earnings
excluding acquisition-related costs were $2.33 per share, an increase of 30
percent from $1.79 in 1998.
Including acquisition-related costs in accordance with generally
accepted accounting principles, net income in 1999 was $7.3 billion, up 21
percent from $6.1 billion in 1998. 1999 earnings per share were $2.11, up 22
percent from $1.73 in 1998.
Acquisition-related costs in 1999 consisted of $392 million in
one-time charges for purchased in-process research and development and $411
million of amortization of goodwill and other acquisition-related intangibles.
For the fourth quarter, net income excluding acquisition-related costs
was $2.4 billion, up 15 percent from the fourth quarter of 1998 and up 26
percent sequentially. Fourth quarter earnings excluding acquisition-related
costs were $0.69 per share, an increase of 15 percent from $0.60 in the
fourth quarter of 1998, and up 25 percent sequentially.
Including acquisition-related costs in accordance with generally
accepted accounting principles, fourth quarter net income was $2.1 billion,
up 2 percent from fourth quarter 1998 and up 45 percent sequentially.
Earnings per share were $0.61, up 3 percent from $0.59 in the fourth quarter
of 1998 and up 45 percent sequentially.
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Acquisition-related costs in the fourth quarter consisted of $59 million
in one-time charges for purchased in-process research and development and
$241 million of amortization of goodwill and other acquisition-related
intangibles.
"We are proud of our quarterly and annual records in both revenue
and earnings," said Craig R. Barrett, president and chief executive officer.
"Notably, these results were achieved as we extended our position as the key
building block supplier to the worldwide Internet economy. We are also
pleased that our 0.18-micron manufacturing process was our fastest ramping
process ever."
"In 2000, we look forward to continued growth in our core
microprocessor business, and to the mid-year production of our new Itanium-TM-
processor which began sampling in the fourth quarter of last year. We are also
excited about the expansion of our new Internet-related businesses," Barrett
added. "This year we expect to grow revenues in our networking, communication
and wireless businesses by 50 percent or more."
During the quarter Intel acquired DSP Communications, Inc., IPivot,
Inc., Parity Software Development Corporation and the Telecom Component Products
Division of Stanford Telecommunications, Inc. For the year, Intel acquired 12
companies and businesses for approximately $6 billion, significantly broadening
and strengthening the company's networking and communications businesses.
During the quarter, the company paid its quarterly cash dividend of
$0.03 per share. The dividend was paid on December 1, 1999, to stockholders of
record on November 7, 1999. Intel has paid a regular quarterly cash dividend
for over seven years.
During the quarter, the company repurchased a total of 12.5 million
shares of common stock, at a cost of $903 million, under an ongoing program.
For the year, the company repurchased a total of 71.3 million shares at a
total cost of $4.6 billion. Since the program began in 1990, the company has
repurchased 659.9 million shares at a total cost of $18.2 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 DECEMBER 25, 1999.
** The company expects revenue for the first quarter of 2000 to be slightly
down from fourth quarter revenue of $8.2 billion, due to seasonal factors.
** Gross margin percentage in the first quarter of 2000 is expected be
approximately flat with the fourth quarter. Intel's gross margin expectation
for 2000 is 61 percent, plus or minus a few points, compared to 59.7 percent
for all of 1999. 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 first quarter
of 2000 are expected to be down 3 to 5 percent from fourth quarter expenses
of $2.0 billion, primarily due to seasonally lower advertising expenses.
Expenses are dependent in part on the level of revenue.
** R&D spending, excluding in-process R&D, is expected to be approximately
$3.8 billion for 2000, up from $3.1 billion in 1999. The higher spending is
driven primarily by the full year impact of acquisitions and investments in
new businesses as well as increased investment in Intel architecture related
businesses.
** The company expects interest and other income for the first quarter of
2000 to be approximately $500 million, depending on interest rates, cash
balances, equity market levels, the realization of expected gains on the sale
of equities in the company's investment portfolio, and assuming no
unanticipated items.
**The tax rate for 2000 is expected to be approximately 31.7 percent,
excluding the impact of acquisition-related costs from both prior and future
mergers or acquisitions.
**Capital spending for 2000 is expected to be approximately $5.0 billion, up
from $3.4 billion in 1999. The higher anticipated capital spending is the
result primarily of expenditures related to the development of next
generation 0.13-micron process technology for both 300 mm and 200 mm, in
addition to increased spending on new fab construction and equipment
purchases to add 0.18-micron capacity.
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**Depreciation is expected to be approximately $870 million in the first
quarter and $3.4 billion for the full year 2000.
**Amortization of goodwill and other acquisition-related intangibles is
expected to be approximately $310 million in the first quarter and $1.2
billion for the full year 2000.
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; excess or 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); impact on the company's business due to
systems of 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 September 25, 1999 (Part I, Item 2, Outlook
section).
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INTEL CORPORATION
CONSOLIDATED SUMMARY INCOME STATEMENT DATA
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------------- -------------------------
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET REVENUE $ 8,212 $ 7,614 $29,389 $ 26,273
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Cost of sales 3,176 3,160 11,836 12,088
Research and development 877 674 3,111 2,509
Marketing, general and administrative 1,105 928 3,872 3,076
Amortization of goodwill and other acquisition-
related intangibles 241 16 411 56
Purchased in-process research and development 59 - 392 165
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Operating costs and expenses 5,458 4,778 19,622 17,894
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OPERATING INCOME 2,754 2,836 9,767 8,379
Interest and other 508 244 $1,461 758
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INCOME BEFORE TAXES 3,262 3,080 11,228 9,137
Income taxes 1,154 1,016 $ 3,914 3,069
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NET INCOME $ 2,108 $ 2,064 $ 7,314 $ 6,068
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BASIC EARNINGS PER SHARE $ 0.63 $ 0.62 $ 2.20 $ 1.82
=========== =========== =========== ===========
DILUTED EARNINGS PER SHARE $ 0.61 $ 0.59 $ 2.11 $ 1.73
=========== =========== =========== ===========
COMMON SHARES OUTSTANDING 3,336 3,325 3,324 3,336
COMMON SHARES ASSUMING DILUTION 3,484 3,478 3,470 3,517
</TABLE>
Note: Certain prior period amounts have been reclassified to conform with the
current presentation.
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PRO FORMA INFORMATION EXCLUDING ACQUISTION-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>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------------- -------------------------
Dec. 25, Dec. 26, Dec. 25, Dec. 26,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Pro forma operating costs and expenses $ 5,158 $ 4,762 $18,819 $ 17,673
Pro forma operating income $ 3,054 $ 2,852 $10,570 $ 8,600
Net income excluding acquisition-related costs $ 2,397 $ 2,080 $ 8,098 $ 6,289
Basic earnings per share excluding
acquisition-related costs $ 0.72 $ 0.63 $ 2.44 $ 1.89
Diluted earnings per share excluding
acquisition-related costs $ 0.69 $ 0.60 $ 2.33 $ 1.79
</TABLE>
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INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Dec. 25, Sept. 25, Dec. 26,
1999 1999 1998
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<S> <C> <C> <C>
CURRENT ASSETS
Cash and short-term investments $11,788 $11,891 $ 7,626
Accounts receivable 3,700 3,494 3,527
Inventories:
Raw materials 183 204 206
Work in process 755 840 795
Finished goods 540 582 581
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1,478 1,626 1,582
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Deferred tax assets and other 853 905 740
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Total current assets 17,819 17,916 13,475
Property, plant and equipment, net 11,715 11,594 11,609
Marketable strategic equity securities 7,121 4,102 1,757
Other long-term investments 790 857 3,608
Goodwill and other acquisition-related intangibles 4,934 3,114 111
Other assets 1,470 1,355 911
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TOTAL ASSETS $43,849 $38,938 $ 31,471
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CURRENT LIABILITIES
Short-term debt $ 230 $ 164 $ 159
Accounts payable and accrued liabilities 4,565 4,459 4,081
Deferred income on shipments to distributors 609 596 606
Income taxes payable 1,695 1,170 958
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Total current liabilities 7,099 6,389 5,804
LONG-TERM DEBT 955 884 702
DEFERRED TAX LIABILITIES 3,130 2,222 1,387
PUT WARRANTS 130 261 201
STOCKHOLDERS' EQUITY
Common Stock and
capital in excess of par value 7,316 7,215 4,822
Other stockholders' equity 25,219 21,967 18,555
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Total stockholders' equity 32,535 29,182 23,377
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $43,849 $38,938 $ 31,471
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</TABLE>
Note: Certain prior period amounts have been reclassified to conform with the
current presentation.
