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<TYPE>EX-99
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<FILENAME>a4492792_ex991.txt
<DESCRIPTION>INTEL CORP. EXHIBIT 99.1
<TEXT>
Exhibit 99.1
Intel Announces Third-Quarter Revenue
of $7.8 Billion, Earnings Per Share $0.25
SANTA CLARA, Calif.--(BUSINESS WIRE)--Oct. 14, 2003--Intel
Corporation today announced third-quarter revenue of $7.8 billion, up
15 percent sequentially and up 20 percent year-over-year.
Third-quarter net income was $1.7 billion, up 85 percent
sequentially and up 142 percent year-over-year. Earnings per share
were $0.25, up 79 percent sequentially and up 150 percent from $0.10
in the third quarter of 2002.
"Intel delivered excellent results in the quarter led by global
strength in our computing-related business, resulting in record unit
shipments of microprocessors and chipsets," said Craig R. Barrett,
Intel chief executive officer. "Our resolve to invest aggressively
during the downturn is paying off with double-digit revenue growth and
a doubling of profit compared to a year ago.
"Our product and technology leadership make us well positioned to
take advantage of improving demand. Going forward, our strategy
remains the same: Invest in leading-edge capacity, develop innovative
new products, and target growth opportunities worldwide."
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, divestitures or other business combinations
that may be completed after Oct. 13, 2003.
Continuing uncertainty in global economic conditions makes it
particularly difficult to predict product demand and other related
matters.
-- Revenue in the fourth quarter is expected to be between $8.1
billion and $8.7 billion.
-- Gross margin percentage in the fourth quarter is expected to
be approximately 60 percent, plus or minus a couple of points,
as compared to 58.2 percent in the third quarter, primarily
due to higher revenue. Intel's gross margin percentage varies
primarily with revenue levels, product mix and pricing,
changes in unit costs and inventory valuation, capacity
utilization, and the timing of factory ramps and associated
costs.
-- The R&D spending expectation for 2003 is $4.3 billion, as
compared to the previous expectation of $4.2 billion.
-- Expenses (R&D plus MG&A) in the fourth quarter are expected to
be between $2.2 billion and $2.3 billion. Expenses,
particularly certain marketing- and compensation-related
expenses, vary depending on the level of revenue and profits.
-- Capital spending for 2003 is expected to be between $3.6
billion and $3.7 billion, as compared to the previous
expectation of $3.5 billion to $3.9 billion.
-- Gains or losses from equity investments and interest and other
in the fourth quarter is expected to be zero due to the
expectation of a net loss on equity investments of
approximately $35 million, primarily as a result of impairment
charges.
-- The tax rate for the fourth quarter is expected to be
approximately 31.5 percent. The increase versus the previous
expectation of 30.5 percent is primarily driven by higher
expected profits for the year with a higher percentage of
profits expected in high-tax jurisdictions. The tax rate
expectation is based on current tax law and current expected
income, and assumes Intel continues to receive tax benefits
for export sales. The tax rate may be affected by the closing
of acquisitions or divestitures, the jurisdiction in which
profits are determined to be earned and taxed, and the ability
to realize deferred tax assets.
-- Depreciation for the fourth quarter is expected to be
approximately $1.2 billion.
-- Amortization of acquisition-related intangibles and costs is
expected to be approximately $65 million in the fourth
quarter.
The statements in this document that refer to plans and
expectations for the fourth quarter, the year and the future are
forward-looking statements that involve a number of risks and
uncertainties. A number of factors in addition to those discussed
above could cause actual results to differ materially from
expectations. Demand for Intel's products, which impacts revenue and
the gross margin percentage, is affected by business and economic
conditions, as well as computing and communications industry trends,
and changes in customer order patterns. Intel conducts much of its
manufacturing, assembly and test, and sales activities outside the
United States and is thus subject to a number of other factors,
including currency controls and fluctuations, tariff and import
regulations, and regulatory requirements which may limit our or our
customers' ability to manufacture or sell products in particular
countries. If terrorist activity, armed conflict, civil or military
unrest or political instability occurs in the United States, Israel or
other locations, such events may disrupt manufacturing, assembly and
test, logistics, security and communications, and could also result in
reduced demand for Intel's products. The impacts of major health
concerns, such as the SARS illness, or of large-scale outages or
interruptions of service from utility or other infrastructure
providers, on Intel, its suppliers, customers or other third parties
could also adversely affect our business and impact our customer order
patterns. Revenue and the gross margin percentage are affected by
competing chip architectures and manufacturing technologies, competing
software-compatible microprocessors, pricing pressures and other
competitive factors, as well as market acceptance of Intel's new
products, availability of sufficient inventory to meet demand,
availability of externally purchased components, and development and
timing of compelling software applications and operating systems that
take advantage of the features of our products. Future revenue is also
dependent on continuing technological advancement, including
developing and implementing new processes and strategic products, as
well as the timing of new product introductions, sustaining and
growing new businesses and integrating and operating any acquired
businesses. The gross margin percentage could also be affected by the
execution of the manufacturing ramp, excess manufacturing capacity,
excess or obsolete inventory, variations in inventory valuation and
impairment of manufacturing assets. The expectation regarding gains or
losses from equity securities and interest and other assumes no
unanticipated events and varies depending on equity market levels and
volatility, gains or losses realized on the sale or exchange of
securities, impairment charges related to non-marketable and other
investments, interest rates, cash balances, and changes in fair value
of derivative instruments. Expectations of impairment charges on
investments are based on experience, and it is not possible to know
which specific investments are likely to be impaired or the extent or
timing of individual impairments. Results could also be affected by
adverse effects associated with product defects and errata (deviations
from published specifications), and by litigation, such as that
described in Intel's SEC reports, as well as other risk factors listed
in Intel's SEC reports, including the report on Form 10-Q for the
quarter ended June 28, 2003.
Status of Business Outlook and Mid-Quarter Business Update
During the quarter, Intel's corporate representatives may
reiterate the Business Outlook during private meetings with investors,
investment analysts, the media and others. Intel intends to publish a
Mid-Quarter Business Update on Dec. 4. From the close of business on
Nov. 26 until publication of the Update, Intel will observe a "Quiet
Period" during which the Outlook and the company's filings with the
SEC on Forms 10-K and 10-Q should be considered to be historical,
speaking as of prior to the Quiet Period only and not subject to
update by the company. For more information about the Outlook, Update
and related Quiet Periods, please refer to the Outlook section of the
Web site at www.intc.com.
THIRD-QUARTER REVIEW AND RECENT HIGHLIGHTS
Financial Review
-- Gains or losses on equity investments and interest and other
resulted in a net loss of $29 million, as compared to the
expectation of a net loss of $25 million. The net loss on
equity investments was $63 million, including the impact of
impairment charges of approximately $92 million.
-- The tax rate for the third quarter was 27 percent, lower than
the company's revised expectation of approximately 28 percent,
primarily because a tax benefit related to a divestiture that
closed during the quarter was slightly larger than expected.
-- During the quarter, the company did not repurchase shares
under its ongoing stock repurchase program. As of the end of
the third quarter, the company is authorized to repurchase an
additional 475 million shares under the program.
Key Product Trends (Sequential)
-- Intel Architecture microprocessor units set a record. The
average selling price was slightly higher.
-- Chipset units set a record.
-- Motherboard units set a record.
-- Flash memory units were slightly higher.
-- Ethernet connectivity product units were higher.
Intel Architecture Business
For the desktop, Intel announced the Pentium(R) 4 processor
Extreme Edition, which will provide PC game enthusiasts and power
users with the performance benefits of Hyper-Threading (HT)
Technology, 3.2 GHz operating speeds and an additional 2 MB of cache
memory. The company also extended the performance of its value line-up
with a 2.7-GHz version of the Celeron(TM) processor for desktop and
notebook PCs.
For the digital home, Intel disclosed a new technology
co-developed by Intel, Hitachi, Toshiba, Sony and Matsushita
(Panasonic) that is designed to allow premium digital entertainment
content to be delivered over wired and wireless digital home networks.
The company also demonstrated the Gateway 610 Media Center* based on
the Intel Pentium 4 Processor with HT Technology. Resembling a
flat-panel TV, the all-in-one device allows consumers to
simultaneously record TV programs while playing music or 3D games.
In mobile, the company announced the availability of a new chipset
for Intel(R) Centrino(TM) Mobile Technology-based notebooks that
offers new power-saving features along with higher memory and
integrated graphics performance when used with DDR-333 memory. The
company introduced a new Mobile Intel(R) Pentium(R) 4 processor that
brings HT technology and speeds up to 3.2 GHz to the portable notebook
segment. Intel also sponsored "One Unwired Day," providing free
wireless Internet trials at more than 5,000 of the many public WiFi
hotspots across the U.S. that are compatible with Intel Centrino
mobile technology.
For the enterprise, the company introduced new Itanium(R) 2
processors optimized for dual-processor systems, extending the Itanium
processor family to lower-cost and lower-power systems for technical
computing and front-end enterprise applications. Intel announced an
agreement with China's Ministry of Education to develop an Itanium
2-based computing grid designed to span 100 of China's leading
universities and deliver performance of more than 15 teraflops. The
company also increased the speed of the Intel(R) Xeon(TM) processor
for 2-way systems to 3.2 GHz.
Wireless Communications and Computing Group
Intel announced the first single-chip cellular phone processor for
use on EDGE (Enhanced Data Rates for GSM Evolution) networks. EDGE
networks are expected to allow users to send and receive data two to
three times faster than possible using today's GSM/GPRS networks.
Availability of the Intel(R) PXA800EF is scheduled for the first
quarter of 2004.
The company introduced software optimization kits that will help
wireless application developers improve the performance and power
consumption of software for Intel(R) XScale(R) technology-based
devices. Intel also disclosed details of its next-generation of Intel
XScale technology-based processors, code named "Bulverde." The
processors are expected to include Intel(R) Wireless MMX(TM)
technology for higher multimedia performance, Wireless Intel(R)
SpeedStep(R) Technology for extended battery life, and Intel(R) Quick
Capture Technology for high-quality digital images.
In flash, Intel announced a unique memory solution for the
increased data storage needs of next-generation wireless handsets. The
Intel(R) StrataFlash(R) Wireless Memory System combines memory for
code execution, data storage and RAM in a single package. The product
will feature 1.8V operation and up to a gigabit of flash storage.
Intel Communications Group
Intel and the Linksys* division of Cisco Systems announced a
technology and marketing program to improve the experience of setting
up and operating wireless networks using Intel(R) Centrino(TM) mobile
technology and Linksys wireless routers and access points for home and
small office applications.
Intel demonstrated its first chips based on PCI Express technology
and detailed its plans for integrating the next-generation
interconnect technology into forthcoming communications and computing
products.
The company announced new programmable digital media processors
optimized for document imaging applications. The Intel(R) MXP5400 and
MXP5800 processors were developed with Xerox to power digital copiers,
scanners and printers.
Intel announced a new suite of Intel(R) NetStructure(TM) telecom
products based on the Advanced Telecom Computing Architecture* and
featuring Intel microprocessors and network processors. The new
products are designed to deliver high performance and high
availability in carrier-grade wireless and wireline telecommunication
infrastructure applications.
The company introduced a new series of products designed to help
eliminate server I/O bottlenecks and meet the high-bandwidth needs of
emerging storage, networking and telecommunications applications. The
new products include an Intel XScale technology-based I/O processor,
an I/O processor chipset with support for SAN and NAS external storage
applications, a low-cost 10-Gbps multimode optical transceiver for
Ethernet and Fibre Channel networks, and a bridge component that
simplifies the transition from PCI to the new PCI Express interconnect
technology.
Technology and Manufacturing Group
Intel announced plans to construct an assembly and test facility
in the city of Chengdu in China's western Sichuan Province.
Construction of the $200-million first phase of the facility is
expected to begin in the first half of 2004, with operations scheduled
for 2005.
The company also opened a new technology center in Malaysia that
will provide non-CPU packaging technology along with chipset assembly
and test processes.
EARNINGS WEBCAST
Intel will hold a public webcast at 2:30 p.m. PDT today on its
Investor Relations Web site at www.intc.com. A replay of the webcast
will be available until Jan. 13, 2004.
Intel, the world's largest chip maker, is also a leading
manufacturer of computer, networking and communications products.
Additional information about Intel is available at
www.intel.com/pressroom.
Intel, Pentium, Celeron, Intel Centrino, Itanium, Intel Xeon,
Intel SpeedStep, Intel Wireless MMX, Intel StrataFlash, Intel XScale
and Intel NetStructure are trademarks or registered trademarks of
Intel Corporation or its subsidiaries in the United States and other
countries.
*Other names and brands may be claimed as the property of others.
INTEL CORPORATION
CONSOLIDATED SUMMARY INCOME STATEMENT DATA
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
------------------- -------------------
Sept. 27, Sept. 28, Sept. 27, Sept. 28,
2003 2002 2003 2002
--------- --------- --------- ---------
NET REVENUE $ 7,833 $ 6,504 $ 21,400 $ 19,604
Cost of sales 3,275 3,331 9,862 9,982
--------- --------- --------- ---------
GROSS MARGIN 4,558 3,173 11,538 9,622
--------- --------- --------- ---------
Research and development 1,135 1,006 3,183 3,012
Marketing, general and
administrative 1,046 1,095 3,143 3,230
Amortization and impairment
of acquisition-related
intangibles and costs 68 102 236 442
Purchased in-process
research and development 5 6 5 20
--------- --------- --------- ---------
OPERATING EXPENSES 2,254 2,209 6,567 6,704
--------- --------- --------- ---------
OPERATING INCOME 2,304 964 4,971 2,918
Losses on equity securities,
net (63) (96) (248) (201)
Interest and other, net 34 49 139 140
--------- --------- --------- ---------
INCOME BEFORE TAXES 2,275 917 4,862 2,857
Income taxes 618 231 1,394 789
--------- --------- --------- ---------
NET INCOME $ 1,657 $ 686 $ 3,468 $ 2,068
========= ========= ========= =========
BASIC EARNINGS PER SHARE $ 0.25 $ 0.10 $ 0.53 $ 0.31
========= ========= ========= =========
DILUTED EARNINGS PER SHARE $ 0.25 $ 0.10 $ 0.53 $ 0.30
========= ========= ========= =========
COMMON SHARES OUTSTANDING 6,517 6,646 6,532 6,669
COMMON SHARES ASSUMING
DILUTION 6,625 6,712 6,605 6,792
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
Sept. 27, June 28, Dec. 28,
2003 2003 2002
--------- --------- ---------
CURRENT ASSETS
Cash and short-term investments $ 13,038 $ 11,202 $ 10,786
Trading assets 2,402 2,434 1,801
Accounts receivable 3,290 2,850 2,574
Inventories:
Raw materials 273 245 223
Work in process 1,247 1,315 1,365
Finished goods 705 592 688
--------- --------- ---------
2,225 2,152 2,276
Deferred tax assets and other 1,383 1,464 1,488
--------- --------- ---------
Total current assets 22,338 20,102 18,925
Property, plant and equipment, net 17,220 17,292 17,847
Marketable strategic equity securities 561 63 56
Other long-term investments 1,134 1,219 1,178
Goodwill 4,317 4,314 4,330
Other assets 1,433 1,475 1,888
--------- --------- ---------
TOTAL ASSETS $ 47,003 $ 44,465 $ 44,224
========= ========= =========
CURRENT LIABILITIES
Short-term debt $ 352 $ 385 $ 436
Accounts payable and accrued
liabilities 4,751 4,254 4,527
Deferred income on shipments to
distributors 696 598 475
Income taxes payable 1,470 1,462 1,157
--------- --------- ---------
Total current liabilities 7,269 6,699 6,595
LONG-TERM DEBT 882 914 929
DEFERRED TAX LIABILITIES 1,491 1,362 1,232
STOCKHOLDERS' EQUITY 37,361 35,490 35,468
--------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 47,003 $ 44,465 $ 44,224
========= ========= =========
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q3 2003 Q2 2003 Q3 2002
--------------------------------
GEOGRAPHIC REVENUE:
Americas $2,168 $1,955 $2,095
28% 28% 32%
Asia-Pacific $3,266 $2,778 $2,489
42% 41% 38%
Europe $1,683 $1,418 $1,505
21% 21% 23%
Japan $716 $665 $415
9% 10% 7%
CASH INVESTMENTS:
Cash and short-term investments $13,038 $11,202 $9,615
Trading assets - fixed income (1) $2,118 $2,162 $1,313
--------------------------------
Total cash investments $15,156 $13,364 $10,928
INTEL CAPITAL PORTFOLIO:
Trading assets - equity securities (2) $0 $0 $89
Marketable strategic equity
securities $561 $63 $56
Other strategic investments $689 $735 $1,169
--------------------------------
Total Intel Capital portfolio $1,250 $798 $1,314
TRADING ASSETS:
Trading assets - equity securities
offsetting deferred compensation (3) $284 $272 $225
Total trading assets - sum of 1+2+3 $2,402 $2,434 $1,627
SELECTED CASH FLOW INFORMATION:
Depreciation $1,167 $1,162 $1,136
Amortization and impairment of
acquisition-related intangibles &
costs $68 $84 $102
Purchased in-process research &
development $5 $0 $6
Capital spending ($1,072) ($923) ($955)
Stock repurchase program $0 ($1,006) ($1,001)
Proceeds from sales of shares to
employees, tax benefit & other $421 $166 $279
Dividends paid ($131) ($131) ($133)
Net cash used for acquisitions $21 $0 ($7)
SHARE INFORMATION:
Average common shares outstanding 6,517 6,525 6,646
Dilutive effect of stock options 108 55 66
Common shares assuming dilution 6,625 6,580 6,712
STOCK BUYBACK:
BUYBACK ACTIVITY:
Shares repurchased - 51.8 56.6
Cumulative shares repurchased 1,824.6 1,824.6 1,651.4
BUYBACK SUMMARY:
Shares authorized for buyback 2,300.0 2,300.0 1,820.0
Cumulative shares repurchased (1,824.6) (1,824.6) (1,651.4)
Shares available for buyback 475.4 475.4 168.6
OTHER INFORMATION:
Employees (in thousands) 79.1 78.7 81.7
Days sales outstanding 37 36 36
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
($ in millions)
9 months 9 months
Q3 2003 Q2 2003 2003 Q3 2002 2002
----------------------------------------------------------------------
OPERATING SEGMENT INFORMATION:
Intel Architecture Business
Revenue 6,838 5,833 18,431 5,407 16,388
Operating income 2,915 1,843 6,681 1,414 4,594
----------------------------------------------------------------------
Wireless Communications and
Computing Group
Revenue 450 465 1,388 586 1,577
Operating loss (124) (123) (341) (30) (196)
----------------------------------------------------------------------
Intel Communications Group
Revenue 544 508 1,555 482 1,536
Operating loss (94) (143) (377) (177) (454)
----------------------------------------------------------------------
All Other
Revenue 1 10 26 29 103
Operating loss (393) (301) (992) (243) (1,026)
----------------------------------------------------------------------
Total
Revenue 7,833 6,816 21,400 6,504 19,604
Operating income 2,304 1,276 4,971 964 2,918
----------------------------------------------------------------------
The Intel Architecture operating segment's products include
microprocessors, chipsets and motherboards. The Wireless
Communications and Computing Group's products include flash memory,
application processors and cellular baseband chipsets for cellular
handsets and handheld devices. The Intel Communications Group's
products include Ethernet connectivity products, network processing
components, embedded control chips and optical products.
The "all other" category includes acquisition-related costs,
including amortization and impairment of acquisition-related
intangibles and in-process research and development. In addition, "all
other" includes certain corporate-level operating expenses, including
a portion of profit-dependent bonus and other expenses that are not
allocated to the operating segments. The nine months results for 2002
included an impairment of identified intangible assets of $112 million
as well as a charge of $106 million related to the wind down of the
Web hosting business. Results of operations have been restated for
certain reorganizations during the period. All prior period amounts
have been restated to conform to the new presentation.
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