<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>a4933708ex991.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
Exhibit 99.1
Intel Posts Record Second-Quarter Revenue of $9.2 Billion;
Earnings Per Share 33 Cents
SANTA CLARA, Calif.--(BUSINESS WIRE)--July 19, 2005--Intel
Corporation today announced second-quarter revenue of $9.2 billion, up
15 percent year-over-year and down 2 percent sequentially.
Second-quarter net income was $2 billion, up 16 percent
year-over-year and down 6 percent sequentially. Earnings per share
were 33 cents, up 22 percent from 27 cents in the second quarter of
2004 and down 6 percent from 35 cents in the first quarter of 2005.
"Intel delivered record second-quarter revenue, with growth of 15
percent versus a year ago led by strong demand for our notebook
platforms," said Paul Otellini, president and CEO. "Our investments in
new products, advanced silicon capacity and emerging markets are
paying off with growth that is outpacing the industry. We look forward
to the second half of 2005 as we ramp dual-core microprocessors into
high volume, begin production on our 65nm process technology and
deliver innovative new platforms."
Intel's results for the previous quarter included an additional
week of business because 2005 is a 53-week fiscal year for the
company. As discussed in the company's June 9 Mid-Quarter Business
Update, Intel's results for the second-quarter included a tax
adjustment primarily related to an increase in estimated research and
development credits for prior years.
The reversal of previously accrued taxes increased second-quarter
earnings-per-share by approximately 2 cents. Intel's results for last
year's second quarter included a reversal of previously accrued taxes
that increased earnings-per-share by 1.3 cents.
BUSINESS OUTLOOK
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ
materially. Please see the Risk Factors Regarding Forward-Looking
Statements in this release for a description of certain important risk
factors that could cause actual results to differ, and refer to
Intel's annual and quarterly reports on file with the Securities and
Exchange Commission (SEC) for a more complete description of the
risks. These statements do not include the potential impact of any
mergers, acquisitions, divestitures, investments or other business
combinations that may be completed after July 18, 2005.
-- Revenue in the third quarter is expected to be between $9.6
billion and $10.2 billion.
-- Gross margin percentage for the third quarter is expected to
be approximately 60 percent, plus or minus a couple of points,
as compared to 56.4 percent in the second quarter. The gross
margin percentage expectation for 2005 has been narrowed from
59 percent, plus or minus a few points, to 59 percent, plus or
minus a couple of points. The gross margin percentage could
vary from expectations based on changes in revenue levels,
product mix and pricing; variations in inventory valuation,
including variations related to the timing of qualifying
products for sale; excess or obsolete inventory; manufacturing
yields; changes in unit costs; capacity utilization;
impairments of long-lived assets, including manufacturing,
assembly/test and intangible assets; and the timing and
execution of the manufacturing ramp and associated costs,
including start-up costs.
-- Expenses (R&D plus MG&A) in the third quarter are expected to
be between $2.8 billion and $2.9 billion, higher than $2.5
billion in the second quarter, primarily driven by increases
in research and development. The company is transferring
resources from 65nm start-up programs to 45nm development and
increasing investments in new platforms. Expenses,
particularly certain marketing and compensation expenses, vary
depending on the level of demand for Intel's products and the
level of revenue and profits.
-- The R&D spending expectation for 2005 is unchanged at
approximately $5.2 billion.
-- The capital spending expectation for 2005 has been increased
to approximately $5.9 billion, plus or minus $200 million, as
compared to the previous expectation of $5.4 billion to $5.8
billion, to support higher expected demand.
-- Gains from equity investments and interest and other in the
third quarter are expected to be approximately $130 million.
-- The tax rate for the third and fourth quarters is expected to
be approximately 30.5 percent. The tax rate expectation does
not reflect the impact of any potential repatriation of cash
under the American Jobs Creation Act (Jobs Act). The company
currently expects to finalize its analysis of whether, and to
what extent, foreign earnings might be repatriated under the
Jobs Act in September, which would impact the third quarter
tax rate. 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; changes in the estimates of credits, benefits and
deductions; the resolution of issues arising from tax audits
with various tax authorities; and the ability to realize
deferred tax assets.
-- Depreciation for the third quarter is expected to be between
$1 billion and $1.1 billion, approximately flat with the
second quarter. Depreciation for 2005 is now expected to be
between $4.3 billion and $4.4 billion, as compared to the
previous expectation of $4.4 billion, plus or minus $100
million.
-- Amortization of acquisition-related intangibles and costs is
expected to be approximately $30 million in the third quarter.
The full-year expectation is now approximately $120 million,
slightly below the previous expectation of $125 million.
SECOND-QUARTER REVIEW AND RECENT HIGHLIGHTS
Financial Review
-- Intel used $2.5 billion in cash to repurchase 98.9 million
shares of its common stock during the quarter under an ongoing
program.
-- The company paid a cash dividend of 8 cents per share on June
1 to stockholders of record on May 7.
-- Gains from equity investments and interest and other in the
second quarter were $105 million. The amount included $22
million in net losses from equity investments driven by $133
million in impairments, primarily due to a $105-million
impairment of Intel's investment in Micron Technology to
reflect the difference between the cost basis of the
investment and the stock price at the end of the quarter. The
impairments were partially offset by gains from dispositions.
-- In June 2005, the U.S. Internal Revenue Service proposed
certain adjustments related to the amounts reflected as a tax
benefit for export sales in Intel's 2001 and 2002 tax returns.
The company does not agree with these adjustments and is in
the process of appealing similar adjustments with respect to
Intel's 1999 and 2000 tax returns (see Intel's SEC filing on
Form 10-Q for the quarter ended April 2, 2005). If the IRS
were to prevail with respect to the 2001 and 2002 proposed
adjustments, Intel's federal income tax due for these years
would increase by approximately $400 million, plus interest.
Key Product Trends (Sequential)
-- Total microprocessor units were at record levels. The average
selling price was slightly lower primarily due to an increase
in Xbox* processor shipments along with slightly lower
computing processor prices.
-- Chipset units were higher.
-- Motherboard units were lower.
-- Flash memory units were higher and at record levels, with
lower average selling prices.
-- Wireless connectivity units set a record.
-- Wired connectivity units were lower.
Digital Enterprise
For business PCs, the company introduced the first Intel(R)
Professional Business Platform, which is based on the recently
introduced Intel(R) Pentium(R) 4 processor with Hyper-Threading
Technology 600 sequence, the new Intel(R) 945G Express Chipset, and
the Intel(R) PRO/1000 PM network connection. The new platform brings
the company's advanced security, management and collaboration
technologies to mainstream business PCs. Enhancements include the
introduction of Intel(R) Active Management Technology (AMT), designed
to help IT managers monitor and manage all Intel AMT-enabled PCs on
their networks.
The company introduced five new Intel(R) Celeron(R) D processors
with 64-bit computing capability for the value PC segment. Intel now
has 64-bit capability available throughout its desktop and server
microprocessor product lines.
For servers, Intel introduced an entry-level server platform based
on the dual-core Intel Pentium D processor and the Intel(R) E7230
chipset. The first of Intel's dual-core platforms for servers, it
supports DDR2 memory, PCI Express* I/O and software RAID.
The company also introduced two Intel(R) Itanium(R) 2 processors
with a 667 MHz front side bus. Itanium-based server bandwidth can be
increased by 65 percent using the new bus architecture, which also
supports Intel's forthcoming dual-core Itanium processor, codenamed
Montecito. A test system based on Montecito set a new 4-way
performance record of 45 gigaflops on the LINPACK floating-point
performance benchmark during the quarter, exceeding the previous
record of 27.5 gigaflops held by a RISC-based system.(1)
According to the latest TOP500* ranking, Intel processors are used
in two-thirds of the world's fastest supercomputers. The Top500 list
now includes 254 systems based on Intel(R) Xeon(TM) and 64-bit Intel
Xeon processors and 79 systems based on Intel Itanium processors.
In telecommunications infrastructure, Intel announced its second
generation of AdvancedTCA* (Advanced Telecom Computing Architecture)
products. The company added three new communication server blades and
related technologies that help manufacturers and service providers
more easily design and build standards-based IP Multimedia Subsystem
(IMS) equipment and services. In addition, Intel and Alcatel announced
plans to bring AdvancedTCA platforms to mobile service providers, with
Alcatel planning to deliver single-board solutions based on the
Intel(R) Pentium(R) M processor in early 2006.
Mobility
Intel's latest notebook PC platform based on Intel(R) Centrino(TM)
Mobile Technology has become the company's fastest-ramping mobile
platform ever, accounting for over 50 percent of performance mobile
shipments in the first full quarter after launch. Formerly codenamed
Sonoma, the platform offers greater performance and new capabilities
for consumer and business applications while maintaining long battery
life. Intel's notebook platforms continue to see strong year-over-year
growth, with double-digit increases in mobile chipsets with integrated
graphics as well as WiFi, where Intel has become the No. 1 silicon
supplier according to ABI Research.
In next-generation wireless broadband technology, Intel announced
plans with Sprint, Huawei Technologies, Nokia and Arraycomm designed
to help advance the development, deployment and adoption of WiMAX
networks. For example, Intel and Sprint announced a collaboration to
advance WiMAX technology for high-capacity wireless broadband coverage
and services in metropolitan areas. Intel and Huawei plan to enable
carrier-grade networks using WiMAX technology. Intel and ArrayComm
announced plans to incorporate additional technologies into the IEEE
802.16 specification to support smart antenna technology that can
improve overall WiMAX network range, capacity and coverage quality.
In flash memory, the company continued to see strong design win
momentum for its Intel(R) StrataFlash(R) memories in cellular phone
designs. The company generated ongoing growth in flash shipments to
the embedded market segment which contributed to overall flash unit
shipments being at record levels for the quarter.
Intel's application processors for phones and consumer electronics
devices saw continued strong demand, with double-digit year-over-year
growth. A new cellular phone design based on the Intel(R) PXA800F
baseband chipset for GSM/GPRS networks was introduced during the
quarter by O2, a major European carrier. Intel's next-generation
baseband chipset for GPRS/EDGE/UMTS networks, code-named Hermon, is
scheduled to be introduced later in the year.
Digital Home
For home PCs, Intel introduced a desktop platform based on the new
dual-core Intel(R) Pentium(R) D processor which is designed to provide
consumers with the ability to do more with their digital content
simultaneously. The new platform includes the Intel(R) 945 Express
Chipset family which supports consumer electronics-like features such
as surround-sound audio, high-definition video and enhanced 3-D
graphics.
Intel took a number of key steps to help accelerate the
availability of premium entertainment content in the digital home.
Intel invested in ClickStar, an online service intended to allow
consumers to view premium movies in the home. ClickStar was formed by
Revelations Entertainment, a partnership between actor Morgan Freeman
and producer Lori McCreary.
Intel also announced a collaboration with the Yoshimoto Kogyo
talent agency of Japan and invested in Bellrock Media, its digital
content production and delivery company in the United States. Intel
invested in Mobilians, a Korean company that is developing payment
services and technologies for purchasing online content using mobile
phones.
Technology and Manufacturing
Intel continued the development of its forthcoming 65nm process
technology and began providing customers with samples of
microprocessors codenamed Yonah, Presler and Dempsey, the company's
first 65nm dual-core microprocessors for notebook, desktop and server
platforms, respectively. Intel's industry-leading 65nm process
technology will enable cost-effective production of dual-core
processors, with platforms ramping into high volume in 2006.
Intel and Corning announced plans to develop photomask substrates
for Extreme Ultraviolet (EUV) lithography. The substrates are needed
to develop low-defect photomasks for high-volume 32nm production using
EUV lithography tools.
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 Oct. 18.
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 Sept. 8. From the close of business on
Sept. 2 until publication of the Update, Intel will observe a "Quiet
Period" during which the Business Outlook disclosed in the company's
press releases and 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 Business Outlook, Update and related Quiet
Periods, please refer to the Business Outlook section of Intel's Web
site at www.intc.com.
RISK FACTORS REGARDING FORWARD-LOOKING STATEMENTS
The statements in this document that refer to plans and
expectations for the third quarter, the year and the future are
forward-looking statements that involve a number of risks and
uncertainties. Many factors could affect Intel's actual results, and
variances from Intel's current expectations regarding such factors
could cause actual results to differ materially from those expressed
in these forward-looking statements. Intel presently considers the
factors accompanying certain of such statements above and set forth
below to be the important factors that could cause actual results to
differ materially from Intel's published expectations. A more detailed
discussion of these factors, as well as other factors that could
affect Intel's results, is contained in Intel's SEC filings, including
the report on Form 10-Q for the quarter ended April 2, 2005.
-- Intel operates in intensely competitive industries. Revenue
and the gross margin percentage are affected by the demand for
and market acceptance of Intel's products, the availability of
sufficient inventory to meet demand, pricing pressures and
actions taken by Intel's competitors. Factors that could cause
demand to be different from Intel's expectations include
changes in customer order patterns, including order
cancellations; changes in the level of inventory at customers;
and changes in business and economic conditions.
-- Gains or losses from equity securities and interest and other
could vary from expectations depending on equity market levels
and volatility; gains or losses realized on the sale or
exchange of securities; impairment charges related to
marketable, non-marketable and other investments; interest
rates; cash balances; and changes in fair value of derivative
instruments.
-- Intel's results could be impacted by unexpected economic,
social and political conditions in the countries in which
Intel, its customers or its suppliers operate, including
security risks, possible infrastructure disruptions and
fluctuations in foreign currency exchange rates.
-- Intel's results could also be affected by adverse effects
associated with product defects and errata (deviations from
published specifications), and by litigation or regulatory
matters involving intellectual property, stockholder,
consumer, antitrust and other issues, such as the litigation
and regulatory matters described in Intel's SEC reports.
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, Itanium, Intel Xeon, Intel Centrino and
Intel StrataFlash are marks 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.
(1) Source: Intel Corporation, June 20, 2005. System
Configuration: Intel Server Platform SR870BN4 using four Montecito
Itanium 2 processors. Source: IBM Corporation, June 21, 2005: Best
LINPACK based RISC result posted to
http://www-1.ibm.com/servers/eserver/pseries/hardware/system_perf.pdf.
Performance will vary depending on the actual hardware and software.
Performance tests and ratings are measured using specific computer
systems and/or components and reflect the approximate performance of
Intel products as measured by those tests. Any difference in system
hardware or software design or configuration may affect actual
performance. For more information, reference
www.intel.com/performance.
INTEL CORPORATION
CONSOLIDATED SUMMARY INCOME STATEMENT DATA
(In millions, except per share amounts)
Three Months Ended Six Months Ended
----------------- -----------------
July 2, June 26, July 2, June 26,
2005 2004 2005 2004
-------- -------- -------- --------
NET REVENUE $ 9,231 $8,049 $18,665 $16,140
Cost of sales 4,028 3,269 7,864 6,490
-------- -------- -------- --------
GROSS MARGIN 5,203 4,780 10,801 9,650
-------- -------- -------- --------
Research and development 1,176 1,186 2,442 2,381
Marketing, general and
administrative 1,342 1,170 2,604 2,311
Amortization of
acquisition-related
intangibles and costs 36 43 74 101
-------- -------- -------- --------
OPERATING EXPENSES 2,554 2,399 5,120 4,793
-------- -------- -------- --------
OPERATING INCOME 2,649 2,381 5,681 4,857
Gains (losses) on equity
securities, net (22) (8) (18) 11
Interest and other, net 127 47 242 96
-------- -------- -------- --------
INCOME BEFORE TAXES 2,754 2,420 5,905 4,964
Income taxes 716 663 1,689 1,477
-------- -------- -------- --------
NET INCOME $ 2,038 $1,757 $ 4,216 $ 3,487
======== ======== ======== ========
BASIC EARNINGS PER SHARE $ 0.33 $ 0.27 $ 0.68 $ 0.54
======== ======== ======== ========
DILUTED EARNINGS PER SHARE $ 0.33 $ 0.27 $ 0.68 $ 0.53
======== ======== ======== ========
COMMON SHARES OUTSTANDING 6,144 6,449 6,177 6,464
COMMON SHARES ASSUMING DILUTION 6,215 6,558 6,244 6,591
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
July 2, April 2, Dec. 25,
2005 2005 2004
-------- -------- --------
CURRENT ASSETS
Cash and short-term investments $12,600 $13,673 $14,061
Trading assets 2,224 2,443 3,111
Accounts receivable 3,448 3,226 2,999
Inventories:
Raw materials 384 392 388
Work in process 1,506 1,517 1,418
Finished goods 849 899 815
-------- -------- --------
2,739 2,808 2,621
Deferred tax assets and other 1,179 1,328 1,266
-------- -------- --------
Total current assets 22,190 23,478 24,058
Property, plant and equipment, net 16,624 16,321 15,768
Marketable strategic equity securities 362 586 656
Other long-term investments 2,247 2,140 2,563
Goodwill 3,805 3,716 3,719
Other assets 1,285 1,325 1,379
-------- -------- --------
TOTAL ASSETS $46,513 $47,566 $48,143
======== ======== ========
CURRENT LIABILITIES
Short-term debt $ 318 $ 222 $ 201
Accounts payable and accrued liabilities 5,425 5,691 6,050
Deferred income on shipments to
distributors 707 707 592
Income taxes payable 1,330 1,953 1,163
-------- -------- --------
Total current liabilities 7,780 8,573 8,006
LONG-TERM DEBT 430 464 703
DEFERRED TAX LIABILITIES 689 818 855
STOCKHOLDERS' EQUITY 37,614 37,711 38,579
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $46,513 $47,566 $48,143
======== ======== ========
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q2 2005 Q1 2005 Q2 2004
------- ------- -------
GEOGRAPHIC REVENUE:
Americas $1,863 $1,972 $1,956
20% 21% 24%
Asia-Pacific $4,679 $4,395 $3,661
51% 47% 45%
Europe $1,809 $2,106 $1,665
20% 22% 21%
Japan $880 $961 $767
9% 10% 10%
CASH INVESTMENTS:
Cash and short-term investments $12,600 $13,673 $14,264
Trading assets - fixed income (1) 1,883 2,108 2,390
---------------------------
Total cash investments $14,483 $15,781 $16,654
INTEL CAPITAL PORTFOLIO:
Marketable strategic equity securities $362 $586 $582
Other strategic investments 518 519 640
---------------------------
Total Intel Capital portfolio $880 $1,105 $1,222
TRADING ASSETS:
Trading assets - equity securities
offsetting deferred compensation (2) $341 $335 $318
Total trading assets - sum of 1+2 $2,224 $2,443 $2,708
SELECTED CASH FLOW INFORMATION:
Depreciation $1,051 $1,189 $1,151
Amortization of acquisition-related
intangibles & costs $36 $38 $43
Capital spending ($1,389) ($1,788) ($1,026)
Stock repurchase program ($2,500) ($2,500) ($1,511)
Proceeds from sales of shares to
employees, tax benefit & other $387 $511 $258
Dividends paid ($493) ($497) ($258)
Net cash used for acquisitions ($81) $0 ($33)
SHARE INFORMATION:
Average common shares outstanding 6,144 6,211 6,449
Dilutive effect of stock options 71 62 109
Common shares assuming dilution 6,215 6,273 6,558
STOCK BUYBACK:
Shares repurchased 98.9 107.9 56.0
Shares authorized for buyback 2,800.0 2,800.0 2,300.0
Cumulative shares repurchased (2,393.3)(2,294.4)(1,991.2)
Shares available for buyback 406.7 505.6 308.8
OTHER INFORMATION:
Employees (in thousands) 91.0 87.1 81.7
INTEL CORPORATION
SUPPLEMENTAL OPERATING RESULTS AND OTHER INFORMATION
($ in millions)
Six Months
Ended
---------------
OPERATING SEGMENT INFORMATION: Q2 2005 Q1 2005 Q2 2005 Q2 2004
-------------------------------------- ------- ------- ------- -------
Digital Enterprise Group
Microprocessor revenue 4,603 4,944 9,547 9,650
Chipset, motherboard and other
revenue 1,398 1,417 2,815 2,489
Net revenue 6,001 6,361 12,362 12,139
Operating income 1,992 2,366 4,358 4,593
-------------------------------------- ------- ------- ------- -------
Mobility Group
Microprocessor revenue 2,056 1,917 3,973 2,386
Flash memory revenue 528 578 1,106 1,004
Chipset and other revenue 566 516 1,082 538
Net revenue 3,150 3,011 6,161 3,928
Operating income 1,140 1,099 2,239 993
-------------------------------------- ------- ------- ------- -------
All Other
Net revenue 80 62 142 73
Operating loss (483) (433) (916) (729)
-------------------------------------- ------- ------- ------- -------
Total
Net revenue 9,231 9,434 18,665 16,140
Operating income 2,649 3,032 5,681 4,857
INTEL CORPORATION
SUPPLEMENTAL OPERATING RESULTS AND OTHER INFORMATION (CONTINUED)
($ in millions)
OPERATING SEGMENT Q4 Q3 Q2 Q1
INFORMATION: 2004 2004 2004 2004 2004 2003
------------------------- ------- ------ ------ ------ ------- -------
Digital Enterprise Group
Microprocessor revenue 5,256 4,520 4,679 4,971 19,426 17,991
Chipset, motherboard and
other revenue 1,517 1,346 1,229 1,260 5,352 5,068
Net revenue 6,773 5,866 5,908 6,231 24,778 23,059
Operating income 2,451 1,807 2,140 2,453 8,851 8,017
------------------------- ------- ------ ------ ------ ------- -------
Mobility Group
Microprocessor revenue 1,710 1,571 1,224 1,162 5,667 4,120
Flash memory revenue 643 638 587 417 2,285 1,608
Chipset and other revenue 425 352 292 246 1,315 966
Net revenue 2,778 2,561 2,103 1,825 9,267 6,694
Operating income 894 796 593 400 2,683 1,589
------------------------- ------- ------ ------ ------ ------- -------
All Other
Net revenue 47 44 38 35 164 388
Operating loss (445) (230) (352) (377) (1,404) (2,073)
------------------------- ------- ------ ------ ------ ------- -------
Total
Net revenue 9,598 8,471 8,049 8,091 34,209 30,141
Operating income 2,900 2,373 2,381 2,476 10,130 7,533
------------------------- ------- ------ ------ ------ ------- -------
During the first quarter of 2005, the company reorganized its business
groups to bring all major product groups in line with the company's
strategy to design and deliver technology platforms. These new
business units include the Digital Enterprise Group, the Mobility
Group, the Digital Home Group, the Digital Health Group and the
Channel Products Group (formerly referred to as "Channel Platforms
Group"). The Digital Enterprise Group and the Mobility group are
reportable operating segments. The Digital Home Group, Digital Health
Group and Channel Products Group operating segments do not meet the
quantitative thresholds for reportable segments as defined by SFAS No.
131, "Disclosures about Segments of an Enterprise and Related
Information." Therefore, these operating segments are included within
the "all other" category. All prior period amounts have been adjusted
retrospectively to reflect the new organizational structure as well as
certain minor reorganizations effected through the second quarter of
2005. As a result of this platform reorganization, further changes may
occur in the future.
The Digital Enterprise Group operating segment's products include
microprocessors and related chipsets and motherboards designed for the
desktop (including consumer desktop) and enterprise computing market
segments, communications infrastructure components such as network
processors and embedded microprocessors, wired connectivity devices
and products for network and server storage. The Mobility Group
operating segment's products include microprocessors and related
chipsets designed for the mobile computing market segment, flash
memory, wireless connectivity products, application processors used in
cellular handsets and handheld computing devices, and cellular
baseband chipsets. Revenue for the "all other" category primarily
consists of microprocessors and related chipsets used in consumer
electronics devices. For further information on the business strategy
of the new operating segments, see Intel's Quarterly Report on Form
10-Q for the quarter ended April 2, 2005.
In addition to the operating results for the Digital Home Group,
Digital Health Group and Channel Products Group operating segments,
the "all other" category also includes acquisition-related costs,
including amortization and any impairments of acquisition-related
intangibles and goodwill. In 2003, acquisition-related costs included
a goodwill impairment charge of $611 million for the remaining balance
related to the former Wireless Communications and Computing Group.
Additionally, "all other" includes the results of operations of seed
businesses that support the company's initiatives. Finally, "all
other" includes certain corporate-level operating expenses, including
a portion of profit-dependent bonus and other expenses not allocated
to the operating segments.
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