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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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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: July
16, 2002 (Date of earliest event
reported) INTEL
CORPORATION (Exact name of
registrant as specified in its charter) Delaware 0-6217 94-1672743 (State of (Commission (IRS Employer incorporation) File Number) Identification No.) 2200 Mission
College Blvd., Santa Clara, California 95052-8119 (Address of principal
executive offices) (Zip Code) (408) 765-8080 (Registrant's telephone number,
including area code) Item 5. 5.1 Item 7. (c) 99.1 SIGNATURES Exhibit 99.1 INTEL REPORTS SECOND-QUARTER RESULTS Second-Quarter Earnings Per Share $0.07; Charges Related to Online Services and Wireline PC Card Businesses
Included SANTA CLARA, Calif., July 16, 2002 -- Intel Corporation today announced second-quarter
revenue of $6.3 billion, down 7 percent sequentially and approximately flat
year-over-year. Second-quarter net income was $446 million, down 52
percent sequentially and up 128 percent year-over-year. Earnings per share were $0.07,
down 50 percent sequentially and up 133 percent from $0.03 in the second quarter of 2001.
The results include a $106-million charge to cost of sales related to the decision to wind
down Intel(Registered Trademark) Online Services, along with a $112- million
write-off of acquired intangibles, primarily related to Xircom PC cards for wireline
networking. In accordance with generally accepted accounting principles (GAAP), the 2001
results reflect charges for the amortization of goodwill, which is no longer amortized in
the current year with the adoption of FASB rule 142. Second-quarter net income excluding acquisition-related
costs1 was $620 million, down 39 percent sequentially and down 27 percent
year-over-year. Earnings excluding acquisition-related costs were $0.09 per share, down 40
percent sequentially and down 25 percent from $0.12 in the second quarter of 2001. These results include the impact of the $106-million
charge related to the online services business. Acquisition-related costs during the quarter consisted of
$14 million in one-time charges for purchased in-process research and development, and
$229 million in amortization of acquisition-related intangibles, write-off of intangibles
and other costs. Intel expects to continue to report earnings excluding
acquisition-related costs through the end of the year to provide a consistent basis for
financial comparisons. "In a tough environment, we continued to execute
well," said Craig R. Barrett, Intel chief executive officer. "Our investments in
technology and manufacturing are delivering processors with clear performance leadership,
resulting in market segment share gains across the board. We also saw growth in our
communications businesses, led by solid flash memory revenue and share growth. "Although an overall industry recovery has been slow
to materialize, we still expect a modest seasonal increase in demand in the second
half," Barrett continued. "In this environment, our strategy remains the same:
Focus on execution, take prudent cost cutting measures, and invest to further improve our
competitive position and long-term growth prospects." 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 June 29, 2002. Continuing uncertainty in global economic conditions makes it particularly difficult to
predict product demand and other related matters. ** Revenue in the third quarter is expected to be between $6.3 billion and $6.9
billion. ** Gross margin percentage in the third quarter is expected to be 51 percent, plus or
minus a couple of points. The second-quarter gross margin percentage was 47 percent and
would have been 48.7 percent without the $106-million charge related to the online
services business. Intel's gross margin percentage varies primarily with revenue levels,
product mix and pricing, changes in unit costs, capacity utilization, and timing of
factory ramps and associated costs. ** Gross margin percentage for 2002 is expected to be 51 percent, plus or minus a few
points, lower than the previous expectation of 53 percent, plus or minus a few points,
primarily due to second-quarter revenue levels and charges. ** Expenses (R&D, excluding in-process R&D, plus MG&A) in the third quarter
are expected to be approximately $2.1 billion. In the second half of 2002, the company
expects to reduce its workforce by approximately 4,000 employees exclusive of
acquisitions, primarily through attrition, voluntary separation programs and some targeted
business disinvestments. Expenses, particularly certain marketing- and
compensation-related expenses, vary depending on the level of revenue and profits. ** R&D spending for 2002, excluding in-process R&D, is expected to be
approximately $4.0 billion, lower than the previous expectation of $4.1 billion. ** Capital spending for 2002 is expected to be between $5.0 billion and $5.2 billion,
lower than the previous expectation of $5.5 billion, primarily due to non-fab-related
spending reductions, with no change in the company's current and future microprocessor
capacity plans. ** Gains or losses from equity investments and interest and other in the third quarter
are expected to be a net loss of $25 million due to the expectation of a net loss on
equity investments of approximately $75 million, primarily as a result of impairment
charges. Gains or losses will vary depending on equity market levels and volatility, gains
or losses realized on the sale or exchange of investments, determination of impairment
charges, including potential impairment of non-marketable investments, interest rates,
cash balances, mark-to-market of derivative instruments, and assuming no unanticipated
items. ** The tax rate for 2002 is expected to be approximately 28.4 percent, excluding the
impact of acquisition-related costs. ** Depreciation is expected to be approximately $1.2 billion in the third quarter and
approximately $4.7 billion for the year. ** Amortization of acquisition-related intangibles and costs is expected to be
approximately $100 million in the third quarter and approximately $530 million for the
full year. The statements in this document that refer to plans and expectations for the current
quarter and the future are forward-looking statements that involve a number of risks and
uncertainties. In addition to the factors discussed above, factors that could cause actual
results to differ materially include the following: business and economic conditions and
trends in the computing and communications industries in various geographic regions;
factors associated with doing business outside the United States, including currency
controls and fluctuations, and tariff, import and other related restrictions and
regulations; possible disruption in commercial activities related to terrorist activity or
armed conflict in the United States, Israel and other locations, such as changes in
logistics, security arrangements, communications infrastructure, and reduced end-user
purchases relative to expectations; civil or military unrest or political instability in a
locale; changes in customer order patterns; changes in the mix of microprocessor types and
speeds sold as well as the mix of related chipsets, motherboards, purchased components and
other semiconductor and non-semiconductor products; competitive factors, such as competing
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;
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 0.13-micron process technology; excess manufacturing capacity;
the ability to sustain and 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 intellectual property, stockholder 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 March 30, 2002 (Part I, Item 2, Outlook
section). Status of Business Outlook and Mid-Quarter Business Update Intel's corporate representatives will meet privately during
the quarter with investors, investment analysts, the media and others, and may reiterate
the Business Outlook. Intel intends to publish a Mid-Quarter Business Update on Sept. 5.
From the close of business on Aug. 30 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. 1
OTHER EVENTS
Attached hereto as Exhibit 99.1 and
incorporated by reference herein is financial information for Intel Corporation for the
quarter ended June 29, 2002 and forward-looking statements relating to 2002 and the third
quarter of 2002 as presented in a press release of July 16, 2002.
FINANCIAL STATEMENTS, PRO FORMA
FINANCIAL INFORMATION AND EXHIBITS
Exhibits
Financial information for Intel
Corporation for the quarter ended June 29, 2002 and forward-looking statements relating to
2002 and the third quarter of 2002.
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: July 16, 2002
By: /s/Andy
D. Bryant
Andy D. Bryant
Executive Vice President,
Chief Financial Officer and
Principal Accounting Officer
Earnings Excluding Acquisition-Related Costs $0.09 Per Share
Intel, Pentium, Celeron, Itanium, Xeon and XScale 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 |
Six Months Ended |
|||||||||||||||||
June 29, |
June 30, |
June 29, |
June 30, |
|||||||||||||||
2002 |
2001 |
2002 |
2001 |
|||||||||||||||
NET REVENUES | $ |
6,319 |
$ |
6,334 |
$ |
13,100 |
$ |
13,011 |
||||||||||
Cost of sales | 3,350 |
3,307 |
6,651 |
6,532 |
||||||||||||||
Research and development | 1,024 |
919 |
2,006 |
1,914 |
||||||||||||||
Marketing, general and administrative | 1,063 |
1,174 |
2,135 |
2,329 |
||||||||||||||
Amortization of goodwill | - |
417 |
- |
858 |
||||||||||||||
Amortization of acquisition-related | ||||||||||||||||||
intangibles and costs | 229 |
177 |
340 |
321 |
||||||||||||||
Purchased in-process research and | ||||||||||||||||||
development | 14 |
123 |
14 |
198 |
||||||||||||||
Operating costs and expenses | 5,680 |
6,117 |
11,146 |
12,152 |
||||||||||||||
OPERATING INCOME | 639 |
217 |
1,954 |
859 |
||||||||||||||
Gains (losses) on equity securities, net | (59) |
3 |
(105) |
3 |
||||||||||||||
Interest and other, net | 43 |
126 |
91 |
390 |
||||||||||||||
INCOME BEFORE TAXES | 623 |
346 |
1,940 |
1,252 |
||||||||||||||
Income taxes | 177 |
150 |
558 |
571 |
||||||||||||||
NET INCOME | $ |
446 |
$ |
196 |
$ |
1,382 |
$ |
681 |
||||||||||
BASIC EARNINGS PER SHARE | $ |
0.07 |
$ |
0.03 |
$ |
0.21 |
$ |
0.10 |
||||||||||
DILUTED EARNINGS PER SHARE | $ |
0.07 |
$ |
0.03 |
$ |
0.20 |
$ |
0.10 |
||||||||||
COMMON SHARES OUTSTANDING | 6,677 |
6,725 |
6,681 |
6,723 |
||||||||||||||
COMMON SHARES ASSUMING DILUTION | 6,803 |
6,889 |
6,832 |
6,894 |
||||||||||||||
PRO FORMA INFORMATION EXCLUDING | ||||||||||||||||||
ACQUISITION-RELATED COSTS | ||||||||||||||||||
The following pro forma supplemental information excludes the effect of acquisition-related costs. This pro forma information is not prepared in accordance with generally accepted accounting principles. |
||||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||||
June 29, |
June 30, |
June 29, |
June 30, |
|||||||||||||||
2002 |
2001 |
2002 |
2001 |
|||||||||||||||
Pro forma operating costs and expenses | $ |
5,437 |
$ |
5,400 |
$ |
10,792 |
$ |
10,775 |
||||||||||
Pro forma operating income | $ |
882 |
$ |
934 |
$ |
2,308 |
$ |
2,236 |
||||||||||
Net income excluding acquisition-related | ||||||||||||||||||
costs | $ |
620 |
$ |
854 |
$ |
1,642 |
$ |
1,953 |
||||||||||
Basic earnings per share excluding | ||||||||||||||||||
acquisition-related costs | $ |
0.09 |
$ |
0.13 |
$ |
0.25 |
$ |
0.29 |
||||||||||
Diluted earnings per share excluding | ||||||||||||||||||
acquisition-related costs | $ |
0.09 |
$ |
0.12 |
$ |
0.24 |
$ |
0.28 |
||||||||||
INTEL CORPORATION |
||||||||||||
CONSOLIDATED SUMMARY BALANCE SHEET DATA |
||||||||||||
(In millions) |
||||||||||||
June 29, |
Mar. 30, |
Dec. 29, |
||||||||||
2002 |
2002 |
2001 |
||||||||||
CURRENT ASSETS | ||||||||||||
Cash and short-term investments | $ |
8,957 |
$ |
9,231 |
$ |
10,326 |
||||||
Trading assets | 1,650 |
1,617 |
1,224 |
|||||||||
Accounts receivable | 2,907 |
2,883 |
2,607 |
|||||||||
Inventories: | ||||||||||||
Raw materials | 242 |
265 |
237 |
|||||||||
Work in process | 1,393 |
1,301 |
1,316 |
|||||||||
Finished goods | 870 |
914 |
700 |
|||||||||
2,505 |
2,480 |
2,253 |
||||||||||
Deferred tax assets and other | 1,182 |
1,278 |
1,223 |
|||||||||
Total current assets | 17,201 |
17,489 |
17,633 |
|||||||||
Property, plant and equipment, net | 18,176 |
18,314 |
18,121 |
|||||||||
Marketable strategic equity securities | 96 |
129 |
155 |
|||||||||
Other long-term investments | 1,438 |
1,605 |
1,319 |
|||||||||
Goodwill, net | 4,338 |
4,338 |
4,330 |
|||||||||
Other assets | 2,249 |
2,514 |
2,837 |
|||||||||
TOTAL ASSETS | $ |
43,498 |
$ |
44,389 |
$ |
44,395 |
||||||
CURRENT LIABILITIES | ||||||||||||
Short-term debt | $ |
383 |
$ |
412 |
$ |
409 |
||||||
Accounts payable and accrued liabilities | 4,195 |
4,604 |
4,755 |
|||||||||
Deferred income on shipments to | ||||||||||||
distributors | 498 |
572 |
418 |
|||||||||
Income taxes payable | 672 |
1,017 |
988 |
|||||||||
Total current liabilities | 5,748 |
6,605 |
6,570 |
|||||||||
LONG-TERM DEBT | 1,081 |
1,064 |
1,050 |
|||||||||
DEFERRED TAX LIABILITIES | 1,089 |
860 |
945 |
|||||||||
STOCKHOLDERS' EQUITY | 35,580 |
35,860 |
35,830 |
|||||||||
TOTAL LIABILITIES AND | ||||||||||||
STOCKHOLDERS' EQUITY | $ |
43,498 |
$ |
44,389 |
$ |
44,395 |
||||||