-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WIEAXPr60sdQHmX0Y1TeWGeqZ25q3+NISGUDHoAQ6YVlSahS2hPlhwMIqHAMQHZa BCeShkv+kCqBkFSuAqzafA== 0001157523-06-000339.txt : 20060117 0001157523-06-000339.hdr.sgml : 20060116 20060117172610 ACCESSION NUMBER: 0001157523-06-000339 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20060117 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20060117 DATE AS OF CHANGE: 20060117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTEL CORP CENTRAL INDEX KEY: 0000050863 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 941672743 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-06217 FILM NUMBER: 06533858 BUSINESS ADDRESS: STREET 1: 2200 MISSION COLLEGE BLVD CITY: SANTA CLARA STATE: CA ZIP: 95052 BUSINESS PHONE: 4087658080 MAIL ADDRESS: STREET 1: 2200 MISSION COLLEGE BLVD STREET 2: RN6-27 CITY: SANTA CLARA STATE: CA ZIP: 95052-8119 8-K 1 a5057913.txt INTEL CORPORATION 8-K 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 17, 2006 (Date of earliest event reported) INTEL CORPORATION (Exact name of registrant as specified in its charter) Delaware 0-06217 94-1672743 -------- ------- ---------- (State of (Commission (IRS Employer incorporation) File Number) Identification No.) 2200 Mission College Blvd., Santa Clara, California 95054-1549 - --------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (408) 765-8080 -------------- (Registrant's telephone number, including area code) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c)) Item 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION Attached hereto as Exhibit 99.1 and incorporated by reference herein is financial information for Intel Corporation for the fourth quarter and fiscal year ended December 31, 2005 and forward-looking statements relating to 2006 and the first quarter of 2006 as presented in a press release of January 17, 2006. Also included in Exhibit 99.1 under the heading "Supplemental Operating Segment Results and Other Information" is certain unaudited annual and quarterly financial information for the company's operating segments, presented on a basis that reflects the revised operating segments of the company effective as of the fourth quarter of 2005. The Flash Memory Group, which had previously been part of the Mobility Group, became a separate operating segment in the fourth quarter. The historical financial information presented under the new organizational structure does not in any way restate or revise the financial position, results of operations or cash flows of Intel Corporation as set forth in any previously reported consolidated balance sheet, consolidated statement of income or consolidated statement of cash flows of the company. This information is provided as supplemental financial information that may be of interest to Intel Corporation stockholders. The information in this report shall be deemed incorporated by reference into any registration statement heretofore or hereafter filed under the Securities Act of 1933, as amended, except to the extent that such information is superseded by information as of a subsequent date that is included in or incorporated by reference into such registration statement. The information in this report shall not be treated as filed for purposes of the Securities Exchange Act of 1934, as amended. In addition to disclosing financial results calculated in accordance with U.S. generally accepted accounting principles (GAAP), the Business Outlook statements in the company's earnings release contain non-GAAP financial measures that exclude the effects of share-based compensation expense and the requirements of SFAS No. 123(R), "Share-based Payment" ("123R"). Commencing with its first quarter 2006 earnings release, the company's earnings releases will include non-GAAP financial measures of its financial results for the reporting period that exclude the income statement effects of share-based compensation and the effects of 123R upon the number of diluted shares used in calculating non-GAAP earnings per share. The non-GAAP financial measures disclosed by the company should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The company will apply the modified prospective method of adoption of 123R, under which the effects of 123R will be reflected in the company's GAAP financial statement presentations for and after the first quarter 2006, but will not be reflected in results for prior periods. Gross margin, expenses (research and development and marketing, general and administrative), operating income, income taxes, net income and earnings per share (EPS) are the primary financial measures management uses for planning and forecasting future periods that are affected by shared-based compensation. Because management will continue to review these financial measures calculated without taking into account the effects of the new requirements under 123R, upon implementation of 123R these financial measures are treated as "non-GAAP financial measures" under Securities and Exchange Commission rules. Management uses the non-GAAP financial measures for internal managerial purposes, including as a means to compare period-to-period results on both a segment basis and consolidated basis and as a means to evaluate the company's results on a consolidated basis compared to those of other companies. In addition, management uses certain of these measures when publicly providing forward-looking statements on expectations regarding future consolidated basis financial results as in the document attached to this Form 8-K. The company's share-based compensation programs are established and managed on a corporate-wide basis, including specification of grant types and amount ranges for employees by category and grade. Following implementation of 123R, segment managers will not be held accountable for share-based compensation charges impacting their business unit's operating income (loss) and accordingly share-based compensation charges will be excluded from the company's measure of segment profitability (operating income). Therefore, the review of segment results by management and the Board of Directors will exclude share-based compensation. Additionally, management and the Board of Directors will continue to compare the company's historical consolidated results of operations (revenue, gross margin, research and development, marketing, general and administrative expenses, operating income as well as net income and EPS), excluding stock-based compensation, to financial information prepared on the same basis during the company's budget and planning process, to assess the business and to compare consolidated results to the objectives identified for the company. The company's budget and planning process commences with a segment-level evaluation - which, as noted above, excludes share-based compensation - and culminates with the preparation of a consolidated annual and/or quarterly budget that includes these non-GAAP financial measures (gross margin, research and development expenses, marketing, general and administrative expenses, operating income, income tax expense, net income and EPS). This budget, once finalized and approved, serves as the basis for allocation of resources and management of operations. While share-based compensation is a significant expense affecting the company's results of operations, management excludes share-based compensation from the company's consolidated budget and planning process to facilitate period to period comparisons and to assess changes in gross margin dollar, net income and earnings per share targets in relation to changes in forecast revenue. The company discloses this information to the public to enable investors who wish to more easily assess the company's performance on the same basis applied by management and to ease comparison on both a GAAP and non-GAAP basis among other companies, that separately identify share-based compensation expenses. In particular, as the company begins to apply 123R, the company believes that it is useful to investors to understand how the expenses and other adjustments associated with the application of 123R are being reflected on the company's income statements. Although these non-GAAP financial measures adjust expense and diluted share items to exclude the accounting treatment of share-based compensation, they should not be viewed as a pro-forma presentation reflecting the elimination of the underlying share-based compensation programs, as those programs are an important element of the company's compensation structure and generally accepted accounting principles indicate that all forms of share-based payments should be valued and included as appropriate in results of operations. Management compensates for this aspect of the non-GAAP financial measures by evaluating the dilutive effect of the company's share-based compensation arrangements on the company's basic and diluted earnings per share calculations and by reviewing other quantitative and qualitative information regarding the company's share-based compensation arrangements, including the information provided in the Management's Discussion and Analysis section of the company's quarterly and annual financial reports under the caption "Employee Equity Incentive Plans." 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 17, 2006 By: /s/ Andy D. Bryant ---------------------------- Andy D. Bryant Executive Vice President, Chief Financial Officer and Principal Accounting Officer EX-99.1 2 a5057913ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 Intel Fourth-Quarter Revenue $10.2 Billion; EPS 40 Cents; Record Quarterly and Annual Revenue and Operating Income; Record Quarterly Unit Shipments of Mobile, Desktop and Server Microprocessors SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 17, 2006--Intel Corporation today announced fourth-quarter revenue of $10.2 billion, operating income of $3.3 billion, net income of $2.5 billion and earnings per share (EPS) of 40 cents. Revenue was below the company's updated expectation of $10.4 billion to $10.6 billion primarily due to lower than expected desktop processor unit shipments and prices. "2005 was our third consecutive year of double-digit revenue and earnings growth, leading to the best operating results in the company's history," said Intel President and CEO Paul Otellini. "Although we fell below our expectations for the fourth quarter, we enter 2006 with exciting new products like the Intel(R) Core(TM) Duo and Viiv(TM). Our industry-leading 65nm process technology is ramping dual-core processors into high volume with an expected crossover in performance segments by mid-year. We expect 2006 will be another year of growth for Intel as we ramp platforms for notebooks, the digital home, the digital office and emerging markets." Q4 2005 vs. Q3 2005 vs. Q4 2004 - ------------------- ------------------ --------------- --------------- Revenue $10.2 billion +2% +6% Operating Income $3.3 billion +7% +14% Net Income $2.5 billion +23% +16% EPS 40 cents +25% +21% - ------------------- ------------------ --------------- --------------- Note: Results for the third quarter of 2005 included a tax item and legal settlement that together lowered EPS by 6 cents. For 2005, Intel achieved record revenue of $38.8 billion, record operating income of $12.1 billion, net income of $8.7 billion and EPS of $1.40. Intel paid record cash dividends of nearly $2 billion and used a record $10.6 billion to repurchase 418.4 million shares of common stock. 2005 2004 Change - ------------------- ------------------ --------------- --------------- Revenue $38.8 billion $34.2 billion + 13.5% Operating Income $12.1 billion $10.1 billion + 19% Net Income $8.7 billion $7.5 billion + 15% EPS $1.40 $1.16 + 21% Financial Review Fourth-quarter gross margin was 61.8 percent, slightly below the company's updated expectation of 63 percent, plus or minus a point, primarily due to lower than expected revenue, a slight shift in the overall product mix to non-microprocessor products, and some inventory valuation adjustments to reflect lower unit costs. The effective tax rate of 29.1 percent was below the expected rate of 31 percent primarily due to tax benefits for export sales and estimated R&D tax credits. Sales Patterns Revenue in the company's Asia Pacific region was essentially flat sequentially while revenue in the Americas region was sequentially lower. These results primarily reflect lower than expected demand for our desktop products among certain OEM customers. Q4 2005 vs. Q3 2005 vs. Q4 2004 - ------------------- ------------------ --------------- --------------- Asia-Pacific $5.1 billion Flat +16% Americas $1.8 billion -3.5% -10% Europe $2.3 billion +14% Flat Japan $945 million +2% +11% Key Product Trends (Sequential) -- Total microprocessor units were higher, setting a new record. The average selling price (ASP) was slightly lower. -- Chipset units set a record. -- Motherboard units were higher. -- Flash units set a record. The ASP was higher. -- Application processor units for products such as cellular phones and PDAs were lower. Recent Highlights -- Intel's board of directors approved a 25 percent increase in the quarterly cash dividend to 10 cents per share beginning with a dividend expected to be declared in the first quarter of 2006 and authorized the repurchase of up to $25 billion in shares of common stock under the company's ongoing stock repurchase program. -- Intel launched a new generation of consumer PC platforms under the Intel(R) Viiv(TM) name that will help make it easier to download, manage and view digital entertainment and information on PCs, TVs and handheld devices. Plans to bring premium digital media to Intel Viiv technology-based PCs and devices were announced by companies including AOL, ClickStar, DirecTV, ESPN, Google, MTV, NBC and Turner Broadcasting. -- Intel launched its next-generation Intel(R) Centrino(R) Duo mobile technology platform that includes a power-efficient dual-core processor called the Intel Core Duo processor that is also being used by Apple Computer in its first Intel-based desktop and notebook systems. -- Intel and Micron Technology formed IM Flash Technologies, a company that will produce NAND flash memory for storing digital data in devices such as iPod(a) music players. -- The company announced plans for Fab 28 in Israel, a 45nm, 300mm wafer factory scheduled for operations in 2008. Business Outlook and Risk Factors Regarding Forward-Looking Statements The following expectations do not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after Jan. 16. Intel is adding additional items to its full-year Business Outlook and is discontinuing the practice of making scheduled mid-quarter Business Updates. 2006 Outlook -- Revenue: Expected to be 6 percent to 9 percent higher than $38.8 billion in 2005. -- Gross margin: 57 percent, plus or minus a few points (58 percent, plus or minus a few points, excluding share-based compensation effects of approximately 1 percent). -- R&D: Approximately $6.5 billion (approximately $6 billion excluding share-based compensation effects of approximately $500 million). -- MG&A: Approximately $6.6 billion (approximately $6 billion excluding share-based compensation effects of approximately $600 million). -- Capital spending: $6.9 billion, plus or minus $200 million. -- Tax rate: Approximately 32 percent. -- Depreciation: $4.7 billion, plus or minus $100 million. -- Amortization of acquisition-related intangibles and costs: Approximately $40 million. Q1 2006 Outlook -- Revenue: Expected to be between $9.1 billion and $9.7 billion. -- Gross margin: 59 percent, plus or minus a couple of points (60 percent, plus or minus a couple of points, excluding share-based compensation effects of approximately 1 percent). -- Expenses (R&D plus MG&A): Approximately $3.3 billion (approximately $3 billion excluding share-based compensation effects of approximately $300 million). -- Gains from equity investments and interest and other: Approximately $140 million. -- Tax rate: Approximately 32 percent. -- Depreciation: $1.1 billion, plus or minus $100 million. -- Amortization of acquisition-related intangibles and costs: Approximately $20 million. The above statements and any others in this document that refer to plans and expectations for the first quarter, the year and the future involve a number of risks and uncertainties. Many factors could cause Intel's actual results to differ materially from current expectations, including the following: -- Intel operates in intensely competitive industries that are characterized by a high percentage of costs that are fixed or difficult to reduce in the short term, and by product demand that is highly variable. Revenue and the gross margin percentage are affected by the demand for and market acceptance of Intel's products; the availability of sufficient inventory of Intel products and related components from other suppliers to meet demand; pricing pressures; actions taken by Intel's competitors; and Intel's ability to respond quickly to technological developments and to incorporate new features into its products. 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. -- 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. -- Dividend declarations and the dividend rate are at the discretion of Intel's board of directors, and plans for future dividends may be revised by the board. Intel's dividend and stock buyback programs could be affected by changes in its capital spending programs, changes in its cash flows and changes in tax laws, as well as by the level and timing of acquisition and investment activity. -- 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 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 jurisdictions 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. -- 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 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's results could be affected by the amount, type, and valuation of share-based awards granted as well as the amount of awards cancelled due to employee turnover. A more detailed discussion of these and other factors that could affect results is contained in Intel's SEC filings, including the report on Form 10-Q for the quarter ended Oct. 1, 2005. Status of Business Outlook During the quarter, Intel's corporate representatives may reiterate the Business Outlook during private meetings with investors, investment analysts, the media and others. From the close of business on March 3 until publication of the company's first-quarter 2006 earnings release on April 19, 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. Earnings Webcast Intel will hold a public webcast at 2:30 p.m. PST today on its Investor Relations Web site at www.intc.com, with a replay available until April 19. Intel, the world leader in silicon innovation, develops technologies, products and initiatives to continually advance how people work and live. Additional information about Intel is available at www.intel.com/pressroom. Intel, the Intel logo, Intel Core, Intel Viiv and Intel Centrino are trademarks or registered trademarks of Intel Corporation or its subsidiaries in the United States and other countries. (a) 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 Twelve Months Ended Ended ---------------- ----------------- Dec. 31, Dec. 25, Dec. 31, Dec. 25, 2005 2004 2005 2004 -------- -------- -------- -------- NET REVENUE $10,201 $9,598 $38,826 $34,209 Cost of sales 3,901 4,221 15,777 14,463 -------- ------- -------- -------- GROSS MARGIN 6,300 5,377 23,049 19,746 -------- ------- -------- -------- Research and development 1,362 1,214 5,145 4,778 Marketing, general and administrative 1,606 1,225 5,688 4,659 Amortization of acquisition-related intangibles and costs 23 38 126 179 -------- ------- -------- -------- OPERATING EXPENSES 2,991 2,477 10,959 9,616 -------- ------- -------- -------- OPERATING INCOME 3,309 2,900 12,090 10,130 Losses on equity securities, net (25) (3) (45) (2) Interest and other, net 178 130 565 289 -------- ------- -------- -------- INCOME BEFORE TAXES 3,462 3,027 12,610 10,417 Income taxes 1,009 904 3,946 2,901 -------- ------- -------- -------- NET INCOME $ 2,453 $2,123 $ 8,664 $ 7,516 ======== ======= ======== ======== BASIC EARNINGS PER SHARE $ 0.41 $ 0.34 $ 1.42 $ 1.17 ======== ======= ======== ======== DILUTED EARNINGS PER SHARE $ 0.40 $ 0.33 $ 1.40 $ 1.16 ======== ======= ======== ======== COMMON SHARES OUTSTANDING 6,008 6,294 6,106 6,400 COMMON SHARES ASSUMING DILUTION 6,081 6,352 6,178 6,494 INTEL CORPORATION CONSOLIDATED SUMMARY BALANCE SHEET DATA (In millions) Dec. 31, Oct. 1, Dec. 25, 2005 2005 2004 -------- -------- -------- CURRENT ASSETS Cash and short-term investments $11,314 $11,951 $14,061 Trading assets 1,458 1,982 3,111 Accounts receivable 3,914 3,748 2,999 Inventories: Raw materials 409 381 388 Work in process 1,662 1,434 1,418 Finished goods 1,055 1,000 815 -------- -------- -------- 3,126 2,815 2,621 Deferred tax assets and other 1,382 1,228 1,266 -------- -------- -------- Total current assets 21,194 21,724 24,058 Property, plant and equipment, net 17,111 16,825 15,768 Marketable strategic equity securities 537 520 656 Other long-term investments 4,135 3,047 2,563 Goodwill 3,873 3,814 3,719 Other assets 1,464 1,430 1,379 -------- -------- -------- TOTAL ASSETS $48,314 $47,360 $48,143 ======== ======== ======== CURRENT LIABILITIES Short-term debt $ 313 $ 252 $ 201 Accounts payable and accrued liabilities 6,453 6,654 6,050 Deferred income on shipments to distributors 632 692 592 Income taxes payable 2,008 1,901 1,163 -------- -------- -------- Total current liabilities 9,406 9,499 8,006 LONG-TERM DEBT 2,106 432 703 DEFERRED TAX LIABILITIES 620 753 855 STOCKHOLDERS' EQUITY 36,182 36,676 38,579 -------- -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $48,314 $47,360 $48,143 ======== ======== ======== INTEL CORPORATION SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION (In millions) Q4 2005 Q3 2005 Q4 2004 -------- -------- -------- GEOGRAPHIC REVENUE: Asia-Pacific $5,132 $5,124 $4,421 50% 52% 46% Americas $1,836 $1,903 $2,047 18% 19% 21% Europe $2,288 $2,007 $2,277 23% 20% 24% Japan $945 $926 $853 9% 9% 9% CASH INVESTMENTS: Cash and short-term investments $11,314 $11,951 $14,061 Trading assets - fixed income (1) 1,095 1,632 2,772 -------- -------- -------- Total cash investments $12,409 $13,583 $16,833 INTEL CAPITAL PORTFOLIO: Marketable strategic equity securities $537 $520 $656 Other strategic investments 595 553 513 -------- -------- -------- Total Intel Capital portfolio $1,132 $1,073 $1,169 TRADING ASSETS: Trading assets - equity securities offsetting deferred compensation (2) $363 $350 $339 Total trading assets - sum of 1+2 $1,458 $1,982 $3,111 SELECTED CASH FLOW INFORMATION: Depreciation $1,050 $1,055 $1,144 Amortization of acquisition-related intangibles & costs $23 $29 $38 Capital spending ($1,359) ($1,282) ($1,031) Stock repurchase program ($3,137) ($2,500) ($2,000) Proceeds from sales of shares to employees, tax benefit & other $211 $444 $168 Dividends paid ($482) ($486) ($252) Net cash used for acquisitions ($88) ($22) $0 EARNINGS PER SHARE INFORMATION: Average common shares outstanding 6,008 6,062 6,294 Dilutive effect of stock options 64 82 58 Dilutive effect of convertible debt 9 N/A N/A Common shares assuming dilution 6,081 6,144 6,352 STOCK BUYBACK: Shares repurchased 118.0 93.6 89.0 Cumulative shares repurchased 2,604.9 2,486.9 2,186.5 Dollars authorized for buyback (in billions) $25.0 N/A N/A Remaining dollars authorized for buyback (in billions) $21.9 N/A N/A OTHER INFORMATION: Employees (in thousands) 99.9 96.0 85.0 INTEL CORPORATION SUPPLEMENTAL OPERATING RESULTS AND OTHER INFORMATION ($ in millions) Q4 Q3 Q2 Q1 Q4 OPERATING SEGMENT INFORMATION: 2005 2005 2005 2005 2004 - ---------------------------------- ------- ------ ------ ------ ------ Digital Enterprise Group Microprocessor revenue 4,929 4,936 4,603 4,944 5,256 Chipset, motherboard and other revenue 1,476 1,434 1,398 1,417 1,517 Net revenue 6,405 6,370 6,001 6,361 6,773 Operating income 2,449 2,162 2,012 2,383 2,450 - ---------------------------------- ------- ------ ------ ------ ------ Mobility Group Microprocessor revenue 2,400 2,331 2,056 1,917 1,710 Chipset and other revenue 705 639 566 517 425 Net revenue 3,105 2,970 2,622 2,434 2,135 Operating income 1,547 1,431 1,221 1,131 951 - ---------------------------------- ------- ------ ------ ------ ------ Flash Memory Group Net revenue 600 572 528 578 643 Operating loss (12) (30) (80) (32) (57) - ---------------------------------- ------- ------ ------ ------ ------ All Other Net revenue 91 48 80 61 47 Operating loss (675) (463) (504) (450) (444) - ---------------------------------- ------- ------ ------ ------ ------ Total Net revenue 10,201 9,960 9,231 9,434 9,598 Operating income 3,309 3,100 2,649 3,032 2,900 - ---------------------------------- ------- ------ ------ ------ ------ INTEL CORPORATION SUPPLEMENTAL OPERATING RESULTS AND OTHER INFORMATION (CONTINUED) ($ in millions) OPERATING SEGMENT INFORMATION: 2005 2004 2003 - ---------------------------------------------- ------- ------- ------- Digital Enterprise Group Microprocessor revenue 19,412 19,426 17,991 Chipset, motherboard and other revenue 5,725 5,352 5,068 Net revenue 25,137 24,778 23,059 Operating income 9,006 8,851 8,017 - ---------------------------------------------- ------- ------- ------- Mobility Group Microprocessor revenue 8,704 5,667 4,120 Chipset and other revenue 2,427 1,314 966 Net revenue 11,131 6,981 5,086 Operating income 5,330 2,833 1,743 - ---------------------------------------------- ------- ------- ------- Flash Memory Group Net revenue 2,278 2,285 1,608 Operating loss (154) (149) (152) - ---------------------------------------------- ------- ------- ------- All Other Net revenue 280 165 388 Operating loss (2,092) (1,405) (2,075) - ---------------------------------------------- ------- ------- ------- Total Net revenue 38,826 34,209 30,141 Operating income 12,090 10,130 7,533 During the first quarter of 2005, the company reorganized its operating segments to bring all major product groups in line with the company's strategy to design and deliver technology platforms. The operating segments after the first quarter reorganization included the Digital Enterprise Group, the Mobility Group, the Digital Home Group, the Digital Health Group and the Channel Platforms Group. In the fourth quarter of 2005, the company added the Flash Memory Group. The Digital Enterprise Group and the Mobility Group are reportable operating segments. The Flash Memory Group, Digital Home Group, Digital Health Group and Channel Platforms Group operating segments do not meet the quantitative thresholds for reportable segments; however, the Flash Memory Group is reported separately as management believes this information is useful to readers. The Digital Home Group, Digital Health Group and Channel Platforms Group operating segments are included within the "all other" category. All prior period amounts have been adjusted retrospectively to reflect the new organizational structure and certain minor reorganizations effected through the fourth quarter of 2005. 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 notebook computing market segment, wireless connectivity products, application and cellular processors used in cellular handsets and handheld computing devices, and cellular baseband chipsets. The Flash Memory Group operating segment's products include NOR flash memory products designed for cellular phones and embedded form factors. Revenue for the "all other" category primarily consists of microprocessors and related chipsets sold by the Digital Home Group. The "all other" category includes certain corporate-level operating expenses, including a portion of profit-dependent bonus and other expenses not allocated to the operating segments. "All other" also includes the results of operations of seed businesses that support the company's initiatives. Finally, "all other" includes acquisition-related costs. In 2003, acquisition-related costs included a goodwill impairment charge of $611 million. -----END PRIVACY-ENHANCED MESSAGE-----