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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Intel Corporation | NASDAQ:INTC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.20 | 0.66% | 30.57 | 30.55 | 30.58 | 30.67 | 30.19 | 30.59 | 50,960,209 | 00:59:59 |
☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||
For the quarterly period ended | July 2, 2022 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
For the transition period from to |
Delaware | 94-1672743 | |||||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
2200 Mission College Boulevard, | Santa Clara, | California | 95054-1549 | |||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common stock, $0.001 par value | INTC | Nasdaq Global Select Market |
Large Accelerated Filer | Accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company | ||||||||||
☑ | ¨ | ¨ | ☐ | ☐ | ||||||||||
Page | |||||||||||
Forward-Looking Statements | |||||||||||
A Quarter in Review | |||||||||||
Consolidated Condensed Financial Statements and Supplemental Details | |||||||||||
Consolidated Condensed Statements of Income | |||||||||||
Consolidated Condensed Statements of Comprehensive Income | |||||||||||
Consolidated Condensed Balance Sheets | |||||||||||
Consolidated Condensed Statements of Cash Flows | |||||||||||
Consolidated Condensed Statements of Stockholders' Equity | |||||||||||
Notes to Consolidated Condensed Financial Statements | |||||||||||
Key Terms | |||||||||||
Management's Discussion and Analysis | |||||||||||
Segment Trends and Results | |||||||||||
Consolidated Results of Operations | |||||||||||
Liquidity and Capital Resources | |||||||||||
Non-GAAP Financial Measures | |||||||||||
Other Key Information | |||||||||||
Quantitative and Qualitative Disclosures about Market Risk | |||||||||||
Risk Factors | |||||||||||
Controls and Procedures | |||||||||||
Issuer Purchases of Equity Securities | |||||||||||
Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934 | |||||||||||
Exhibits | |||||||||||
Form 10-Q Cross-Reference Index |
1 |
A Quarter in Review | |||||
Revenue | Gross Margin | Diluted EPS | Cash Flows | |||||||||||||||||
■ GAAP $B ■ Non-GAAP $B | ■ GAAP ■ Non-GAAP | ■ GAAP ■ Non-GAAP | ■ Operating Cash Flow $B ■ Adjusted Free Cash Flow $B |
A Quarter in Review | 2 |
Consolidated Condensed Statements of Income | |||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions, Except Per Share Amounts; Unaudited) | Jul 2, 2022 | Jun 26, 2021 | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||||||||||||
Net revenue | $ | 15,321 | $ | 19,631 | $ | 33,674 | $ | 39,304 | ||||||||||||||||||
Cost of sales | 9,734 | 8,425 | 18,843 | 17,244 | ||||||||||||||||||||||
Gross margin | 5,587 | 11,206 | 14,831 | 22,060 | ||||||||||||||||||||||
Research and development | 4,400 | 3,715 | 8,762 | 7,338 | ||||||||||||||||||||||
Marketing, general and administrative | 1,800 | 1,599 | 3,552 | 2,927 | ||||||||||||||||||||||
Restructuring and other charges | 87 | 346 | (1,124) | 2,555 | ||||||||||||||||||||||
Operating expenses | 6,287 | 5,660 | 11,190 | 12,820 | ||||||||||||||||||||||
Operating income (loss) | (700) | 5,546 | 3,641 | 9,240 | ||||||||||||||||||||||
Gains (losses) on equity investments, net | (90) | 295 | 4,233 | 663 | ||||||||||||||||||||||
Interest and other, net | (119) | (96) | 878 | (252) | ||||||||||||||||||||||
Income (loss) before taxes | (909) | 5,745 | 8,752 | 9,651 | ||||||||||||||||||||||
Provision for (benefit from) taxes | (455) | 684 | 1,093 | 1,229 | ||||||||||||||||||||||
Net income (loss) | $ | (454) | $ | 5,061 | $ | 7,659 | $ | 8,422 | ||||||||||||||||||
Earnings (loss) per share—basic | $ | (0.11) | $ | 1.25 | $ | 1.87 | $ | 2.08 | ||||||||||||||||||
Earnings (loss) per share—diluted | $ | (0.11) | $ | 1.24 | $ | 1.86 | $ | 2.06 | ||||||||||||||||||
Weighted average shares of common stock outstanding: | ||||||||||||||||||||||||||
Basic | 4,100 | 4,049 | 4,095 | 4,053 | ||||||||||||||||||||||
Diluted | 4,100 | 4,084 | 4,120 | 4,090 |
Financial Statements | Consolidated Condensed Statements of Income | 3 |
Consolidated Condensed Statements of Comprehensive Income | |||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions; Unaudited) | Jul 2, 2022 | Jun 26, 2021 | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||||||||||||
Net income (loss) | $ | (454) | $ | 5,061 | $ | 7,659 | $ | 8,422 | ||||||||||||||||||
Changes in other comprehensive income, net of tax: | ||||||||||||||||||||||||||
Net unrealized holding gains (losses) on derivatives | (627) | 6 | (742) | (344) | ||||||||||||||||||||||
Actuarial valuation and other pension benefits (expenses), net | 9 | 12 | 27 | 25 | ||||||||||||||||||||||
Translation adjustments and other | (5) | (10) | (30) | (25) | ||||||||||||||||||||||
Other comprehensive income (loss) | (623) | 8 | (745) | (344) | ||||||||||||||||||||||
Total comprehensive income (loss) | $ | (1,077) | $ | 5,069 | $ | 6,914 | $ | 8,078 |
Financial Statements | Consolidated Condensed Statements of Comprehensive Income | 4 |
Consolidated Condensed Balance Sheets | |||||
(In Millions; Unaudited) | Jul 2, 2022 | Dec 25, 2021 | ||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 4,390 | $ | 4,827 | ||||||||||
Short-term investments | 22,654 | 24,426 | ||||||||||||
Accounts receivable | 6,063 | 9,457 | ||||||||||||
Inventories | 12,174 | 10,776 | ||||||||||||
Assets held for sale | 32 | 6,942 | ||||||||||||
Other current assets | 5,275 | 2,130 | ||||||||||||
Total current assets | 50,588 | 58,558 | ||||||||||||
Property, plant and equipment, net of accumulated depreciation of $89,163 ($85,294 as of December 25, 2021) | 71,660 | 63,245 | ||||||||||||
Equity investments | 5,929 | 6,298 | ||||||||||||
Goodwill | 27,587 | 26,963 | ||||||||||||
Identified intangible assets, net | 6,427 | 7,270 | ||||||||||||
Other long-term assets | 8,227 | 6,072 | ||||||||||||
Total assets | $ | 170,418 | $ | 168,406 | ||||||||||
Liabilities and stockholders’ equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Short-term debt | $ | 2,882 | $ | 4,591 | ||||||||||
Accounts payable | 7,945 | 5,747 | ||||||||||||
Accrued compensation and benefits | 2,730 | 4,535 | ||||||||||||
Other accrued liabilities | 13,661 | 12,589 | ||||||||||||
Total current liabilities | 27,218 | 27,462 | ||||||||||||
Debt | 32,548 | 33,510 | ||||||||||||
Income taxes payable | 3,684 | 4,305 | ||||||||||||
Deferred income taxes | 572 | 2,667 | ||||||||||||
Other long-term liabilities | 5,178 | 5,071 | ||||||||||||
Contingencies (Note 12) | ||||||||||||||
Stockholders’ equity: | ||||||||||||||
Common stock and capital in excess of par value, 4,106 issued and outstanding (4,070 issued and outstanding as of December 25, 2021) | 29,858 | 28,006 | ||||||||||||
Accumulated other comprehensive income (loss) | (1,625) | (880) | ||||||||||||
Retained earnings | 72,985 | 68,265 | ||||||||||||
Total stockholders’ equity | 101,218 | 95,391 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 170,418 | $ | 168,406 |
Financial Statements | Consolidated Condensed Balance Sheets | 5 |
Consolidated Condensed Statements of Cash Flows | |||||
Six Months Ended | ||||||||||||||
(In Millions; Unaudited) | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||
Cash and cash equivalents, beginning of period | $ | 4,827 | $ | 5,865 | ||||||||||
Cash flows provided by (used for) operating activities: | ||||||||||||||
Net income (loss) | 7,659 | 8,422 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Depreciation | 5,528 | 4,862 | ||||||||||||
Share-based compensation | 1,599 | 1,044 | ||||||||||||
Restructuring and other charges | 73 | 2,555 | ||||||||||||
Amortization of intangibles | 968 | 897 | ||||||||||||
(Gains) losses on equity investments, net | (4,230) | (555) | ||||||||||||
(Gains) losses on divestitures | (1,072) | — | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||
Accounts receivable | 3,397 | (678) | ||||||||||||
Inventories | (1,386) | (126) | ||||||||||||
Accounts payable | 117 | 425 | ||||||||||||
Accrued compensation and benefits | (1,985) | (836) | ||||||||||||
Prepaid customer supply agreements | (12) | (1,571) | ||||||||||||
Income taxes | (2,232) | 114 | ||||||||||||
Other assets and liabilities | (1,724) | (404) | ||||||||||||
Total adjustments | (959) | 5,727 | ||||||||||||
Net cash provided by operating activities | 6,700 | 14,149 | ||||||||||||
Cash flows provided by (used for) investing activities: | ||||||||||||||
Additions to property, plant and equipment | (11,846) | (7,574) | ||||||||||||
Additions to held for sale NAND property, plant and equipment | (206) | (682) | ||||||||||||
Purchases of short-term investments | (25,514) | (16,637) | ||||||||||||
Maturities and sales of short-term investments | 25,407 | 15,062 | ||||||||||||
Sales of equity investments | 4,775 | 149 | ||||||||||||
Proceeds from divestitures | 6,579 | — | ||||||||||||
Other investing | (1,667) | 768 | ||||||||||||
Net cash used for investing activities | (2,472) | (8,914) | ||||||||||||
Cash flows provided by (used for) financing activities: | ||||||||||||||
Payments on finance leases | (299) | — | ||||||||||||
Repayment of debt | (1,688) | (500) | ||||||||||||
Proceeds from sales of common stock through employee equity incentive plans | 589 | 589 | ||||||||||||
Repurchase of common stock | — | (2,415) | ||||||||||||
Payment of dividends to stockholders | (2,986) | (2,821) | ||||||||||||
Other financing | (281) | (1,207) | ||||||||||||
Net cash used for financing activities | (4,665) | (6,354) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (437) | (1,119) | ||||||||||||
Cash and cash equivalents, end of period | $ | 4,390 | $ | 4,746 | ||||||||||
Supplemental disclosures: | ||||||||||||||
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities | $ | 3,286 | $ | 2,426 | ||||||||||
Cash paid during the period for: | ||||||||||||||
Interest, net of capitalized interest | $ | 214 | $ | 283 | ||||||||||
Income taxes, net of refunds | $ | 3,326 | $ | 1,110 | ||||||||||
Financial Statements | Consolidated Condensed Statements of Cash Flows | 6 |
Consolidated Condensed Statements of Stockholders' Equity | |||||
Common Stock and Capital in Excess of Par Value | Accumulated Other Comprehensive Income (Loss) | Retained Earnings1 | Total | |||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts; Unaudited) | Shares | Amount | ||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||
Balance as of April 02, 2022 | 4,089 | $ | 29,244 | $ | (1,002) | $ | 74,894 | $ | 103,136 | |||||||||||||||||||||||
Net income (loss) | — | — | — | (454) | (454) | |||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | (623) | — | (623) | |||||||||||||||||||||||||||
Employee equity incentive plans and other | 22 | 12 | — | — | 12 | |||||||||||||||||||||||||||
Share-based compensation | — | 892 | — | — | 892 | |||||||||||||||||||||||||||
Restricted stock unit withholdings | (5) | (290) | — | 44 | (246) | |||||||||||||||||||||||||||
Cash dividends declared ($0.37 per share) | — | — | — | (1,499) | (1,499) | |||||||||||||||||||||||||||
Balance as of July 02, 2022 | 4,106 | $ | 29,858 | $ | (1,625) | $ | 72,985 | $ | 101,218 | |||||||||||||||||||||||
Balance as of March 27, 2021 | 4,038 | $ | 26,272 | $ | (1,103) | $ | 54,638 | $ | 79,807 | |||||||||||||||||||||||
Net income (loss) | — | — | — | 5,061 | 5,061 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | 8 | — | 8 | |||||||||||||||||||||||||||
Employee equity incentive plans and other | 24 | 23 | — | — | 23 | |||||||||||||||||||||||||||
Share-based compensation | — | 619 | — | — | 619 | |||||||||||||||||||||||||||
Restricted stock unit withholdings | (5) | (259) | — | (52) | (311) | |||||||||||||||||||||||||||
Balance as of June 26, 2021 | 4,057 | $ | 26,655 | $ | (1,095) | $ | 59,647 | $ | 85,207 | |||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||||||
Balance as of December 25, 2021 | 4,070 | $ | 28,006 | $ | (880) | $ | 68,265 | $ | 95,391 | |||||||||||||||||||||||
Net income (loss) | — | — | — | 7,659 | 7,659 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | (745) | — | (745) | |||||||||||||||||||||||||||
Employee equity incentive plans and other | 42 | 601 | — | — | 601 | |||||||||||||||||||||||||||
Share-based compensation | — | 1,599 | — | — | 1,599 | |||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | |||||||||||||||||||||||||||
Restricted stock unit withholdings | (6) | (348) | — | 47 | (301) | |||||||||||||||||||||||||||
Cash dividends declared ($0.73 per share) | — | — | — | (2,986) | (2,986) | |||||||||||||||||||||||||||
Balance as of July 02, 2022 | 4,106 | $ | 29,858 | $ | (1,625) | $ | 72,985 | $ | 101,218 | |||||||||||||||||||||||
Balance as of December 26, 2020 | 4,062 | $ | 25,556 | $ | (751) | $ | 56,268 | $ | 81,073 | |||||||||||||||||||||||
Net income (loss) | — | — | — | 8,422 | 8,422 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | (344) | — | (344) | |||||||||||||||||||||||||||
Employee equity incentive plans and other | 41 | 588 | — | — | 588 | |||||||||||||||||||||||||||
Share-based compensation | — | 1,044 | — | — | 1,044 | |||||||||||||||||||||||||||
Repurchase of common stock | (40) | (249) | — | (2,166) | (2,415) | |||||||||||||||||||||||||||
Restricted stock unit withholdings | (6) | (284) | — | (56) | (340) | |||||||||||||||||||||||||||
Cash dividends declared ($0.70 per share) | — | — | — | (2,821) | (2,821) | |||||||||||||||||||||||||||
Balance as of June 26, 2021 | 4,057 | $ | 26,655 | $ | (1,095) | $ | 59,647 | $ | 85,207 |
Financial Statements | Consolidated Condensed Statements of Stockholders' Equity | 7 |
Notes to Consolidated Condensed Financial Statements | |||||
Note 1 : | Basis of Presentation |
Note 2 : | Operating Segments |
Financial Statements | Notes to Financial Statements | 8 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions) | Jul 2, 2022 | Jun 26, 2021 | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||||||||||||
Operating segment revenue: | ||||||||||||||||||||||||||
Client Computing | ||||||||||||||||||||||||||
Desktop | $ | 2,289 | $ | 2,792 | $ | 4,930 | $ | 5,562 | ||||||||||||||||||
Notebook | 4,751 | 6,734 | 10,710 | 13,690 | ||||||||||||||||||||||
Other | 625 | 727 | 1,319 | 1,724 | ||||||||||||||||||||||
7,665 | 10,253 | 16,959 | 20,976 | |||||||||||||||||||||||
Datacenter and AI | 4,649 | 5,547 | 10,683 | 10,487 | ||||||||||||||||||||||
Network and Edge | 2,333 | 2,105 | 4,546 | 3,904 | ||||||||||||||||||||||
Accelerated Computing Systems and Graphics | 186 | 177 | 405 | 358 | ||||||||||||||||||||||
Mobileye | 460 | 327 | 854 | 704 | ||||||||||||||||||||||
Intel Foundry Services | 122 | 264 | 405 | 367 | ||||||||||||||||||||||
All other | 32 | 1,129 | 99 | 2,853 | ||||||||||||||||||||||
Total operating segment revenue | $ | 15,447 | $ | 19,802 | $ | 33,951 | $ | 39,649 | ||||||||||||||||||
Operating income (loss): | ||||||||||||||||||||||||||
Client Computing | $ | 1,085 | $ | 4,029 | $ | 3,912 | 8,317 | |||||||||||||||||||
Datacenter and AI | 214 | 2,090 | 1,900 | 3,796 | ||||||||||||||||||||||
Network and Edge | 241 | 605 | 607 | 848 | ||||||||||||||||||||||
Accelerated Computing Systems and Graphics | (507) | (168) | (897) | (344) | ||||||||||||||||||||||
Mobileye | 190 | 133 | 338 | 304 | ||||||||||||||||||||||
Intel Foundry Services | (155) | 52 | (186) | 18 | ||||||||||||||||||||||
All other | (1,768) | (1,195) | (2,033) | (3,699) | ||||||||||||||||||||||
Total operating income (loss) | $ | (700) | $ | 5,546 | $ | 3,641 | $ | 9,240 |
Total operating segment revenue | $ | 15,447 | $ | 19,802 | $ | 33,951 | $ | 39,649 | ||||||||||||||||||
Less: Accelerated Computing Systems and Graphics intersegment revenue | (126) | (171) | (277) | (345) | ||||||||||||||||||||||
Total net revenue | $ | 15,321 | $ | 19,631 | $ | 33,674 | $ | 39,304 |
Financial Statements | Notes to Financial Statements | 9 |
Note 3 : | Earnings Per Share |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | Jul 2, 2022 | Jun 26, 2021 | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||||||||||||
Net income (loss) available to common stockholders | $ | (454) | $ | 5,061 | $ | 7,659 | $ | 8,422 | ||||||||||||||||||
Weighted average shares of common stock outstanding—basic | 4,100 | 4,049 | 4,095 | 4,053 | ||||||||||||||||||||||
Dilutive effect of employee equity incentive plans | — | 35 | 25 | 37 | ||||||||||||||||||||||
Weighted average shares of common stock outstanding—diluted | 4,100 | 4,084 | 4,120 | 4,090 | ||||||||||||||||||||||
Earnings (loss) per share—basic | $ | (0.11) | $ | 1.25 | $ | 1.87 | $ | 2.08 | ||||||||||||||||||
Earnings (loss) per share—diluted | $ | (0.11) | $ | 1.24 | $ | 1.86 | $ | 2.06 |
Note 4 : | Other Financial Statement Details |
(In Millions) | Jul 2, 2022 | Dec 25, 2021 | ||||||||||||
Raw materials | $ | 1,587 | $ | 1,441 | ||||||||||
Work in process | 6,164 | 6,656 | ||||||||||||
Finished goods | 4,423 | 2,679 | ||||||||||||
Total inventories | $ | 12,174 | $ | 10,776 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions) | Jul 2, 2022 | Jun 26, 2021 | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||||||||||||
Interest income | $ | 98 | $ | 37 | $ | 145 | $ | 74 | ||||||||||||||||||
Interest expense | (109) | (129) | (233) | (319) | ||||||||||||||||||||||
Other, net | (108) | (4) | 966 | (7) | ||||||||||||||||||||||
Total interest and other, net | $ | (119) | $ | (96) | $ | 878 | $ | (252) |
Financial Statements | Notes to Financial Statements | 10 |
Note 5 : | Restructuring and Other Charges |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions) | Jul 2, 2022 | Jun 26, 2021 | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||||||||||||
Employee severance and benefit arrangements | $ | 38 | $ | 15 | $ | 43 | $ | 22 | ||||||||||||||||||
Litigation charges and other | 13 | 49 | (1,203) | 2,251 | ||||||||||||||||||||||
Asset impairment charges | 36 | 282 | 36 | 282 | ||||||||||||||||||||||
Total restructuring and other charges | $ | 87 | $ | 346 | $ | (1,124) | $ | 2,555 |
Note 6 : | Investments |
(In Millions) | Fair Value | |||||||
Due in 1 year or less | $ | 14,673 | ||||||
Due in 1–2 years | 3,315 | |||||||
Due in 2–5 years | 5,033 | |||||||
Due after 5 years | 714 | |||||||
Instruments not due at a single maturity date | 713 | |||||||
Total | $ | 24,448 |
Financial Statements | Notes to Financial Statements | 11 |
(In Millions) | Jul 2, 2022 | Dec 25, 2021 | ||||||||||||
Marketable equity securities | $ | 1,456 | $ | 2,171 | ||||||||||
Non-marketable equity securities | 4,460 | 4,111 | ||||||||||||
Equity method investments | 13 | 16 | ||||||||||||
Total | $ | 5,929 | $ | 6,298 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions) | Jul 2, 2022 | Jun 26, 2021 | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||||||||||||
Ongoing mark-to-market adjustments on marketable equity securities | $ | (209) | $ | 138 | $ | (639) | $ | (153) | ||||||||||||||||||
Observable price adjustments on non-marketable equity securities | 135 | 72 | 206 | 623 | ||||||||||||||||||||||
Impairment charges | (44) | (35) | (67) | (73) | ||||||||||||||||||||||
Sale of equity investments and other¹ | 28 | 120 | 4,733 | 266 | ||||||||||||||||||||||
Total gains (losses) on equity investments, net | $ | (90) | $ | 295 | $ | 4,233 | $ | 663 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions) | Jul 2, 2022 | Jun 26, 2021 | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||||||||||||
Net gains (losses) recognized during the period on equity securities | $ | (93) | $ | 226 | $ | (337) | $ | 537 | ||||||||||||||||||
Less: Net (gains) losses recognized during the period on equity securities sold during the period | (19) | (26) | (11) | (125) | ||||||||||||||||||||||
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date | $ | (112) | $ | 200 | $ | (348) | $ | 412 |
Note 7 : | Acquisitions and Divestitures |
Financial Statements | Notes to Financial Statements | 12 |
(In Millions) | Dec 29, 2021 | |||||||||||||
Inventories | $ | 941 | ||||||||||||
Property, plant and equipment, net | 6,018 | |||||||||||||
Total sold | $ | 6,959 |
Note 8 : | Borrowings |
Financial Statements | Notes to Financial Statements | 13 |
Note 9 : | Fair Value |
Jul 2, 2022 | Dec 25, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measured and Recorded at Reporting Date Using | Fair Value Measured and Recorded at Reporting Date Using | |||||||||||||||||||||||||||||||||||||||||||||||||
(In Millions) | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cash equivalents: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | $ | — | $ | 48 | $ | — | $ | 48 | $ | — | $ | 65 | $ | — | $ | 65 | ||||||||||||||||||||||||||||||||||
Financial institution instruments¹ | 484 | 1,262 | — | 1,746 | 1,216 | 763 | — | 1,979 | ||||||||||||||||||||||||||||||||||||||||||
Reverse repurchase agreements | — | 2,002 | — | 2,002 | — | 1,595 | — | 1,595 | ||||||||||||||||||||||||||||||||||||||||||
Short-term investments: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | — | 7,301 | — | 7,301 | — | 6,367 | — | 6,367 | ||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments¹ | 229 | 6,886 | — | 7,115 | 154 | 5,162 | — | 5,316 | ||||||||||||||||||||||||||||||||||||||||||
Government debt² | 48 | 8,190 | — | 8,238 | 50 | 12,693 | — | 12,743 | ||||||||||||||||||||||||||||||||||||||||||
Other current assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets | — | 1,661 | — | 1,661 | 80 | 576 | — | 656 | ||||||||||||||||||||||||||||||||||||||||||
Loans receivable³ | — | — | — | — | — | 152 | — | 152 | ||||||||||||||||||||||||||||||||||||||||||
Marketable equity securities4 | 1,369 | 87 | — | 1,456 | 1,854 | 317 | — | 2,171 | ||||||||||||||||||||||||||||||||||||||||||
Other long-term assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets | — | 40 | — | 40 | — | 772 | 7 | 779 | ||||||||||||||||||||||||||||||||||||||||||
Loans receivable³ | — | 73 | — | 73 | — | 57 | — | 57 | ||||||||||||||||||||||||||||||||||||||||||
Total assets measured and recorded at fair value | $ | 2,130 | $ | 27,550 | $ | — | $ | 29,680 | $ | 3,354 | $ | 28,519 | $ | 7 | $ | 31,880 | ||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||
Other accrued liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities | $ | 119 | $ | 1,120 | $ | — | $ | 1,239 | $ | 4 | $ | 516 | $ | — | $ | 520 | ||||||||||||||||||||||||||||||||||
Other long-term liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities | — | 194 | 49 | 243 | — | 9 | — | 9 | ||||||||||||||||||||||||||||||||||||||||||
Total liabilities measured and recorded at fair value | $ | 119 | $ | 1,314 | $ | 49 | $ | 1,482 | $ | 4 | $ | 525 | $ | — | $ | 529 |
Financial Statements | Notes to Financial Statements | 14 |
Note 10 : | Other Comprehensive Income (Loss) |
(In Millions) | Unrealized Holding Gains (Losses) on Derivatives | Actuarial Valuation and Other Pension Expenses | Translation Adjustments and Other | Total | ||||||||||||||||||||||
Balance as of December 25, 2021 | $ | 211 | $ | (1,114) | $ | 23 | $ | (880) | ||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (897) | — | (38) | (935) | ||||||||||||||||||||||
Amounts reclassified out of accumulated other comprehensive income (loss) | 49 | 22 | — | 71 | ||||||||||||||||||||||
Tax effects | 106 | 5 | 8 | 119 | ||||||||||||||||||||||
Other comprehensive income (loss) | (742) | 27 | (30) | (745) | ||||||||||||||||||||||
Balance as of July 2, 2022 | $ | (531) | $ | (1,087) | $ | (7) | $ | (1,625) |
Note 11 : | Derivative Financial Instruments |
(In Millions) | Jul 2, 2022 | Dec 25, 2021 | ||||||||||||
Foreign currency contracts | $ | 40,046 | $ | 38,024 | ||||||||||
Interest rate contracts | 16,803 | 15,209 | ||||||||||||
Other | 2,109 | 2,517 | ||||||||||||
Total | $ | 58,958 | $ | 55,750 |
Financial Statements | Notes to Financial Statements | 15 |
Jul 2, 2022 | Dec 25, 2021 | |||||||||||||||||||||||||
(In Millions) | Assets1 | Liabilities2 | Assets1 | Liabilities2 | ||||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||
Foreign currency contracts3 | $ | 5 | $ | 768 | $ | 80 | $ | 163 | ||||||||||||||||||
Interest rate contracts | 65 | 238 | 774 | — | ||||||||||||||||||||||
Total derivatives designated as hedging instruments | 70 | 1,006 | 854 | 163 | ||||||||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||||||||
Foreign currency contracts3 | 1,458 | 320 | 475 | 297 | ||||||||||||||||||||||
Interest rate contracts | 173 | 37 | 26 | 65 | ||||||||||||||||||||||
Equity contracts | — | 119 | 80 | 4 | ||||||||||||||||||||||
Total derivatives not designated as hedging instruments | 1,631 | 476 | 581 | 366 | ||||||||||||||||||||||
Total derivatives | $ | 1,701 | $ | 1,482 | $ | 1,435 | $ | 529 |
Jul 2, 2022 | ||||||||||||||||||||||||||||||||||||||
Gross Amounts Not Offset in the Balance Sheet | ||||||||||||||||||||||||||||||||||||||
(In Millions) | Gross Amounts Recognized | Gross Amounts Offset in the Balance Sheet | Net Amounts Presented in the Balance Sheet | Financial Instruments | Cash and Non-Cash Collateral Received or Pledged | Net Amount | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||
Derivative assets subject to master netting arrangements | $ | 1,651 | $ | — | $ | 1,651 | $ | (595) | $ | (1,044) | $ | 12 | ||||||||||||||||||||||||||
Reverse repurchase agreements | 2,400 | — | 2,400 | — | (2,400) | — | ||||||||||||||||||||||||||||||||
Total assets | 4,051 | — | 4,051 | (595) | (3,444) | 12 | ||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||
Derivative liabilities subject to master netting arrangements | 1,373 | — | 1,373 | (595) | (759) | 19 | ||||||||||||||||||||||||||||||||
Total liabilities | $ | 1,373 | $ | — | $ | 1,373 | $ | (595) | $ | (759) | $ | 19 |
Financial Statements | Notes to Financial Statements | 16 |
Dec 25, 2021 | ||||||||||||||||||||||||||||||||||||||
Gross Amounts Not Offset in the Balance Sheet | ||||||||||||||||||||||||||||||||||||||
(In Millions) | Gross Amounts Recognized | Gross Amounts Offset in the Balance Sheet | Net Amounts Presented in the Balance Sheet | Financial Instruments | Cash and Non-Cash Collateral Received or Pledged | Net Amount | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||||||||
Derivative assets subject to master netting arrangements | $ | 1,427 | $ | — | $ | 1,427 | $ | (332) | $ | (986) | $ | 109 | ||||||||||||||||||||||||||
Reverse repurchase agreements | 1,595 | — | 1,595 | — | (1,595) | — | ||||||||||||||||||||||||||||||||
Total assets | 3,022 | — | 3,022 | (332) | (2,581) | 109 | ||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||
Derivative liabilities subject to master netting arrangements | 392 | — | 392 | (332) | (60) | — | ||||||||||||||||||||||||||||||||
Total liabilities | $ | 392 | $ | — | $ | 392 | $ | (332) | $ | (60) | $ | — |
Gains (Losses) Recognized in Consolidated Condensed Statements of Income on Derivatives | ||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions) | Jul 2, 2022 | Jun 26, 2021 | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||||||||||||
Interest rate contracts | $ | (236) | $ | 35 | $ | (947) | $ | (477) | ||||||||||||||||||
Hedged items | 236 | (35) | 947 | 477 | ||||||||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — |
Financial Statements | Notes to Financial Statements | 17 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
(In Millions) | Location of Gains (Losses) Recognized in Income on Derivatives | Jul 2, 2022 | Jun 26, 2021 | Jul 2, 2022 | Jun 26, 2021 | |||||||||||||||||||||||||||
Foreign currency contracts | Interest and other, net | $ | 1,023 | $ | (22) | $ | 1,181 | $ | 212 | |||||||||||||||||||||||
Interest rate contracts | Interest and other, net | 31 | (2) | 125 | 21 | |||||||||||||||||||||||||||
Other | Various | (331) | 140 | (465) | 195 | |||||||||||||||||||||||||||
Total | $ | 723 | $ | 116 | $ | 841 | $ | 428 |
Note 12 : | Contingencies |
Financial Statements | Notes to Financial Statements | 18 |
Financial Statements | Notes to Financial Statements | 19 |
Financial Statements | Notes to Financial Statements | 20 |
Financial Statements | Notes to Financial Statements | 21 |
Financial Statements | Notes to Financial Statements | 22 |
Key Terms | |||||
Term | Definition | |||||||||||||
5G | The fifth-gen mobile network, which is expected to bring dramatic improvements in network speeds and latency, and which we view as a transformative technology and opportunity for many industries | |||||||||||||
ADAS | Advanced driver-assistance systems | |||||||||||||
AI | Artificial intelligence | |||||||||||||
ASP | Average selling price | |||||||||||||
AXG | Advanced Computing and Graphics operating segment | |||||||||||||
CCG | Client Computing Group operating segment | |||||||||||||
CODM | Chief operating decision maker | |||||||||||||
COVID-19 | The infectious disease caused by the most recently discovered coronavirus (aka SARS-CoV-2), which was declared a global pandemic by the World Health Organization | |||||||||||||
CPU | Processor or central processing unit | |||||||||||||
CXL standard | Compute Express Link standard | |||||||||||||
DCAI | Data Center and AI operating segment | |||||||||||||
EC | European Commission | |||||||||||||
Form 10-K | Annual Report on Form 10-K | |||||||||||||
Form 10-Q | Quarterly Report on Form 10-Q | |||||||||||||
FPGA | Field-programmable gate array | |||||||||||||
GPU | Graphics processing unit | |||||||||||||
IDM | Integrated device manufacturer, a semiconductor company that both designs and builds chips | |||||||||||||
HPC-AI | High performance computing for AI | |||||||||||||
IFS | Intel Foundry Services operating segment | |||||||||||||
IP | Intellectual property | |||||||||||||
LIBOR | London Inter-Bank Offered Rate, an interest rate average calculated from estimates by the leading banks in London | |||||||||||||
MBMW | Multi-Beam Mask Writer | |||||||||||||
MD&A | Management's Discussion & Analysis | |||||||||||||
MG&A | Marketing, general and administrative | |||||||||||||
NAND | NAND flash memory | |||||||||||||
NEX | Networking and Edge operating segment | |||||||||||||
nm | Nanometer | |||||||||||||
ODM | Original design manufacturer | |||||||||||||
OEM | Original equipment manufacturer | |||||||||||||
R&D | Research and development | |||||||||||||
RSU | Restricted stock unit | |||||||||||||
SEC | U.S. Securities and Exchange Commission | |||||||||||||
SoC | A System-on-a-Chip, which integrates most of the components of a computer or other electronic system into a single silicon chip. We offer a range of SoC products in CCG, DCAI, and NEX. In our DCAI and NEX businesses, we offer SoCs across many market segments for a variety of applications, including products targeted for 5G base stations and network infrastructure | |||||||||||||
SOFR | Secured Overnight Financing Rate, a benchmark interest rate for dollar-denominated derivatives and loans, replacing LIBOR | |||||||||||||
SSD | Solid-state drive | |||||||||||||
TAM | Total addressable market | |||||||||||||
Tax Reform | U.S. Tax Cuts and Jobs Act | |||||||||||||
U.S. GAAP | U.S. Generally Accepted Accounting Principles | |||||||||||||
VLSI | VLSI Technology LLC | |||||||||||||
Financial Statements | Notes to Financial Statements | 23 |
Management's Discussion and Analysis | |||||
CCG Revenue $B | CCG Operating Income $B |
■ Notebook | ■ Desktop | ■ Other |
Revenue Summary |
Q2 2022 vs. Q2 2021 |
YTD 2022 vs. YTD 2021 |
MD&A | 24 |
Operating Income Summary |
(In Millions) | ||||||||
$ | 1,085 | Q2 2022 CCG Operating Income | ||||||
(1,375) | Lower gross margin from revenue, primarily driven by notebook and desktop | |||||||
(540) | Higher desktop and notebook unit cost primarily from increased mix of Intel 7 products | |||||||
(435) | Higher operating expenses driven by increased investments in leadership products | |||||||
(420) | Higher period charges primarily driven by inventory reserves taken in Q2 2022 | |||||||
(180) | Higher period charges primarily associated with the ramp up of Intel 4 | |||||||
6 | Other | |||||||
$ | 4,029 | Q2 2021 CCG Operating Income | ||||||
$ | 3,912 | YTD 2022 CCG Operating Income | ||||||
(1,565) | Lower gross margin from revenue, primarily driven by notebook and desktop | |||||||
(1,225) | Higher desktop and notebook unit cost primarily from increased mix of Intel 7 products | |||||||
(790) | Higher operating expenses driven by increased investments in leadership products | |||||||
(555) | Higher period charges primarily driven by inventory reserves taken in 2022 | |||||||
(355) | Higher period charges primarily associated with the ramp up of Intel 4 | |||||||
85 | Other | |||||||
$ | 8,317 | YTD 2021 CCG Operating Income |
MD&A | 25 |
DCAI Revenue $B | DCAI Operating Income $B |
Revenue Summary |
Q2 2022 vs. Q2 2021 |
YTD 2022 vs. YTD 2021 |
MD&A | 26 |
Operating Income Summary |
(In Millions) | ||||||||
$ | 214 | Q2 2022 DCAI Operating Income | ||||||
(890) | Lower gross margin from Server revenue | |||||||
(400) | Higher period charges primarily associated with the ramp up of Intel 4 | |||||||
(320) | Higher operating expenses driven by increased investments in leadership products | |||||||
(275) | Higher period charges primarily driven by inventory reserves taken on non-qualified products | |||||||
(175) | Higher Server unit cost from increased mix of 10nm SuperFin and Intel 7 products | |||||||
100 | Higher gross margin from DCAI other product revenue | |||||||
84 | Other | |||||||
$ | 2,090 | Q2 2021 DCAI Operating Income | ||||||
$ | 1,900 | YTD 2022 DCAI Operating Income | ||||||
(750) | Higher period charges primarily associated with the ramp up of Intel 4 | |||||||
(595) | Higher operating expenses driven by increased investments in leadership products | |||||||
(405) | Higher period charges driven by inventory reserves taken in 2022, including reserves on non-qualified products in Q2 2022 | |||||||
(270) | Higher Server unit cost from increased mix of 10nm SuperFin and Intel 7 products | |||||||
(115) | Lower gross margin from Server revenue | |||||||
215 | Higher gross margin from DCAI other product revenue | |||||||
24 | Other | |||||||
$ | 3,796 | YTD 2021 DCAI Operating Income |
MD&A | 27 |
NEX Revenue $B | NEX Operating Income $B |
Revenue Summary |
Q2 2022 vs. Q2 2021 |
YTD 2022 vs. YTD 2021 |
Operating Income Summary |
(In Millions) | ||||||||
$ | 241 | Q2 2022 NEX Operating Income | ||||||
(185) | Lower gross margin from Network Xeon revenue primarily driven by decreased demand | |||||||
(150) | Higher operating expenses driven by increased investments in leadership products | |||||||
(125) | Higher period charges primarily associated with ramp up of Intel 4 | |||||||
(120) | Higher period charges driven by reserves taken in Q2'22 and lack of sell-through of reserves compared to Q2 2021 | |||||||
160 | Lower unit cost primarily from increased mix of 10nm SuperFin products | |||||||
56 | Other | |||||||
$ | 605 | Q2 2021 NEX Operating Income | ||||||
$ | 607 | YTD 2022 NEX Operating Income | ||||||
(255) | Higher operating expenses driven by increased investments in leadership products | |||||||
(215) | Higher period charges primarily associated with the ramp up of Intel 4 | |||||||
(175) | Higher period charges driven by reserves taken in 2022 and lack of sell-through of reserves compared to 2021 | |||||||
290 | Lower unit cost primarily from increased mix of 10nm SuperFin products | |||||||
175 | Higher gross margin from NEX revenue, primarily driven by demand for the edge and Network Xeon products | |||||||
(61) | Other | |||||||
$ | 848 | YTD 2021 NEX Operating Income |
MD&A | 28 |
AXG Revenue $B | AXG Operating Income (Loss) $B |
Revenue and Operating Income (Loss) Summary |
Q2 2022 vs. Q2 2021 |
YTD 2022 vs. YTD 2021 |
MD&A | 29 |
Mobileye Revenue $B | Mobileye Operating Income $B |
Revenue and Operating Income Summary |
Q2 2022 vs. Q2 2021 |
YTD 2022 vs. YTD 2021 |
MD&A | 30 |
IFS Revenue $B | IFS Operating Income (Loss) $B |
Revenue and Operating Income (Loss) Summary |
Q2 2022 vs. Q2 2021 |
YTD 2022 vs. YTD 2021 |
MD&A | 31 |
Consolidated Results of Operations | |||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | |||||||||||||||||||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | Amount | % of Net Revenue | Amount | % of Net Revenue | Amount | % of Net Revenue | Amount | % of Net Revenue | ||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 15,321 | 100.0 | % | $ | 19,631 | 100.0 | % | $ | 33,674 | 100.0 | % | $ | 39,304 | 100.0 | % | ||||||||||||||||||||||||||||||||||
Cost of sales | 9,734 | 63.5 | % | 8,425 | 42.9 | % | 18,843 | 56.0 | % | 17,244 | 43.9 | % | ||||||||||||||||||||||||||||||||||||||
Gross margin | 5,587 | 36.5 | % | 11,206 | 57.1 | % | 14,831 | 44.0 | % | 22,060 | 56.1 | % | ||||||||||||||||||||||||||||||||||||||
Research and development | 4,400 | 28.7 | % | 3,715 | 18.9 | % | 8,762 | 26.0 | % | 7,338 | 18.7 | % | ||||||||||||||||||||||||||||||||||||||
Marketing, general and administrative | 1,800 | 11.7 | % | 1,599 | 8.1 | % | 3,552 | 10.5 | % | 2,927 | 7.4 | % | ||||||||||||||||||||||||||||||||||||||
Restructuring and other charges | 87 | 0.6 | % | 346 | 1.8 | % | (1,124) | (3.3) | % | 2,555 | 6.5 | % | ||||||||||||||||||||||||||||||||||||||
Operating income (loss) | (700) | (4.6) | % | 5,546 | 28.3 | % | 3,641 | 10.8 | % | 9,240 | 23.5 | % | ||||||||||||||||||||||||||||||||||||||
Gains (losses) on equity investments, net | (90) | (0.6) | % | 295 | 1.5 | % | 4,233 | 12.6 | % | 663 | 1.7 | % | ||||||||||||||||||||||||||||||||||||||
Interest and other, net | (119) | (0.8) | % | (96) | (0.5) | % | 878 | 2.6 | % | (252) | (0.6) | % | ||||||||||||||||||||||||||||||||||||||
Income (loss) before taxes | (909) | (5.9) | % | 5,745 | 29.3 | % | 8,752 | 26.0 | % | 9,651 | 24.6 | % | ||||||||||||||||||||||||||||||||||||||
Provision for (benefit from) taxes | (455) | (3.0) | % | 684 | 3.5 | % | 1,093 | 3.2 | % | 1,229 | 3.1 | % | ||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (454) | (3.0) | % | $ | 5,061 | 25.8 | % | $ | 7,659 | 22.7 | % | $ | 8,422 | 21.4 | % | ||||||||||||||||||||||||||||||||||
Earnings (loss) per share—diluted | $ | (0.11) | $ | 1.24 | $ | 1.86 | $ | 2.06 |
MD&A | 32 |
Segment Revenue Walk $B | |||||
MD&A | 33 |
Gross Margin $B | ||
(In Millions) | ||||||||
$ | 5,587 | Q2 2022 Gross Margin | ||||||
(1,375) | Lower gross margin from CCG revenue, driven by notebook and desktop revenue | |||||||
(1,075) | Lower gross margin from Server and Network Xeon revenue | |||||||
(1,030) | Higher period charges primarily driven by inventory reserves taken in Q2 2022, including reserves on non-qualified products | |||||||
(705) | Higher period charges primarily associated with the ramp up of Intel 4 | |||||||
(559) | Optane inventory impairment related to winding down our Intel Optane memory business | |||||||
(555) | Higher unit cost primarily from increased mix of 10nm SuperFin and Intel 7 products | |||||||
(546) | Lower gross margin related to the divested NAND memory business | |||||||
(205) | Corporate charges from patent settlement | |||||||
105 | Higher gross margin from DCAI other product revenue | |||||||
95 | Lower incentive-based cash compensation charges | |||||||
231 | Other | |||||||
$ | 11,206 | Q2 2021 Gross Margin | ||||||
$ | 14,831 | YTD 2022 Gross Margin | ||||||
(1,565) | Lower gross margin from CCG revenue, primarily driven by notebook and desktop revenue | |||||||
(1,475) | Higher period charges primarily driven by inventory reserves taken in 2022, including reserves on non-qualified products in Q2 2022 | |||||||
(1,320) | Higher period charges primarily associated with the ramp up of Intel 4 | |||||||
(1,205) | Higher unit cost primarily from increased mix of 10nm SuperFin and Intel 7 products | |||||||
(855) | Lower gross margin related to the divested NAND memory business | |||||||
(584) | Lack of revenue recognized in Q1 2021 from a prepaid customer supply contract | |||||||
(559) | Optane inventory impairment related to the wind down of our Intel Optane memory business | |||||||
(205) | Corporate charges from patent settlement | |||||||
285 | Higher gross margin primarily from DCAI other product revenue | |||||||
60 | Higher gross margin from Server and Network Xeon revenue | |||||||
194 | Other | |||||||
$ | 22,060 | YTD 2021 Gross Margin |
MD&A | 34 |
Research and Development $B | Marketing, General, and Administrative $B | ||||||||||
Research and Development |
R&D increased by $685 million, or 18.4%, driven by the following: | |||||
+ | Investments in our process technology | ||||
+ | Investments in our businesses to drive strategic growth | ||||
+ | Increase in corporate spending | ||||
- | Incentive-based cash compensation | ||||
R&D spending increased by $1.4 billion, or 19.4%, driven by the following: | |||||
+ | Investments in our process technology | ||||
+ | Investments in our businesses to drive strategic growth | ||||
+ | Increase in corporate spending | ||||
- | Incentive-based cash compensation | ||||
Marketing, General, and Administrative |
MG&A increased by $201 million, or 12.6%, driven by the following: | |||||
+ | Increase in corporate spending | ||||
- | Incentive-based cash compensation | ||||
MG&A spending increased by $625 million, or 21.4%, driven by the following: | |||||
+ | Increase in corporate spending | ||||
- | Incentive-based cash compensation | ||||
MD&A | 35 |
(In Millions) | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | ||||||||||||||||||||||
Ongoing mark-to-market adjustments on marketable equity securities | $ | (209) | $ | 138 | $ | (639) | $ | (153) | ||||||||||||||||||
Observable price adjustments on non-marketable equity securities | 135 | 72 | 206 | 623 | ||||||||||||||||||||||
Impairment charges | (44) | (35) | (67) | (73) | ||||||||||||||||||||||
Sale of equity investments and other | 28 | 120 | 4,733 | 266 | ||||||||||||||||||||||
Gains (losses) on equity investments, net | $ | (90) | $ | 295 | $ | 4,233 | $ | 663 | ||||||||||||||||||
Interest and other, net | $ | (119) | $ | (96) | $ | 878 | $ | (252) |
(In Millions) | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | |||||||||||||||||||||||||
Employee severance and benefit arrangements | $ | 38 | $ | 15 | $ | 43 | $ | 22 | |||||||||||||||||||||
Litigation charges and other | 13 | 49 | (1,203) | 2,251 | |||||||||||||||||||||||||
Asset impairment charges | 36 | 282 | 36 | 282 | |||||||||||||||||||||||||
Total restructuring and other charges | $ | 87 | $ | 346 | $ | (1,124) | $ | 2,555 |
(In Millions) | Q2 2022 | Q2 2021 | YTD 2022 | YTD 2021 | ||||||||||||||||||||||
Income (loss) before taxes | $ | (909) | $ | 5,745 | $ | 8,752 | $ | 9,651 | ||||||||||||||||||
Provision for (benefit from) taxes | $ | (455) | $ | 684 | $ | 1,093 | $ | 1,229 | ||||||||||||||||||
Effective tax rate | 50.1 | % | 11.9 | % | 12.5 | % | 12.7 | % |
MD&A | 36 |
(In Millions) | Jul 2, 2022 | Dec 25, 2021 | ||||||||||||
Cash and cash equivalents | $ | 4,390 | $ | 4,827 | ||||||||||
Short-term investments | 22,654 | 24,426 | ||||||||||||
Loans receivable and other | 498 | 240 | ||||||||||||
Total cash and investments1 | $ | 27,542 | $ | 29,493 | ||||||||||
Total debt | $ | 35,430 | $ | 38,101 |
Cash from Operations $B | Capital Expenditures $B | Cash to Stockholders $B |
■ Dividends ■ Dividends ■ Buybacks |
Six Months Ended | ||||||||||||||
(In Millions) | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||
Net cash provided by operating activities | $ | 6,700 | $ | 14,149 | ||||||||||
Net cash used for investing activities | (2,472) | (8,914) | ||||||||||||
Net cash provided by (used for) financing activities | (4,665) | (6,354) | ||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | (437) | $ | (1,119) |
MD&A | 37 |
MD&A | 38 |
Non-GAAP adjustment or measure | Definition | Usefulness to management and investors | ||||||
NAND memory business | We completed the first closing of the divestiture of our NAND memory business to SK hynix on December 29, 2021 and fully deconsolidated our ongoing interests in the NAND OpCo Business in the first quarter of 2022. | We exclude the impact of our NAND memory business in certain non-GAAP measures. While the second closing of the sale is still pending and subject to closing conditions, we deconsolidated this business in Q1 2022 and management does not view the historical results of the business as a part of our core operations. We believe these adjustments provide investors with a useful view, through the eyes of management, of our core business model and how management currently evaluates core operational performance. In making these adjustments, we have not made any changes to our methods for measuring and calculating revenue or other financial statement amounts. | ||||||
Acquisition-related adjustments | Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology, brands, and customer relationships acquired in connection with business combinations. Charges related to the amortization of these intangibles are recorded within both cost of sales and MG&A in our US GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years. | We exclude amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. These adjustments facilitate a useful evaluation of our current operating performance and comparison to our past operating performance and provide investors with additional means to evaluate cost and expense trends. | ||||||
Restructuring and other charges | Restructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges include periodic goodwill and asset impairments, pension charges, and costs associated with restructuring activity. | We exclude restructuring and other charges, including any adjustments to charges recorded in prior periods, for purposes of calculating certain non-GAAP measures because these costs do not reflect our core operating performance. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. | ||||||
Share-based compensation | Share-based compensation consists of charges related to our employee equity incentive plans. | We exclude charges related to share-based compensation for purposes of calculating certain non-GAAP measures because we believe these adjustments provide better comparability to peer company results and because these charges are not viewed by management as part of our core operating performance. We believe these adjustments provide investors with a useful view, through the eyes of management, of our core business model, how management currently evaluates core operational performance, and additional means to evaluate expense trends, including in comparison to other peer companies. |
MD&A | 39 |
Non-GAAP adjustment or measure | Definition | Usefulness to management and investors | ||||||
Patent settlement | A portion of the charge from our IP settlements represents a catch-up of cumulative amortization that would have been incurred for the right to use the related patents in prior periods. This charge related to prior periods is excluded from our non-GAAP results; amortization related to the right to use the patents in the current (and ongoing periods) is included. | We exclude the catch-up charge related to prior periods for purposes of calculating certain non-GAAP measures because this adjustment facilitates comparison to past operating results and provides a useful evaluation of our current operating performance. | ||||||
Optane inventory impairment | In Q2 2022, we initiated the winding down of our Intel Optane memory business. | We exclude these impairments for purposes of calculating certain non-GAAP measures because these charges do not reflect our current operating performance. This adjustment facilitates a useful evaluation of our current operating performance and comparisons to past operating results. | ||||||
(Gains) losses on equity investments, net | (Gains) losses on equity investments, net consists of ongoing mark-to-market adjustments on marketable equity securities, observable price adjustments on non-marketable equity securities, related impairment charges, and the sale of equity investments and other. | We exclude these non-operating earnings for better comparability between periods. The exclusion reflects how management evaluates the core operations of the business. | ||||||
Tax Reform | Adjustments for Tax Reform reflect the impact of a change in tax law from 2017 Tax Reform related to the capitalization of R&D costs. | We exclude the impacts of this 2022 change in U.S. tax treatment of R&D costs for purposes of calculating certain non-GAAP measures as we believe these adjustments facilitate a better evaluation of our current operating performance and comparison to past operating results. | ||||||
Adjusted free cash flow | We reference a non-GAAP financial measure of adjusted free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and quality of earnings. Adjusted free cash flow is operating cash flow adjusted for 1) additions to property, plant and equipment, net of proceeds from capital grants received, 2) payments on finance leases, and 3) proceeds from the McAfee equity sale. | This non-GAAP financial measure is helpful in understanding our capital requirements and sources of liquidity by providing an additional means to evaluate the cash flow trends of our business. Since the 2017 divestiture, McAfee equity distributions and sales have contributed to operating and free cash flow, and while the McAfee equity sale in Q1 2022 would typically be excluded from adjusted free cash flow as an equity sale, we believe including the sale proceeds in adjusted free cash flow facilitate a better, more consistent comparison to past presentations of liquidity. | ||||||
Total cash and investments | Total cash and investments is used by management when assessing our sources of liquidity, which includes cash and cash equivalents, short-term investments, and loans receivable and other. | This non-GAAP measure is helpful in understanding our capital resources and liquidity position. |
MD&A | 40 |
Three Months Ended | ||||||||||||||
(In Millions, Except Per Share Amounts) | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||
Net revenue | $ | 15,321 | $ | 19,631 | ||||||||||
NAND memory business | — | (1,098) | ||||||||||||
Non-GAAP net revenue | $ | 15,321 | $ | 18,533 | ||||||||||
Gross margin percentage | 36.5 | % | 57.1 | % | ||||||||||
Acquisition-related adjustments | 2.2 | % | 1.6 | % | ||||||||||
Share-based compensation | 1.2 | % | 0.5 | % | ||||||||||
Patent settlement | 1.3 | % | — | % | ||||||||||
Optane inventory impairment | 3.6 | % | — | % | ||||||||||
NAND memory business | — | % | 0.5 | % | ||||||||||
Non-GAAP gross margin percentage1 | 44.8 | % | 59.8 | % | ||||||||||
Earnings (loss) per share—diluted | $ | (0.11) | $ | 1.24 | ||||||||||
Acquisition-related adjustments | 0.09 | 0.09 | ||||||||||||
Restructuring and other charges | 0.02 | 0.08 | ||||||||||||
Share-based compensation | 0.22 | 0.15 | ||||||||||||
Patent settlement | 0.05 | — | ||||||||||||
Optane inventory impairment | 0.14 | — | ||||||||||||
(Gains) losses on equity investments, net | 0.02 | (0.07) | ||||||||||||
NAND memory business | — | (0.09) | ||||||||||||
Tax Reform | 0.01 | — | ||||||||||||
Income tax effects | (0.15) | (0.04) | ||||||||||||
Non-GAAP earnings per share—diluted | $ | 0.29 | $ | 1.36 |
Six Months Ended | ||||||||||||||
(In Millions) | Jul 2, 2022 | Jun 26, 2021 | ||||||||||||
Net cash provided by operating activities | $ | 6,700 | $ | 14,149 | ||||||||||
Net additions to property, plant and equipment1 | (11,793) | (7,481) | ||||||||||||
Payments on finance leases | (299) | — | ||||||||||||
Sale of equity investment | 4,561 | — | ||||||||||||
Adjusted free cash flow | $ | (831) | $ | 6,668 | ||||||||||
Net cash used for investing activities | $ | (2,472) | $ | (8,914) | ||||||||||
Net cash used for financing activities | $ | (4,665) | $ | (6,354) | ||||||||||
MD&A | 41 |
Other Key Information | |||||
Other Key Information | 42 |
Other Key Information | 43 |
Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith | ||||||||||||||||||||||||||||||||
3.1 | 8-K | 000-06217 | 3.1 | 5/22/2006 | ||||||||||||||||||||||||||||||||||
3.2 | 8-K | 000-06217 | 3.2 | 3/16/2021 | ||||||||||||||||||||||||||||||||||
10.1† | X | |||||||||||||||||||||||||||||||||||||
10.2† | X | |||||||||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||||||||
101 | Inline XBRL Document Set for the consolidated condensed financial statements and accompanying notes in Consolidated Condensed Financial Statements and Supplemental Details | X | ||||||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101 | X |
Other Key Information | 44 |
Item Number | Item | |||||||
Part I - Financial Information | ||||||||
Item 1. | Financial Statements | |||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations: | |||||||
Liquidity and capital resources | ||||||||
Results of operations | ||||||||
Critical accounting estimates | ||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | Page 42 | ||||||
Item 4. | Controls and Procedures | Page 42 | ||||||
Part II - Other Information | ||||||||
Item 1. | Legal Proceedings | |||||||
Item 1A. | Risk Factors | Page 42 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | Page 42 | ||||||
Item 3. | Defaults Upon Senior Securities | Not applicable | ||||||
Item 4. | Mine Safety Disclosures | Not applicable | ||||||
Item 5. | Other Information | |||||||
Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934 | Page 43 | |||||||
Item 6. | Exhibits | |||||||
Signatures | Page 46 |
Other Key Information | 45 |
INTEL CORPORATION (Registrant) | |||||||||||||||||
Date: | July 28, 2022 | By: | /s/ DAVID ZINSNER | ||||||||||||||
David Zinsner | |||||||||||||||||
Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||||||||||||||||
Date: | July 28, 2022 | By: | /s/ SCOTT GAWEL | ||||||||||||||
Scott Gawel | |||||||||||||||||
Corporate Vice President and Chief Accounting Officer (Principal Accounting Officer) |
46 |
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