Intel Reports Second-Quarter 2022 Financial Results

News Sum­ma­ry

▪Second-quar­ter GAAP reve­nue of $15.3 bil­li­on, down 22% year over year (YoY), and non-GAAP reve­nue of $15.3 bil­li­on, down 17% YoY.

▪Intel’s Cli­ent Com­pu­ting and Dat­a­cen­ter and AI Groups lar­ge­ly impac­ted by con­ti­nued adver­se mar­ket con­di­ti­ons; Net­work and Edge Group and Mobi­leye achie­ved record quar­ter­ly revenue.

▪Second-quar­ter GAAP ear­nings per share (EPS) was $(0.11); non-GAAP EPS was $0.29.

▪Revi­sing full-year reve­nue gui­d­ance to $65 bil­li­on to $68 bil­li­on; rei­tera­ting full-year adjus­ted free cash flow guidance.

SANTA CLARA, Calif., July28, 2022 –Intel Cor­po­ra­ti­on today repor­ted second-quar­ter 2022 finan­cial results.

This quarter’s results were below the stan­dards we have set for the com­pa­ny and our share­hol­ders. We must and will do bet­ter. The sud­den and rapid decli­ne in eco­no­mic acti­vi­ty was the lar­gest dri­ver, but the short­fall also reflects our own exe­cu­ti­on issu­es,” said Pat Gel­sin­ger, Intel CEO. “We are being respon­si­ve to chan­ging busi­ness con­di­ti­ons, working clo­se­ly with our cus­to­mers while remai­ning laser-focu­sed on our stra­te­gy and long-term oppor­tu­nities. We are embra­cing this chal­len­ging envi­ron­ment to acce­le­ra­te our transformation.”

We are taking necessa­ry actions to mana­ge through the cur­rent envi­ron­ment, inclu­ding acce­le­ra­ting the deploy­ment of our smart capi­tal stra­te­gy, while rei­tera­ting our pri­or full-year adjus­ted free cash flow gui­d­ance and retur­ning gross mar­gins to our tar­get ran­ge by the fourth quar­ter,” said David Zins­ner, Intel CFO. “We remain ful­ly com­mit­ted to our busi­ness stra­te­gy, the long-term finan­cial model com­mu­ni­ca­ted at our inves­tor mee­ting and a strong and gro­wing dividend.”

Q2 2022 Finan­cial Highlights

  GAAP   Non-GAAP
  Q2 2022 Q2 2021 vs. Q2 2021   Q2 2022 Q2 2021 vs. Q2 2021
Reve­nue ($B) $15.3 $19.6 down 22%   $15.3^ $18.5 down 17%
Gross Mar­gin 36.5% 57.1% down 20.6 ppt   44.8% 59.8% down 15.0 ppt
R&D and MG&A ($B) $6.2 $5.3 up 17%   $5.5 $4.6 up 18%
Ope­ra­ting Margin (4.6)% 28.3% down 32.8 ppt   9.2% 34.9% down 25.7 ppt
Tax Rate 50.1% 11.9% up 38.1 ppt   10.3% 12.7% down 2.3 ppt
Net Inco­me (loss) ($B) $(0.5) $5.1 down 109%   $1.2 $5.6 down 79%
Ear­nings (loss) Per Share $(0.11) $1.24 down 109%   $0.29 $1.36 down 79%

In the second quar­ter, the com­pa­ny gene­ra­ted $0.8 bil­li­on in cash from ope­ra­ti­ons and paid divi­dends of $1.5 billion.

Busi­ness Unit Summary

Intel pre­vious­ly announ­ced several orga­niz­a­tio­nal chan­ges to acce­le­ra­te its exe­cu­ti­on and inno­va­ti­on by allowing it to cap­tu­re growth in both lar­ge tra­di­tio­nal mar­kets and high-growth emer­ging mar­kets. This inclu­des the reor­ga­niz­a­ti­on of Intel’s busi­ness units to cap­tu­re this growth and pro­vi­de incre­a­sed trans­pa­ren­cy, focus and accoun­ta­bi­li­ty. As a result, the com­pa­ny modi­fied its seg­ment repor­ting to align to the pre­vious­ly announ­ced busi­ness reor­ga­niz­a­ti­on. All pri­or-peri­od seg­ment data has been retro­spec­tively adjus­ted to reflect the way the com­pa­ny intern­al­ly mana­ges and moni­tors ope­ra­ting seg­ment per­for­mance star­ting in fis­cal year 2022.

Key Busi­ness Unit Reve­nue and Trends   Q2 2022   vs. Q2 2021
Cli­ent Com­pu­ting Group (CCG)   $7.7 bil­li­on   down 25%
Dat­a­cen­ter and AI Group (DCAI)   $4.6 bil­li­on   down 16%
Net­work and Edge Group (NEX)   $2.3 bil­li­on   up 11%
Acce­le­ra­ted Com­pu­ting Sys­tems and Gra­phics Group (AXG)   $186 mil­li­on   up 5%
Mobi­leye   $460 mil­li­on   up 41%
Intel Found­ry Ser­vices (IFS)   $122 mil­li­on   down 54%

Busi­ness Highlights

 

▪Intel made signi­fi­cant pro­gress during the quar­ter on the ramp of Intel 7, now ship­ping in aggre­ga­te over 35 mil­li­on units. The com­pa­ny expects Intel 4 to be rea­dy for volu­me pro­duc­tion in the second half of this year and is at or ahead of sche­du­le for Intel 3, 20A and 18A.

IFS recent­ly announ­ced a stra­te­gic part­ners­hip with Media­Tek to manu­fac­tu­re chips for a ran­ge of smart edge devices using Intel pro­cess tech­no­lo­gies. During the quar­ter, Intel also laun­ched the IFS Cloud Alli­an­ce, the next pha­se of its acce­le­ra­tor eco­sys­tem pro­gram that will enab­le secu­re design envi­ron­ments in the cloud.

▪In the second quar­ter, CCG laun­ched the 12th genera­ti­on Intel®Core™ HX pro­ces­sors, the final pro­ducts in Intel’s Alder Lake fami­ly, which is now powe­ring more than 525 designs.

▪In DCAI, Intel expan­ded its sup­ply agree­ment with Meta, lever­aging its IDM advan­ta­ge so that Meta can meet its expan­ding com­pu­te needs.In the quar­ter, Intel agreed to expand its part­ners­hip with AWS to inclu­de the co-deve­lo­p­ment of mul­ti-genera­tio­nal data cen­ter solu­ti­ons opti­mi­zed for AWS infra­st­ruc­tu­re, and Intel as a stra­te­gic cus­to­mer for inter­nal workloads, inclu­ding EDA. Intel expects the­se cus­tom­In­tel®Xeon®solu­ti­ons will bring grea­ter levels of dif­fe­ren­tia­ti­on and a dura­ble TCO advan­ta­ge to AWS and its cus­to­mers, inclu­ding Intel.In addi­ti­on, NVIDIA announ­ced its selec­tion of Sap­phi­re Rapids for use in its new DGX-H100, which will cou­p­le Sap­phi­re Rapids with NVIDIA’s Hop­per GPUs to deli­ver unpre­ce­den­ted AI performance.

NEX achie­ved record reve­nue and began ship­ping Mount Evans, a 200G ASIC IPU, which was co-deve­lo­ped and is begin­ning to ramp with a lar­ge hypersca­ler. In addi­ti­on, the Intel®Xeon®D pro­ces­sor is ram­ping with lea­ding com­pa­nies across industries.

AXG ship­ped Intel’s first Intel®Block­sca­leTMASIC, and the Intel®ArcTMA‑series GPUs for lap­tops began ship­ping with OEMs, inclu­ding Sam­sung, Leno­vo, Acer, HP and Asus.

▪Mobi­leye achie­ved record reve­nue in the quar­ter with first half 2022 design wins genera­ting 37 mil­li­on units of pro­jec­ted future business.

Busi­ness Outlook

Intel’s gui­d­ance for the third quar­ter and full year inclu­des both GAAP and non-GAAP esti­ma­tes. Recon­ci­lia­ti­ons bet­ween GAAP and non-GAAP finan­cial mea­su­res are inclu­ded below.

Q3 2022   GAAP   Non-GAAP
    Appro­xi­mate­ly   Appro­xi­mate­ly
Reve­nue   $15–16 bil­li­on   $15–16 bil­li­on^
Gross Mar­gin   43.2%   46.5%
Tax rate   (17)%   13%
Ear­nings per share   $0.12   $0.35
Full-Year 2022   GAAP   Non-GAAP
    Appro­xi­mate­ly   Appro­xi­mate­ly
Reve­nue   $65–68 bil­li­on   $65–68 bil­li­on^
Gross Mar­gin   44.8%   49.0%
Tax rate   6%   8%
Ear­nings per share   $2.57   $2.30
Full-year net capi­tal spending   $27 bil­li­on   $23 bil­li­on
Adjus­ted free cash flow   N/A   ($1–2 bil­li­on)

Actu­al results may dif­fer mate­ri­al­ly from Intel’s Busi­ness Out­look as a result of, among other things, the fac­tors descri­bed under “For­ward-Loo­king State­ments” below.

Ear­nings Webcast

Intel will hold a public web­cast at 2 p.m. PDT today to dis­cuss the results for its second quar­ter of 2022. The live public web­cast can be acces­sed on Intel’s Inves­tor Rela­ti­ons web­site atwww.intc.com. The Q2’22 ear­nings pre­sen­ta­ti­on, web­cast replay and audio down­load will also be avail­ab­le on the site.

For­ward-Loo­king Statements

Intel’s Busi­ness Out­look and other state­ments in this release that refer to future plans and expec­ta­ti­ons are for­ward-loo­king state­ments that invol­ve a num­ber of risks and uncer­tain­ties. Words such as “acce­le­ra­te,” “achie­ve,” “adjust,” “allow,” “anti­ci­pa­tes,” “belie­ves,” “com­mit­ted,” “con­ti­nues,” “could,” “deli­ver,” “esti­ma­tes,” “expand,” “expects,” “focus,” “fore­cast,” “future,” “goals,” “grow,” “gui­d­ance,” “impro­ve,” “incre­a­sing,” “mana­ge,” “may,” “on-track,” “oppor­tu­ni­ty,” “out­look,” “plan,” “posi­tio­ned,” “poten­ti­al,” “pro­gress,” “ramp,” “refo­cus,” “regain,” “shar­pen,” “should,” “sup­port,” “will,” “would,” and varia­ti­ons of such words and simi­lar expres­si­ons are inten­ded to iden­ti­fy such for­ward-loo­king state­ments. State­ments that refer to or are based on esti­ma­tes, fore­casts, pro­jec­tions, uncer­tain events or assump­ti­ons, inclu­ding state­ments rela­ting to Intel’s stra­te­gy and its anti­ci­pa­ted bene­fits, inclu­ding our Febru­a­ry 2022 Inves­tor Day finan­cial model, Smart Capi­tal stra­te­gy, and updates to our repor­ting struc­tu­re; manu­fac­tu­ring expan­si­on, finan­cing, and invest­ment plans, inclu­ding the impacts of plans such as our announ­ced invest­ments in the U.S. and abroad; plans, cus­to­mers, and goals rela­ted to Intel’s found­ry busi­ness; pro­jec­ted cos­ts and yield trends; sup­ply expec­ta­ti­ons, inclu­ding regar­ding indus­try shor­ta­ges, cons­traints, limi­ta­ti­ons, pri­cing and suf­fi­ci­en­cy of future sup­ply; pen­ding tran­sac­tions, inclu­ding the pen­ding acqui­si­ti­on of Tower Semi­con­duc­tor Ltd.and the wind-down of our Intel® Opta­ne™ memo­ry busi­ness; the pro­po­sed initi­al public offe­ring of Mobi­leye; total address­able mar­ket (TAM) and mar­ket oppor­tu­ni­ty; busi­ness plans and finan­cial expec­ta­ti­ons; future macroeco­no­mic and geo­po­li­ti­cal con­di­ti­ons; future legis­la­ti­on, inclu­ding any expec­ta­ti­ons regar­ding anti­ci­pa­ted finan­cial and other bene­fits or incen­ti­ves the­re­un­der; tax- and accoun­ting-rela­ted expec­ta­ti­ons; future respon­ses to and effects of the COVID-19 pan­de­mic, inclu­ding manu­fac­tu­ring, trans­por­ta­ti­on, and ope­ra­tio­nal restric­tions or dis­rup­ti­ons, such as the recent port shut­downs in Chi­na; future pro­ducts, tech­no­lo­gy, and ser­vices, and the expec­ted regu­la­ti­on, avai­la­bi­li­ty, pro­duc­tion, and bene­fits of such pro­ducts, tech­no­lo­gy, and ser­vices, inclu­ding pro­duct ramps, manu­fac­tu­ring goals, plans, time­li­nes, and future pro­gress, future pro­cess nodes and tech­no­lo­gies inclu­ding Intel 20A, Rib­bon­FET, and Power­Via, pro­cess per­for­mance pari­ty and lea­ders­hip expec­ta­ti­ons, future pro­duct archi­tec­tures, Alder Lake, Mete­or Lake, Rapid Lake, Sap­phi­re Rapids, and future GPU and IPU pro­ducts; future busi­ness, social, and envi­ron­men­tal per­for­mance, goals, mea­su­res, and stra­te­gies; expec­ta­ti­ons regar­ding cus­to­mers, inclu­ding with respect to designs, wins, orders, and part­ners­hips; pro­jec­tions regar­ding com­pe­ti­tors; and anti­ci­pa­ted trends in our busi­nes­ses or the mar­kets rele­vant to them, inclu­ding with respect to future demand and indus­try growth, also iden­ti­fy for­ward-loo­king state­ments. All for­ward-loo­king state­ments inclu­ded in this release are based on management’s expec­ta­ti­ons as of the date of this release and, except as requi­red by law, Intel dis­c­laims any obli­ga­ti­on to update the­se for­ward-loo­king state­ments to reflect future events or cir­cum­s­tan­ces. Unless spe­ci­fi­cal­ly indi­ca­ted other­wi­se, the for­ward-loo­king state­ments in this release do not reflect the poten­ti­al impact of any dive­s­ti­tures, mer­gers, acqui­si­ti­ons, or other busi­ness com­bi­na­ti­ons that have not been com­ple­ted as of the date of this pre­sen­ta­ti­on. For­ward-loo­king state­ments invol­ve many risks and uncer­tain­ties that could cau­se actu­al results to dif­fer mate­ri­al­ly from tho­se expres­sed or implied in such state­ments. Intel pre­sent­ly con­si­ders the fol­lowing to be among the important fac­tors that can cau­se actu­al results to dif­fer mate­ri­al­ly from the company’s expectations.

▪Demand for Intel’s pro­ducts is high­ly varia­ble and can dif­fer from expec­ta­ti­ons due to fac­tors inclu­ding chan­ges in busi­ness and eco­no­mic con­di­ti­ons; cus­to­mer con­fi­dence or inco­me levels, and the levels of cus­to­mer capi­tal spen­ding; the intro­duc­tion, avai­la­bi­li­ty, and mar­ket accep­t­ance of Intel’s pro­ducts, pro­ducts used tog­e­ther with Intel pro­ducts, and com­pe­ti­tors’ pro­ducts; com­pe­ti­ti­ve and pri­cing pres­su­res, inclu­ding actions taken by com­pe­ti­tors; sup­ply cons­traints and other dis­rup­ti­ons affec­ting cus­to­mers; chan­ges in cus­to­mer order pat­terns or fore­casts inclu­ding order can­cel­la­ti­ons; chan­ges in cus­to­mer needs and emer­ging tech­no­lo­gy trends; and chan­ges in the level of inven­to­ry and com­pu­ting capa­ci­ty at customers.

▪Intel’s results can vary signi­fi­cant­ly from expec­ta­ti­ons based on capa­ci­ty uti­liz­a­ti­on; varia­ti­ons in inven­to­ry valua­ti­on, inclu­ding varia­ti­ons rela­ted to the timing of qua­li­fy­ing pro­ducts for sale; chan­ges in reve­nue levels; seg­ment pro­duct mix; the timing and exe­cu­ti­on of the manu­fac­tu­ring ramp and asso­cia­ted cos­ts; excess or obso­le­te inven­to­ry; chan­ges in unit cos­ts; defects or dis­rup­ti­ons in the sup­ply of mate­ri­als or resour­ces, inclu­ding as a result of ongo­ing indus­try shor­ta­ges of com­pon­ents and sub­stra­tes; sup­pliers exten­ding lead times, expe­ri­en­cing capa­ci­ty cons­traints, limi­t­ing or can­ce­ling sup­ply, allo­ca­ting sup­ply to other cus­to­mers inclu­ding com­pe­ti­tors, delay­ing or can­ce­ling deli­ve­ries or incre­a­sing pri­ces, or other sup­ply chain issu­es; pro­duct manu­fac­tu­ring quality/yields; and chan­ges in capi­tal requi­re­ments and invest­ment plans. Varia­ti­ons in results can also be cau­sed by the timing of Intel pro­duct intro­duc­tions and rela­ted expen­ses, inclu­ding mar­ke­ting pro­grams and Intel’s abi­li­ty to respond quick­ly to tech­no­lo­gi­cal deve­lo­p­ments and to intro­du­ce new pro­ducts or incor­po­ra­te new fea­tures into exis­ting pro­ducts, as well as decisi­ons to exit pro­duct lines or busi­nes­ses, which can result in rest­ruc­tu­ring and asset impairment charges.

▪Intel’s results can be affec­ted by adver­se eco­no­mic, social, poli­ti­cal, regu­la­to­ry, and physical/infrastructure con­di­ti­ons in coun­tries whe­re Intel, its cus­to­mers or its sup­pliers ope­ra­te, inclu­ding reces­si­on or slowing growth, mili­ta­ry con­flict and other secu­ri­ty risks, natu­ral dis­as­ters, infra­st­ruc­tu­re dis­rup­ti­ons, health con­cerns (inclu­ding the COVID-19 pan­de­mic), fluc­tua­tions in cur­ren­cy exchan­ge rates, infla­ti­on, inte­rest rate risks, sanc­tions and tariffs, poli­ti­cal dis­pu­tes, chan­ges in government grants and incen­ti­ves, and con­ti­nuing uncer­tain­ty regar­ding social, poli­ti­cal, immi­gra­ti­on, and tax and tra­de poli­ci­es in the U.S. and abroad. Results can also be affec­ted by the for­mal or infor­mal impo­si­ti­on by coun­tries of new or revi­sed export and/or import and doing-busi­ness regu­la­ti­ons, inclu­ding chan­ges or uncer­tain­ty rela­ted to the U.S. government enti­ty list and chan­ges in the abi­li­ty to obtain export licen­ses, which can be chan­ged without pri­or noti­ce. For examp­le, in respon­se to Russia’s war with Ukrai­ne, nume­rous coun­tries and orga­niz­a­ti­ons have impo­sed finan­cial and other sanc­tions and export con­trols against Rus­sia and Bela­rus, while busi­nes­ses, inclu­ding the Com­pa­ny, have limi­ted or sus­pen­ded Rus­si­an ope­ra­ti­ons. Rus­sia has like­wi­se impo­sed cur­ren­cy restric­tions and regu­la­ti­ons and may fur­ther take reta­lia­to­ry tra­de or other actions, inclu­ding the natio­na­liz­a­ti­on of for­eign businesses.

▪The COVID-19pan­de­mic has pre­vious­ly adver­se­ly affec­ted signi­fi­cant por­ti­ons of Intel’s busi­ness and could have a mate­ri­al adver­se effect on Intel’s finan­cial con­di­ti­on and results of ope­ra­ti­ons. The pan­de­mic has resul­ted in aut­ho­ri­ties impo­sing nume­rous mea­su­res to try to con­tain the virus, inclu­ding manu­fac­tu­ring, trans­por­ta­ti­on, and ope­ra­tio­nal restric­tions or dis­rup­ti­ons, such as the recent Shang­hai port shut­down. The­se mea­su­res have impac­ted and may fur­ther impact our work­for­ce and ope­ra­ti­ons, the ope­ra­ti­ons of our cus­to­mers, and tho­se of our respec­ti­ve ven­dors, sup­pliers, and part­ners. Restric­tions on our manu­fac­tu­ring or sup­port ope­ra­ti­ons or work­for­ce, or simi­lar limi­ta­ti­ons for our ven­dors and sup­pliers, can impact our abi­li­ty to meet cus­to­mer demand and could have a mate­ri­al adver­se effect on us. Restric­tions or dis­rup­ti­ons of trans­por­ta­ti­on, or dis­rup­ti­ons in our cus­to­mers’ ope­ra­ti­ons and sup­ply chains, may adver­se­ly affect our results of ope­ra­ti­ons. The pan­de­mi­chas cau­sed us to modi­fy our busi­ness prac­ti­ces. The­re is no cer­tain­ty that such mea­su­res will be suf­fi­ci­ent to miti­ga­te the risks posed by the virus, and ill­ness and work­for­ce dis­rup­ti­ons could lead to unavai­la­bi­li­ty of our key per­son­nel and harm our abi­li­ty to per­form cri­ti­cal func­tions. The pan­de­mic has signi­fi­cant­ly incre­a­sed eco­no­mic and demand uncer­tain­ty. Demand for our pro­ducts has been and could again be mate­ri­al­ly har­med in the future. The pan­de­mic could lead to incre­a­sed dis­rup­ti­on and vola­ti­li­ty in capi­tal mar­kets and credit mar­kets, which could adver­se­ly affect our liqui­di­ty and capi­tal resour­ces. The degree to which­CO­VID-19im­pacts our results will depend on future deve­lo­p­ments, which are high­ly uncer­tain. The impact of the pan­de­mic can also exa­cer­ba­te other risks dis­cus­sed in this section.

▪Intel ope­ra­tes in high­ly com­pe­ti­ti­ve indus­tries and its ope­ra­ti­ons have high cos­ts that are eit­her fixed or dif­fi­cult to redu­ce in the short term. In addi­ti­on, we have ent­e­red new are­as and intro­du­ced adja­cent pro­ducts, such as our inten­ti­on to beco­me a major pro­vi­der of found­ry ser­vices, and we face new sources of com­pe­ti­ti­on and uncer­tain mar­ket demand or accep­t­ance of our offe­rings with respect to the­se new are­as and pro­ducts, and they do not always grow as projected.

▪Intel’s expec­ted tax rate is based on cur­rent tax law, inclu­ding cur­rent inter­pre­ta­ti­ons of the Tax Cuts and Jobs Act of 2017 (TCJA), and cur­rent expec­ted inco­me and can be affec­ted by chan­ges in inter­pre­ta­ti­ons of TCJA and other laws; chan­ges in the volu­me and mix of pro­fits ear­ned and loca­ti­on of assets across juris­dic­tions with vary­ing tax rates; chan­ges in the esti­ma­tes of credits, bene­fits, and deduc­tions; the reso­lu­ti­on of issu­es ari­sing from tax audits with various tax aut­ho­ri­ties, inclu­ding pay­ment of inte­rest and pen­al­ties; and the abi­li­ty to rea­li­ze defer­red tax assets.

▪Intel’s results can be affec­ted by gains or los­ses from equi­ty secu­ri­ties and inte­rest and other, which can vary depen­ding on gains or los­ses on the chan­ge in fair value, sale, exchan­ge, or impairments of equi­ty and debt invest­ments, inte­rest rates, cash balan­ces, and chan­ges in fair value of deri­va­ti­ve instruments.

▪Pro­duct defects or erra­ta (devia­ti­ons from publis­hed spe­ci­fi­ca­ti­ons) can adver­se­ly impact our expen­ses, reve­nues, and reputation.

▪We or third par­ties regu­lar­ly iden­ti­fy secu­ri­ty vul­nera­bi­li­ties with respect to our pro­ces­sors and other pro­ducts as well as the ope­ra­ting sys­tems and workloads run­ning on them. Secu­ri­ty vul­nera­bi­li­ties and any limi­ta­ti­ons of, or adver­se effects resul­ting from, miti­ga­ti­on tech­ni­ques can adver­se­ly affect our results of ope­ra­ti­ons, finan­cial con­di­ti­on, cus­to­mer rela­ti­ons­hips, pro­spects, and repu­ta­ti­on in a num­ber of ways, any of which may be mate­ri­al, inclu­ding incur­ring signi­fi­cant cos­ts rela­ted to deve­lo­ping and deploy­ing updates and miti­ga­ti­ons, wri­ting down inven­to­ry value, a reduc­tion in the com­pe­ti­ti­ve­ness of our pro­ducts, defen­ding against pro­duct claims and liti­ga­ti­on, respon­ding to regu­la­to­ry inqui­ries or actions, paying dama­ges, addres­sing cus­to­mer satis­fac­tion con­si­de­ra­ti­ons, or taking other reme­di­al steps with respect to third par­ties. Adver­se publi­ci­ty about secu­ri­ty vul­nera­bi­li­ties or miti­ga­ti­ons could dama­ge our repu­ta­ti­on with cus­to­mers or users and redu­ce demand for our pro­ducts and services.

▪Cyber­se­cu­ri­ty inci­dents, whe­ther or not suc­cess­ful, can affect Intel’s results by causing us to incur signi­fi­cant cos­ts or dis­rup­t­ing our ope­ra­ti­ons or tho­se of our cus­to­mers and sup­pliers, and can result in repu­ta­tio­nal harm.

▪Intel’s results can be affec­ted by liti­ga­ti­on or regu­la­to­ry mat­ters invol­ving intel­lec­tu­al pro­per­ty, stock­hol­der, con­su­mer, anti­trust, com­mer­cial, dis­clo­sure, and other issu­es, as well as by the impact and timing of sett­le­ments and dis­pu­te reso­lu­ti­ons. For examp­le, in the first quar­ter of 2022, the Gene­ral Court in the Euro­pean Com­mis­si­on (EC) com­pe­ti­ti­on mat­ter annul­led the EC’s fin­dings against Intel regar­ding reba­tes, as well as the fine pre­vious­ly impo­sed on and paid by Intel. $1.2 bil­li­on was retur­ned to Intel in Febru­a­ry, and the EC has appealed this decisi­on to the Court of Justice.

▪Intel’s results can be affec­ted by the impact and timing of clo­sing of acqui­si­ti­ons, dive­s­ti­tures, and other signi­fi­cant tran­sac­tions, such as the pen­ding acqui­si­ti­on of Tower Semi­con­duc­tor Inc. and the pro­po­sed initi­al public offe­ring of Mobi­leye. In addi­ti­on, the­se tran­sac­tions do not always achie­ve our finan­cial or stra­te­gic objec­ti­ves and can dis­rupt our ongo­ing busi­ness and adver­se­ly impact our results of ope­ra­ti­ons. We may not rea­li­ze the expec­ted bene­fits of port­fo­lio decisi­ons due to nume­rous risks, inclu­ding unfa­vor­able pri­ces and terms; chan­ges in mar­ket con­di­ti­ons; limi­ta­ti­ons due to regu­la­to­ry or govern­men­tal appro­vals, con­trac­tu­al terms, or other con­di­ti­ons; and poten­ti­al con­ti­nued finan­cial obli­ga­ti­ons asso­cia­ted with such tran­sac­tions. Risks and uncer­tain­ties rela­ting to the sale of our NAND memo­ry busi­ness to SK hynix are descri­bed in our Form 10‑K filed with the SEC on Janu­a­ry 22, 2021.

Detail­ed infor­ma­ti­on regar­ding the­se and other fac­tors that could affect Intel’s busi­ness and results is inclu­ded in Intel’s SEC filings, inclu­ding the company’s most recent reports on Forms 10‑K and 10‑Q, par­ti­cu­lar­ly the “Risk Fac­tors” sec­tions of tho­se reports. Copies of the­se filings may be obtai­ned by visi­t­ing our Inves­tor Rela­ti­ons web­site atwww.intc.comor the SEC’s web­site atwww.sec.gov.

About Intel

Intel (Nasdaq: INTC) is an indus­try lea­der, crea­ting world-chan­ging tech­no­lo­gy that enab­les glo­bal pro­gress and enri­ches lives. Inspi­red by Moore’s Law, we con­ti­nuous­ly work to advan­ce the design and manu­fac­tu­ring of semi­con­duc­tors to help address our cus­to­mers’ grea­test chal­len­ges. By embed­ding intel­li­gence in the cloud, net­work, edge and every kind of com­pu­ting device, we unleash the poten­ti­al of data to trans­form busi­ness and socie­ty for the bet­ter. To learn more about Intel’s inno­va­tions, go tonewsroom.intel.comandintel.com.

© Intel Cor­po­ra­ti­on. Intel, the Intel logo, and other Intel marks are trade­marks of Intel Cor­po­ra­ti­on or its sub­si­dia­ries. Other names and brands may be clai­med as the pro­per­ty of others.

 

 

Intel Cor­po­ra­ti­on

Con­so­li­da­ted Con­den­sed State­ments of Inco­me and Other Information

    Three Mon­ths Ended
(In Mil­li­ons, Except Per Share Amounts; unaudited)   Jul 2, 2022   Jun 26, 2021
Net reve­nue   $ 15,321   $ 19,631
Cost of sales   9,734   8,425
Gross mar­gin   5,587   11,206
Rese­arch and development   4,400   3,715
Mar­ke­ting, gene­ral and administrative   1,800   1,599
Rest­ruc­tu­ring and other charges   87   346
Ope­ra­ting expenses   6,287   5,660
Ope­ra­ting inco­me (loss)   (700)   5,546
Gains (los­ses) on equi­ty invest­ments, net   (90)   295
Inte­rest and other, net   (119)   (96)
Inco­me (loss) befo­re taxes   (909)   5,745
Pro­vi­si­on for (bene­fit from) taxes   (455)   684
Net inco­me (loss)   $ (454)   $ 5,061
         
Ear­nings (loss) per share—basic   $ (0.11)   $ 1.25
Ear­nings (loss) per share—diluted   $ (0.11)   $ 1.24
         
Weigh­ted average shares of com­mon stock outstanding:        
Basic   4,100   4,049
Dilu­t­ed   4,100   4,084
    Three Mon­ths Ended
(In Mil­li­ons)   Jul 2, 2022   Jun 26, 2021
Ear­nings per share of com­mon stock information:        
Weigh­ted average shares of com­mon stock outstanding—basic   4,100   4,049
Dilu­ti­ve effect of employee equi­ty incen­ti­ve plans     35
Weigh­ted average shares of com­mon stock outstanding—diluted   4,100   4,084
         
Other infor­ma­ti­on:        
Employees (in thousands)   128.2   113.7

 

Intel Cor­po­ra­ti­on

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        
Raw mate­ri­als   1,587   1,441
Work in process   6,164   6,656
Finis­hed goods   4,423   2,679
    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   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        
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
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

Intel Cor­po­ra­ti­on

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:        
Repay­ment of debt   (1,688)   (500)
Pay­ments on finan­ce leases   (299)  
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

Intel Cor­po­ra­ti­on

Sup­ple­men­tal Ope­ra­ting Seg­ment Results

    Three Mon­ths Ended
(In Mil­li­ons)   Jul 2, 2022   Jun 26, 2021
Ope­ra­ting seg­ment revenue:        
Cli­ent Computing        
Desk­top   $ 2,289   $ 2,792
Note­book   4,751   6,734
Other   625   727
    7,665   10,253
         
Dat­a­cen­ter and AI   4,649   5,547
Net­work and Edge   2,333   2,105
Acce­le­ra­ted Com­pu­ting Sys­tems and Graphics   186   177
Mobi­leye   460   327
Intel Found­ry Services   122   264
All other   32   1,129
Total ope­ra­ting seg­ment revenue   $ 15,447   $ 19,802
         
Ope­ra­ting inco­me (loss):        
Cli­ent Computing   $ 1,085   $ 4,029
Dat­a­cen­ter and AI   214   2,090
Net­work and Edge   241   605
Acce­le­ra­ted Com­pu­ting Sys­tems and Graphics   (507)   (168)
Mobi­leye   190   133
Intel Found­ry Services   (155)   52
All other   (1,768)   (1,195)
Total ope­ra­ting inco­me (loss)   $ (700)   $ 5,546

The fol­lowing table pres­ents inter­seg­ment reve­nue befo­re eliminations:

Total ope­ra­ting seg­ment revenue   $ 15,447   $ 19,802
Less: Acce­le­ra­ted Com­pu­ting Sys­tems and Gra­phics inter­seg­ment revenue   (126)   (171)
Total net revenue   $ 15,321   $ 19,631

We deri­ve a sub­stan­ti­al majo­ri­ty of our reve­nue from our princi­pal pro­ducts that incor­po­ra­te various com­pon­ents and tech­no­lo­gies, inclu­ding a micro­pro­ces­sor and chip­set, a stand-alo­ne SoC, or a mul­ti­chip packa­ge, which is based on Intel’s architecture.

Reve­nue for our repor­ta­ble and non-repor­ta­ble ope­ra­ting seg­ments is pri­ma­ri­ly rela­ted to the fol­lowing pro­duct lines:

CCG inclu­des pro­ducts desi­gned for end-user form fac­tors, focu­sing on hig­her growth seg­ments of 2‑in‑1, thin-and-light, com­mer­cial and gaming, and gro­wing other pro­ducts such as con­nec­ti­vi­ty and graphics.

DCAI inclu­des a broad port­fo­lio of CPUs, domain spe­ci­fic acce­le­ra­tors, FPGAs and memo­ry, desi­gned to empower dat­a­cen­ter and hypersca­le solu­ti­ons for diver­se com­pu­ting needs.

NEX inclu­des pro­gramm­a­ble plat­forms and high-per­for­mance con­nec­ti­vi­ty and com­pu­te solu­ti­ons desi­gned for mar­ket seg­ments such as cloud net­wor­king, com­mu­ni­ca­ti­ons net­works, retail, indus­tri­al, health­ca­re, and vision.

AXG inclu­des CPUs for high per­for­mance com­pu­ting (HPC) and GPUs tar­ge­ted for a ran­ge of workloads and plat­forms from gaming and con­tent crea­ti­on to HPC and AI in the data center.

▪Mobi­leye inclu­des the deve­lo­p­ment and deploy­ment of advan­ced dri­ver assi­s­tance sys­tems (ADAS) and auto­no­mous dri­ving tech­no­lo­gies and solutions.

IFS is a ser­vices pro­vi­der offe­ring a com­bi­na­ti­on of lea­ding-edge pack­a­ging and pro­cess tech­no­lo­gy, world-class dif­fe­ren­tia­ted inter­nal IPs (ie: x86, gra­phics, AI), broad 3rd par­ty eco­sys­tem and sili­con design support.

We have sales and mar­ke­ting, manu­fac­tu­ring, engi­nee­ring, finan­ce, and admi­nis­tra­ti­on groups. Expen­ses for the­se groups are gene­ral­ly allo­ca­ted to the ope­ra­ting segments.

We have an “all other” cate­go­ry that inclu­des reve­nue, expen­ses, and char­ges such as:

▪his­to­ri­cal results of ope­ra­ti­ons from dive­s­ted businesses;

▪results of ope­ra­ti­ons of start-up busi­nes­ses that sup­port our initiatives;

▪amounts inclu­ded wit­hin rest­ruc­tu­ring and other charges;

▪employee bene­fits, com­pen­sa­ti­on, impairment char­ges, and other expen­ses not allo­ca­ted to the ope­ra­ting seg­ments (begin­ning the first quar­ter of 2022, this inclu­des all of our stock-based com­pen­sa­ti­on); and

▪acqui­si­ti­on-rela­ted cos­ts, inclu­ding amor­tiz­a­ti­on and any impairment of acqui­si­ti­on-rela­ted intan­gi­bles and goodwill.

Intel Cor­po­ra­ti­on

Explana­ti­on of Non-GAAP Measures

In addi­ti­on to dis­clo­sing finan­cial results in accordance with US GAAP, this docu­ment con­tains refe­ren­ces to the non-GAAP finan­cial mea­su­res below. We belie­ve the­se non-GAAP finan­cial mea­su­res pro­vi­de inves­tors with use­ful sup­ple­men­tal infor­ma­ti­on about our ope­ra­ting per­for­mance, enab­le com­pa­ri­son of finan­cial trends and results bet­ween peri­ods whe­re cer­tain items may vary inde­pen­dent of busi­ness per­for­mance, and allow for grea­ter trans­pa­ren­cy with respect to key metrics used by manage­ment in ope­ra­ting our busi­ness and mea­su­ring our per­for­mance. Cer­tain of the­se non-GAAP finan­cial mea­su­res are used in our per­for­mance-based RSUs and our annu­al cash bonus plan.

Our non-GAAP finan­cial mea­su­res reflect adjus­t­ments based on one or more of the fol­lowing items, as well as the rela­ted inco­me tax effects whe­re app­li­ca­ble. Inco­me tax effects have been cal­cu­la­ted using an appro­pria­te tax rate for each adjus­t­ment, as app­li­ca­ble. The­se non-GAAP finan­cial mea­su­res should not be con­si­de­red a sub­sti­tu­te for, or supe­ri­or to, finan­cial mea­su­res cal­cu­la­ted in accordance with US GAAP, and the finan­cial results cal­cu­la­ted in accordance with US GAAP and recon­ci­lia­ti­ons from the­se results should be care­ful­ly evaluated.

Non-GAAP adjus­t­ment or measure Defi­ni­ti­on Use­ful­ness to manage­ment and investors
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.
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) from divestiture Gains or los­ses are reco­gni­zed at the clo­se of a dive­s­ti­tu­re, or over a spe­ci­fied defer­ral peri­od when defer­red con­si­de­ra­ti­on is recei­ved at the time of clo­sing. Based on our ongo­ing obli­ga­ti­on under the NAND wafer manu­fac­tu­ring and sale agree­ment ent­e­red into in con­nec­tion with the first clo­sing of the sale of our NAND memo­ry busi­ness on Decem­ber 29, 2021, a por­ti­on of the initi­al clo­sing con­si­de­ra­ti­on was defer­red and will be reco­gni­zed bet­ween first and second closing. We exclu­de gains or los­ses resul­ting from dive­s­ti­tures for pur­po­ses of cal­cu­la­ting cer­tain non-GAAP mea­su­res becau­se they do not reflect our cur­rent ope­ra­ting per­for­mance. The­se adjus­t­ments faci­li­ta­te 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.
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.
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 and part­ner con­tri­bu­ti­ons, 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.

Intel Cor­po­ra­ti­on

Sup­ple­men­tal Recon­ci­lia­ti­ons of GAAP Actu­als to Non-GAAP Actuals

Set forth below are recon­ci­lia­ti­ons of the non-GAAP finan­cial mea­su­re to the most direct­ly com­pa­ra­ble U.S. GAAP finan­cial mea­su­re. The­se non-GAAP finan­cial mea­su­res should not be con­si­de­red a sub­sti­tu­te for, or supe­ri­or to, finan­cial mea­su­res cal­cu­la­ted in accordance with U.S. GAAP, and the recon­ci­lia­ti­ons from U.S. GAAP to Non-GAAP actu­als should be care­ful­ly eva­lua­ted. Plea­se refer to “Explana­ti­on of Non-GAAP Mea­su­res” in this docu­ment for a detail­ed explana­ti­on of the adjus­t­ments made to the com­pa­ra­ble U.S. GAAP mea­su­res, the ways manage­ment uses the non-GAAP mea­su­res, and the rea­sons why manage­ment belie­ves the non-GAAP mea­su­res pro­vi­de use­ful infor­ma­ti­on for investors.

    Three Mon­ths Ended
(In Mil­li­ons, Except Per Share Amounts)   Jul 2, 2022   Jun 26, 2021
GAAP net revenue   $ 15,321   $ 19,631
NAND memo­ry business     (1,098)
Non-GAAP net revenue   $ 15,321   $ 18,533
GAAP gross margin   $ 5,587   $ 11,206
Acqui­si­ti­on-rela­ted adjustments   329   314
Share-based com­pen­sa­ti­on   188   106
Patent sett­le­ment   204  
Opta­ne inven­to­ry impairment   559  
NAND memo­ry business     (544)
Non-GAAP gross margin   $ 6,867   $ 11,082
GAAP 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 %
GAAP R&D and MG&A   $ 6,200   $ 5,314
Acqui­si­ti­on-rela­ted adjustments   (48)   (52)
Share-based com­pen­sa­ti­on   (702)   (513)
NAND memo­ry business     (142)
Non-GAAP R&D and MG&A   $ 5,450   $ 4,607
GAAP ope­ra­ting inco­me (loss)   $ (700)   $ 5,546
Acqui­si­ti­on-rela­ted adjustments   377   366
Rest­ruc­tu­ring and other charges   87   346
Share-based com­pen­sa­ti­on   890   619
Patent sett­le­ment   204  
Opta­ne inven­to­ry impairment   559  
NAND memo­ry business     (402)
Non-GAAP ope­ra­ting income   $ 1,417   $ 6,475
GAAP ope­ra­ting margin   (4.6) %   28.3 %
Acqui­si­ti­on-rela­ted adjustments   2.5 %   1.9 %
Rest­ruc­tu­ring and other charges   0.6 %   1.8 %
Share-based com­pen­sa­ti­on   5.8 %   3.2 %
Patent sett­le­ment   1.3 %   — %
Opta­ne inven­to­ry impairment   3.6 %   — %
NAND memo­ry business   — %   (0.3) %
Non-GAAP ope­ra­ting mar­gin1   9.2 %   34.9 %
1Our recon­ci­lia­ti­ons of GAAP to non-GAAP pri­or year gross mar­gin and ope­ra­ting mar­gin per­cen­ta­ge reflect the exclu­si­on of our NAND memo­ry busi­ness from net revenue.
GAAP tax rate   50.1 %   11.9 %
Tax Reform   (2.5) %   — %
Inco­me tax effects   (37.3) %   0.8 %
Non-GAAP tax rate   10.3 %   12.7 %
         
(In Mil­li­ons, Except Per Share Amounts)   Jul 2, 2022   Jun 26, 2021
GAAP net inco­me (loss)   $ (454)   $ 5,061
Acqui­si­ti­on-rela­ted adjustments   377   366
Rest­ruc­tu­ring and other charges   87   346
Share-based com­pen­sa­ti­on   890   619
Patent sett­le­ment   204  
Opta­ne inven­to­ry impairment   559  
(Gains) los­ses from divestiture   19  
(Gains) los­ses on equi­ty invest­ments, net   90   (295)
NAND memo­ry business     (402)
Tax Reform   33  
Inco­me tax effects   (624)   (124)
Non-GAAP net income   $ 1,181   $ 5,571
 
GAAP 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 from divestiture    
(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
    Three Mon­ths Ended
(In Mil­li­ons)   Jul 2, 2022
GAAP cash from operations   $ 809
Net addi­ti­ons to pro­per­ty, plant and equip­ment1   (7,190)
Adjus­ted free cash flow   $ (6,381)
GAAP cash pro­vi­ded by inves­ting activities   $ 168
GAAP cash used for finan­cing activities   $ (2,802)

1The cal­cu­la­ti­on of adjus­ted free cash flow inclu­des addi­ti­ons to pro­per­ty, plant and equip­ment net of pro­ceeds from capi­tal grants.

Intel Cor­po­ra­ti­on

Sup­ple­men­tal Recon­ci­lia­ti­ons of GAAP Out­look to Non-GAAP Outlook

Set forth below are recon­ci­lia­ti­ons of the non-GAAP finan­cial mea­su­re to the most direct­ly com­pa­ra­ble U.S. GAAP finan­cial mea­su­re. The­se non-GAAP finan­cial mea­su­res should not be con­si­de­red a sub­sti­tu­te for, or supe­ri­or to, finan­cial mea­su­res cal­cu­la­ted in accordance with U.S. GAAP, and the finan­cial out­look pre­pa­red in accordance with U.S. GAAP and the recon­ci­lia­ti­ons from this Busi­ness Out­look should be care­ful­ly evaluated.

Plea­se refer to “Explana­ti­on of Non-GAAP Mea­su­res” in this docu­ment for a detail­ed explana­ti­on of the adjus­t­ments made to the com­pa­ra­ble U.S. GAAP mea­su­res, the ways manage­ment uses the non-GAAP mea­su­res, and the rea­sons why manage­ment belie­ves the non-GAAP mea­su­res pro­vi­de use­ful infor­ma­ti­on for investors.

(In Bil­li­ons, Except Per Share Amounts)   Q3 2022 Outlook   Full-Year 2022
    Appro­xi­mate­ly   Appro­xi­mate­ly
GAAP gross margin   43.2 %   44.8 %
Amor­tiz­a­ti­on of acqui­si­ti­on-rela­ted intan­gi­ble assets   2.1 %   2.0 %
Share-based com­pen­sa­ti­on   1.2 %   1.1 %
Patent sett­le­ment   — %   0.3 %
Opta­ne inven­to­ry impairment   — %   0.8 %
Non-GAAP gross margin   46.5 %   49.0 %
         
GAAP tax rate   (17) %   6 %
Tax reform   11 %   9 %
Inco­me tax effects   19 %   (7) %
Non-GAAP tax rate   13 %   8 %
         
GAAP ear­nings (loss) per share—diluted   $ 0.12   $ 2.57
Acqui­si­ti­on-rela­ted adjustments   0.09   0.37
Rest­ruc­tu­ring and other charges   0.03   (0.23)
Share-based com­pen­sa­ti­on   0.20   0.79
Patent sett­le­ment     0.05
Opta­ne inven­to­ry impairment     0.14
(Gains) los­ses from divestiture   (0.01)   (0.30)
(Gains) los­ses on equi­ty invest­ments, net   (0.01)   (1.05)
Tax Reform   (0.03)   (0.17)
Inco­me tax effects   (0.04)   0.13
Non-GAAP ear­nings per share—diluted   $ 0.35   $ 2.30

Adjus­ted Free Cash Flow is pro­vi­ded on a non-GAAP basis. We are unab­le to pro­vi­de a full recon­ci­lia­ti­on of this mea­su­re to the cor­re­spon­ding GAAP mea­su­re without unre­a­son­ab­le efforts, as the amount and timing of rela­ted adjus­t­ments on a long-term basis are sub­ject to con­si­derable uncer­tain­ty, depend on various fac­tors, and could be mate­ri­al to our results com­pu­ted in accordance with GAAP. We belie­ve such a recon­ci­lia­ti­on would also imply a degree of pre­cisi­on that is inap­pro­pria­te for this for­ward-loo­king measure.

(In Bil­li­ons)   Full-Year 2022
GAAP cash from operations   $ 16.8
Net addi­ti­ons to pro­per­ty, plant and equip­ment1   (23.0)
Pay­ments on finan­ce leases   (0.4)
Sale of equi­ty investment   4.6
Adjus­ted free cash flow   $ (2.0)

1The cal­cu­la­ti­on of adjus­ted free cash flow inclu­des addi­ti­ons to pro­per­ty, plant and equip­ment net of pro­ceeds from capi­tal grants.

Released Jul 28, 2022 • 4:00 PM EDT