Intel Reports Second-Quarter 2022 Financial Results

News Sum짯ma짯ry

뼧Second-quar짯ter GAAP reve짯nue of $15.3 bil짯li짯on, down 22% year over year (YoY), and non-GAAP reve짯nue of $15.3 bil짯li짯on, down 17% YoY.

뼧Intel셲 Cli짯ent Com짯pu짯ting and Dat짯a짯cen짯ter and AI Groups lar짯ge짯ly impac짯ted by con짯tin짯ued adver짯se mar짯ket con짯di짯ti짯ons; Net짯work and Edge Group and Mobi짯leye achie짯ved record quar짯ter짯ly revenue.

뼧Second-quar짯ter GAAP ear짯nings per share (EPS) was $(0.11); non-GAAP EPS was $0.29.

뼧Revi짯sing full-year reve짯nue gui짯dance to $65 bil짯li짯on to $68 bil짯li짯on; rei짯te짯ra짯ting full-year adjus짯ted free cash flow guidance.

SANTA CLARA, Calif., July28, 2022 밒ntel Cor짯po짯ra짯ti짯on today repor짯ted second-quar짯ter 2022 finan짯cial results.

This quarter셲 results were below the stan짯dards we have set for the com짯pa짯ny and our share짯hol짯ders. We must and will do bet짯ter. The sud짯den and rapid decli짯ne in eco짯no짯mic acti짯vi짯ty was the lar짯gest dri짯ver, but the short짯fall also reflects our own exe짯cu짯ti짯on issues, said Pat Gel짯sin짯ger, Intel CEO. 쏻e are being respon짯si짯ve to chan짯ging busi짯ness con짯di짯ti짯ons, working clo짯se짯ly with our cus짯to짯mers while remai짯ning laser-focu짯sed on our stra짯tegy and long-term oppor짯tu짯ni짯ties. We are embra짯cing this chal짯len짯ging envi짯ron짯ment to acce짯le짯ra짯te our transformation.

We are taking neces짯sa짯ry actions to mana짯ge through the cur짯rent envi짯ron짯ment, inclu짯ding acce짯le짯ra짯ting the deploy짯ment of our smart capi짯tal stra짯tegy, while rei짯te짯ra짯ting our pri짯or full-year adjus짯ted free cash flow gui짯dance and retur짯ning gross mar짯gins to our tar짯get ran짯ge by the fourth quar짯ter, said David Zins짯ner, Intel CFO. 쏻e remain ful짯ly com짯mit짯ted to our busi짯ness stra짯tegy, the long-term finan짯cial model com짯mu짯ni짯ca짯ted at our inves짯tor mee짯ting and a strong and gro짯wing dividend.

Q2 2022 Finan짯cial Highlights

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

In the second quar짯ter, the com짯pa짯ny gene짯ra짯ted $0.8 bil짯li짯on in cash from ope짯ra짯ti짯ons and paid divi짯dends of $1.5 billion.

Busi짯ness Unit Summary

Intel pre짯vious짯ly announ짯ced seve짯ral orga짯niza짯tio짯nal chan짯ges to acce짯le짯ra짯te its exe짯cu짯ti짯on and inno짯va짯ti짯on by allo짯wing it to cap짯tu짯re growth in both lar짯ge tra짯di짯tio짯nal mar짯kets and high-growth emer짯ging mar짯kets. This includes the reor짯ga짯niza짯ti짯on of Intel셲 busi짯ness units to cap짯tu짯re this growth and pro짯vi짯de increased trans짯pa짯ren짯cy, focus and accoun짯ta짯bi짯li짯ty. As a result, the com짯pa짯ny modi짯fied its seg짯ment report짯ing to ali짯gn to the pre짯vious짯ly announ짯ced busi짯ness reor짯ga짯niza짯ti짯on. All pri짯or-peri짯od seg짯ment data has been retro짯s짯pec짯tively adjus짯ted to reflect the way the com짯pa짯ny intern짯al짯ly mana짯ges and moni짯tors ope짯ra짯ting seg짯ment per짯for짯mance start짯ing in fis짯cal year 2022.

Key Busi짯ness Unit Reve짯nue and Trends   Q2 2022   vs. Q2 2021
Cli짯ent Com짯pu짯ting Group (CCG)   $7.7 bil짯li짯on   down 25%
Dat짯a짯cen짯ter and AI Group (DCAI)   $4.6 bil짯li짯on   down 16%
Net짯work and Edge Group (NEX)   $2.3 bil짯li짯on   up 11%
Acce짯le짯ra짯ted Com짯pu짯ting Sys짯tems and Gra짯phics Group (AXG)   $186 mil짯li짯on   up 5%
Mobi짯leye   $460 mil짯li짯on   up 41%
Intel Foundry Ser짯vices (IFS)   $122 mil짯li짯on   down 54%

Busi짯ness Highlights

 

뼧Intel made signi짯fi짯cant pro짯gress during the quar짯ter on the ramp of Intel 7, now ship짯ping in aggre짯ga짯te over 35 mil짯li짯on units. The com짯pa짯ny expects Intel 4 to be rea짯dy for volu짯me pro짯duc짯tion in the second half of this year and is at or ahead of sche짯du짯le for Intel 3, 20A and 18A.

IFS recent짯ly announ짯ced a stra짯te짯gic part짯ner짯ship with Media짯Tek to manu짯fac짯tu짯re chips for a ran짯ge of smart edge devices using Intel pro짯cess tech짯no짯lo짯gies. During the quar짯ter, Intel also laun짯ched the IFS Cloud Alli짯ance, the next pha짯se of its acce짯le짯ra짯tor eco짯sys짯tem pro짯gram that will enable secu짯re design envi짯ron짯ments in the cloud.

뼧In the second quar짯ter, CCG laun짯ched the 12th gene짯ra짯ti짯on IntelCore꽓 HX pro짯ces짯sors, the final pro짯ducts in Intel셲 Alder Lake fami짯ly, which is now powe짯ring more than 525 designs.

뼧In DCAI, Intel expan짯ded its sup짯p짯ly agree짯ment with Meta, lever짯aging its IDM advan짯ta짯ge so that Meta can meet its expan짯ding com짯pu짯te needs.In the quar짯ter, Intel agreed to expand its part짯ner짯ship with AWS to include the co-deve짯lo짯p짯ment of mul짯ti-gene짯ra짯tio짯nal data cen짯ter solu짯ti짯ons opti짯mi짯zed for AWS infra짯struc짯tu짯re, and Intel as a stra짯te짯gic cus짯to짯mer for inter짯nal workloads, inclu짯ding EDA. Intel expects the짯se cus짯tom짯In짯telXeonsolu짯ti짯ons will bring grea짯ter levels of dif짯fe짯ren짯tia짯ti짯on and a dura짯ble TCO advan짯ta짯ge to AWS and its cus짯to짯mers, inclu짯ding Intel.In addi짯ti짯on, NVIDIA announ짯ced its sel짯ec짯tion of Sap짯phi짯re Rapids for use in its new DGX-H100, which will cou짯ple Sap짯phi짯re Rapids with NVIDIA셲 Hop짯per GPUs to deli짯ver unpre짯ce짯den짯ted AI performance.

NEX achie짯ved record reve짯nue and began ship짯ping Mount Evans, a 200G ASIC IPU, which was co-deve짯lo짯ped and is begin짯ning to ramp with a lar짯ge hypers짯ca짯ler. In addi짯ti짯on, the IntelXeonD pro짯ces짯sor is ram짯ping with lea짯ding com짯pa짯nies across industries.

AXG ship짯ped Intel셲 first IntelBlocksca짯leTMASIC, and the IntelArcTMA몊eries GPUs for lap짯tops began ship짯ping with OEMs, inclu짯ding Sam짯sung, Leno짯vo, Acer, HP and Asus.

뼧Mobi짯leye achie짯ved record reve짯nue in the quar짯ter with first half 2022 design wins gene짯ra짯ting 37 mil짯li짯on units of pro짯jec짯ted future business.

Busi짯ness Outlook

Intel셲 gui짯dance for the third quar짯ter and full year includes both GAAP and non-GAAP esti짯ma짯tes. Recon짯ci짯lia짯ti짯ons bet짯ween GAAP and non-GAAP finan짯cial mea짯su짯res are included below.

Q3 2022   GAAP   Non-GAAP
    Appro짯xi짯m짯ate짯ly   Appro짯xi짯m짯ate짯ly
Reve짯nue   $1516 bil짯li짯on   $1516 bil짯li짯on^
Gross Mar짯gin   43.2%   46.5%
Tax rate   (17)%   13%
Ear짯nings per share   $0.12   $0.35
Full-Year 2022   GAAP   Non-GAAP
    Appro짯xi짯m짯ate짯ly   Appro짯xi짯m짯ate짯ly
Reve짯nue   $6568 bil짯li짯on   $6568 bil짯li짯on^
Gross Mar짯gin   44.8%   49.0%
Tax rate   6%   8%
Ear짯nings per share   $2.57   $2.30
Full-year net capi짯tal spending   $27 bil짯li짯on   $23 bil짯li짯on
Adjus짯ted free cash flow   N/A   ($12 bil짯li짯on)

Actu짯al results may dif짯fer mate짯ri짯al짯ly from Intel셲 Busi짯ness Out짯look as a result of, among other things, the fac짯tors descri짯bed under 쏤or짯ward-Loo짯king State짯ments below.

Ear짯nings Webcast

Intel will hold a public web짯cast at 2 p.m. PDT today to dis짯cuss the results for its second quar짯ter of 2022. The live public web짯cast can be acces짯sed on Intel셲 Inves짯tor Rela짯ti짯ons web짯site atwww.intc.com. The Q222 ear짯nings pre짯sen짯ta짯ti짯on, web짯cast replay and audio down짯load will also be available on the site.

For짯ward-Loo짯king Statements

Intel셲 Busi짯ness Out짯look and other state짯ments in this release that refer to future plans and expec짯ta짯ti짯ons are for짯ward-loo짯king state짯ments that invol짯ve a num짯ber of risks and uncer짯tain짯ties. Words such as 쏿cce짯le짯ra짯te, 쏿chie짯ve, 쏿djust, 쏿llow, 쏿nti짯ci짯pa짯tes, 쐀elie짯ves, 쐁om짯mit짯ted, 쐁on짯ti짯nues, 쐁ould, 쐂eli짯ver, 쐃sti짯ma짯tes, 쐃xpand, 쐃xpects, 쐄ocus, 쐄ore짯cast, 쐄uture, 쐅oals, 쐅row, 쐅ui짯dance, 쐇mpro짯ve, 쐇ncre짯asing, 쐌ana짯ge, 쐌ay, 쐎n-track, 쐎ppor짯tu짯ni짯ty, 쐎ut짯look, 쐏lan, 쐏osi짯tio짯ned, 쐏oten짯ti짯al, 쐏ro짯gress, 쐒amp, 쐒efo짯cus, 쐒egain, 쐓har짯pen, 쐓hould, 쐓up짯port, 쐗ill, 쐗ould, and varia짯ti짯ons of such words and simi짯lar expres짯si짯ons are inten짯ded to iden짯ti짯fy such for짯ward-loo짯king state짯ments. State짯ments that refer to or are based on esti짯ma짯tes, fore짯casts, pro짯jec짯tions, uncer짯tain events or assump짯ti짯ons, inclu짯ding state짯ments rela짯ting to Intel셲 stra짯tegy and its anti짯ci짯pa짯ted bene짯fits, inclu짯ding our Febru짯ary 2022 Inves짯tor Day finan짯cial model, Smart Capi짯tal stra짯tegy, and updates to our report짯ing struc짯tu짯re; manu짯fac짯tu짯ring expan짯si짯on, finan짯cing, and invest짯ment plans, inclu짯ding the impacts of plans such as our announ짯ced invest짯ments in the U.S. and abroad; plans, cus짯to짯mers, and goals rela짯ted to Intel셲 foundry busi짯ness; pro짯jec짯ted cos짯ts and yield trends; sup짯p짯ly expec짯ta짯ti짯ons, inclu짯ding regar짯ding indus짯try shorta짯ges, cons짯traints, limi짯ta짯ti짯ons, pri짯cing and suf짯fi짯ci짯en짯cy of future sup짯p짯ly; pen짯ding tran짯sac짯tions, inclu짯ding the pen짯ding acqui짯si짯ti짯on of Tower Semi짯con짯duc짯tor Ltd.and the wind-down of our Intel짰 Opta짯ne꽓 memo짯ry busi짯ness; the pro짯po짯sed initi짯al public offe짯ring of Mobi짯leye; total addressa짯ble mar짯ket (TAM) and mar짯ket oppor짯tu짯ni짯ty; busi짯ness plans and finan짯cial expec짯ta짯ti짯ons; future macroe짯co짯no짯mic and geo짯po짯li짯ti짯cal con짯di짯ti짯ons; future legis짯la짯ti짯on, inclu짯ding any expec짯ta짯ti짯ons regar짯ding anti짯ci짯pa짯ted finan짯cial and other bene짯fits or incen짯ti짯ves the짯reun짯der; tax- and accoun짯ting-rela짯ted expec짯ta짯ti짯ons; future respon짯ses to and effects of the COVID-19 pan짯de짯mic, inclu짯ding manu짯fac짯tu짯ring, trans짯por짯ta짯ti짯on, and ope짯ra짯tio짯nal rest짯ric짯tions or dis짯rup짯ti짯ons, such as the recent port shut짯downs in Chi짯na; future pro짯ducts, tech짯no짯lo짯gy, and ser짯vices, and the expec짯ted regu짯la짯ti짯on, avai짯la짯bi짯li짯ty, pro짯duc짯tion, and bene짯fits of such pro짯ducts, tech짯no짯lo짯gy, and ser짯vices, inclu짯ding pro짯duct ramps, manu짯fac짯tu짯ring goals, plans, time짯lines, and future pro짯gress, future pro짯cess nodes and tech짯no짯lo짯gies inclu짯ding Intel 20A, Rib짯bon짯FET, and Power짯Via, pro짯cess per짯for짯mance pari짯ty and lea짯der짯ship expec짯ta짯ti짯ons, future pro짯duct archi짯tec짯tures, Alder Lake, Mete짯or Lake, Rapid Lake, Sap짯phi짯re Rapids, and future GPU and IPU pro짯ducts; future busi짯ness, social, and envi짯ron짯men짯tal per짯for짯mance, goals, mea짯su짯res, and stra짯te짯gies; expec짯ta짯ti짯ons regar짯ding cus짯to짯mers, inclu짯ding with respect to designs, wins, orders, and part짯ner짯ships; pro짯jec짯tions regar짯ding com짯pe짯ti짯tors; and anti짯ci짯pa짯ted trends in our busi짯nesses or the mar짯kets rele짯vant to them, inclu짯ding with respect to future demand and indus짯try growth, also iden짯ti짯fy for짯ward-loo짯king state짯ments. All for짯ward-loo짯king state짯ments included in this release are based on management셲 expec짯ta짯ti짯ons as of the date of this release and, except as requi짯red by law, Intel dis짯claims any obli짯ga짯ti짯on to update the짯se for짯ward-loo짯king state짯ments to reflect future events or cir짯cum짯s짯tances. Unless spe짯ci짯fi짯cal짯ly indi짯ca짯ted other짯wi짯se, the for짯ward-loo짯king state짯ments in this release do not reflect the poten짯ti짯al impact of any dives짯ti짯tures, mer짯gers, acqui짯si짯ti짯ons, or other busi짯ness com짯bi짯na짯ti짯ons that have not been com짯ple짯ted as of the date of this pre짯sen짯ta짯ti짯on. For짯ward-loo짯king state짯ments invol짯ve many risks and uncer짯tain짯ties that could cau짯se actu짯al results to dif짯fer mate짯ri짯al짯ly from tho짯se expres짯sed or impli짯ed in such state짯ments. Intel pre짯sent짯ly con짯siders the fol짯lo짯wing to be among the important fac짯tors that can cau짯se actu짯al results to dif짯fer mate짯ri짯al짯ly from the company셲 expectations.

뼧Demand for Intel셲 pro짯ducts is high짯ly varia짯ble and can dif짯fer from expec짯ta짯ti짯ons due to fac짯tors inclu짯ding chan짯ges in busi짯ness and eco짯no짯mic con짯di짯ti짯ons; cus짯to짯mer con짯fi짯dence or inco짯me levels, and the levels of cus짯to짯mer capi짯tal spen짯ding; the intro짯duc짯tion, avai짯la짯bi짯li짯ty, and mar짯ket accep짯tance of Intel셲 pro짯ducts, pro짯ducts used tog짯e짯ther with Intel pro짯ducts, and com짯pe짯ti짯tors pro짯ducts; com짯pe짯ti짯ti짯ve and pri짯cing pres짯su짯res, inclu짯ding actions taken by com짯pe짯ti짯tors; sup짯p짯ly cons짯traints and other dis짯rup짯ti짯ons affec짯ting cus짯to짯mers; chan짯ges in cus짯to짯mer order pat짯terns or fore짯casts inclu짯ding order can짯cel짯la짯ti짯ons; chan짯ges in cus짯to짯mer needs and emer짯ging tech짯no짯lo짯gy trends; and chan짯ges in the level of inven짯to짯ry and com짯pu짯ting capa짯ci짯ty at customers.

뼧Intel셲 results can vary signi짯fi짯cant짯ly from expec짯ta짯ti짯ons based on capa짯ci짯ty uti짯liza짯ti짯on; varia짯ti짯ons in inven짯to짯ry valua짯ti짯on, inclu짯ding varia짯ti짯ons rela짯ted to the timing of qua짯li짯fy짯ing pro짯ducts for sale; chan짯ges in reve짯nue levels; seg짯ment pro짯duct mix; the timing and exe짯cu짯ti짯on of the manu짯fac짯tu짯ring ramp and asso짯cia짯ted cos짯ts; excess or obso짯le짯te inven짯to짯ry; chan짯ges in unit cos짯ts; defects or dis짯rup짯ti짯ons in the sup짯p짯ly of mate짯ri짯als or resour짯ces, inclu짯ding as a result of ongo짯ing indus짯try shorta짯ges of com짯pon짯ents and sub짯stra짯tes; sup짯pli짯ers exten짯ding lead times, expe짯ri짯en짯cing capa짯ci짯ty cons짯traints, limi짯ting or can짯ce짯ling sup짯p짯ly, allo짯ca짯ting sup짯p짯ly to other cus짯to짯mers inclu짯ding com짯pe짯ti짯tors, delay짯ing or can짯ce짯ling deli짯veries or incre짯asing pri짯ces, or other sup짯p짯ly chain issues; pro짯duct manu짯fac짯tu짯ring quality/yields; and chan짯ges in capi짯tal requi짯re짯ments and invest짯ment plans. Varia짯ti짯ons in results can also be cau짯sed by the timing of Intel pro짯duct intro짯duc짯tions and rela짯ted expen짯ses, inclu짯ding mar짯ke짯ting pro짯grams and Intel셲 abili짯ty to respond quick짯ly to tech짯no짯lo짯gi짯cal deve짯lo짯p짯ments and to intro짯du짯ce new pro짯ducts or incor짯po짯ra짯te new fea짯tures into exis짯ting pro짯ducts, as well as decis짯i짯ons to exit pro짯duct lines or busi짯nesses, which can result in res짯truc짯tu짯ring and asset impair짯ment charges.

뼧Intel셲 results can be affec짯ted by adver짯se eco짯no짯mic, social, poli짯ti짯cal, regu짯la짯to짯ry, and physical/infrastructure con짯di짯ti짯ons in count짯ries whe짯re Intel, its cus짯to짯mers or its sup짯pli짯ers ope짯ra짯te, inclu짯ding reces짯si짯on or slo짯wing growth, mili짯ta짯ry con짯flict and other secu짯ri짯ty risks, natu짯ral dis짯as짯ters, infra짯struc짯tu짯re dis짯rup짯ti짯ons, health con짯cerns (inclu짯ding the COVID-19 pan짯de짯mic), fluc짯tua짯tions in cur짯ren짯cy exch짯an짯ge rates, infla짯ti짯on, inte짯rest rate risks, sanc짯tions and tariffs, poli짯ti짯cal dis짯pu짯tes, chan짯ges in govern짯ment grants and incen짯ti짯ves, and con짯ti짯nuing uncer짯tain짯ty regar짯ding social, poli짯ti짯cal, immi짯gra짯ti짯on, and tax and trade poli짯ci짯es in the U.S. and abroad. Results can also be affec짯ted by the for짯mal or infor짯mal impo짯si짯ti짯on by count짯ries of new or revi짯sed export and/or import and doing-busi짯ness regu짯la짯ti짯ons, inclu짯ding chan짯ges or uncer짯tain짯ty rela짯ted to the U.S. govern짯ment enti짯ty list and chan짯ges in the abili짯ty to obtain export licen짯ses, which can be chan짯ged wit짯hout pri짯or noti짯ce. For exam짯p짯le, in respon짯se to Russia셲 war with Ukrai짯ne, num짯e짯rous count짯ries and orga짯niza짯ti짯ons have impo짯sed finan짯cial and other sanc짯tions and export con짯trols against Rus짯sia and Bela짯rus, while busi짯nesses, inclu짯ding the Com짯pa짯ny, have limi짯t짯ed or sus짯pen짯ded Rus짯si짯an ope짯ra짯ti짯ons. Rus짯sia has like짯wi짯se impo짯sed cur짯ren짯cy rest짯ric짯tions and regu짯la짯ti짯ons and may fur짯ther take reta짯li짯a짯to짯ry trade or other actions, inclu짯ding the natio짯na짯liza짯ti짯on of for짯eign businesses.

뼧The COVID-19pan짯de짯mic has pre짯vious짯ly adver짯se짯ly affec짯ted signi짯fi짯cant por짯ti짯ons of Intel셲 busi짯ness and could have a mate짯ri짯al adver짯se effect on Intel셲 finan짯cial con짯di짯ti짯on and results of ope짯ra짯ti짯ons. The pan짯de짯mic has resul짯ted in aut짯ho짯ri짯ties impo짯sing num짯e짯rous mea짯su짯res to try to con짯tain the virus, inclu짯ding manu짯fac짯tu짯ring, trans짯por짯ta짯ti짯on, and ope짯ra짯tio짯nal rest짯ric짯tions or dis짯rup짯ti짯ons, such as the recent Shang짯hai port shut짯down. The짯se mea짯su짯res have impac짯ted and may fur짯ther impact our work짯force and ope짯ra짯ti짯ons, the ope짯ra짯ti짯ons of our cus짯to짯mers, and tho짯se of our respec짯ti짯ve ven짯dors, sup짯pli짯ers, and part짯ners. Rest짯ric짯tions on our manu짯fac짯tu짯ring or sup짯port ope짯ra짯ti짯ons or work짯force, or simi짯lar limi짯ta짯ti짯ons for our ven짯dors and sup짯pli짯ers, can impact our abili짯ty to meet cus짯to짯mer demand and could have a mate짯ri짯al adver짯se effect on us. Rest짯ric짯tions or dis짯rup짯ti짯ons of trans짯por짯ta짯ti짯on, or dis짯rup짯ti짯ons in our cus짯to짯mers ope짯ra짯ti짯ons and sup짯p짯ly chains, may adver짯se짯ly affect our results of ope짯ra짯ti짯ons. The pan짯de짯mi짯chas cau짯sed us to modi짯fy our busi짯ness prac짯ti짯ces. The짯re is no cer짯tain짯ty that such mea짯su짯res will be suf짯fi짯ci짯ent to miti짯ga짯te the risks posed by the virus, and ill짯ness and work짯force dis짯rup짯ti짯ons could lead to unavai짯la짯bi짯li짯ty of our key per짯son짯nel and harm our abili짯ty to per짯form cri짯ti짯cal func짯tions. The pan짯de짯mic has signi짯fi짯cant짯ly increased eco짯no짯mic and demand uncer짯tain짯ty. Demand for our pro짯ducts has been and could again be mate짯ri짯al짯ly har짯med in the future. The pan짯de짯mic could lead to increased dis짯rup짯ti짯on and vola짯ti짯li짯ty in capi짯tal mar짯kets and cre짯dit mar짯kets, which could adver짯se짯ly affect our liqui짯di짯ty and capi짯tal resour짯ces. The degree to which짯CO짯VID-19im짯pacts our results will depend on future deve짯lo짯p짯ments, which are high짯ly uncer짯tain. The impact of the pan짯de짯mic can also exa짯cer짯ba짯te other risks dis짯cus짯sed in this section.

뼧Intel ope짯ra짯tes in high짯ly com짯pe짯ti짯ti짯ve indus짯tries and its ope짯ra짯ti짯ons have high cos짯ts that are eit짯her fixed or dif짯fi짯cult to redu짯ce in the short term. In addi짯ti짯on, we have ente짯red new are짯as and intro짯du짯ced adja짯cent pro짯ducts, such as our inten짯ti짯on to beco짯me a major pro짯vi짯der of foundry ser짯vices, and we face new sources of com짯pe짯ti짯ti짯on and uncer짯tain mar짯ket demand or accep짯tance of our offe짯rings with respect to the짯se new are짯as and pro짯ducts, and they do not always grow as projected.

뼧Intel셲 expec짯ted tax rate is based on cur짯rent tax law, inclu짯ding cur짯rent inter짯pre짯ta짯ti짯ons of the Tax Cuts and Jobs Act of 2017 (TCJA), and cur짯rent expec짯ted inco짯me and can be affec짯ted by chan짯ges in inter짯pre짯ta짯ti짯ons of TCJA and other laws; chan짯ges in the volu짯me and mix of pro짯fits ear짯ned and loca짯ti짯on of assets across juris짯dic짯tions with vary짯ing tax rates; chan짯ges in the esti짯ma짯tes of cre짯dits, bene짯fits, and deduc짯tions; the reso짯lu짯ti짯on of issues ari짯sing from tax audits with various tax aut짯ho짯ri짯ties, inclu짯ding pay짯ment of inte짯rest and pen짯al짯ties; and the abili짯ty to rea짯li짯ze defer짯red tax assets.

뼧Intel셲 results can be affec짯ted by gains or los짯ses from equi짯ty secu짯ri짯ties and inte짯rest and other, which can vary depen짯ding on gains or los짯ses on the chan짯ge in fair value, sale, exch짯an짯ge, or impairm짯ents of equi짯ty and debt invest짯ments, inte짯rest rates, cash balan짯ces, and chan짯ges in fair value of deri짯va짯ti짯ve instruments.

뼧Pro짯duct defects or erra짯ta (devia짯ti짯ons from published spe짯ci짯fi짯ca짯ti짯ons) can adver짯se짯ly impact our expen짯ses, reve짯nues, and reputation.

뼧We or third par짯ties regu짯lar짯ly iden짯ti짯fy secu짯ri짯ty vul짯nerabi짯li짯ties with respect to our pro짯ces짯sors and other pro짯ducts as well as the ope짯ra짯ting sys짯tems and workloads run짯ning on them. Secu짯ri짯ty vul짯nerabi짯li짯ties and any limi짯ta짯ti짯ons of, or adver짯se effects resul짯ting from, miti짯ga짯ti짯on tech짯ni짯ques can adver짯se짯ly affect our results of ope짯ra짯ti짯ons, finan짯cial con짯di짯ti짯on, cus짯to짯mer rela짯ti짯onships, pro짯s짯pects, and repu짯ta짯ti짯on in a num짯ber of ways, any of which may be mate짯ri짯al, inclu짯ding incur짯ring signi짯fi짯cant cos짯ts rela짯ted to deve짯lo짯ping and deploy짯ing updates and miti짯ga짯ti짯ons, wri짯ting down inven짯to짯ry value, a reduc짯tion in the com짯pe짯ti짯ti짯ve짯ness of our pro짯ducts, defen짯ding against pro짯duct claims and liti짯ga짯ti짯on, respon짯ding to regu짯la짯to짯ry inqui짯ries or actions, pay짯ing dama짯ges, addres짯sing cus짯to짯mer satis짯fac짯tion con짯side짯ra짯ti짯ons, or taking other reme짯di짯al steps with respect to third par짯ties. Adver짯se publi짯ci짯ty about secu짯ri짯ty vul짯nerabi짯li짯ties or miti짯ga짯ti짯ons could dama짯ge our repu짯ta짯ti짯on with cus짯to짯mers or users and redu짯ce demand for our pro짯ducts and services.

뼧Cyber짯se짯cu짯ri짯ty inci짯dents, whe짯ther or not suc짯cessful, can affect Intel셲 results by caus짯ing us to incur signi짯fi짯cant cos짯ts or dis짯rupt짯ing our ope짯ra짯ti짯ons or tho짯se of our cus짯to짯mers and sup짯pli짯ers, and can result in repu짯ta짯tio짯nal harm.

뼧Intel셲 results can be affec짯ted by liti짯ga짯ti짯on or regu짯la짯to짯ry mat짯ters invol짯ving intellec짯tu짯al pro짯per짯ty, stock짯hol짯der, con짯su짯mer, anti짯trust, com짯mer짯cial, dis짯clo짯sure, and other issues, as well as by the impact and timing of sett짯le짯ments and dis짯pu짯te reso짯lu짯ti짯ons. For exam짯p짯le, in the first quar짯ter of 2022, the Gene짯ral Court in the Euro짯pean Com짯mis짯si짯on (EC) com짯pe짯ti짯ti짯on mat짯ter annul짯led the EC셲 fin짯dings against Intel regar짯ding reba짯tes, as well as the fine pre짯vious짯ly impo짯sed on and paid by Intel. $1.2 bil짯li짯on was retur짯ned to Intel in Febru짯ary, and the EC has appea짯led this decis짯i짯on to the Court of Justice.

뼧Intel셲 results can be affec짯ted by the impact and timing of clo짯sing of acqui짯si짯ti짯ons, dives짯ti짯tures, and other signi짯fi짯cant tran짯sac짯tions, such as the pen짯ding acqui짯si짯ti짯on of Tower Semi짯con짯duc짯tor Inc. and the pro짯po짯sed initi짯al public offe짯ring of Mobi짯leye. In addi짯ti짯on, the짯se tran짯sac짯tions do not always achie짯ve our finan짯cial or stra짯te짯gic objec짯ti짯ves and can dis짯rupt our ongo짯ing busi짯ness and adver짯se짯ly impact our results of ope짯ra짯ti짯ons. We may not rea짯li짯ze the expec짯ted bene짯fits of port짯fo짯lio decis짯i짯ons due to num짯e짯rous risks, inclu짯ding unfa짯vorable pri짯ces and terms; chan짯ges in mar짯ket con짯di짯ti짯ons; limi짯ta짯ti짯ons due to regu짯la짯to짯ry or govern짯men짯tal appr짯ovals, con짯trac짯tu짯al terms, or other con짯di짯ti짯ons; and poten짯ti짯al con짯tin짯ued finan짯cial obli짯ga짯ti짯ons asso짯cia짯ted with such tran짯sac짯tions. Risks and uncer짯tain짯ties rela짯ting to the sale of our NAND memo짯ry busi짯ness to SK hynix are descri짯bed in our Form 10멚 filed with the SEC on Janu짯ary 22, 2021.

Detail짯ed infor짯ma짯ti짯on regar짯ding the짯se and other fac짯tors that could affect Intel셲 busi짯ness and results is included in Intel셲 SEC filings, inclu짯ding the company셲 most recent reports on Forms 10멚 and 10멡, par짯ti짯cu짯lar짯ly the 쏳isk Fac짯tors sec짯tions of tho짯se reports. Copies of the짯se filings may be obtai짯ned by visi짯ting our Inves짯tor Rela짯ti짯ons web짯site atwww.intc.comor the SEC셲 web짯site atwww.sec.gov.

About Intel

Intel (Nasdaq: INTC) is an indus짯try lea짯der, crea짯ting world-chan짯ging tech짯no짯lo짯gy that enables glo짯bal pro짯gress and enri짯ches lives. Inspi짯red by Moore셲 Law, we con짯ti짯nuous짯ly work to advan짯ce the design and manu짯fac짯tu짯ring of semi짯con짯duc짯tors to help address our cus짯to짯mers grea짯test chal짯lenges. By embed짯ding intel짯li짯gence in the cloud, net짯work, edge and every kind of com짯pu짯ting device, we unleash the poten짯ti짯al of data to trans짯form busi짯ness and socie짯ty for the bet짯ter. To learn more about Intel셲 inno짯va짯tions, go tonewsroom.intel.comandintel.com.

짤 Intel Cor짯po짯ra짯ti짯on. Intel, the Intel logo, and other Intel marks are trade짯marks of Intel Cor짯po짯ra짯ti짯on or its sub짯si짯dia짯ries. Other names and brands may be clai짯med as the pro짯per짯ty of others.

 

 

Intel Cor짯po짯ra짯ti짯on

Con짯so짯li짯da짯ted Con짯den짯sed State짯ments of Inco짯me and Other Information

    Three Months Ended
(In Mil짯li짯ons, Except Per Share Amounts; unaudited)   Jul 2, 2022   Jun 26, 2021
Net reve짯nue   $ 15,321   $ 19,631
Cost of sales   9,734   8,425
Gross mar짯gin   5,587   11,206
Rese짯arch and development   4,400   3,715
Mar짯ke짯ting, gene짯ral and administrative   1,800   1,599
Res짯truc짯tu짯ring and other charges   87   346
Ope짯ra짯ting expenses   6,287   5,660
Ope짯ra짯ting inco짯me (loss)   (700)   5,546
Gains (los짯ses) on equi짯ty invest짯ments, net   (90)   295
Inte짯rest and other, net   (119)   (96)
Inco짯me (loss) befo짯re taxes   (909)   5,745
Pro짯vi짯si짯on for (bene짯fit from) taxes   (455)   684
Net inco짯me (loss)   $ (454)   $ 5,061
         
Ear짯nings (loss) per share봟asic   $ (0.11)   $ 1.25
Ear짯nings (loss) per share봡iluted   $ (0.11)   $ 1.24
         
Weigh짯ted avera짯ge shares of com짯mon stock outstanding:        
Basic   4,100   4,049
Diluted   4,100   4,084
    Three Months Ended
(In Mil짯li짯ons)   Jul 2, 2022   Jun 26, 2021
Ear짯nings per share of com짯mon stock information:        
Weigh짯ted avera짯ge shares of com짯mon stock outstanding봟asic   4,100   4,049
Dilu짯ti짯ve effect of employee equi짯ty incen짯ti짯ve plans     35
Weigh짯ted avera짯ge shares of com짯mon stock outstanding봡iluted   4,100   4,084
         
Other infor짯ma짯ti짯on:        
Employees (in thousands)   128.2   113.7

 

Intel Cor짯po짯ra짯ti짯on

Con짯so짯li짯da짯ted Con짯den짯sed Balan짯ce Sheets

(In Mil짯li짯ons; Unaudited)   Jul 2, 2022   Dec 25, 2021
Assets        
Cur짯rent assets:        
Cash and cash equivalents   $ 4,390   $ 4,827
Short-term invest짯ments   22,654   24,426
Accounts receiva짯ble   6,063   9,457
Invent짯ories        
Raw mate짯ri짯als   1,587   1,441
Work in process   6,164   6,656
Finis짯hed goods   4,423   2,679
    12,174   10,776
Assets held for sale   32   6,942
Other cur짯rent assets   5,275   2,130
Total cur짯rent assets   50,588   58,558
         
Pro짯per짯ty, plant and equip짯ment, net   71,660   63,245
Equi짯ty investments   5,929   6,298
Good짯will   27,587   26,963
Iden짯ti짯fied intan짯gi짯ble assets, net   6,427   7,270
Other long-term assets   8,227   6,072
Total assets   $ 170,418   $ 168,406
         
Lia짯bi짯li짯ties        
Cur짯rent liabilities        
Short-term debt   $ 2,882   $ 4,591
Accounts paya짯ble   7,945   5,747
Accrued com짯pen짯sa짯ti짯on and benefits   2,730   4,535
Other accrued liabilities   13,661   12,589
Total cur짯rent liabilities   27,218   27,462
Debt   32,548   33,510
Inco짯me taxes payable   3,684   4,305
Defer짯red inco짯me taxes   572   2,667
Other long-term liabilities   5,178   5,071
Stock짯hol짯ders equity        
Com짯mon stock and capi짯tal in excess of par value, 4,106 issued and out짯stan짯ding (4,070 issued and out짯stan짯ding as of Decem짯ber 25, 2021)   29,858   28,006
Accu짯mu짯la짯ted other com짯pre짯hen짯si짯ve inco짯me (loss)   (1,625)   (880)
Retai짯ned earnings   72,985   68,265
Total stock짯hol짯ders equity   101,218   95,391
Total lia짯bi짯li짯ties and stock짯hol짯ders equity   $ 170,418   $ 168,406

Intel Cor짯po짯ra짯ti짯on

Con짯so짯li짯da짯ted Con짯den짯sed State짯ments of Cash Flows

    Six Months Ended
(In Mil짯li짯ons; unaudited)   Jul 2, 2022   Jun 26, 2021
         
Cash and cash equi짯va짯lents, begin짯ning of period   $ 4,827   $ 5,865
Cash flows pro짯vi짯ded by (used for) ope짯ra짯ting activities:        
Net inco짯me (loss)   7,659   8,422
Adjus짯t짯ments to recon짯ci짯le net inco짯me to net cash pro짯vi짯ded by ope짯ra짯ting activities:        
Depre짯cia짯ti짯on   5,528   4,862
Share-based com짯pen짯sa짯ti짯on   1,599   1,044
Res짯truc짯tu짯ring and other charges   73   2,555
Amor짯tiza짯ti짯on of intangibles   968   897
(Gains) los짯ses on equi짯ty invest짯ments, net   (4,230)   (555)
(Gains) los짯ses on divestitures   (1,072)  
Chan짯ges in assets and liabilities:        
Accounts receiva짯ble   3,397   (678)
Invent짯ories   (1,386)   (126)
Accounts paya짯ble   117   425
Accrued com짯pen짯sa짯ti짯on and benefits   (1,985)   (836)
Pre짯paid cus짯to짯mer sup짯p짯ly agreements   (12)   (1,571)
Inco짯me taxes   (2,232)   114
Other assets and liabilities   (1,724)   (404)
Total adjus짯t짯ments   (959)   5,727
Net cash pro짯vi짯ded by ope짯ra짯ting activities   6,700   14,149
Cash flows pro짯vi짯ded by (used for) inves짯t짯ing activities:        
Addi짯ti짯ons to pro짯per짯ty, plant and equipment   (11,846)   (7,574)
Addi짯ti짯ons to held for sale NAND pro짯per짯ty, plant and equipment   (206)   (682)
Purcha짯ses of short-term investments   (25,514)   (16,637)
Matu짯ri짯ties and sales of short-term investments   25,407   15,062
Sales of equi짯ty investments   4,775   149
Pro짯ceeds from divestitures   6,579  
Other inves짯t짯ing   (1,667)   768
Net cash used for inves짯t짯ing activities   (2,472)   (8,914)
Cash flows pro짯vi짯ded by (used for) finan짯cing activities:        
Repay짯ment of debt   (1,688)   (500)
Pay짯ments on finan짯ce leases   (299)  
Pro짯ceeds from sales of com짯mon stock through employee equi짯ty incen짯ti짯ve plans   589   589
Repurcha짯se of com짯mon stock     (2,415)
Pay짯ment of divi짯dends to stockholders   (2,986)   (2,821)
Other finan짯cing   (281)   (1,207)
Net cash used for finan짯cing activities   (4,665)   (6,354)
Net increase (decrease) in cash and cash equivalents   (437)   (1,119)
Cash and cash equi짯va짯lents, end of period   $ 4,390   $ 4,746

Intel Cor짯po짯ra짯ti짯on

Sup짯ple짯men짯tal Ope짯ra짯ting Seg짯ment Results

    Three Months Ended
(In Mil짯li짯ons)   Jul 2, 2022   Jun 26, 2021
Ope짯ra짯ting seg짯ment revenue:        
Cli짯ent Computing        
Desk짯top   $ 2,289   $ 2,792
Note짯book   4,751   6,734
Other   625   727
    7,665   10,253
         
Dat짯a짯cen짯ter and AI   4,649   5,547
Net짯work and Edge   2,333   2,105
Acce짯le짯ra짯ted Com짯pu짯ting Sys짯tems and Graphics   186   177
Mobi짯leye   460   327
Intel Foundry Services   122   264
All other   32   1,129
Total ope짯ra짯ting seg짯ment revenue   $ 15,447   $ 19,802
         
Ope짯ra짯ting inco짯me (loss):        
Cli짯ent Computing   $ 1,085   $ 4,029
Dat짯a짯cen짯ter and AI   214   2,090
Net짯work and Edge   241   605
Acce짯le짯ra짯ted Com짯pu짯ting Sys짯tems and Graphics   (507)   (168)
Mobi짯leye   190   133
Intel Foundry Services   (155)   52
All other   (1,768)   (1,195)
Total ope짯ra짯ting inco짯me (loss)   $ (700)   $ 5,546

The fol짯lo짯wing table pres짯ents inter짯seg짯ment reve짯nue befo짯re eliminations:

Total ope짯ra짯ting seg짯ment revenue   $ 15,447   $ 19,802
Less: Acce짯le짯ra짯ted Com짯pu짯ting Sys짯tems and Gra짯phics inter짯seg짯ment revenue   (126)   (171)
Total net revenue   $ 15,321   $ 19,631

We deri짯ve a sub짯stan짯ti짯al majo짯ri짯ty of our reve짯nue from our prin짯ci짯pal pro짯ducts that incor짯po짯ra짯te various com짯pon짯ents and tech짯no짯lo짯gies, inclu짯ding a micro짯pro짯ces짯sor and chip짯set, a stand-alo짯ne SoC, or a mul짯ti짯chip packa짯ge, which is based on Intel셲 architecture.

Reve짯nue for our repor짯ta짯ble and non-repor짯ta짯ble ope짯ra짯ting seg짯ments is pri짯ma짯ri짯ly rela짯ted to the fol짯lo짯wing pro짯duct lines:

CCG includes pro짯ducts desi짯gned for end-user form fac짯tors, focu짯sing on hig짯her growth seg짯ments of 2멼n1, thin-and-light, com짯mer짯cial and gam짯ing, and gro짯wing other pro짯ducts such as con짯nec짯ti짯vi짯ty and graphics.

DCAI includes a broad port짯fo짯lio of CPUs, domain spe짯ci짯fic acce짯le짯ra짯tors, FPGAs and memo짯ry, desi짯gned to empower dat짯a짯cen짯ter and hypers짯ca짯le solu짯ti짯ons for diver짯se com짯pu짯ting needs.

NEX includes pro짯gramma짯ble plat짯forms and high-per짯for짯mance con짯nec짯ti짯vi짯ty and com짯pu짯te solu짯ti짯ons desi짯gned for mar짯ket seg짯ments such as cloud net짯wor짯king, com짯mu짯ni짯ca짯ti짯ons net짯works, retail, indus짯tri짯al, health짯ca짯re, and vision.

AXG includes CPUs for high per짯for짯mance com짯pu짯ting (HPC) and GPUs tar짯ge짯ted for a ran짯ge of workloads and plat짯forms from gam짯ing and con짯tent crea짯ti짯on to HPC and AI in the data center.

뼧Mobi짯leye includes the deve짯lo짯p짯ment and deploy짯ment of advan짯ced dri짯ver assis짯tance sys짯tems (ADAS) and auto짯no짯mous dri짯ving tech짯no짯lo짯gies and solutions.

IFS is a ser짯vices pro짯vi짯der offe짯ring a com짯bi짯na짯ti짯on of lea짯ding-edge pack짯a짯ging and pro짯cess tech짯no짯lo짯gy, world-class dif짯fe짯ren짯tia짯ted inter짯nal IPs (ie: x86, gra짯phics, AI), broad 3rd par짯ty eco짯sys짯tem and sili짯con design support.

We have sales and mar짯ke짯ting, manu짯fac짯tu짯ring, engi짯nee짯ring, finan짯ce, and admi짯nis짯tra짯ti짯on groups. Expen짯ses for the짯se groups are gene짯ral짯ly allo짯ca짯ted to the ope짯ra짯ting segments.

We have an 쏿ll other cate짯go짯ry that includes reve짯nue, expen짯ses, and char짯ges such as:

뼧his짯to짯ri짯cal results of ope짯ra짯ti짯ons from dive짯s짯ted businesses;

뼧results of ope짯ra짯ti짯ons of start-up busi짯nesses that sup짯port our initiatives;

뼧amounts included within res짯truc짯tu짯ring and other charges;

뼧employee bene짯fits, com짯pen짯sa짯ti짯on, impair짯ment char짯ges, and other expen짯ses not allo짯ca짯ted to the ope짯ra짯ting seg짯ments (begin짯ning the first quar짯ter of 2022, this includes all of our stock-based com짯pen짯sa짯ti짯on); and

뼧acqui짯si짯ti짯on-rela짯ted cos짯ts, inclu짯ding amor짯tiza짯ti짯on and any impair짯ment of acqui짯si짯ti짯on-rela짯ted intan짯gi짯bles and goodwill.

Intel Cor짯po짯ra짯ti짯on

Expl짯ana짯ti짯on of Non-GAAP Measures

In addi짯ti짯on to dis짯clo짯sing finan짯cial results in accordance with US GAAP, this docu짯ment con짯ta짯ins refe짯ren짯ces to the non-GAAP finan짯cial mea짯su짯res below. We belie짯ve the짯se non-GAAP finan짯cial mea짯su짯res pro짯vi짯de inves짯tors with useful sup짯ple짯men짯tal infor짯ma짯ti짯on about our ope짯ra짯ting per짯for짯mance, enable com짯pa짯ri짯son of finan짯cial trends and results bet짯ween peri짯ods whe짯re cer짯tain items may vary inde짯pen짯dent of busi짯ness per짯for짯mance, and allow for grea짯ter trans짯pa짯ren짯cy with respect to key metrics used by manage짯ment in ope짯ra짯ting our busi짯ness and mea짯su짯ring our per짯for짯mance. Cer짯tain of the짯se non-GAAP finan짯cial mea짯su짯res are used in our per짯for짯mance-based RSUs and our annu짯al cash bonus plan.

Our non-GAAP finan짯cial mea짯su짯res reflect adjus짯t짯ments based on one or more of the fol짯lo짯wing items, as well as the rela짯ted inco짯me tax effects whe짯re appli짯ca짯ble. Inco짯me tax effects have been cal짯cu짯la짯ted using an appro짯pria짯te tax rate for each adjus짯t짯ment, as appli짯ca짯ble. The짯se non-GAAP finan짯cial mea짯su짯res should not be con짯side짯red a sub짯sti짯tu짯te for, or supe짯ri짯or to, finan짯cial mea짯su짯res cal짯cu짯la짯ted in accordance with US GAAP, and the finan짯cial results cal짯cu짯la짯ted in accordance with US GAAP and recon짯ci짯lia짯ti짯ons from the짯se results should be careful짯ly evaluated.

Non-GAAP adjus짯t짯ment or measure Defi짯ni짯ti짯on Useful짯ness to manage짯ment and investors
Acqui짯si짯ti짯on-rela짯ted adjustments Amor짯tiza짯ti짯on of acqui짯si짯ti짯on-rela짯ted intan짯gi짯ble assets con짯sists of amor짯tiza짯ti짯on of intan짯gi짯ble assets such as deve짯lo짯ped tech짯no짯lo짯gy, brands, and cus짯to짯mer rela짯ti짯onships acqui짯red in con짯nec짯tion with busi짯ness com짯bi짯na짯ti짯ons. Char짯ges rela짯ted to the amor짯tiza짯ti짯on of the짯se intan짯gi짯bles are recor짯ded within both cost of sales and MG&A in our US GAAP finan짯cial state짯ments. Amor짯tiza짯ti짯on char짯ges are recor짯ded over the esti짯ma짯ted useful life of the rela짯ted acqui짯red intan짯gi짯ble asset, and thus are gene짯ral짯ly recor짯ded over mul짯ti짯ple years. We exclude amor짯tiza짯ti짯on char짯ges for our acqui짯si짯ti짯on-rela짯ted intan짯gi짯ble assets for pur짯po짯ses of cal짯cu짯la짯ting cer짯tain non-GAAP mea짯su짯res becau짯se the짯se char짯ges are incon짯sis짯tent in size and are signi짯fi짯cant짯ly impac짯ted by the timing and valua짯ti짯on of our acqui짯si짯ti짯ons. The짯se adjus짯t짯ments faci짯li짯ta짯te a useful eva짯lua짯ti짯on of our cur짯rent ope짯ra짯ting per짯for짯mance and com짯pa짯ri짯son to our past ope짯ra짯ting per짯for짯mance and pro짯vi짯de inves짯tors with addi짯tio짯nal means to eva짯lua짯te cost and expen짯se trends.
Res짯truc짯tu짯ring and other charges Res짯truc짯tu짯ring char짯ges are cos짯ts asso짯cia짯ted with a for짯mal res짯truc짯tu짯ring plan and are pri짯ma짯ri짯ly rela짯ted to employee sever짯ance and bene짯fit arran짯ge짯ments. Other char짯ges include peri짯odic good짯will and asset impairm짯ents, pen짯si짯on char짯ges, and cos짯ts asso짯cia짯ted with res짯truc짯tu짯ring activity. We exclude res짯truc짯tu짯ring and other char짯ges, inclu짯ding any adjus짯t짯ments to char짯ges recor짯ded in pri짯or peri짯ods, for pur짯po짯ses of cal짯cu짯la짯ting cer짯tain non-GAAP mea짯su짯res becau짯se the짯se cos짯ts do not reflect our core ope짯ra짯ting per짯for짯mance. The짯se adjus짯t짯ments faci짯li짯ta짯te a useful eva짯lua짯ti짯on of our core ope짯ra짯ting per짯for짯mance and com짯pa짯ri짯sons to past ope짯ra짯ting results and pro짯vi짯de inves짯tors with addi짯tio짯nal means to eva짯lua짯te expen짯se trends.
Share-based com짯pen짯sa짯ti짯on Share-based com짯pen짯sa짯ti짯on con짯sists of char짯ges rela짯ted to our employee equi짯ty incen짯ti짯ve plans. We exclude char짯ges rela짯ted to share-based com짯pen짯sa짯ti짯on for pur짯po짯ses of cal짯cu짯la짯ting cer짯tain non-GAAP mea짯su짯res becau짯se we belie짯ve the짯se adjus짯t짯ments pro짯vi짯de bet짯ter com짯pa짯ra짯bi짯li짯ty to peer com짯pa짯ny results and becau짯se the짯se char짯ges are not view짯ed by manage짯ment as part of our core ope짯ra짯ting per짯for짯mance. We belie짯ve the짯se adjus짯t짯ments pro짯vi짯de inves짯tors with a useful view, through the eyes of manage짯ment, of our core busi짯ness model, how manage짯ment curr짯ent짯ly eva짯lua짯tes core ope짯ra짯tio짯nal per짯for짯mance, and addi짯tio짯nal means to eva짯lua짯te expen짯se trends, inclu짯ding in com짯pa짯ri짯son to other peer companies.
Patent sett짯le짯ment A por짯ti짯on of the char짯ge from our IP sett짯le짯ments repres짯ents a catch-up of cumu짯la짯ti짯ve amor짯tiza짯ti짯on that would have been incur짯red for the right to use the rela짯ted patents in pri짯or peri짯ods. This char짯ge rela짯ted to pri짯or peri짯ods is excluded from our non-GAAP results; amor짯tiza짯ti짯on rela짯ted to the right to use the patents in the cur짯rent (and ongo짯ing peri짯ods) is included. We exclude the catch-up char짯ge rela짯ted to pri짯or peri짯ods for pur짯po짯ses of cal짯cu짯la짯ting cer짯tain non-GAAP mea짯su짯res becau짯se this adjus짯t짯ment faci짯li짯ta짯tes com짯pa짯ri짯son to past ope짯ra짯ting results and pro짯vi짯des a useful eva짯lua짯ti짯on of our cur짯rent ope짯ra짯ting performance.
Opta짯ne inven짯to짯ry impairment In Q2 2022, we initia짯ted the win짯ding down of our Intel Opta짯ne memo짯ry business. We exclude the짯se impairm짯ents for pur짯po짯ses of cal짯cu짯la짯ting cer짯tain non-GAAP mea짯su짯res becau짯se the짯se char짯ges do not reflect our cur짯rent ope짯ra짯ting per짯for짯mance. This adjus짯t짯ment faci짯li짯ta짯tes a useful eva짯lua짯ti짯on of our cur짯rent ope짯ra짯ting per짯for짯mance and com짯pa짯ri짯sons to past ope짯ra짯ting results.
Gains (los짯ses) from divestiture Gains or los짯ses are reco짯gni짯zed at the clo짯se of a dives짯ti짯tu짯re, or over a spe짯ci짯fied defer짯ral peri짯od when defer짯red con짯side짯ra짯ti짯on is recei짯ved at the time of clo짯sing. Based on our ongo짯ing obli짯ga짯ti짯on under the NAND wafer manu짯fac짯tu짯ring and sale agree짯ment ente짯red into in con짯nec짯tion with the first clo짯sing of the sale of our NAND memo짯ry busi짯ness on Decem짯ber 29, 2021, a por짯ti짯on of the initi짯al clo짯sing con짯side짯ra짯ti짯on was defer짯red and will be reco짯gni짯zed bet짯ween first and second closing. We exclude gains or los짯ses resul짯ting from dives짯ti짯tures for pur짯po짯ses of cal짯cu짯la짯ting cer짯tain non-GAAP mea짯su짯res becau짯se they do not reflect our cur짯rent ope짯ra짯ting per짯for짯mance. The짯se adjus짯t짯ments faci짯li짯ta짯te a useful eva짯lua짯ti짯on of our cur짯rent ope짯ra짯ting per짯for짯mance and com짯pa짯ri짯sons to past ope짯ra짯ting results.
(Gains) los짯ses on equi짯ty invest짯ments, net (Gains) los짯ses on equi짯ty invest짯ments, net con짯sists of ongo짯ing mark-to-mar짯ket adjus짯t짯ments on mar짯ke짯ta짯ble equi짯ty secu짯ri짯ties, obser짯va짯ble pri짯ce adjus짯t짯ments on non-mar짯ke짯ta짯ble equi짯ty secu짯ri짯ties, rela짯ted impair짯ment char짯ges, and the sale of equi짯ty invest짯ments and other. We exclude the짯se non-ope짯ra짯ting ear짯nings for bet짯ter com짯pa짯ra짯bi짯li짯ty bet짯ween peri짯ods. The exclu짯si짯on reflects how manage짯ment eva짯lua짯tes the core ope짯ra짯ti짯ons of the business.
NAND memo짯ry business We com짯ple짯ted the first clo짯sing of the dives짯ti짯tu짯re of our NAND memo짯ry busi짯ness to SK hynix on Decem짯ber 29, 2021 and ful짯ly decon짯so짯li짯da짯ted our ongo짯ing inte짯rests in the NAND OpCo Busi짯ness in the first quar짯ter of 2022. We exclude the impact of our NAND memo짯ry busi짯ness in cer짯tain non-GAAP mea짯su짯res. While the second clo짯sing of the sale is still pen짯ding and sub짯ject to clo짯sing con짯di짯ti짯ons, we decon짯so짯li짯da짯ted this busi짯ness in Q1 2022 and manage짯ment does not view the his짯to짯ri짯cal results of the busi짯ness as a part of our core ope짯ra짯ti짯ons. We belie짯ve the짯se adjus짯t짯ments pro짯vi짯de inves짯tors with a useful view, through the eyes of manage짯ment, of our core busi짯ness model and how manage짯ment curr짯ent짯ly eva짯lua짯tes core ope짯ra짯tio짯nal per짯for짯mance. In making the짯se adjus짯t짯ments, we have not made any chan짯ges to our methods for mea짯su짯ring and cal짯cu짯la짯ting reve짯nue or other finan짯cial state짯ment amounts.
Tax Reform Adjus짯t짯ments for Tax Reform reflect the impact of a chan짯ge in tax law from 2017 Tax Reform rela짯ted to the capi짯ta짯liza짯ti짯on of R&D costs. We exclude the impacts of this 2022 chan짯ge in U.S. tax tre짯at짯ment of R&D cos짯ts for pur짯po짯ses of cal짯cu짯la짯ting cer짯tain non-GAAP mea짯su짯res as we belie짯ve the짯se adjus짯t짯ments faci짯li짯ta짯te a bet짯ter eva짯lua짯ti짯on of our cur짯rent ope짯ra짯ting per짯for짯mance and com짯pa짯ri짯son to past ope짯ra짯ting results.
Adjus짯ted free cash flow We refe짯rence a non-GAAP finan짯cial mea짯su짯re of adjus짯ted free cash flow, which is used by manage짯ment when asses짯sing our sources of liqui짯di짯ty, capi짯tal resour짯ces, and qua짯li짯ty of ear짯nings. Adjus짯ted free cash flow is ope짯ra짯ting cash flow adjus짯ted for 1) addi짯ti짯ons to pro짯per짯ty, plant and equip짯ment, net of pro짯ceeds from capi짯tal grants and part짯ner con짯tri짯bu짯ti짯ons, 2) pay짯ments on finan짯ce lea짯ses, and 3) pro짯ceeds from the McA짯fee equi짯ty sale. This non-GAAP finan짯cial mea짯su짯re is hel짯pful in under짯stan짯ding our capi짯tal requi짯re짯ments and sources of liqui짯di짯ty by pro짯vi짯ding an addi짯tio짯nal means to eva짯lua짯te the cash flow trends of our busi짯ness. Sin짯ce the 2017 dives짯ti짯tu짯re, McA짯fee equi짯ty dis짯tri짯bu짯ti짯ons and sales have con짯tri짯bu짯ted to ope짯ra짯ting and free cash flow, and while the McA짯fee equi짯ty sale in Q1 2022 would typi짯cal짯ly be excluded from adjus짯ted free cash flow as an equi짯ty sale, we belie짯ve inclu짯ding the sale pro짯ceeds in adjus짯ted free cash flow faci짯li짯ta짯te a bet짯ter, more con짯sis짯tent com짯pa짯ri짯son to past pre짯sen짯ta짯ti짯ons of liquidity.

Intel Cor짯po짯ra짯ti짯on

Sup짯ple짯men짯tal Recon짯ci짯lia짯ti짯ons of GAAP Actu짯als to Non-GAAP Actuals

Set forth below are recon짯ci짯lia짯ti짯ons of the non-GAAP finan짯cial mea짯su짯re to the most direct짯ly com짯pa짯ra짯ble U.S. GAAP finan짯cial mea짯su짯re. The짯se non-GAAP finan짯cial mea짯su짯res should not be con짯side짯red a sub짯sti짯tu짯te for, or supe짯ri짯or to, finan짯cial mea짯su짯res cal짯cu짯la짯ted in accordance with U.S. GAAP, and the recon짯ci짯lia짯ti짯ons from U.S. GAAP to Non-GAAP actu짯als should be careful짯ly eva짯lua짯ted. Plea짯se refer to 쏣xpl짯ana짯ti짯on of Non-GAAP Mea짯su짯res in this docu짯ment for a detail짯ed expl짯ana짯ti짯on of the adjus짯t짯ments made to the com짯pa짯ra짯ble U.S. GAAP mea짯su짯res, the ways manage짯ment uses the non-GAAP mea짯su짯res, and the reasons why manage짯ment belie짯ves the non-GAAP mea짯su짯res pro짯vi짯de useful infor짯ma짯ti짯on for investors.

    Three Months Ended
(In Mil짯li짯ons, Except Per Share Amounts)   Jul 2, 2022   Jun 26, 2021
GAAP net revenue   $ 15,321   $ 19,631
NAND memo짯ry business     (1,098)
Non-GAAP net revenue   $ 15,321   $ 18,533
GAAP gross margin   $ 5,587   $ 11,206
Acqui짯si짯ti짯on-rela짯ted adjustments   329   314
Share-based com짯pen짯sa짯ti짯on   188   106
Patent sett짯le짯ment   204  
Opta짯ne inven짯to짯ry impairment   559  
NAND memo짯ry business     (544)
Non-GAAP gross margin   $ 6,867   $ 11,082
GAAP gross mar짯gin percentage   36.5 %   57.1 %
Acqui짯si짯ti짯on-rela짯ted adjustments   2.2 %   1.6 %
Share-based com짯pen짯sa짯ti짯on   1.2 %   0.5 %
Patent sett짯le짯ment   1.3 %   %
Opta짯ne inven짯to짯ry impairment   3.6 %   %
NAND memo짯ry business   %   0.5 %
Non-GAAP gross mar짯gin per짯cen짯ta짯ge1   44.8 %   59.8 %
GAAP R&D and MG&A   $ 6,200   $ 5,314
Acqui짯si짯ti짯on-rela짯ted adjustments   (48)   (52)
Share-based com짯pen짯sa짯ti짯on   (702)   (513)
NAND memo짯ry business     (142)
Non-GAAP R&D and MG&A   $ 5,450   $ 4,607
GAAP ope짯ra짯ting inco짯me (loss)   $ (700)   $ 5,546
Acqui짯si짯ti짯on-rela짯ted adjustments   377   366
Res짯truc짯tu짯ring and other charges   87   346
Share-based com짯pen짯sa짯ti짯on   890   619
Patent sett짯le짯ment   204  
Opta짯ne inven짯to짯ry impairment   559  
NAND memo짯ry business     (402)
Non-GAAP ope짯ra짯ting income   $ 1,417   $ 6,475
GAAP ope짯ra짯ting margin   (4.6) %   28.3 %
Acqui짯si짯ti짯on-rela짯ted adjustments   2.5 %   1.9 %
Res짯truc짯tu짯ring and other charges   0.6 %   1.8 %
Share-based com짯pen짯sa짯ti짯on   5.8 %   3.2 %
Patent sett짯le짯ment   1.3 %   %
Opta짯ne inven짯to짯ry impairment   3.6 %   %
NAND memo짯ry business   %   (0.3) %
Non-GAAP ope짯ra짯ting mar짯gin1   9.2 %   34.9 %
1Our recon짯ci짯lia짯ti짯ons of GAAP to non-GAAP pri짯or year gross mar짯gin and ope짯ra짯ting mar짯gin per짯cen짯ta짯ge reflect the exclu짯si짯on of our NAND memo짯ry busi짯ness from net revenue.
GAAP tax rate   50.1 %   11.9 %
Tax Reform   (2.5) %   %
Inco짯me tax effects   (37.3) %   0.8 %
Non-GAAP tax rate   10.3 %   12.7 %
         
(In Mil짯li짯ons, Except Per Share Amounts)   Jul 2, 2022   Jun 26, 2021
GAAP net inco짯me (loss)   $ (454)   $ 5,061
Acqui짯si짯ti짯on-rela짯ted adjustments   377   366
Res짯truc짯tu짯ring and other charges   87   346
Share-based com짯pen짯sa짯ti짯on   890   619
Patent sett짯le짯ment   204  
Opta짯ne inven짯to짯ry impairment   559  
(Gains) los짯ses from divestiture   19  
(Gains) los짯ses on equi짯ty invest짯ments, net   90   (295)
NAND memo짯ry business     (402)
Tax Reform   33  
Inco짯me tax effects   (624)   (124)
Non-GAAP net income   $ 1,181   $ 5,571
 
GAAP ear짯nings (loss) per share봡iluted   $ (0.11)   $ 1.24
Acqui짯si짯ti짯on-rela짯ted adjustments   0.09   0.09
Res짯truc짯tu짯ring and other charges   0.02   0.08
Share-based com짯pen짯sa짯ti짯on   0.22   0.15
Patent sett짯le짯ment   0.05  
Opta짯ne inven짯to짯ry impairment   0.14  
(Gains) los짯ses from divestiture    
(Gains) los짯ses on equi짯ty invest짯ments, net   0.02   (0.07)
NAND memo짯ry business     (0.09)
Tax Reform   0.01  
Inco짯me tax effects   (0.15)   (0.04)
Non-GAAP ear짯nings per share봡iluted   $ 0.29   $ 1.36
    Three Months Ended
(In Mil짯li짯ons)   Jul 2, 2022
GAAP cash from operations   $ 809
Net addi짯ti짯ons to pro짯per짯ty, plant and equip짯ment1   (7,190)
Adjus짯ted free cash flow   $ (6,381)
GAAP cash pro짯vi짯ded by inves짯t짯ing activities   $ 168
GAAP cash used for finan짯cing activities   $ (2,802)

1The cal짯cu짯la짯ti짯on of adjus짯ted free cash flow includes addi짯ti짯ons to pro짯per짯ty, plant and equip짯ment net of pro짯ceeds from capi짯tal grants.

Intel Cor짯po짯ra짯ti짯on

Sup짯ple짯men짯tal Recon짯ci짯lia짯ti짯ons of GAAP Out짯look to Non-GAAP Outlook

Set forth below are recon짯ci짯lia짯ti짯ons of the non-GAAP finan짯cial mea짯su짯re to the most direct짯ly com짯pa짯ra짯ble U.S. GAAP finan짯cial mea짯su짯re. The짯se non-GAAP finan짯cial mea짯su짯res should not be con짯side짯red a sub짯sti짯tu짯te for, or supe짯ri짯or to, finan짯cial mea짯su짯res cal짯cu짯la짯ted in accordance with U.S. GAAP, and the finan짯cial out짯look pre짯pared in accordance with U.S. GAAP and the recon짯ci짯lia짯ti짯ons from this Busi짯ness Out짯look should be careful짯ly evaluated.

Plea짯se refer to 쏣xpl짯ana짯ti짯on of Non-GAAP Mea짯su짯res in this docu짯ment for a detail짯ed expl짯ana짯ti짯on of the adjus짯t짯ments made to the com짯pa짯ra짯ble U.S. GAAP mea짯su짯res, the ways manage짯ment uses the non-GAAP mea짯su짯res, and the reasons why manage짯ment belie짯ves the non-GAAP mea짯su짯res pro짯vi짯de useful infor짯ma짯ti짯on for investors.

(In Bil짯li짯ons, Except Per Share Amounts)   Q3 2022 Outlook   Full-Year 2022
    Appro짯xi짯m짯ate짯ly   Appro짯xi짯m짯ate짯ly
GAAP gross margin   43.2 %   44.8 %
Amor짯tiza짯ti짯on of acqui짯si짯ti짯on-rela짯ted intan짯gi짯ble assets   2.1 %   2.0 %
Share-based com짯pen짯sa짯ti짯on   1.2 %   1.1 %
Patent sett짯le짯ment   %   0.3 %
Opta짯ne inven짯to짯ry impairment   %   0.8 %
Non-GAAP gross margin   46.5 %   49.0 %
         
GAAP tax rate   (17) %   6 %
Tax reform   11 %   9 %
Inco짯me tax effects   19 %   (7) %
Non-GAAP tax rate   13 %   8 %
         
GAAP ear짯nings (loss) per share봡iluted   $ 0.12   $ 2.57
Acqui짯si짯ti짯on-rela짯ted adjustments   0.09   0.37
Res짯truc짯tu짯ring and other charges   0.03   (0.23)
Share-based com짯pen짯sa짯ti짯on   0.20   0.79
Patent sett짯le짯ment     0.05
Opta짯ne inven짯to짯ry impairment     0.14
(Gains) los짯ses from divestiture   (0.01)   (0.30)
(Gains) los짯ses on equi짯ty invest짯ments, net   (0.01)   (1.05)
Tax Reform   (0.03)   (0.17)
Inco짯me tax effects   (0.04)   0.13
Non-GAAP ear짯nings per share봡iluted   $ 0.35   $ 2.30

Adjus짯ted Free Cash Flow is pro짯vi짯ded on a non-GAAP basis. We are unable to pro짯vi짯de a full recon짯ci짯lia짯ti짯on of this mea짯su짯re to the cor짯re짯spon짯ding GAAP mea짯su짯re wit짯hout unre짯asonable efforts, as the amount and timing of rela짯ted adjus짯t짯ments on a long-term basis are sub짯ject to con짯sidera짯ble uncer짯tain짯ty, depend on various fac짯tors, and could be mate짯ri짯al to our results com짯pu짯ted in accordance with GAAP. We belie짯ve such a recon짯ci짯lia짯ti짯on would also imply a degree of pre짯cis짯i짯on that is inap짯pro짯pria짯te for this for짯ward-loo짯king measure.

(In Bil짯li짯ons)   Full-Year 2022
GAAP cash from operations   $ 16.8
Net addi짯ti짯ons to pro짯per짯ty, plant and equip짯ment1   (23.0)
Pay짯ments on finan짯ce leases   (0.4)
Sale of equi짯ty investment   4.6
Adjus짯ted free cash flow   $ (2.0)

1The cal짯cu짯la짯ti짯on of adjus짯ted free cash flow includes addi짯ti짯ons to pro짯per짯ty, plant and equip짯ment net of pro짯ceeds from capi짯tal grants.

Released Jul 28, 2022 4:00 PM EDT