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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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For the quarterly period ended April 1, 2017.
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Delaware
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94-1672743
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2200 Mission College Boulevard, Santa Clara, California
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95054-1549
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
þ
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
¨
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Emerging growth company
¨
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(Do not check if a smaller reporting company)
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Class
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Outstanding as of April 1, 2017
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Common stock, $0.001 par value
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4,709 million
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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ITEM 1.
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FINANCIAL STATEMENTS
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Three Months Ended
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||||||
(In Millions, Except Per Share Amounts)
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Apr 1,
2017 |
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Apr 2,
2016 |
||||
Net revenue
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$
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14,796
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$
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13,702
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Cost of sales
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5,649
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5,572
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Gross margin
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9,147
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8,130
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Research and development
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3,326
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3,246
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Marketing, general and administrative
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2,104
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2,226
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Restructuring and other charges
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80
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—
|
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Amortization of acquisition-related intangibles
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38
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90
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Operating expenses
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5,548
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5,562
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Operating income
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3,599
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2,568
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Gains (losses) on equity investments, net
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252
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22
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Interest and other, net
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(36
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)
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(82
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)
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Income before taxes
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3,815
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2,508
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Provision for taxes
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851
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462
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Net income
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$
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2,964
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$
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2,046
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Basic earnings per share of common stock
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$
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0.63
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$
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0.43
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Diluted earnings per share of common stock
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$
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0.61
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$
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0.42
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Cash dividends declared per share of common stock
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$
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0.5325
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$
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0.5200
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Weighted average shares of common stock outstanding:
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|
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||||
Basic
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4,723
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4,722
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Diluted
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4,881
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4,875
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Three Months Ended
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||||||
(In Millions)
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Apr 1,
2017 |
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Apr 2,
2016 |
||||
Net income
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$
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2,964
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$
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2,046
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Changes in other comprehensive income, net of tax:
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Net unrealized holding gains (losses) on available-for-sale investments
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543
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291
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Deferred tax asset valuation allowance
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—
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(1
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)
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Net unrealized holding gains (losses) on derivatives
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195
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187
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Net prior service (costs) credits
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2
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2
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Actuarial valuation
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16
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19
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Net foreign currency translation adjustment
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1
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2
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Other comprehensive income (loss)
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757
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500
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Total comprehensive income
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$
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3,721
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$
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2,546
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(In Millions)
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Apr 1,
2017 |
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Dec 31,
2016 |
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Assets
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|
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Current assets:
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|
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Cash and cash equivalents
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$
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4,934
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$
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5,560
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Short-term investments
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3,058
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3,225
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Trading assets
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9,303
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8,314
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Accounts receivable, net
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4,921
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4,690
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Inventories
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5,801
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5,553
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Assets held for sale
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5,138
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5,210
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Other current assets
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2,903
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2,956
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Total current assets
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36,058
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35,508
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Property, plant and equipment, net of accumulated depreciation of $55,173 ($53,934 as of December 31, 2016)
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36,911
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36,171
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Marketable equity securities
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6,831
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6,180
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Other long-term investments
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5,149
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4,716
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Goodwill
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14,099
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14,099
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Identified intangible assets, net
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9,157
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9,494
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Other long-term assets
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7,443
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7,159
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Total assets
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$
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115,648
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$
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113,327
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Liabilities, temporary equity, and stockholders’ equity
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Current liabilities:
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Short-term debt
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$
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5,073
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$
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4,634
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Accounts payable
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3,221
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|
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2,475
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Accrued compensation and benefits
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2,145
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3,465
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Accrued advertising
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772
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810
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Deferred income
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1,698
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1,718
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Liabilities held for sale
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1,746
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1,920
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Other accrued liabilities
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6,650
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5,280
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Total current liabilities
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21,305
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20,302
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Long-term debt
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20,678
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20,649
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Long-term deferred tax liabilities
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2,285
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1,730
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Other long-term liabilities
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3,658
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3,538
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Contingencies (Note 15)
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|
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Temporary equity
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878
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882
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Stockholders’ equity:
|
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Preferred stock
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—
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—
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Common stock and capital in excess of par value, 4,709 issued and outstanding (4,730 issued and outstanding as of December 31, 2016)
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25,890
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25,373
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|
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Accumulated other comprehensive income (loss)
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863
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|
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106
|
|
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Retained earnings
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40,091
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|
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40,747
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|
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Total stockholders’ equity
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66,844
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|
|
66,226
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|
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Total liabilities, temporary equity, and stockholders’ equity
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$
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115,648
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|
|
$
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113,327
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|
|
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Three Months Ended
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||||||
(In Millions)
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|
Apr 1,
2017 |
|
Apr 2,
2016 |
||||
Cash and cash equivalents, beginning of period
|
|
$
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5,560
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|
|
$
|
15,308
|
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Cash flows provided by (used for) operating activities:
|
|
|
|
|
||||
Net income
|
|
2,964
|
|
|
2,046
|
|
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Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation
|
|
1,625
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|
|
1,619
|
|
||
Share-based compensation
|
|
397
|
|
|
448
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|
||
Restructuring and other charges
|
|
80
|
|
|
—
|
|
||
Amortization of intangibles
|
|
321
|
|
|
396
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|
||
(Gains) losses on equity investments, net
|
|
(250
|
)
|
|
(22
|
)
|
||
Deferred taxes
|
|
212
|
|
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(43
|
)
|
||
Changes in assets and liabilities:
1
|
|
|
|
|
||||
Accounts receivable
|
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(105
|
)
|
|
942
|
|
||
Inventories
|
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(232
|
)
|
|
(57
|
)
|
||
Accounts payable
|
|
188
|
|
|
434
|
|
||
Accrued compensation and benefits
|
|
(1,277
|
)
|
|
(1,307
|
)
|
||
Income taxes payable and receivable
|
|
427
|
|
|
497
|
|
||
Other assets and liabilities
|
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(452
|
)
|
|
(898
|
)
|
||
Total adjustments
|
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934
|
|
|
2,009
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|
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Net cash provided by operating activities
|
|
3,898
|
|
|
4,055
|
|
||
Cash flows provided by (used for) investing activities:
|
|
|
|
|
||||
Additions to property, plant and equipment
|
|
(1,952
|
)
|
|
(1,346
|
)
|
||
Acquisitions, net of cash acquired
|
|
—
|
|
|
(14,569
|
)
|
||
Purchases of available-for-sale investments
|
|
(1,746
|
)
|
|
(2,847
|
)
|
||
Sales of available-for-sale investments
|
|
431
|
|
|
2,810
|
|
||
Maturities of available-for-sale investments
|
|
1,508
|
|
|
1,359
|
|
||
Purchases of trading assets
|
|
(3,075
|
)
|
|
(4,533
|
)
|
||
Maturities and sales of trading assets
|
|
2,433
|
|
|
3,138
|
|
||
Investments in loans receivable and reverse repurchase agreements
|
|
—
|
|
|
(223
|
)
|
||
Collection of loans receivable and reverse repurchase agreements
|
|
—
|
|
|
650
|
|
||
Investments in non-marketable equity investments
|
|
(422
|
)
|
|
(182
|
)
|
||
Purchases of licensed technology and patents
|
|
(115
|
)
|
|
—
|
|
||
Other investing
|
|
160
|
|
|
223
|
|
||
Net cash used for investing activities
|
|
(2,778
|
)
|
|
(15,520
|
)
|
||
Cash flows provided by (used for) financing activities:
|
|
|
|
|
||||
Increase (decrease) in short-term debt, net
|
|
435
|
|
|
956
|
|
||
Proceeds from sales of common stock through employee equity incentive plans
|
|
329
|
|
|
343
|
|
||
Repurchase of common stock
|
|
(1,242
|
)
|
|
(793
|
)
|
||
Restricted stock unit withholdings
|
|
(70
|
)
|
|
(63
|
)
|
||
Payment of dividends to stockholders
|
|
(1,229
|
)
|
|
(1,228
|
)
|
||
Other financing
|
|
31
|
|
|
3
|
|
||
Net cash provided by (used for) financing activities
|
|
(1,746
|
)
|
|
(782
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
(626
|
)
|
|
(12,247
|
)
|
||
Cash and cash equivalents, end of period
|
|
$
|
4,934
|
|
|
$
|
3,061
|
|
|
|
|
|
|
||||
Supplemental disclosures of noncash investing activities and cash flow information:
|
|
|
|
|
||||
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities
|
|
$
|
1,448
|
|
|
$
|
1,083
|
|
Cash paid during the period for:
|
|
|
|
|
||||
Interest, net of capitalized interest and interest rate swap payments/receipts
|
|
$
|
97
|
|
|
$
|
254
|
|
Income taxes, net of refunds
|
|
$
|
171
|
|
|
$
|
(72
|
)
|
1
|
The impact of assets and liabilities reclassified as held for sale was not considered in the changes in assets and liabilities within cash flows from operating activities. See "
Note 8: Acquisitions and Divestitures
" for additional information.
|
Client Computing Group (CCG)
|
|
Includes platforms designed for notebooks, 2 in 1 systems, desktops (including all-in-ones and high-end enthusiast PCs), tablets, phones, wireless and wired connectivity products, and mobile communication components.
|
|
Data Center Group (DCG)
|
|
Includes workload-optimized platforms and related products designed for enterprise, cloud, and communication infrastructure market segments.
|
|
Internet of Things Group (IOTG)
|
|
Includes platforms designed for Internet of Things market segments, including retail, transportation, industrial, video, buildings and smart cities, along with a broad range of other market segments.
|
|
Non-Volatile Memory Solutions Group (NSG)
|
|
Includes Intel® Optane™ SSD products and NAND flash memory products primarily used in solid-state drives.
|
|
Intel Security Group (ISecG)
|
|
Includes security software products designed to deliver innovative solutions that secure computers, mobile devices, and networks around the world.
|
|
Programmable Solutions Group (PSG)
|
|
Includes programmable semiconductors primarily field-programmable gate array (FPGAs) and related products for a broad range of market segments, including communications, data center, industrial, military, and automotive.
|
|
All other
|
|
Includes results from our other non-reportable segments and corporate-related charges.
|
•
|
results of operations from non-reportable segments;
|
•
|
amounts included within restructuring and other charges;
|
•
|
a portion of profit-dependent compensation and other expenses not allocated to the operating segments;
|
•
|
divested businesses for which discrete operating results are not regularly reviewed by our Chief Operating Decision Maker (CODM), who is our Chief Executive Officer;
|
•
|
results of operations of start-up businesses that support our initiatives, including our foundry business; and
|
•
|
acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.
|
|
|
Three Months Ended
|
||||||
(In Millions)
|
|
Apr 1,
2017 |
|
Apr 2,
2016 |
||||
Net revenue:
|
|
|
|
|
||||
Client Computing Group
|
|
|
|
|
||||
Platform
|
|
$
|
7,397
|
|
|
$
|
7,199
|
|
Other
|
|
579
|
|
|
350
|
|
||
|
|
7,976
|
|
|
7,549
|
|
||
Data Center Group
|
|
|
|
|
||||
Platform
|
|
3,879
|
|
|
3,707
|
|
||
Other
|
|
353
|
|
|
292
|
|
||
|
|
4,232
|
|
|
3,999
|
|
||
Internet of Things Group
|
|
|
|
|
||||
Platform
|
|
632
|
|
|
571
|
|
||
Other
|
|
89
|
|
|
80
|
|
||
|
|
721
|
|
|
651
|
|
||
Non-Volatile Memory Solutions Group
|
|
866
|
|
|
557
|
|
||
Intel Security Group
|
|
534
|
|
|
537
|
|
||
Programmable Solutions Group
|
|
425
|
|
|
359
|
|
||
All other
|
|
42
|
|
|
50
|
|
||
Total net revenue
|
|
$
|
14,796
|
|
|
$
|
13,702
|
|
Operating income (loss):
|
|
|
|
|
||||
Client Computing Group
|
|
$
|
3,031
|
|
|
$
|
1,885
|
|
Data Center Group
|
|
1,487
|
|
|
1,764
|
|
||
Internet of Things Group
|
|
105
|
|
|
123
|
|
||
Non-Volatile Memory Solutions Group
|
|
(129
|
)
|
|
(95
|
)
|
||
Intel Security Group
|
|
95
|
|
|
85
|
|
||
Programmable Solutions Group
|
|
92
|
|
|
(200
|
)
|
||
All other
|
|
(1,082
|
)
|
|
(994
|
)
|
||
Total operating income
|
|
$
|
3,599
|
|
|
$
|
2,568
|
|
|
|
Three Months Ended
|
||||||
(In Millions, Except Per Share Amounts)
|
|
Apr 1,
2017 |
|
Apr 2,
2016 |
||||
Net income available to common stockholders
|
|
$
|
2,964
|
|
|
$
|
2,046
|
|
Weighted average shares of common stock outstanding—basic
|
|
4,723
|
|
|
4,722
|
|
||
Dilutive effect of employee equity incentive plans
|
|
58
|
|
|
66
|
|
||
Dilutive effect of convertible debt
|
|
100
|
|
|
87
|
|
||
Weighted average shares of common stock outstanding—diluted
|
|
4,881
|
|
|
4,875
|
|
||
Basic earnings per share of common stock
|
|
$
|
0.63
|
|
|
$
|
0.43
|
|
Diluted earnings per share of common stock
|
|
$
|
0.61
|
|
|
$
|
0.42
|
|
(In Millions)
|
|
Apr 1,
2017 |
|
Dec 31,
2016 |
||||
Raw materials
|
|
$
|
786
|
|
|
$
|
695
|
|
Work in process
|
|
3,412
|
|
|
3,190
|
|
||
Finished goods
|
|
1,603
|
|
|
1,668
|
|
||
Total inventories
|
|
$
|
5,801
|
|
|
$
|
5,553
|
|
(In Millions)
|
|
Apr 1,
2017 |
|
Dec 31,
2016 |
||||
Deferred income on shipments of components to distributors
|
|
$
|
1,461
|
|
|
$
|
1,475
|
|
Deferred income from software, services and other
|
|
237
|
|
|
243
|
|
||
Current deferred income
|
|
$
|
1,698
|
|
|
$
|
1,718
|
|
|
|
Three Months Ended
|
||||||
(In Millions)
|
|
Apr 1,
2017 |
|
Apr 2,
2016 |
||||
Share of equity method investee losses, net
|
|
$
|
(11
|
)
|
|
$
|
(8
|
)
|
Impairments
|
|
(48
|
)
|
|
(29
|
)
|
||
Gains on sales, net
|
|
274
|
|
|
96
|
|
||
Other, net
|
|
37
|
|
|
(37
|
)
|
||
Total gains (losses) on equity investments, net
|
|
$
|
252
|
|
|
$
|
22
|
|
|
|
Three Months Ended
|
||||||
(In Millions)
|
|
Apr 1,
2017 |
|
Apr 2,
2016 |
||||
Interest income
|
|
$
|
76
|
|
|
$
|
52
|
|
Interest expense
|
|
(146
|
)
|
|
(208
|
)
|
||
Other, net
|
|
34
|
|
|
74
|
|
||
Total interest and other, net
|
|
$
|
(36
|
)
|
|
$
|
(82
|
)
|
|
|
Three Months Ended
|
||
(In Millions)
|
|
Apr 1,
2017 |
||
2016 Restructuring Program
|
|
$
|
(11
|
)
|
Other charges
|
|
91
|
|
|
Total restructuring and other charges
|
|
$
|
80
|
|
|
|
Three Months Ended
|
||
(In Millions)
|
|
Apr 1,
2017 |
||
Employee severance and benefit arrangements
|
|
$
|
(21
|
)
|
Asset impairment and other charges
|
|
10
|
|
|
Total restructuring and other charges
|
|
$
|
(11
|
)
|
(In Millions)
|
|
Employee Severance and Benefits
|
|
Asset Impairments and Other
|
|
Total
|
||||||
Accrued restructuring balance as of December 31, 2016
|
|
$
|
585
|
|
|
$
|
10
|
|
|
$
|
595
|
|
Additional accruals
|
|
—
|
|
|
10
|
|
|
10
|
|
|||
Adjustments
|
|
(21
|
)
|
|
—
|
|
|
(21
|
)
|
|||
Cash payments
|
|
(108
|
)
|
|
(8
|
)
|
|
(116
|
)
|
|||
Non-cash settlements
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Accrued restructuring balance as of April 1, 2017
|
|
$
|
456
|
|
|
$
|
11
|
|
|
$
|
467
|
|
|
|
Three Months Ended
|
||
(In Millions)
|
|
Apr 1,
2017 |
||
ISecG separation costs
|
|
$
|
73
|
|
Other
|
|
18
|
|
|
Total other charges
|
|
$
|
91
|
|
|
|
April 1, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
(In Millions)
|
|
Adjusted Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
|
Adjusted Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||||||||||
Corporate debt
|
|
$
|
4,396
|
|
|
$
|
7
|
|
|
$
|
(10
|
)
|
|
$
|
4,393
|
|
|
$
|
3,847
|
|
|
$
|
4
|
|
|
$
|
(14
|
)
|
|
$
|
3,837
|
|
Financial institution instruments
|
|
4,708
|
|
|
8
|
|
|
(10
|
)
|
|
4,706
|
|
|
6,098
|
|
|
5
|
|
|
(11
|
)
|
|
6,092
|
|
||||||||
Government debt
|
|
1,417
|
|
|
1
|
|
|
(7
|
)
|
|
1,411
|
|
|
1,581
|
|
|
—
|
|
|
(8
|
)
|
|
1,573
|
|
||||||||
Marketable equity securities
|
|
2,649
|
|
|
4,182
|
|
|
—
|
|
|
6,831
|
|
|
2,818
|
|
|
3,363
|
|
|
(1
|
)
|
|
6,180
|
|
||||||||
Total available-for-sale investments
|
|
$
|
13,170
|
|
|
$
|
4,198
|
|
|
$
|
(27
|
)
|
|
$
|
17,341
|
|
|
$
|
14,344
|
|
|
$
|
3,372
|
|
|
$
|
(34
|
)
|
|
$
|
17,682
|
|
(In Millions)
|
|
Fair Value
|
||
Due in 1 year or less
|
|
$
|
4,287
|
|
Due in 1–2 years
|
|
1,647
|
|
|
Due in 2–5 years
|
|
3,357
|
|
|
Due after 5 years
|
|
145
|
|
|
Instruments not due at a single maturity date
|
|
1,074
|
|
|
Total
|
|
$
|
10,510
|
|
(In Millions)
|
|
Apr 1,
2017 |
||
Accounts receivable
|
|
$
|
280
|
|
Goodwill
|
|
3,600
|
|
|
Identified intangible assets
|
|
966
|
|
|
Other assets
|
|
269
|
|
|
Total assets held for sale
|
|
$
|
5,115
|
|
|
|
|
||
Deferred income
|
|
$
|
1,552
|
|
Other liabilities
|
|
194
|
|
|
Total liabilities held for sale
|
|
$
|
1,746
|
|
|
|
April 1, 2017
|
||||||||||
(In Millions)
|
|
Gross Assets
|
|
Accumulated
Amortization |
|
Net
|
||||||
Acquisition-related developed technology
|
|
$
|
7,340
|
|
|
$
|
(1,992
|
)
|
|
$
|
5,348
|
|
Acquisition-related customer relationships
|
|
1,340
|
|
|
(190
|
)
|
|
1,150
|
|
|||
Acquisition-related brands
|
|
79
|
|
|
(16
|
)
|
|
63
|
|
|||
Licensed technology and patents
|
|
3,178
|
|
|
(1,390
|
)
|
|
1,788
|
|
|||
Identified intangible assets subject to amortization
|
|
11,937
|
|
|
(3,588
|
)
|
|
8,349
|
|
|||
In-process research and development
|
|
808
|
|
|
—
|
|
|
808
|
|
|||
Identified intangible assets not subject to amortization
|
|
808
|
|
|
—
|
|
|
808
|
|
|||
Total identified intangible assets
|
|
$
|
12,745
|
|
|
$
|
(3,588
|
)
|
|
$
|
9,157
|
|
|
|
December 31, 2016
|
||||||||||
(In Millions)
|
|
Gross Assets
|
|
Accumulated
Amortization |
|
Net
|
||||||
Acquisition-related developed technology
|
|
$
|
7,405
|
|
|
$
|
(1,836
|
)
|
|
$
|
5,569
|
|
Acquisition-related customer relationships
|
|
1,449
|
|
|
(260
|
)
|
|
1,189
|
|
|||
Acquisition-related brands
|
|
87
|
|
|
(21
|
)
|
|
66
|
|
|||
Licensed technology and patents
|
|
3,285
|
|
|
(1,423
|
)
|
|
1,862
|
|
|||
Identified intangible assets subject to amortization
|
|
12,226
|
|
|
(3,540
|
)
|
|
8,686
|
|
|||
In-process research and development
|
|
808
|
|
|
—
|
|
|
808
|
|
|||
Identified intangible assets not subject to amortization
|
|
808
|
|
|
—
|
|
|
808
|
|
|||
Total identified intangible assets
|
|
$
|
13,034
|
|
|
$
|
(3,540
|
)
|
|
$
|
9,494
|
|
|
|
|
|
Three Months Ended
|
||||||
(In Millions)
|
|
Location
|
|
Apr 1,
2017 |
|
Apr 2,
2016 |
||||
Acquisition-related developed technology
|
|
Cost of sales
|
|
$
|
209
|
|
|
$
|
235
|
|
Acquisition-related customer relationships
|
|
Amortization of acquisition-related intangibles
|
|
35
|
|
|
83
|
|
||
Acquisition-related brands
|
|
Amortization of acquisition-related intangibles
|
|
3
|
|
|
7
|
|
||
Licensed technology and patents
|
|
Cost of sales
|
|
74
|
|
|
71
|
|
||
Total amortization expenses
|
|
|
|
$
|
321
|
|
|
$
|
396
|
|
(In Millions)
|
|
Remainder of 2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
||||||||||
Acquisition-related developed technology
|
|
$
|
592
|
|
|
$
|
784
|
|
|
$
|
782
|
|
|
$
|
750
|
|
|
$
|
715
|
|
Acquisition-related customer relationships
|
|
101
|
|
|
122
|
|
|
121
|
|
|
119
|
|
|
119
|
|
|||||
Acquisition-related brands
|
|
10
|
|
|
13
|
|
|
13
|
|
|
13
|
|
|
14
|
|
|||||
Licensed technology and patents
|
|
205
|
|
|
230
|
|
|
218
|
|
|
193
|
|
|
177
|
|
|||||
Total future amortization expenses
|
|
$
|
908
|
|
|
$
|
1,149
|
|
|
$
|
1,134
|
|
|
$
|
1,075
|
|
|
$
|
1,025
|
|
(In Millions)
|
|
Apr 1,
2017 |
|
Dec 31,
2016 |
||||
Equity method investments
|
|
$
|
1,315
|
|
|
$
|
1,328
|
|
Non-marketable cost method investments
|
|
3,418
|
|
|
3,098
|
|
||
Non-current deferred tax assets
|
|
915
|
|
|
907
|
|
||
Pre-payments for property, plant and equipment
|
|
419
|
|
|
347
|
|
||
Loans receivable
|
|
360
|
|
|
236
|
|
||
Reverse repurchase agreements
|
|
—
|
|
|
250
|
|
||
Other
|
|
1,016
|
|
|
993
|
|
||
Total other long-term assets
|
|
$
|
7,443
|
|
|
$
|
7,159
|
|
|
|
April 1, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||||||||
|
|
Fair Value Measured and Recorded at Reporting Date Using
|
|
|
|
Fair Value Measured and Recorded at Reporting Date Using
|
|
|
||||||||||||||||||||||||
(In Millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt
|
|
$
|
—
|
|
|
$
|
650
|
|
|
$
|
—
|
|
|
$
|
650
|
|
|
$
|
—
|
|
|
$
|
498
|
|
|
$
|
—
|
|
|
$
|
498
|
|
Financial institution instruments
|
|
1,075
|
|
|
528
|
|
|
—
|
|
|
1,603
|
|
|
1,920
|
|
|
811
|
|
|
—
|
|
|
2,731
|
|
||||||||
Government debt
|
|
—
|
|
|
50
|
|
|
—
|
|
|
50
|
|
|
—
|
|
|
332
|
|
|
—
|
|
|
332
|
|
||||||||
Reverse repurchase agreements
|
|
—
|
|
|
1,398
|
|
|
—
|
|
|
1,398
|
|
|
—
|
|
|
768
|
|
|
—
|
|
|
768
|
|
||||||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt
|
|
320
|
|
|
1,103
|
|
|
6
|
|
|
1,429
|
|
|
391
|
|
|
941
|
|
|
6
|
|
|
1,338
|
|
||||||||
Financial institution instruments
|
|
253
|
|
|
1,140
|
|
|
—
|
|
|
1,393
|
|
|
119
|
|
|
1,484
|
|
|
—
|
|
|
1,603
|
|
||||||||
Government debt
|
|
100
|
|
|
136
|
|
|
—
|
|
|
236
|
|
|
71
|
|
|
213
|
|
|
—
|
|
|
284
|
|
||||||||
Trading assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Asset-backed securities
|
|
—
|
|
|
57
|
|
|
6
|
|
|
63
|
|
|
—
|
|
|
80
|
|
|
7
|
|
|
87
|
|
||||||||
Corporate debt
|
|
2,307
|
|
|
598
|
|
|
—
|
|
|
2,905
|
|
|
2,237
|
|
|
610
|
|
|
—
|
|
|
2,847
|
|
||||||||
Financial institution instruments
|
|
873
|
|
|
561
|
|
|
—
|
|
|
1,434
|
|
|
973
|
|
|
671
|
|
|
—
|
|
|
1,644
|
|
||||||||
Government debt
|
|
2,313
|
|
|
2,588
|
|
|
—
|
|
|
4,901
|
|
|
2,063
|
|
|
1,673
|
|
|
—
|
|
|
3,736
|
|
||||||||
Other current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative assets
|
|
—
|
|
|
285
|
|
|
—
|
|
|
285
|
|
|
—
|
|
|
382
|
|
|
—
|
|
|
382
|
|
||||||||
Loans receivable
|
|
—
|
|
|
215
|
|
|
—
|
|
|
215
|
|
|
—
|
|
|
326
|
|
|
—
|
|
|
326
|
|
||||||||
Marketable equity securities
|
|
6,831
|
|
|
—
|
|
|
—
|
|
|
6,831
|
|
|
6,180
|
|
|
—
|
|
|
—
|
|
|
6,180
|
|
||||||||
Other long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt
|
|
1,644
|
|
|
664
|
|
|
6
|
|
|
2,314
|
|
|
1,126
|
|
|
869
|
|
|
6
|
|
|
2,001
|
|
||||||||
Financial institution instruments
|
|
1,021
|
|
|
689
|
|
|
—
|
|
|
1,710
|
|
|
663
|
|
|
1,095
|
|
|
—
|
|
|
1,758
|
|
||||||||
Government debt
|
|
888
|
|
|
237
|
|
|
—
|
|
|
1,125
|
|
|
681
|
|
|
276
|
|
|
—
|
|
|
957
|
|
||||||||
Other long-term assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative assets
|
|
—
|
|
|
74
|
|
|
9
|
|
|
83
|
|
|
—
|
|
|
31
|
|
|
9
|
|
|
40
|
|
||||||||
Loans receivable
|
|
—
|
|
|
360
|
|
|
—
|
|
|
360
|
|
|
—
|
|
|
236
|
|
|
—
|
|
|
236
|
|
||||||||
Total assets measured and recorded at fair value
|
|
17,625
|
|
|
11,333
|
|
|
27
|
|
|
28,985
|
|
|
16,424
|
|
|
11,296
|
|
|
28
|
|
|
27,748
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other accrued liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities
|
|
—
|
|
|
304
|
|
|
—
|
|
|
304
|
|
|
—
|
|
|
371
|
|
|
—
|
|
|
371
|
|
||||||||
Other long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities
|
|
—
|
|
|
193
|
|
|
30
|
|
|
223
|
|
|
—
|
|
|
179
|
|
|
33
|
|
|
212
|
|
||||||||
Total liabilities measured and recorded at fair value
|
|
$
|
—
|
|
|
$
|
497
|
|
|
$
|
30
|
|
|
$
|
527
|
|
|
$
|
—
|
|
|
$
|
550
|
|
|
$
|
33
|
|
|
$
|
583
|
|
|
|
April 1, 2017
|
||||||||||||||||||
(In Millions)
|
|
Carrying
Amount
|
|
Fair Value Measured Using
|
|
Fair Value
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||||||||
Grants receivable
|
|
$
|
359
|
|
|
$
|
—
|
|
|
$
|
360
|
|
|
$
|
—
|
|
|
$
|
360
|
|
Loans receivable
|
|
$
|
265
|
|
|
$
|
—
|
|
|
$
|
265
|
|
|
$
|
—
|
|
|
$
|
265
|
|
Non-marketable cost method investments
|
|
$
|
3,418
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,287
|
|
|
$
|
4,287
|
|
Reverse repurchase agreements
|
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
250
|
|
Short-term debt
|
|
$
|
5,043
|
|
|
$
|
3,003
|
|
|
$
|
2,567
|
|
|
$
|
—
|
|
|
$
|
5,570
|
|
Long-term debt
|
|
$
|
20,678
|
|
|
$
|
8,618
|
|
|
$
|
13,425
|
|
|
$
|
—
|
|
|
$
|
22,043
|
|
|
|
December 31, 2016
|
||||||||||||||||||
(In Millions)
|
|
Carrying
Amount
|
|
Fair Value Measured Using
|
|
Fair Value
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||||||||
Grants receivable
|
|
$
|
361
|
|
|
$
|
—
|
|
|
$
|
362
|
|
|
$
|
—
|
|
|
$
|
362
|
|
Loans receivable
|
|
$
|
265
|
|
|
$
|
—
|
|
|
$
|
265
|
|
|
$
|
—
|
|
|
$
|
265
|
|
Non-marketable cost method investments
|
|
$
|
3,098
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,890
|
|
|
$
|
3,890
|
|
Reverse repurchase agreements
|
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
250
|
|
Short-term debt
|
|
$
|
4,609
|
|
|
$
|
3,006
|
|
|
$
|
2,114
|
|
|
$
|
—
|
|
|
$
|
5,120
|
|
Long-term debt
|
|
$
|
20,649
|
|
|
$
|
12,171
|
|
|
$
|
9,786
|
|
|
$
|
—
|
|
|
$
|
21,957
|
|
(In Millions)
|
|
Unrealized Holding Gains (Losses) on Available-for-Sale Investments
|
|
Unrealized Holding Gains (Losses) on Derivatives
|
|
Prior Service Credits (Costs)
|
|
Actuarial Gains (Losses)
|
|
Foreign Currency Translation Adjustment
|
|
Total
|
||||||||||||
December 31, 2016
|
|
$
|
2,164
|
|
|
$
|
(259
|
)
|
|
$
|
(40
|
)
|
|
$
|
(1,240
|
)
|
|
$
|
(519
|
)
|
|
$
|
106
|
|
Other comprehensive income (loss) before reclassifications
|
|
1,098
|
|
|
266
|
|
|
—
|
|
|
(6
|
)
|
|
1
|
|
|
1,359
|
|
||||||
Amounts reclassified out of accumulated other comprehensive income (loss)
|
|
(263
|
)
|
|
(1
|
)
|
|
2
|
|
|
22
|
|
|
—
|
|
|
(240
|
)
|
||||||
Tax effects
|
|
(292
|
)
|
|
(70
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(362
|
)
|
||||||
Other comprehensive income (loss)
|
|
543
|
|
|
195
|
|
|
2
|
|
|
16
|
|
|
1
|
|
|
757
|
|
||||||
April 1, 2017
|
|
$
|
2,707
|
|
|
$
|
(64
|
)
|
|
$
|
(38
|
)
|
|
$
|
(1,224
|
)
|
|
$
|
(518
|
)
|
|
$
|
863
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended
|
|
|
||||||
Comprehensive Income Components
|
|
Apr 1,
2017 |
|
Apr 2,
2016 |
|
Location
|
||||
Unrealized holding gains (losses)
1
on available-for-sale investments:
|
|
|
|
|
|
|
||||
|
|
$
|
263
|
|
|
$
|
86
|
|
|
Gains (losses) on equity investments, net
|
|
|
—
|
|
|
(1
|
)
|
|
Interest and other, net
|
||
|
|
263
|
|
|
85
|
|
|
|
||
Unrealized holding gains (losses) on derivatives:
|
|
|
|
|
|
|
||||
Foreign currency contracts
|
|
(20
|
)
|
|
(42
|
)
|
|
Cost of sales
|
||
|
|
(16
|
)
|
|
(10
|
)
|
|
Research and development
|
||
|
|
(5
|
)
|
|
(4
|
)
|
|
Marketing, general and administrative
|
||
|
|
4
|
|
|
—
|
|
|
Gains (losses) on equity investments, net
|
||
|
|
38
|
|
|
34
|
|
|
Interest and other, net
|
||
|
|
1
|
|
|
(22
|
)
|
|
|
||
Amortization of pension and postretirement benefit components:
|
|
|
|
|
|
|
||||
Prior service credits (costs)
|
|
(2
|
)
|
|
(2
|
)
|
|
|
||
Actuarial gains (losses)
|
|
(22
|
)
|
|
(12
|
)
|
|
|
||
|
|
(24
|
)
|
|
(14
|
)
|
|
|
||
Total amounts reclassified out of accumulated other comprehensive income (loss)
|
|
$
|
240
|
|
|
$
|
49
|
|
|
|
1
|
We determine the cost of the investment sold based on an average cost basis at the individual security level.
|
(In Millions)
|
|
Apr 1,
2017 |
|
Dec 31,
2016 |
|
Apr 2,
2016 |
||||||
Foreign currency contracts
|
|
$
|
18,575
|
|
|
$
|
17,960
|
|
|
$
|
17,520
|
|
Interest rate contracts
|
|
14,815
|
|
|
14,228
|
|
|
11,540
|
|
|||
Other
|
|
1,357
|
|
|
1,340
|
|
|
1,210
|
|
|||
Total
|
|
$
|
34,747
|
|
|
$
|
33,528
|
|
|
$
|
30,270
|
|
|
|
April 1, 2017
|
|
December 31, 2016
|
||||||||||||
(In Millions)
|
|
Assets
1
|
|
Liabilities
2
|
|
Assets
1
|
|
Liabilities
2
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
3
|
|
$
|
173
|
|
|
$
|
94
|
|
|
$
|
21
|
|
|
$
|
252
|
|
Interest rate contracts
|
|
2
|
|
|
200
|
|
|
3
|
|
|
187
|
|
||||
Total derivatives designated as hedging instruments
|
|
175
|
|
|
294
|
|
|
24
|
|
|
439
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
4
|
|
167
|
|
|
200
|
|
|
374
|
|
|
114
|
|
||||
Interest rate contracts
|
|
16
|
|
|
33
|
|
|
15
|
|
|
30
|
|
||||
Other
|
|
10
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||
Total derivatives not designated as hedging instruments
|
|
193
|
|
|
233
|
|
|
398
|
|
|
144
|
|
||||
Total derivatives
|
|
$
|
368
|
|
|
$
|
527
|
|
|
$
|
422
|
|
|
$
|
583
|
|
1
|
Derivative assets are recorded as other assets, current and non-current in the consolidated condensed balance sheets.
|
2
|
Derivative liabilities are recorded as other liabilities, current and non-current in the consolidated condensed balance sheets.
|
3
|
The substantial majority of these instruments mature within
12 months.
|
4
|
The majority of these instruments mature within
12 months.
|
|
|
April 1, 2017
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
|
||||||||||||||
(In Millions)
|
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Balance Sheet
|
|
Net Amounts Presented in the Balance Sheet
|
|
Financial Instruments
|
|
Cash and Non-Cash Collateral Received or Pledged
|
|
Net Amount
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative assets subject to master netting arrangements
|
|
$
|
357
|
|
|
$
|
—
|
|
|
$
|
357
|
|
|
$
|
(243
|
)
|
|
$
|
(82
|
)
|
|
$
|
32
|
|
Reverse repurchase agreements
|
|
1,648
|
|
|
—
|
|
|
1,648
|
|
|
—
|
|
|
(1,648
|
)
|
|
—
|
|
||||||
Total assets
|
|
2,005
|
|
|
—
|
|
|
2,005
|
|
|
(243
|
)
|
|
(1,730
|
)
|
|
32
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative liabilities subject to master netting arrangements
|
|
499
|
|
|
—
|
|
|
499
|
|
|
(243
|
)
|
|
(240
|
)
|
|
16
|
|
||||||
Total liabilities
|
|
$
|
499
|
|
|
$
|
—
|
|
|
$
|
499
|
|
|
$
|
(243
|
)
|
|
$
|
(240
|
)
|
|
$
|
16
|
|
|
|
December 31, 2016
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Balance Sheet
|
|
|
||||||||||||||
(In Millions)
|
|
Gross Amounts Recognized
|
|
Gross Amounts Offset in the Balance Sheet
|
|
Net Amounts Presented in the Balance Sheet
|
|
Financial Instruments
|
|
Cash and Non-Cash Collateral Received or Pledged
|
|
Net Amount
|
||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative assets subject to master netting arrangements
|
|
$
|
433
|
|
|
$
|
—
|
|
|
$
|
433
|
|
|
$
|
(368
|
)
|
|
$
|
(42
|
)
|
|
$
|
23
|
|
Reverse repurchase agreements
|
|
1,018
|
|
|
—
|
|
|
1,018
|
|
|
—
|
|
|
(1,018
|
)
|
|
—
|
|
||||||
Total assets
|
|
1,451
|
|
|
—
|
|
|
1,451
|
|
|
(368
|
)
|
|
(1,060
|
)
|
|
23
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative liabilities subject to master netting arrangements
|
|
588
|
|
|
—
|
|
|
588
|
|
|
(368
|
)
|
|
(201
|
)
|
|
19
|
|
||||||
Total liabilities
|
|
$
|
588
|
|
|
$
|
—
|
|
|
$
|
588
|
|
|
$
|
(368
|
)
|
|
$
|
(201
|
)
|
|
$
|
19
|
|
|
|
Three Months Ended
|
||||||
(In Millions)
|
|
Apr 1,
2017 |
|
Apr 2,
2016 |
||||
Interest rate contracts
|
|
$
|
(14
|
)
|
|
$
|
162
|
|
Hedged items
|
|
14
|
|
|
(162
|
)
|
||
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Three Months Ended
|
||||||
(In Millions)
|
|
Location of Gains (Losses)
Recognized in Income on Derivatives
|
|
Apr 1,
2017 |
|
Apr 2,
2016 |
||||
Foreign currency contracts
|
|
Interest and other, net
|
|
$
|
(160
|
)
|
|
$
|
(238
|
)
|
Other
|
|
Various
|
|
56
|
|
|
4
|
|
||
Total
|
|
|
|
$
|
(104
|
)
|
|
$
|
(234
|
)
|
|
|
Number of
RSUs
(In Millions)
|
|
Weighted Average
Grant-Date
Fair Value
|
|||
December 31, 2016
|
|
106.8
|
|
|
$
|
28.99
|
|
Granted
|
|
7.4
|
|
|
$
|
36.38
|
|
Vested
|
|
(3.4
|
)
|
|
$
|
30.72
|
|
Forfeited
|
|
(2.1
|
)
|
|
$
|
29.35
|
|
April 1, 2017
|
|
108.7
|
|
|
$
|
29.43
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Overview
. Discussion of our business and overall analysis of financial and other highlights affecting the company in order to provide context for the remainder of MD&A.
|
•
|
Results of Operations
. Analysis of our financial results comparing the
three months ended
April 1, 2017
to the
three months ended
April 2, 2016
.
|
•
|
Liquidity and Capital Resources
. Analysis of changes in our balance sheets and cash flows, and discussion of our financial condition and potential sources of liquidity.
|
•
|
Contractual Obligations.
Material changes, outside our ordinary course of business, to our significant contractual obligations as of
December 31, 2016
.
|
•
|
Client Computing Group (CCG) had revenue of
$8.0 billion
,
up
6%
with platform volumes
down
4%
and platform average selling prices
up
7%
compared to
Q1 2016
. The business remains strong and healthy with growing revenue and profit despite of the declining PC market.
|
•
|
Data Center Group had revenue of
$4.2 billion
,
up
6%
with platform volumes
down
1%
and platform average selling prices
up
6%
compared to
Q1 2016
.
|
•
|
Gross margin of
61.8%
was
up 2.5 points
compared to
Q1 2016
.
|
•
|
Research and development (R&D) plus marketing, general, and administrative (MG&A) spending for the quarter was
$5.4 billion
,
down 1%
from a year ago. R&D and MG&A were
36.7%
of revenue, down approximately 3 points from Q1 2016.
|
•
|
Operating income for
Q1 2017
was
$3.6 billion
,
up
40%
on a year-on-year basis. The tax rate for the quarter was
22.3%
, up 3.9% compared to
Q1 2016
. Net income for
Q1 2017
was
$3.0 billion
,
up
45%
from
Q1 2016
.
|
•
|
Our business continues to generate healthy cash flow with
$3.9 billion
of cash from operations in
Q1 2017
. During
Q1 2017
, we purchased
$2.0 billion
in capital assets, paid
$1.2 billion
in dividends, and used
$1.2 billion
to repurchase
35 million
shares of stock.
|
|
|
Q1 2017
|
|
Q1 2016
|
||||||||||
(Dollars in Millions, Except Per Share Amounts)
|
|
Dollars
|
|
% of Net
Revenue |
|
Dollars
|
|
% of Net
Revenue |
||||||
Net revenue
|
|
$
|
14,796
|
|
|
100.0
|
%
|
|
$
|
13,702
|
|
|
100.0
|
%
|
Cost of sales
|
|
5,649
|
|
|
38.2
|
%
|
|
5,572
|
|
|
40.7
|
%
|
||
Gross margin
|
|
9,147
|
|
|
61.8
|
%
|
|
8,130
|
|
|
59.3
|
%
|
||
Research and development
|
|
3,326
|
|
|
22.5
|
%
|
|
3,246
|
|
|
23.7
|
%
|
||
Marketing, general and administrative
|
|
2,104
|
|
|
14.2
|
%
|
|
2,226
|
|
|
16.2
|
%
|
||
Restructuring and other charges
|
|
80
|
|
|
0.5
|
%
|
|
—
|
|
|
—
|
%
|
||
Amortization of acquisition-related intangibles
|
|
38
|
|
|
0.3
|
%
|
|
90
|
|
|
0.7
|
%
|
||
Operating income
|
|
3,599
|
|
|
24.3
|
%
|
|
2,568
|
|
|
18.7
|
%
|
||
Gains (losses) on equity investments, net
|
|
252
|
|
|
1.7
|
%
|
|
22
|
|
|
0.2
|
%
|
||
Interest and other, net
|
|
(36
|
)
|
|
(0.2
|
)%
|
|
(82
|
)
|
|
(0.6
|
)%
|
||
Income before taxes
|
|
3,815
|
|
|
25.8
|
%
|
|
2,508
|
|
|
18.3
|
%
|
||
Provision for taxes
|
|
851
|
|
|
5.8
|
%
|
|
462
|
|
|
3.4
|
%
|
||
Net income
|
|
$
|
2,964
|
|
|
20.0
|
%
|
|
$
|
2,046
|
|
|
14.9
|
%
|
|
|
|
|
|
|
|
|
|
||||||
Diluted earnings per common share
|
|
$
|
0.61
|
|
|
|
|
$
|
0.42
|
|
|
|
(In Millions)
|
|
Gross Margin Reconciliation
|
||
$
|
9,147
|
|
|
Q1 2017 Gross Margin
|
505
|
|
|
Higher gross margin from platform revenue
|
|
315
|
|
|
Lower Altera and other acquisition-related charges
|
|
285
|
|
|
Lower platform unit cost, primarily on 14nm cost improvement
|
|
100
|
|
|
Lower period charges, primarily from product sampling
|
|
(250
|
)
|
|
Higher factory start-up costs, primarily driven by the ramp of our 10nm process technology
|
|
62
|
|
|
Other
|
|
$
|
8,130
|
|
|
Q1 2016 Gross Margin
|
(Dollars in Millions)
|
|
Q1 2017
|
|
Q1 2016
|
|
% Change
|
|||||
Platform revenue
|
|
$
|
7,397
|
|
|
$
|
7,199
|
|
|
3
|
%
|
Other revenue
|
|
579
|
|
|
350
|
|
|
65
|
%
|
||
Net revenue
|
|
$
|
7,976
|
|
|
$
|
7,549
|
|
|
6
|
%
|
Operating income
|
|
$
|
3,031
|
|
|
$
|
1,885
|
|
|
61
|
%
|
CCG platform unit sales
|
|
|
|
|
|
(4
|
)%
|
||||
CCG platform average selling prices
|
|
|
|
|
|
7
|
%
|
(In Millions)
|
|
Revenue Reconciliation
|
||
$
|
7,976
|
|
|
Q1 2017 CCG Revenue
|
306
|
|
|
Higher notebook platform average selling prices, up 7%, from mix of products
|
|
229
|
|
|
Higher CCG non-platform revenue, including modem products
|
|
(229
|
)
|
|
Lower desktop platform unit sales, down 7%
|
|
121
|
|
|
Other
|
|
$
|
7,549
|
|
|
Q1 2016 CCG Revenue
|
(In Millions)
|
|
Operating Income Reconciliation
|
||
$
|
3,031
|
|
|
Q1 2017 CCG Operating Income
|
395
|
|
|
Lower CCG platform unit cost, primarily on 14nm cost improvement
|
|
305
|
|
|
Lower CCG operating expense, primarily from decreased share of technology development and MG&A costs
|
|
260
|
|
|
Higher gross margin from CCG platform revenue
|
|
186
|
|
|
Other
|
|
$
|
1,885
|
|
|
Q1 2016 CCG Operating Income
|
(Dollars in Millions)
|
|
Q1 2017
|
|
Q1 2016
|
|
% Change
|
|||||
Platform revenue
|
|
$
|
3,879
|
|
|
$
|
3,707
|
|
|
5
|
%
|
Other revenue
|
|
353
|
|
|
292
|
|
|
21
|
%
|
||
Net revenue
|
|
$
|
4,232
|
|
|
$
|
3,999
|
|
|
6
|
%
|
Operating income
|
|
$
|
1,487
|
|
|
$
|
1,764
|
|
|
(16
|
)%
|
DCG platform unit sales
|
|
|
|
|
|
(1
|
)%
|
||||
DCG platform average selling prices
|
|
|
|
|
|
6
|
%
|
(In Millions)
|
|
Revenue Reconciliation
|
||
$
|
4,232
|
|
|
Q1 2017 DCG Revenue
|
216
|
|
|
Higher DCG platform average selling prices, up 6% from mix of performance processors
|
|
17
|
|
|
Other
|
|
$
|
3,999
|
|
|
Q1 2016 DCG Revenue
|
(In Millions)
|
|
Operating Income Reconciliation
|
||
$
|
1,487
|
|
|
Q1 2017 DCG Operating Income
|
(160
|
)
|
|
Higher DCG operating expense, primarily on increased share of technology development and MG&A costs
|
|
(155
|
)
|
|
Higher factory start-up costs, primarily driven by the ramp of our 10nm process technology
|
|
(80
|
)
|
|
Higher pre-qualification product costs as we transition to 14nm
|
|
180
|
|
|
Higher gross margin from DCG platform revenue
|
|
(62
|
)
|
|
Other
|
|
$
|
1,764
|
|
|
Q1 2016 DCG Operating Income
|
(Dollars in Millions)
|
|
Q1 2017
|
|
Q1 2016
|
|
% Change
|
|||||
Platform revenue
|
|
$
|
632
|
|
|
$
|
571
|
|
|
11
|
%
|
Other revenue
|
|
89
|
|
|
80
|
|
|
11
|
%
|
||
Net revenue
|
|
$
|
721
|
|
|
$
|
651
|
|
|
11
|
%
|
Operating income
|
|
$
|
105
|
|
|
$
|
123
|
|
|
(15
|
)%
|
(Dollars in Millions)
|
|
Q1 2017
|
|
Q1 2016
|
|
% Change
|
|||||
Net revenue
|
|
$
|
866
|
|
|
$
|
557
|
|
|
55
|
%
|
Operating income (loss)
|
|
$
|
(129
|
)
|
|
$
|
(95
|
)
|
|
36
|
%
|
(Dollars in Millions)
|
|
Q1 2017
|
|
Q1 2016
|
|
% Change
|
|||||
Net revenue
|
|
$
|
534
|
|
|
$
|
537
|
|
|
(1
|
)%
|
Operating income
|
|
$
|
95
|
|
|
$
|
85
|
|
|
12
|
%
|
(Dollars in Millions)
|
|
Q1 2017
|
|
Q1 2016
|
|
% Change
|
|||||
Net revenue
|
|
$
|
425
|
|
|
$
|
359
|
|
|
18
|
%
|
Operating income (loss)
|
|
$
|
92
|
|
|
$
|
(200
|
)
|
|
(146
|
)%
|
(Dollars in Millions)
|
|
Q1 2017
|
|
Q1 2016
|
||||
Research and development (R&D)
|
|
$
|
3,326
|
|
|
$
|
3,246
|
|
Marketing, general and administrative (MG&A)
|
|
$
|
2,104
|
|
|
$
|
2,226
|
|
R&D and MG&A as percentage of net revenue
|
|
36.7
|
%
|
|
39.9
|
%
|
||
Restructuring and other charges
|
|
$
|
80
|
|
|
$
|
—
|
|
Amortization of acquisition-related intangibles
|
|
$
|
38
|
|
|
$
|
90
|
|
(In Millions)
|
|
Q1 2017
|
||
2016 Restructuring Program
|
|
$
|
(11
|
)
|
Other charges
|
|
91
|
|
|
Total restructuring and other charges
|
|
$
|
80
|
|
(In Millions)
|
|
Q1 2017
|
|
Q1 2016
|
||||
Gains (losses) on equity investments, net
|
|
$
|
252
|
|
|
$
|
22
|
|
Interest and other, net
|
|
$
|
(36
|
)
|
|
$
|
(82
|
)
|
(Dollars in Millions)
|
|
Q1 2017
|
|
Q1 2016
|
||||
Income before taxes
|
|
$
|
3,815
|
|
|
$
|
2,508
|
|
Provision for taxes
|
|
$
|
851
|
|
|
$
|
462
|
|
Effective tax rate
|
|
22.3
|
%
|
|
18.4
|
%
|
(Dollars in Millions)
|
|
Apr 1,
2017 |
|
Dec 31,
2016 |
||||
Cash and cash equivalents, short-term investments, and trading assets
|
|
$
|
17,295
|
|
|
$
|
17,099
|
|
Other long-term investments
|
|
$
|
5,149
|
|
|
$
|
4,716
|
|
Loans receivable and other
|
|
$
|
1,010
|
|
|
$
|
996
|
|
Reverse repurchase agreements with original maturities greater than three months
|
|
$
|
250
|
|
|
$
|
250
|
|
Unsettled trade liabilities and other
|
|
$
|
229
|
|
|
$
|
119
|
|
Short-term and long-term debt
|
|
$
|
25,751
|
|
|
$
|
25,283
|
|
Temporary equity
|
|
$
|
878
|
|
|
$
|
882
|
|
Debt as percentage of permanent stockholders’ equity
|
|
38.5
|
%
|
|
38.2
|
%
|
|
|
Three Months Ended
|
||||||
(In Millions)
|
|
Apr 1,
2017 |
|
Apr 2,
2016 |
||||
Net cash provided by operating activities
|
|
3,898
|
|
|
4,055
|
|
||
Net cash used for investing activities
|
|
(2,778
|
)
|
|
(15,520
|
)
|
||
Net cash provided by (used for) financing activities
|
|
(1,746
|
)
|
|
(782
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
(626
|
)
|
|
$
|
(12,247
|
)
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
|
Total Number
of Shares Purchased (In Millions) |
|
Average Price
Paid Per Share |
|
Dollar Value of
Shares That May Yet Be Purchased (In Millions) |
|||||
January 1, 2017 - January 28, 2017
|
|
4.1
|
|
|
$
|
36.90
|
|
|
$
|
6,650
|
|
January 29, 2017 - February 25, 2017
|
|
12.8
|
|
|
$
|
36.18
|
|
|
$
|
6,188
|
|
February 26, 2017 - April 1, 2017
|
|
18.2
|
|
|
$
|
35.55
|
|
|
$
|
5,538
|
|
Total
|
|
35.1
|
|
|
$
|
35.94
|
|
|
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
File Number
|
|
Exhibit
|
|
Filing
Date
|
|
Filed or
Furnished
Herewith
|
2.1
|
|
|
8-K
|
|
000-06217
|
|
2.1
|
|
3/13/2017
|
|
|
|
3.1
|
|
|
8-K
|
|
000-06217
|
|
3.1
|
|
5/22/2006
|
|
|
|
3.2
|
|
|
8-K
|
|
000-06217
|
|
3.2
|
|
1/26/2016
|
|
|
|
10.1**
|
|
Intel Corporation Restricted Stock Unit Agreement under the 2006 Equity Incentive Plan (for RSUs granted on or after February 1, 2017 under the Executive OSU program)
|
|
|
|
|
|
|
|
|
|
X
|
10.2**
|
|
Intel Corporation Non-Employee Director Restricted Stock Unit Agreement under the 2006 Equity Incentive Plan (for RSUs granted on or after February 1, 2017 under the Director OSU program)
|
|
|
|
|
|
|
|
|
|
X
|
12.1
|
|
Statement Setting Forth the Computation of Ratios of Earnings to Fixed Charges
|
|
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act)
|
|
|
|
|
|
|
|
|
|
X
|
31.2
|
|
Certification of Chief Financial Officer and Principal Accounting Officer pursuant to Rule 13a-14(a) of the Exchange Act
|
|
|
|
|
|
|
|
|
|
X
|
32.1
|
|
Certification of the Chief Executive Officer and the Chief Financial Officer and Principal Accounting Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
|
|
|
X
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
INTEL CORPORATION
(Registrant) |
||
|
|
|
|
|
|
Date:
|
April 27, 2017
|
|
By:
|
|
/s/ R
OBERT
H. S
WAN
|
|
|
|
|
|
Robert H. Swan
|
|
|
|
|
|
Executive Vice President, Chief Financial Officer, and Principal Accounting Officer
|
1.
|
TERMS OF RESTRICTED STOCK UNIT
|
2.
|
SIGNATURE
|
3.
|
VESTING OF RSUs
|
4.
|
CONVERSION OF RSUs
|
(a)
|
The conversion rate of RSUs into the right to receive a number of shares of Common Stock depends on the “Intel TSR” relative to the “S&P 500 IT TSR” at the end of the “Performance Period,” as those terms are defined in this Section 4. The conversion rate of RSUs into the right to receive a number of shares of Common Stock will be determined in accordance with following:
|
(1)
|
If the Intel TSR and the S&P 500 IT TSR are within 1 percentage point, the conversion rate will be 100%.
|
(2)
|
If the Intel TSR is greater than the S&P 500 IT TSR, the conversion rate will be 100% plus four times the difference in percentage points between the Intel TSR and the S&P 500 IT TSR; provided that the maximum conversion rate is 200%.
|
(3)
|
If the S&P 500 IT TSR is greater than the Intel TSR, the conversion rate will be 100% minus four times the difference in percentage points between the Intel TSR and the S&P 500 IT TSR. Accordingly, if the S&P 500 IT TSR exceeds the Intel TSR by 25 or more percentage points, then the conversion rate will be 0%.
|
(4)
|
In the event that the conversion rate results in the right to receive a partial share of Common Stock, the conversion rate will be rounded down so that the RSUs will not convert into the right to receive the partial share.
|
•
|
If the Intel TSR equals 100.5%, the difference between the Intel TSR and the S&P 500 IT TSR is within 1 percentage point. As a result, the conversion rate is 100%, such that your RSUs convert into the right to receive 100% of the Target Number of Shares.
|
•
|
If the Intel TSR is 105%, the difference between the Intel TSR and the S&P 500 IT TSR is 5 percentage points. As a result, the conversion rate is 120%, such that your RSUs convert into the right to receive 120% of the Target Number of Shares.
|
•
|
If the Intel TSR is 90%, the difference between the Intel TSR and the S&P 500 IT TSR is 10 percentage points. As a result, the conversion rate is 60%, such that your RSUs convert into the right to receive 60% of the Target Number of Shares.
|
•
|
If the Intel TSR is 70%, the difference between the Intel TSR and the S&P 500 IT TSR is more than 25 percentage points. As a result, the conversion rate is 0%, such that your RSUs convert into the right to receive 0% of the Target Number of Shares.
|
(b)
|
“Intel TSR” is a percentage (to the third decimal point) derived by:
|
(1)
|
A numerator that is the difference between the average closing sale price of Common Stock during the 3 months following and including the Grant Date subtracted from the average closing sale price of Common Stock during the 3 months prior to and including the end of the Performance Period; and
|
(2)
|
A denominator that is the average closing sale price of Common Stock during the 3 months following and including the Grant Date;
|
(c)
|
“S&P 500 IT TSR” is a percentage (to the third decimal point) derived by:
|
(1)
|
A numerator that is the difference between the average closing sale price of the total return index for the Standard & Poor’s 500 Information Technology Index (which measure assumes reinvestment of dividends paid on the Standard & Poor’s 500 Information Technology Index) during the 3 months following and including the Grant Date subtracted from the average closing sale price of the total return index for the Standard & Poor’s 500 Information Technology Index during the 3 months prior to and including the end of the Performance Period; and
|
(2)
|
A denominator that is the average closing sale price of the total return index for the Standard & Poor’s 500 Information Technology Index during the 3 months following and including the Grant Date.
|
(d)
|
For purposes of determining the “Intel TSR:
|
(1)
|
Any dividend paid in securities with a readily ascertainable fair market value will be valued at the market value of the securities as of the ex-dividend date. Any dividend paid in other property will be valued based on the value assigned to such dividend by the paying company for tax purposes.
|
(2)
|
The Compensation Committee may equitably adjust Intel TSR for equity restructuring transactions including, but not limited to, a stock split, combination of shares, extraordinary dividend of cash and/or assets, recapitalization or reorganization.
|
(e)
|
Performance Period is the period beginning with the Grant Date and ending three years later on the third anniversary of the Grant Date. If the third anniversary of the Grant Date falls on a weekend or any other day on which the NASDAQ is not open, the Performance Period will end on the next following NASDAQ business day. If for any reason the Corporation (including any successor corporation) ceases to have its stock price quoted on a national securities exchange, the Performance Period will end as of the last date that the stock price is quoted on a national securities exchange.
|
5.
|
SETTLEMENT INTO COMMON STOCK
|
6.
|
SUSPENSION OR TERMINATION OF RSU FOR MISCONDUCT
|
7.
|
TERMINATION OF EMPLOYMENT
|
8.
|
DEATH
|
9.
|
DISABLEMENT
|
10.
|
RETIREMENT
|
(a)
|
You terminate employment with the Corporation at or after age 60 (“Standard Retirement”); or
|
(b)
|
You terminate employment with the Corporation and as of the termination date your age plus years of service (in each case measured in complete, whole years) equals or exceeds 75 (“Rule of 75”).
|
11.
|
TAX WITHHOLDING
|
12.
|
RIGHTS AS A STOCKHOLDER
|
13.
|
DISPUTES
|
14.
|
AMENDMENTS
|
15.
|
DATA PRIVACY
|
16.
|
THE 2006 PLAN AND OTHER TERMS; OTHER MATTERS
|
(a)
|
Certain capitalized terms used in this Agreement are defined in the 2006 Plan. Any prior agreements, commitments or negotiations concerning the RSUs are superseded by this Agreement and your Notice of Grant. You hereby acknowledge that a copy of the 2006 Plan has been made available to you.
|
(b)
|
To the extent that the grant of RSUs refers to the Common Stock of Intel Corporation, and as required by the laws of your country of residence or employment, only authorized but unissued shares thereof will be utilized for delivery upon vesting in accord with the terms hereof.
|
(c)
|
Notwithstanding any other provision of this Agreement, if any changes in law or the financial or tax accounting rules applicable to the RSUs covered by this Agreement will occur, the Corporation may, in its sole discretion, (1) modify this Agreement to impose such restrictions or procedures with respect to the RSUs (whether vested or unvested), the shares issued or issuable pursuant to the RSUs and/or any proceeds or payments from or relating to such shares as it determines to be necessary or appropriate to comply with applicable law or to address, comply with or offset the economic effect to the Corporation of any accounting or administrative matters relating thereto, or (2) cancel and cause a forfeiture with respect to any unvested RSUs at the time of such determination.
|
(d)
|
Nothing contained in this Agreement creates or implies an employment contract or term of employment upon which you may rely.
|
(e)
|
Because this Agreement relates to terms and conditions under which you may be issued shares of Common Stock of Intel Corporation, a Delaware corporation, an essential term of this Agreement is that it will be governed by the laws of the State of Delaware, without regard to choice of law principles of Delaware or other jurisdictions. Any action, suit, or proceeding relating to this Agreement or the RSUs granted hereunder will be brought in the state or federal courts of competent jurisdiction in the State of California.
|
(f)
|
Notwithstanding anything to the contrary in this Agreement or the applicable Notice of Grant, your RSUs are subject to reduction by the Corporation if you change your employment classification from a full-time employee to a part-time employee.
|
(g)
|
RSUs are not part of your employment contract (if any) with the Corporation or any Subsidiary, your salary, your normal or expected compensation, or other remuneration for any purposes, including for purposes of computing severance pay or other termination compensation or indemnity.
|
(h)
|
In consideration of the grant of RSUs, no claim or entitlement to compensation or damages will arise from termination of your RSUs or diminution in value of the RSUs or Common Stock acquired through vested RSUs resulting from termination of your active employment by the Corporation (for any reason whatsoever and whether or not in breach of local labor laws) and you hereby release the Corporation from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then you will be deemed irrevocably to have waived your entitlement to pursue such claim.
|
(i)
|
Notwithstanding any terms or conditions of the 2006 Plan to the contrary, in the event of involuntary termination of your employment (whether or not in breach of local labor laws), your right to receive the RSUs and vest in RSUs under the 2006 Plan, if any, will terminate effective as of the date that
|
(j)
|
Notwithstanding any provision of this Agreement, the Notice of Grant or the 2006 Plan to the contrary, if, at the time of your termination of employment with the Corporation, you are a “specified employee” as defined in Section 409A of the Internal Revenue Code ("Code"), and one or more of the payments or benefits received or to be received by you pursuant to the RSUs would constitute deferred compensation subject to Section 409A, no such payment or benefit will be provided under the RSUs until the earliest of (A) the date which is six (6) months after your "separation from service” for any reason, other than death or “disability” (as such terms are used in Section 409A(a)(2) of the Code), (B) the date of your death or “disability” (as such term is used in Section 409A(a)(2)(C) of the Code) or (C) the effective date of a “change in the ownership or effective control” of the Corporation (as such term is used in Section 409A(a)(2)(A)(v) of the Code). The provisions of this Section 16(j) will only apply to the extent required to avoid your incurrence of any penalty tax or interest under Section 409A of the Code or any regulations or Treasury guidance promulgated thereunder. In addition, if any provision of the RSUs would cause you to incur any penalty tax or interest under Section 409A of the Code or any regulations or Treasury guidance promulgated thereunder, the Corporation may reform such provision to maintain to the maximum extent practicable the original intent of the applicable provision without violating the provisions of Section 409A of the Code.
|
(k)
|
Copies of Intel Corporation's Annual Report to Stockholders for its latest fiscal year and Intel Corporation's latest quarterly report are available, without charge, at the Corporation's business office.
|
(l)
|
Chile
. If you are employed in or a resident of Chile, please note: NEITHER INTEL CORPORATION NOR ANY OF ITS SHARES ARE REGISTERED WITH THE
SUPERINTENDENCIA DE VALORES Y SEGUROS
(THE "SVS") NOR SUBJECT TO THE CONTROL OF THE SVS.
|
(m)
|
France
. If you are employed in or a resident of the France, you will not be required to hold the shares of Common Stock issued to you for the vest of these RSUs for the minimum required holding period of the ‘
régime fiscal de faveur’
.
|
(n)
|
The People’s Republic of China
. If you are employed in and a citizen of the People’s Republic of China, you authorize the Corporation to instruct UBS Financial Services Inc., or any successor plan administrator, to sell all of your shares of Common Stock that are issued under these RSUs, and are in your brokerage account established with UBS Financial Services Inc., or any successor plan administrator on the 90th day following your termination of employment or as soon as administratively feasible after the 90th day, including termination of employment due to death, Disablement or Retirement. Furthermore, you authorize UBS Financial Services Inc., or any successor plan administrator to send the net proceeds from such sale (after the payment of any tax withholding amounts and expenses of sale) to the Corporation on your behalf for payment through payroll, unless the Corporation's counsel determines that local laws do not necessitate such payments through payroll. The shares may be sold as part of a block trade with other participants in which all participants receive an average price.
|
(o)
|
Vietnam
. If you are employed in or a resident of Vietnam, you authorize UBS Financial Services Inc., E*TRADE Financial Corporate Services, Inc. or any successor plan administrator, to sell all of your shares of Common Stock that are issued under the RSUs, and are in your brokerage account established with UBS Financial Services Inc., E*TRADE Financial Corporate Services, Inc. or any successor plan administrator, as soon as administratively feasible after your termination of employment, death, Disablement or Retirement.
|
1.
|
TERMS OF RESTRICTED STOCK UNIT
|
2.
|
VESTING OF RSUs
|
3.
|
CONVERSION OF RSUs
|
(a)
|
The conversion rate of RSUs into the right to receive a number of shares of Common Stock depends on the “Intel TSR” relative to the “S&P 500 IT TSR” at the end of the “Performance Period,” as those terms are defined in this Section. The conversion rate of RSUs into the right to receive a number of shares of Common Stock will be determined in accordance with following:
|
(1)
|
If the Intel TSR and the S&P 500 IT TSR are within 1 percentage point, the conversion rate will be 100%.
|
(2)
|
If the Intel TSR is greater than the S&P 500 IT TSR, the conversion rate will be 100% plus four times the difference in percentage points between the Intel TSR and the S&P 500 IT TSR; provided that the maximum conversion rate is 200%.
|
(3)
|
If the S&P 500 IT TSR is greater than the Intel TSR, the conversion rate will be 100% minus four times the difference in percentage points between the Intel TSR and the S&P 500 IT TSR. Accordingly, if the S&P 500 IT TSR exceeds the Intel TSR by 25 or more percentage points, then the conversion rate will be 0%.
|
(4)
|
In the event that the conversion rate results in the right to receive a partial share of Common Stock, the conversion rate will be rounded down so that the RSUs will not convert into the right to receive the partial share.
|
•
|
If the Intel TSR equals 100.5%, the difference between the Intel TSR and the S&P 500 IT TSR is within 1 percentage point. As a result, the conversion rate is 100%, such that your RSUs convert into the right to receive 100% of the Target Number of Shares.
|
•
|
If the Intel TSR is 105%, the difference between the Intel TSR and the S&P 500 IT TSR is 5 percentage points. As a result, the conversion rate is 120%, such that your RSUs convert into the right to receive 120% of the Target Number of Shares.
|
•
|
If the Intel TSR is 90%, the difference between the Intel TSR and the S&P 500 IT TSR is 10 percentage points. As a result, the conversion rate is 60%, such that your RSUs convert into the right to receive 60% of the Target Number of Shares.
|
•
|
If the Intel TSR is 70%, the difference between the Intel TSR and the S&P 500 IT TSR is more than 25 percentage points. As a result, the conversion rate is 0%, such that your RSUs convert into the right to receive 0% of the Target Number of Shares.
|
(b)
|
“Intel TSR” is a percentage (to the third decimal point) derived by:
|
(1)
|
A numerator that is the difference between the average closing sale price of Common Stock during the 3 months following and including the Grant Date subtracted from the average closing sale price of Common Stock during the 3 months prior to and including the end of the Performance Period; and
|
(2)
|
A denominator that is the average closing sale price of Common Stock during the 3 months following and including the Grant Date;
|
(c)
|
“S&P 500 IT TSR” is a percentage (to the third decimal point) derived by:
|
(1)
|
A numerator that is the difference between the average closing sale price of the total return index for the Standard & Poor’s 500 Information Technology Index (which measure assumes reinvestment of dividends paid on the Standard & Poor’s 500 Information Technology Index) during the 3 months following and including the Grant Date subtracted from the average closing sale price of the total return index for the Standard & Poor’s 500 Information Technology Index during the 3 months prior to and including the end of the Performance Period; and
|
(2)
|
A denominator that is the average closing sale price of the total return index for the Standard & Poor’s 500 Information Technology Index during the 3 months following and including the Grant Date.
|
(d)
|
For purposes of determining the Intel TSR:
|
(1)
|
Any dividend paid in securities with a readily ascertainable fair market value will be valued at the market value of the securities as of the ex-dividend date. Any dividend paid in other property will be valued based on the value assigned to such dividend by the paying company for tax purposes.
|
(2)
|
The Compensation Committee may equitably adjust Intel TSR for equity restructuring transactions including, but not limited to, a stock split, combination of shares, extraordinary dividend of cash and/or assets, recapitalization or reorganization.
|
(e)
|
Performance Period is the period beginning with the Grant Date and ending three years later on the third anniversary of the Grant Date. If the third anniversary of the Grant Date falls on a weekend or any other day on which the NASDAQ is not open, the Performance Period will end on the next following NASDAQ business day. If for any reason the Corporation (including any successor corporation) ceases to have its stock price quoted on a national securities exchange, the Performance Period will end as of the last date that the stock price is quoted on a national securities exchange.
|
4.
|
SETTLEMENT INTO COMMON STOCK
|
5.
|
TERMINATION OF SERVICE AS DIRECTOR
|
6.
|
DEATH
|
7.
|
DISABLEMENT
|
8.
|
RETIREMENT
|
9.
|
TAX WITHHOLDING
|
10.
|
ELECTION TO DEFER RECEIPT OF RSU SHARES
|
11.
|
RIGHTS AS A STOCKHOLDER
|
12.
|
AMENDMENTS
|
13.
|
DATA PRIVACY
|
14.
|
THE 2006 PLAN AND OTHER TERMS; OTHER MATTERS
|
(a)
|
Certain capitalized terms used in this Agreement are defined in the 2006 Plan. Any prior agreements, commitments or negotiations concerning the RSUs are superseded by this Agreement and your Notice of Grant. You hereby acknowledge that a copy of the 2006 Plan has been made available to you.
|
(b)
|
To the extent that the grant of RSUs refers to the Common Stock of Intel Corporation, and as required by the laws of your country of residence or employment, only authorized but unissued shares thereof will be utilized for delivery upon vesting in accord with the terms hereof.
|
(c)
|
Notwithstanding any other provision of this Agreement, if any changes in law or the financial or tax accounting rules applicable to the RSUs covered by this Agreement will occur, the Corporation may, in its sole discretion, (1) modify this Agreement to impose such restrictions or procedures with respect to the RSUs (whether vested or unvested), the shares issued or issuable pursuant to the RSUs and/or any proceeds or payments from or relating to such shares as it determines to be necessary or appropriate to comply with applicable law or to address, comply with or offset the economic effect to the Corporation of any accounting or administrative matters relating thereto, or (2) cancel and cause a forfeiture with respect to any unvested RSUs at the time of such determination.
|
(d)
|
Because this Agreement relates to terms and conditions under which you may be issued shares of Common Stock of Intel Corporation, a Delaware corporation, an essential term of this Agreement is that it will be governed by the laws of the State of Delaware, without regard to choice of law principles of Delaware or other jurisdictions. Any action, suit, or proceeding relating to this Agreement or the RSUs granted hereunder will be brought in the state or federal courts of competent jurisdiction in the State of California.
|
(e)
|
Copies of Intel Corporation's Annual Report to Stockholders for its latest fiscal year and Intel Corporation's latest quarterly report are available, without charge, at the Corporation's business office.
|
|
|
|
|
Three Months Ended
|
||||||
(Dollars in Millions)
|
|
Apr 1,
2017 |
|
Apr 2,
2016 |
||||||
Earnings
1
|
|
$
|
3,861
|
|
|
$
|
2,549
|
|
||
Adjustments:
|
|
|
|
|
||||||
|
Add - Fixed charges
|
|
223
|
|
|
240
|
|
|||
|
Subtract - Capitalized interest
|
|
(67
|
)
|
|
(22
|
)
|
|||
Earnings and fixed charges (net of capitalized interest)
|
|
$
|
4,017
|
|
|
$
|
2,767
|
|
||
|
|
|
|
|
|
|
||||
Fixed charges:
|
|
|
|
|
||||||
|
Interest
2
|
|
$
|
146
|
|
|
$
|
208
|
|
|
|
Capitalized interest
|
|
67
|
|
|
22
|
|
|||
|
Estimated interest component of rental expense
|
|
10
|
|
|
10
|
|
|||
Total
|
|
$
|
223
|
|
|
$
|
240
|
|
||
|
|
|
|
|
|
|
||||
Ratio of earnings before taxes and fixed charges, to fixed charges
|
|
18x
|
|
|
12x
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Intel Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
April 27, 2017
|
|
By:
|
|
/s/ B
RIAN
M. K
RZANICH
|
|
|
|
|
|
Brian M. Krzanich
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Intel Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
April 27, 2017
|
|
By:
|
|
/s/ ROBERT H. SWAN
|
|
|
|
|
|
Robert H. Swan
Executive Vice President, Chief Financial Officer, and Principal Accounting Officer |
Date:
|
April 27, 2017
|
|
By:
|
|
/s/ BRIAN M. KRZANICH
|
|
|
|
|
|
Brian M. Krzanich
Chief Executive Officer |
|
|
|
|
|
|
Date:
|
April 27, 2017
|
|
By:
|
|
/s/ ROBERT H. SWAN
|
|
|
|
|
|
Robert H. Swan
Executive Vice President, Chief Financial Officer, and Principal Accounting Officer |