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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 July 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 July 1, 2017
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Common stock, $0.001 par value
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4,699 million
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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ITEM 1.
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FINANCIAL STATEMENTS
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Three Months Ended
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Six Months Ended
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||||||||||||
(In Millions, Except Per Share Amounts)
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Jul 1,
2017 |
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Jul 2,
2016 |
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Jul 1,
2017 |
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Jul 2,
2016 |
||||||||
Net revenue
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$
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14,763
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$
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13,533
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$
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29,559
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$
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27,235
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Cost of sales
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5,665
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5,560
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11,314
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11,132
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Gross margin
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9,098
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7,973
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18,245
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16,103
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Research and development
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3,275
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3,145
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6,601
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6,391
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Marketing, general and administrative
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1,854
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2,007
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3,958
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4,233
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Restructuring and other charges
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105
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1,414
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185
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1,414
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Amortization of acquisition-related intangibles
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37
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89
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75
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179
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Operating expenses
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5,271
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6,655
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10,819
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12,217
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||||
Operating income
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3,827
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1,318
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7,426
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3,886
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Gains (losses) on equity investments, net
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342
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478
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594
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500
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Interest and other, net
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403
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(126
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)
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367
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(208
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)
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Income before taxes
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4,572
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1,670
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8,387
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4,178
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Provision for taxes
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1,764
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340
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2,615
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802
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Net income
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$
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2,808
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$
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1,330
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$
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5,772
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$
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3,376
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Basic earnings per share of common stock
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$
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0.60
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$
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0.28
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$
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1.22
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$
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0.71
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Diluted earnings per share of common stock
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$
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0.58
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$
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0.27
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$
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1.19
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$
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0.69
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Cash dividends declared per share of common stock
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$
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—
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$
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—
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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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||||||||
Basic
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4,710
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4,729
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4,717
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4,725
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Diluted
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4,845
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4,866
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4,864
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4,870
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Three Months Ended
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Six Months Ended
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||||||||||||
(In Millions)
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Jul 1,
2017 |
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Jul 2,
2016 |
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Jul 1,
2017 |
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Jul 2,
2016 |
||||||||
Net income
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$
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2,808
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$
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1,330
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$
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5,772
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$
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3,376
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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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(534
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)
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(346
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)
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9
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(55
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)
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Deferred tax asset valuation allowance
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—
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(2
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)
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—
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(3
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)
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Net unrealized holding gains (losses) on derivatives
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136
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26
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331
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213
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Net prior service (costs) credits
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(12
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)
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1
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(10
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)
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3
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Actuarial valuation
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214
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(318
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)
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230
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(299
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)
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Net foreign currency translation adjustment
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507
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(1
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)
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508
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1
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Other comprehensive income (loss)
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311
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(640
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)
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1,068
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(140
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)
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Total comprehensive income
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$
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3,119
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$
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690
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$
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6,840
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$
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3,236
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(In Millions)
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Jul 1,
2017 |
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Dec 31,
2016 |
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Assets
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Current assets:
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Cash and cash equivalents
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$
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11,687
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$
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5,560
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Short-term investments
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3,158
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3,225
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Trading assets
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11,084
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8,314
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Accounts receivable, net
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5,397
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4,690
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Inventories
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6,324
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5,553
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Assets held for sale
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—
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5,210
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Other current assets
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2,967
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2,956
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Total current assets
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40,617
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35,508
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Property, plant and equipment, net of accumulated depreciation of $56,520 ($53,934 as of December 31, 2016)
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38,130
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36,171
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Marketable equity securities
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5,904
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6,180
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Other long-term investments
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4,481
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4,716
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Goodwill
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14,102
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14,099
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Identified intangible assets, net
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8,867
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9,494
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Other long-term assets
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10,006
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|
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7,159
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Total assets
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$
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122,107
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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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4,130
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$
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4,634
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Accounts payable
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3,671
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2,475
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Accrued compensation and benefits
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2,332
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3,465
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Accrued advertising
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835
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810
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Deferred income
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1,587
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1,718
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Liabilities held for sale
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—
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1,920
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Other accrued liabilities
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6,227
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5,280
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Total current liabilities
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18,782
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20,302
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Long-term debt
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27,855
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20,649
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Long-term deferred tax liabilities
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2,502
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1,730
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Other long-term liabilities
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3,469
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3,538
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Contingencies (Note 17)
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Temporary equity
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874
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882
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Stockholders’ equity:
|
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|
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|
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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, 4,699 issued and outstanding (4,730 issued and outstanding as of December 31, 2016)
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25,781
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|
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25,373
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|
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Accumulated other comprehensive income (loss)
|
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1,174
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|
|
106
|
|
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Retained earnings
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41,670
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|
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40,747
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Total stockholders’ equity
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68,625
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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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122,107
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|
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$
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113,327
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|
|
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Six Months Ended
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||||||
(In Millions)
|
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Jul 1,
2017 |
|
Jul 2,
2016 |
||||
Cash and cash equivalents, beginning of period
|
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$
|
5,560
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|
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$
|
15,308
|
|
Cash flows provided by (used for) operating activities:
|
|
|
|
|
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Net income
|
|
5,772
|
|
|
3,376
|
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
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|
||||
Depreciation
|
|
3,300
|
|
|
3,141
|
|
||
Share-based compensation
|
|
725
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|
|
812
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|
||
Restructuring and other charges
|
|
185
|
|
|
1,414
|
|
||
Amortization of intangibles
|
|
634
|
|
|
791
|
|
||
(Gains) losses on equity investments, net
|
|
(526
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)
|
|
(426
|
)
|
||
(Gains) losses on divestitures
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(387
|
)
|
|
—
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|
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Deferred taxes
|
|
807
|
|
|
71
|
|
||
Changes in assets and liabilities:
1
|
|
|
|
|
||||
Accounts receivable
|
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(618
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)
|
|
734
|
|
||
Inventories
|
|
(760
|
)
|
|
(104
|
)
|
||
Accounts payable
|
|
425
|
|
|
375
|
|
||
Accrued compensation and benefits
|
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(1,102
|
)
|
|
(1,659
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)
|
||
Income taxes payable and receivable
|
|
563
|
|
|
(79
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)
|
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Other assets and liabilities
|
|
(413
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)
|
|
(546
|
)
|
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Total adjustments
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2,833
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|
|
4,524
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|
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Net cash provided by operating activities
|
|
8,605
|
|
|
7,900
|
|
||
Cash flows provided by (used for) investing activities:
|
|
|
|
|
||||
Additions to property, plant and equipment
|
|
(4,730
|
)
|
|
(3,632
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)
|
||
Acquisitions, net of cash acquired
|
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(3
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)
|
|
(14,619
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)
|
||
Purchases of available-for-sale investments
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(1,894
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)
|
|
(5,693
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)
|
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Sales of available-for-sale investments
|
|
1,698
|
|
|
3,685
|
|
||
Maturities of available-for-sale investments
|
|
2,197
|
|
|
2,393
|
|
||
Purchases of trading assets
|
|
(7,961
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)
|
|
(7,205
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)
|
||
Maturities and sales of trading assets
|
|
5,977
|
|
|
5,313
|
|
||
Investments in loans receivable and reverse repurchase agreements
|
|
—
|
|
|
(223
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)
|
||
Collection of loans receivable and reverse repurchase agreements
|
|
—
|
|
|
650
|
|
||
Investments in non-marketable equity investments
|
|
(625
|
)
|
|
(663
|
)
|
||
Proceeds from divestitures
|
|
924
|
|
|
—
|
|
||
Other investing
|
|
201
|
|
|
304
|
|
||
Net cash used for investing activities
|
|
(4,216
|
)
|
|
(19,690
|
)
|
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Cash flows provided by (used for) financing activities:
|
|
|
|
|
||||
Increase (decrease) in short-term debt, net
|
|
(12
|
)
|
|
1,416
|
|
||
Issuance of long-term debt, net of issuance costs
|
|
7,078
|
|
|
2,734
|
|
||
Repayment of debt
|
|
(500
|
)
|
|
—
|
|
||
Proceeds from sales of common stock through employee equity incentive plans
|
|
406
|
|
|
527
|
|
||
Repurchase of common stock
|
|
(2,518
|
)
|
|
(1,597
|
)
|
||
Restricted stock unit withholdings
|
|
(404
|
)
|
|
(394
|
)
|
||
Payment of dividends to stockholders
|
|
(2,516
|
)
|
|
(2,461
|
)
|
||
Other financing
|
|
204
|
|
|
142
|
|
||
Net cash provided by (used for) financing activities
|
|
1,738
|
|
|
367
|
|
||
Net increase (decrease) in cash and cash equivalents
|
|
6,127
|
|
|
(11,423
|
)
|
||
Cash and cash equivalents, end of period
|
|
$
|
11,687
|
|
|
$
|
3,885
|
|
|
|
|
|
|
||||
Supplemental disclosures of noncash investing activities and cash flow information:
|
|
|
|
|
||||
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities
|
|
$
|
1,686
|
|
|
$
|
1,479
|
|
Loan receivable from McAfee and TPG
|
|
$
|
2,200
|
|
|
$
|
—
|
|
Non-marketable equity investment in McAfee
|
|
$
|
1,078
|
|
|
$
|
—
|
|
Cash paid during the period for:
|
|
|
|
|
||||
Interest, net of capitalized interest and interest rate swap payments/receipts
|
|
$
|
280
|
|
|
$
|
348
|
|
Income taxes, net of refunds
|
|
$
|
1,139
|
|
|
$
|
689
|
|
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 9: Acquisitions and Divestitures
" for additional information.
|
Standard/Description
|
Effective Date and Adoption Considerations
|
Effect on Financial Statements or Other Significant Matters
|
Intangibles - Goodwill and Other - Simplifying the Test for Goodwill Impairment
. This accounting standard update eliminates Step 2 from the existing guidance to simplify how goodwill impairment tests are performed.
With the elimination of this step, a goodwill impairment test is performed by comparing the fair value of a reporting unit to its carrying value. An impairment charge is recognized for the amount by which the reporting unit's carrying value exceeds its fair value.
|
We elected to early adopt this accounting standard update in the second quarter of 2017 on a prospective basis.
|
We expect the adoption of this update to simplify our annual goodwill impairment testing process, by eliminating the need to estimate the implied fair value of a reporting unit’s goodwill, if its respective carrying value exceeds fair value.
|
Standard/Description
|
Effective Date and Adoption Considerations
|
Effect on Financial Statements or Other Significant Matters
|
Compensation - Retirement Benefits - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.
This amended standard was issued to provide additional guidance on the presentation of net benefit cost in the income statement and on the components eligible for capitalization in assets. The service cost component of the net periodic benefit cost will continue to be reported within operating income on the consolidated income statement. All other non-service components are required to be presented separately outside operating income and only service costs will be eligible for inventory capitalization.
|
Effective in the first quarter of 2018.
Changes to the presentation of benefit costs are required to be adopted retrospectively while changes to the capitalization of service costs into inventories are required to be adopted prospectively. The standard permits, as a practical expedient, to use the amounts disclosed in the Retirement Benefit Plans footnote for the prior comparative periods as the estimation basis for applying the retrospective presentation requirement.
|
We expect the adoption of the amended standard to result in the reclassification of approximately $260 million from non-service components above the subtotal of operating income to interest and other, net, for the year ended December 31, 2016. We are continuing to assess the impacts of adoption to our 2017 financial statements.
|
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 for compute, storage, and network functions 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.
|
|
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
|
|
Six Months Ended
|
||||||||||||
(In Millions)
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||||||
Net revenue:
|
|
|
|
|
|
|
|
|
||||||||
Client Computing Group
|
|
|
|
|
|
|
|
|
||||||||
Platform
|
|
$
|
7,634
|
|
|
$
|
6,938
|
|
|
$
|
15,031
|
|
|
$
|
14,137
|
|
Other
|
|
579
|
|
|
400
|
|
|
1,158
|
|
|
750
|
|
||||
|
|
8,213
|
|
|
7,338
|
|
|
16,189
|
|
|
14,887
|
|
||||
Data Center Group
|
|
|
|
|
|
|
|
|
||||||||
Platform
|
|
4,026
|
|
|
3,718
|
|
|
7,905
|
|
|
7,425
|
|
||||
Other
|
|
346
|
|
|
309
|
|
|
699
|
|
|
601
|
|
||||
|
|
4,372
|
|
|
4,027
|
|
|
8,604
|
|
|
8,026
|
|
||||
Internet of Things Group
|
|
|
|
|
|
|
|
|
||||||||
Platform
|
|
614
|
|
|
497
|
|
|
1,246
|
|
|
1,068
|
|
||||
Other
|
|
106
|
|
|
75
|
|
|
195
|
|
|
155
|
|
||||
|
|
720
|
|
|
572
|
|
|
1,441
|
|
|
1,223
|
|
||||
Non-Volatile Memory Solutions Group
|
|
874
|
|
|
554
|
|
|
1,740
|
|
|
1,111
|
|
||||
Programmable Solutions Group
|
|
440
|
|
|
465
|
|
|
865
|
|
|
824
|
|
||||
All other
|
|
144
|
|
|
577
|
|
|
720
|
|
|
1,164
|
|
||||
Total net revenue
|
|
$
|
14,763
|
|
|
$
|
13,533
|
|
|
$
|
29,559
|
|
|
$
|
27,235
|
|
Operating income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Client Computing Group
|
|
$
|
3,025
|
|
|
$
|
1,911
|
|
|
$
|
6,056
|
|
|
$
|
3,796
|
|
Data Center Group
|
|
1,661
|
|
|
1,765
|
|
|
3,148
|
|
|
3,529
|
|
||||
Internet of Things Group
|
|
139
|
|
|
89
|
|
|
244
|
|
|
212
|
|
||||
Non-Volatile Memory Solutions Group
|
|
(110
|
)
|
|
(224
|
)
|
|
(239
|
)
|
|
(319
|
)
|
||||
Programmable Solutions Group
|
|
97
|
|
|
(62
|
)
|
|
189
|
|
|
(262
|
)
|
||||
All other
|
|
(985
|
)
|
|
(2,161
|
)
|
|
(1,972
|
)
|
|
(3,070
|
)
|
||||
Total operating income
|
|
$
|
3,827
|
|
|
$
|
1,318
|
|
|
$
|
7,426
|
|
|
$
|
3,886
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In Millions, Except Per Share Amounts)
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||||||
Net income available to common stockholders
|
|
$
|
2,808
|
|
|
$
|
1,330
|
|
|
$
|
5,772
|
|
|
$
|
3,376
|
|
Weighted average shares of common stock outstanding—basic
|
|
4,710
|
|
|
4,729
|
|
|
4,717
|
|
|
4,725
|
|
||||
Dilutive effect of employee equity incentive plans
|
|
36
|
|
|
49
|
|
|
48
|
|
|
57
|
|
||||
Dilutive effect of convertible debt
|
|
99
|
|
|
88
|
|
|
99
|
|
|
88
|
|
||||
Weighted average shares of common stock outstanding—diluted
|
|
4,845
|
|
|
4,866
|
|
|
4,864
|
|
|
4,870
|
|
||||
Basic earnings per share of common stock
|
|
$
|
0.60
|
|
|
$
|
0.28
|
|
|
$
|
1.22
|
|
|
$
|
0.71
|
|
Diluted earnings per share of common stock
|
|
$
|
0.58
|
|
|
$
|
0.27
|
|
|
$
|
1.19
|
|
|
$
|
0.69
|
|
(In Millions)
|
|
Jul 1,
2017 |
|
Dec 31,
2016 |
||||
Raw materials
|
|
$
|
1,014
|
|
|
$
|
695
|
|
Work in process
|
|
3,775
|
|
|
3,190
|
|
||
Finished goods
|
|
1,535
|
|
|
1,668
|
|
||
Total inventories
|
|
$
|
6,324
|
|
|
$
|
5,553
|
|
(In Millions)
|
|
Jul 1,
2017 |
|
Dec 31,
2016 |
||||
Deferred income on shipments of components to distributors
|
|
$
|
1,416
|
|
|
$
|
1,475
|
|
Deferred income from software, services and other
|
|
171
|
|
|
243
|
|
||
Current deferred income
|
|
$
|
1,587
|
|
|
$
|
1,718
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In Millions)
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||||||
Share of equity method investee losses, net
|
|
$
|
(8
|
)
|
|
$
|
(12
|
)
|
|
$
|
(19
|
)
|
|
$
|
(20
|
)
|
Impairments
|
|
(555
|
)
|
|
(60
|
)
|
|
(603
|
)
|
|
(89
|
)
|
||||
Gains on sales, net
|
|
802
|
|
|
419
|
|
|
1,076
|
|
|
515
|
|
||||
Dividends
|
|
66
|
|
|
74
|
|
|
68
|
|
|
74
|
|
||||
Other, net
|
|
37
|
|
|
57
|
|
|
72
|
|
|
20
|
|
||||
Total gains (losses) on equity investments, net
|
|
$
|
342
|
|
|
$
|
478
|
|
|
$
|
594
|
|
|
$
|
500
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In Millions)
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||||||
Interest income
|
|
$
|
136
|
|
|
$
|
51
|
|
|
$
|
212
|
|
|
$
|
103
|
|
Interest expense
|
|
(156
|
)
|
|
(187
|
)
|
|
(302
|
)
|
|
(395
|
)
|
||||
Other, net
|
|
423
|
|
|
10
|
|
|
457
|
|
|
84
|
|
||||
Total interest and other, net
|
|
$
|
403
|
|
|
$
|
(126
|
)
|
|
$
|
367
|
|
|
$
|
(208
|
)
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In Millions)
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||||||
2016 Restructuring Program
|
|
$
|
(42
|
)
|
|
$
|
1,414
|
|
|
$
|
(53
|
)
|
|
$
|
1,414
|
|
Other charges
|
|
147
|
|
|
—
|
|
|
238
|
|
|
—
|
|
||||
Total restructuring and other charges
|
|
$
|
105
|
|
|
$
|
1,414
|
|
|
$
|
185
|
|
|
$
|
1,414
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In Millions)
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||||||
Employee severance and benefit arrangements
|
|
$
|
(49
|
)
|
|
$
|
1,414
|
|
|
$
|
(70
|
)
|
|
$
|
1,414
|
|
Asset impairment and other charges
|
|
7
|
|
|
—
|
|
|
17
|
|
|
—
|
|
||||
Total restructuring and other charges
|
|
$
|
(42
|
)
|
|
$
|
1,414
|
|
|
$
|
(53
|
)
|
|
$
|
1,414
|
|
(In Millions)
|
|
Employee Severance and Benefits
|
|
Asset Impairments and Other
|
|
Total
|
||||||
Accrued restructuring balance as of December 31, 2016
|
|
$
|
585
|
|
|
$
|
10
|
|
|
$
|
595
|
|
Additional accruals
|
|
—
|
|
|
17
|
|
|
17
|
|
|||
Adjustments
|
|
(70
|
)
|
|
—
|
|
|
(70
|
)
|
|||
Cash payments
|
|
(217
|
)
|
|
(16
|
)
|
|
(233
|
)
|
|||
Non-cash settlements
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Accrued restructuring balance as of July 1, 2017
|
|
$
|
298
|
|
|
$
|
10
|
|
|
$
|
308
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
(In Millions)
|
|
Jul 1,
2017 |
|
Jul 1,
2017 |
||||
ISecG separation costs
|
|
$
|
70
|
|
|
$
|
143
|
|
Other
|
|
77
|
|
|
95
|
|
||
Total other charges
|
|
$
|
147
|
|
|
$
|
238
|
|
|
|
July 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
|
|
$
|
6,115
|
|
|
$
|
13
|
|
|
$
|
(7
|
)
|
|
$
|
6,121
|
|
|
$
|
3,847
|
|
|
$
|
4
|
|
|
$
|
(14
|
)
|
|
$
|
3,837
|
|
Financial institution instruments
|
|
8,011
|
|
|
7
|
|
|
(6
|
)
|
|
8,012
|
|
|
6,098
|
|
|
5
|
|
|
(11
|
)
|
|
6,092
|
|
||||||||
Government debt
|
|
1,778
|
|
|
3
|
|
|
(5
|
)
|
|
1,776
|
|
|
1,581
|
|
|
—
|
|
|
(8
|
)
|
|
1,573
|
|
||||||||
Marketable equity securities
|
|
2,560
|
|
|
3,344
|
|
|
—
|
|
|
5,904
|
|
|
2,818
|
|
|
3,363
|
|
|
(1
|
)
|
|
6,180
|
|
||||||||
Total available-for-sale investments
|
|
$
|
18,464
|
|
|
$
|
3,367
|
|
|
$
|
(18
|
)
|
|
$
|
21,813
|
|
|
$
|
14,344
|
|
|
$
|
3,372
|
|
|
$
|
(34
|
)
|
|
$
|
17,682
|
|
(In Millions)
|
|
Fair Value
|
||
Due in 1 year or less
|
|
$
|
8,408
|
|
Due in 1–2 years
|
|
1,434
|
|
|
Due in 2–5 years
|
|
2,976
|
|
|
Due after 5 years
|
|
71
|
|
|
Instruments not due at a single maturity date
|
|
3,020
|
|
|
Total
|
|
$
|
15,909
|
|
(In Millions)
|
|
Apr 3,
2017 |
||
Accounts receivable
|
|
$
|
317
|
|
Goodwill
|
|
3,601
|
|
|
Identified intangible assets
|
|
965
|
|
|
Other assets
|
|
276
|
|
|
Total assets
|
|
$
|
5,159
|
|
|
|
|
||
Deferred income
|
|
$
|
1,553
|
|
Other liabilities
|
|
276
|
|
|
Total liabilities
|
|
$
|
1,829
|
|
|
|
July 1, 2017
|
||||||||||
(In Millions)
|
|
Gross Assets
|
|
Accumulated
Amortization |
|
Net
|
||||||
Acquisition-related developed technology
|
|
$
|
6,591
|
|
|
$
|
(1,441
|
)
|
|
$
|
5,150
|
|
Acquisition-related customer relationships
|
|
1,340
|
|
|
(224
|
)
|
|
1,116
|
|
|||
Acquisition-related brands
|
|
79
|
|
|
(19
|
)
|
|
60
|
|
|||
Licensed technology and patents
|
|
3,184
|
|
|
(1,451
|
)
|
|
1,733
|
|
|||
Identified intangible assets subject to amortization
|
|
11,194
|
|
|
(3,135
|
)
|
|
8,059
|
|
|||
In-process research and development
|
|
808
|
|
|
—
|
|
|
808
|
|
|||
Identified intangible assets not subject to amortization
|
|
808
|
|
|
—
|
|
|
808
|
|
|||
Total identified intangible assets
|
|
$
|
12,002
|
|
|
$
|
(3,135
|
)
|
|
$
|
8,867
|
|
|
|
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
|
|
Six Months Ended
|
||||||||||||
(In Millions)
|
|
Location
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||||||
Acquisition-related developed technology
|
|
Cost of sales
|
|
$
|
198
|
|
|
$
|
235
|
|
|
$
|
407
|
|
|
$
|
470
|
|
Acquisition-related customer relationships
|
|
Amortization of acquisition-related intangibles
|
|
33
|
|
|
82
|
|
|
68
|
|
|
165
|
|
||||
Acquisition-related brands
|
|
Amortization of acquisition-related intangibles
|
|
4
|
|
|
7
|
|
|
7
|
|
|
14
|
|
||||
Licensed technology and patents
|
|
Cost of sales
|
|
78
|
|
|
71
|
|
|
152
|
|
|
142
|
|
||||
Total amortization expense
|
|
|
|
$
|
313
|
|
|
$
|
395
|
|
|
$
|
634
|
|
|
$
|
791
|
|
(In Millions)
|
|
Remainder of 2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
||||||||||
Acquisition-related developed technology
|
|
$
|
394
|
|
|
$
|
784
|
|
|
$
|
782
|
|
|
$
|
750
|
|
|
$
|
715
|
|
Acquisition-related customer relationships
|
|
67
|
|
|
122
|
|
|
121
|
|
|
119
|
|
|
119
|
|
|||||
Acquisition-related brands
|
|
7
|
|
|
13
|
|
|
13
|
|
|
13
|
|
|
14
|
|
|||||
Licensed technology and patents
|
|
132
|
|
|
231
|
|
|
219
|
|
|
194
|
|
|
179
|
|
|||||
Total future amortization expenses
|
|
$
|
600
|
|
|
$
|
1,150
|
|
|
$
|
1,135
|
|
|
$
|
1,076
|
|
|
$
|
1,027
|
|
(In Millions)
|
|
Jul 1,
2017 |
|
Dec 31,
2016 |
||||
Equity method investments
|
|
$
|
2,266
|
|
|
$
|
1,328
|
|
Non-marketable cost method investments
|
|
2,719
|
|
|
3,098
|
|
||
Non-current deferred tax assets
|
|
753
|
|
|
907
|
|
||
Pre-payments for property, plant and equipment
|
|
422
|
|
|
347
|
|
||
Loans receivable
|
|
2,725
|
|
|
236
|
|
||
Reverse repurchase agreements
|
|
—
|
|
|
250
|
|
||
Other
|
|
1,121
|
|
|
993
|
|
||
Total other long-term assets
|
|
$
|
10,006
|
|
|
$
|
7,159
|
|
(In Millions)
|
|
Jul 1,
2017 |
|
Dec 31,
2016 |
||||
Drafts payable
|
|
$
|
13
|
|
|
$
|
25
|
|
Current portion of long-term debt
|
|
4,125
|
|
|
4,618
|
|
||
Less: debt issuance costs associated with the current portion of long-term debt
|
|
(8
|
)
|
|
(9
|
)
|
||
Total short-term debt
|
|
$
|
4,130
|
|
|
$
|
4,634
|
|
(In Millions)
|
|
Jul 1,
2017 |
|
Dec 31,
2016 |
||||
Floating-rate senior notes:
|
|
|
|
|
||||
$700, three-month LIBOR plus 0.08%, due May 2020
|
|
$
|
700
|
|
|
$
|
—
|
|
$800, three-month LIBOR plus 0.35%, due May 2022
|
|
800
|
|
|
—
|
|
||
Fixed-rate senior notes:
|
|
|
|
|
||||
$500, 1.75%, due May 2017
|
|
—
|
|
|
501
|
|
||
$3,000, 1.35%, due December 2017
|
|
3,000
|
|
|
2,999
|
|
||
$600, 2.50%, due November 2018
|
|
603
|
|
|
604
|
|
||
A$250, 3.25%, due December 2019
1
|
|
191
|
|
|
180
|
|
||
$1,000, 1.85%, due May 2020
|
|
1,000
|
|
|
—
|
|
||
$1,750, 2.45%, due July 2020
|
|
1,749
|
|
|
1,749
|
|
||
$500, 1.70%, due May 2021
|
|
499
|
|
|
499
|
|
||
$2,000, 3.30%, due October 2021
|
|
1,999
|
|
|
1,988
|
|
||
$750, 2.35%, due May 2022
|
|
748
|
|
|
—
|
|
||
$1,000, 3.10%, due July 2022
|
|
995
|
|
|
987
|
|
||
A$550, 4.00%, due December 2022
1
|
|
419
|
|
|
394
|
|
||
$1,500, 2.70%, due December 2022
|
|
1,493
|
|
|
1,480
|
|
||
$400, 4.10%, due November 2023
|
|
422
|
|
|
424
|
|
||
$1,250, 2.88%, due May 2024
|
|
1,241
|
|
|
—
|
|
||
$600, 2.70%, due June 2024
|
|
600
|
|
|
—
|
|
||
$2,250, 3.70%, due July 2025
|
|
2,176
|
|
|
2,148
|
|
||
$1,000, 2.60%, due May 2026
|
|
995
|
|
|
983
|
|
||
$1,000, 3.15%, due May 2027
|
|
997
|
|
|
—
|
|
||
$750, 4.00%, due December 2032
|
|
745
|
|
|
745
|
|
||
$1,500, 4.80%, due October 2041
|
|
1,491
|
|
|
1,491
|
|
||
$925, 4.25%, due December 2042
|
|
924
|
|
|
924
|
|
||
$2,000, 4.90%, due July 2045
|
|
1,999
|
|
|
1,999
|
|
||
$1,007, 4.90%, due August 2045
|
|
1,005
|
|
|
995
|
|
||
$915, 4.70%, due December 2045
|
|
905
|
|
|
894
|
|
||
$1,250, 4.10%, due May 2046
|
|
1,243
|
|
|
1,243
|
|
||
$1,000, 4.10%, due May 2047
|
|
994
|
|
|
—
|
|
||
Junior subordinated convertible debentures:
|
|
|
|
|
||||
$1,600, 2.95%, due December 2035
|
|
1,000
|
|
|
992
|
|
||
$2,000, 3.25%, due August 2039
|
|
1,126
|
|
|
1,118
|
|
||
Long-term debt
|
|
32,059
|
|
|
25,337
|
|
||
Less: current portion of long-term debt
|
|
(4,125
|
)
|
|
(4,618
|
)
|
||
Less: debt issuance costs
|
|
(79
|
)
|
|
(70
|
)
|
||
Total long-term debt
|
|
$
|
27,855
|
|
|
$
|
20,649
|
|
1
|
To manage foreign currency risk associated with the Australian-dollar-denominated notes issued in 2015, we entered into currency interest rate swaps with an aggregate notional amount of
$577 million
, which effectively converted these notes to U.S.-dollar-denominated notes. For further discussion on our currency interest rate swaps, see "
Note 15: Derivative Financial Instruments
."
|
|
|
July 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
|
|
$
|
—
|
|
|
$
|
2,645
|
|
|
$
|
—
|
|
|
$
|
2,645
|
|
|
$
|
—
|
|
|
$
|
498
|
|
|
$
|
—
|
|
|
$
|
498
|
|
Financial institution instruments
1
|
|
3,020
|
|
|
2,139
|
|
|
—
|
|
|
5,159
|
|
|
1,920
|
|
|
811
|
|
|
—
|
|
|
2,731
|
|
||||||||
Government debt
2
|
|
—
|
|
|
466
|
|
|
—
|
|
|
466
|
|
|
—
|
|
|
332
|
|
|
—
|
|
|
332
|
|
||||||||
Reverse repurchase agreements
|
|
—
|
|
|
2,335
|
|
|
—
|
|
|
2,335
|
|
|
—
|
|
|
768
|
|
|
—
|
|
|
768
|
|
||||||||
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt
|
|
—
|
|
|
1,654
|
|
|
6
|
|
|
1,660
|
|
|
—
|
|
|
1,332
|
|
|
6
|
|
|
1,338
|
|
||||||||
Financial institution instruments
1
|
|
—
|
|
|
1,221
|
|
|
—
|
|
|
1,221
|
|
|
—
|
|
|
1,603
|
|
|
—
|
|
|
1,603
|
|
||||||||
Government debt
2
|
|
—
|
|
|
277
|
|
|
—
|
|
|
277
|
|
|
—
|
|
|
284
|
|
|
—
|
|
|
284
|
|
||||||||
Trading assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Asset-backed securities
|
|
—
|
|
|
22
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
87
|
|
|
—
|
|
|
87
|
|
||||||||
Corporate debt
|
|
—
|
|
|
2,461
|
|
|
—
|
|
|
2,461
|
|
|
—
|
|
|
2,847
|
|
|
—
|
|
|
2,847
|
|
||||||||
Financial institution instruments
1
|
|
92
|
|
|
1,544
|
|
|
—
|
|
|
1,636
|
|
|
36
|
|
|
1,608
|
|
|
—
|
|
|
1,644
|
|
||||||||
Government debt
2
|
|
31
|
|
|
6,934
|
|
|
—
|
|
|
6,965
|
|
|
32
|
|
|
3,704
|
|
|
—
|
|
|
3,736
|
|
||||||||
Other current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative assets
|
|
—
|
|
|
326
|
|
|
—
|
|
|
326
|
|
|
—
|
|
|
382
|
|
|
—
|
|
|
382
|
|
||||||||
Loans receivable
|
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
326
|
|
|
—
|
|
|
326
|
|
||||||||
Marketable equity securities
|
|
5,472
|
|
|
432
|
|
|
—
|
|
|
5,904
|
|
|
6,180
|
|
|
—
|
|
|
—
|
|
|
6,180
|
|
||||||||
Other long-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt
|
|
—
|
|
|
1,811
|
|
|
5
|
|
|
1,816
|
|
|
—
|
|
|
1,995
|
|
|
6
|
|
|
2,001
|
|
||||||||
Financial institution instruments
1
|
|
—
|
|
|
1,632
|
|
|
—
|
|
|
1,632
|
|
|
—
|
|
|
1,758
|
|
|
—
|
|
|
1,758
|
|
||||||||
Government debt
2
|
|
—
|
|
|
1,033
|
|
|
—
|
|
|
1,033
|
|
|
—
|
|
|
957
|
|
|
—
|
|
|
957
|
|
||||||||
Other long-term assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative assets
|
|
—
|
|
|
64
|
|
|
9
|
|
|
73
|
|
|
—
|
|
|
31
|
|
|
9
|
|
|
40
|
|
||||||||
Loans receivable
|
|
—
|
|
|
525
|
|
|
—
|
|
|
525
|
|
|
—
|
|
|
236
|
|
|
—
|
|
|
236
|
|
||||||||
Total assets measured and recorded at fair value
|
|
8,615
|
|
|
27,607
|
|
|
20
|
|
|
36,242
|
|
|
8,168
|
|
|
19,559
|
|
|
21
|
|
|
27,748
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Other accrued liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities
|
|
—
|
|
|
444
|
|
|
—
|
|
|
444
|
|
|
—
|
|
|
371
|
|
|
—
|
|
|
371
|
|
||||||||
Other long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Derivative liabilities
|
|
—
|
|
|
125
|
|
|
12
|
|
|
137
|
|
|
—
|
|
|
179
|
|
|
33
|
|
|
212
|
|
||||||||
Total liabilities measured and recorded at fair value
|
|
$
|
—
|
|
|
$
|
569
|
|
|
$
|
12
|
|
|
$
|
581
|
|
|
$
|
—
|
|
|
$
|
550
|
|
|
$
|
33
|
|
|
$
|
583
|
|
1
|
Level 1 investments consist of money market funds. Level 2 investments consist primarily of commercial paper, certificates of deposit, time deposits, and notes and bonds issued by financial institutions.
|
2
|
Level 1 investments consist primarily of US Treasury securities. Level 2 investments consist primarily of US Agency notes and non-U.S. government debt.
|
|
|
July 1, 2017
|
||||||||||||||||||
(In Millions)
|
|
Carrying
Amount
|
|
Fair Value Measured Using
|
|
Fair Value
|
||||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|
|||||||||||||||
Grants receivable
|
|
$
|
440
|
|
|
$
|
—
|
|
|
$
|
440
|
|
|
$
|
—
|
|
|
$
|
440
|
|
Loans receivable
1
|
|
$
|
2,465
|
|
|
$
|
—
|
|
|
$
|
2,465
|
|
|
$
|
—
|
|
|
$
|
2,465
|
|
Non-marketable cost method investments
|
|
$
|
2,719
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,457
|
|
|
$
|
3,457
|
|
Reverse repurchase agreements
|
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
250
|
|
|
$
|
—
|
|
|
$
|
250
|
|
Short-term debt
|
|
$
|
4,117
|
|
|
$
|
—
|
|
|
$
|
4,697
|
|
|
$
|
—
|
|
|
$
|
4,697
|
|
Long-term debt
|
|
$
|
27,855
|
|
|
$
|
17,980
|
|
|
$
|
11,630
|
|
|
$
|
—
|
|
|
$
|
29,610
|
|
1
|
Includes a loan receivable of
$2.2 billion
due from McAfee and TPG. The fair value of this loan receivable approximates its carrying value and we did not obtain or secure collateral against this obligation. For further information, see "
Note 9: Acquisitions and Divestitures
."
|
|
|
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
|
|
1,059
|
|
|
445
|
|
|
—
|
|
|
217
|
|
|
1
|
|
|
1,722
|
|
||||||
Amounts reclassified out of accumulated other comprehensive income
|
|
(1,046
|
)
|
|
16
|
|
|
(12
|
)
|
|
40
|
|
|
507
|
|
|
(495
|
)
|
||||||
Tax effects
|
|
(4
|
)
|
|
(130
|
)
|
|
2
|
|
|
(27
|
)
|
|
—
|
|
|
(159
|
)
|
||||||
Other comprehensive income (loss)
|
|
9
|
|
|
331
|
|
|
(10
|
)
|
|
230
|
|
|
508
|
|
|
1,068
|
|
||||||
July 1, 2017
|
|
$
|
2,173
|
|
|
$
|
72
|
|
|
$
|
(50
|
)
|
|
$
|
(1,010
|
)
|
|
$
|
(11
|
)
|
|
$
|
1,174
|
|
1
|
In the second quarter of 2017, we froze future benefit accruals for our Ireland pension plan.
|
|
|
Income Before Taxes Impact
(In Millions) |
|
|
||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
||||||||||||
Comprehensive Income Components
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Location
|
||||||||
Unrealized holding gains (losses)
1
on available-for-sale investments:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
$
|
783
|
|
|
$
|
403
|
|
|
$
|
1,046
|
|
|
$
|
488
|
|
|
Gains (losses) on equity investments, net
|
|
|
783
|
|
|
403
|
|
|
1,046
|
|
|
488
|
|
|
|
||||
Unrealized holding gains (losses) on derivatives:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
|
|
(27
|
)
|
|
(17
|
)
|
|
(47
|
)
|
|
(59
|
)
|
|
Cost of sales
|
||||
|
|
2
|
|
|
7
|
|
|
(14
|
)
|
|
(3
|
)
|
|
Research and development
|
||||
|
|
(1
|
)
|
|
3
|
|
|
(6
|
)
|
|
(1
|
)
|
|
Marketing, general and administrative
|
||||
|
|
12
|
|
|
11
|
|
|
16
|
|
|
11
|
|
|
Gains (losses) on equity investments, net
|
||||
|
|
(3
|
)
|
|
(17
|
)
|
|
35
|
|
|
17
|
|
|
Interest and other, net
|
||||
|
|
(17
|
)
|
|
(13
|
)
|
|
(16
|
)
|
|
(35
|
)
|
|
|
||||
Amortization of pension and postretirement benefit components:
|
|
|
|
|
|
|
|
|
|
|
||||||||
Prior service credits (costs)
|
|
14
|
|
|
(2
|
)
|
|
12
|
|
|
(4
|
)
|
|
|
||||
Actuarial gains (losses)
|
|
(18
|
)
|
|
(14
|
)
|
|
(40
|
)
|
|
(26
|
)
|
|
|
||||
|
|
(4
|
)
|
|
(16
|
)
|
|
(28
|
)
|
|
(30
|
)
|
|
|
||||
Currency translation adjustment
|
|
(507
|
)
|
|
—
|
|
|
(507
|
)
|
|
—
|
|
|
Interest and other, net
|
||||
Total amounts reclassified out of accumulated other comprehensive income (loss)
|
|
$
|
255
|
|
|
$
|
374
|
|
|
$
|
495
|
|
|
$
|
423
|
|
|
|
1
|
We determine the cost of the investment sold based on an average cost basis at the individual security level.
|
(In Millions)
|
|
Jul 1,
2017 |
|
Dec 31,
2016 |
|
Jul 2,
2016 |
||||||
Foreign currency contracts
|
|
$
|
20,861
|
|
|
$
|
17,960
|
|
|
$
|
18,682
|
|
Interest rate contracts
|
|
16,781
|
|
|
14,228
|
|
|
10,039
|
|
|||
Other
|
|
1,396
|
|
|
1,340
|
|
|
1,307
|
|
|||
Total
|
|
$
|
39,038
|
|
|
$
|
33,528
|
|
|
$
|
30,028
|
|
|
|
July 1, 2017
|
|
December 31, 2016
|
||||||||||||
(In Millions)
|
|
Assets
1
|
|
Liabilities
2
|
|
Assets
1
|
|
Liabilities
2
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
3
|
|
$
|
283
|
|
|
$
|
23
|
|
|
$
|
21
|
|
|
$
|
252
|
|
Interest rate contracts
|
|
12
|
|
|
114
|
|
|
3
|
|
|
187
|
|
||||
Total derivatives designated as hedging instruments
|
|
295
|
|
|
137
|
|
|
24
|
|
|
439
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency contracts
3
|
|
83
|
|
|
421
|
|
|
374
|
|
|
114
|
|
||||
Interest rate contracts
|
|
12
|
|
|
23
|
|
|
15
|
|
|
30
|
|
||||
Other
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
||||
Total derivatives not designated as hedging instruments
|
|
104
|
|
|
444
|
|
|
398
|
|
|
144
|
|
||||
Total derivatives
|
|
$
|
399
|
|
|
$
|
581
|
|
|
$
|
422
|
|
|
$
|
583
|
|
1
|
Derivative assets are recorded as other assets, current and non-current.
|
2
|
Derivative liabilities are recorded as other liabilities, current and non-current.
|
3
|
The majority of these instruments mature within
12 months.
|
|
|
July 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
|
|
$
|
386
|
|
|
$
|
—
|
|
|
$
|
386
|
|
|
$
|
(232
|
)
|
|
$
|
(135
|
)
|
|
$
|
19
|
|
Reverse repurchase agreements
|
|
2,585
|
|
|
—
|
|
|
2,585
|
|
|
—
|
|
|
(2,585
|
)
|
|
—
|
|
||||||
Total assets
|
|
2,971
|
|
|
—
|
|
|
2,971
|
|
|
(232
|
)
|
|
(2,720
|
)
|
|
19
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Derivative liabilities subject to master netting arrangements
|
|
563
|
|
|
—
|
|
|
563
|
|
|
(232
|
)
|
|
(303
|
)
|
|
28
|
|
||||||
Total liabilities
|
|
$
|
563
|
|
|
$
|
—
|
|
|
$
|
563
|
|
|
$
|
(232
|
)
|
|
$
|
(303
|
)
|
|
$
|
28
|
|
|
|
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
|
|
Six Months Ended
|
||||||||||||
(In Millions)
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||||||
Interest rate contracts
|
|
$
|
96
|
|
|
$
|
60
|
|
|
$
|
82
|
|
|
$
|
222
|
|
Hedged items
|
|
(96
|
)
|
|
(60
|
)
|
|
(82
|
)
|
|
(222
|
)
|
||||
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In Millions)
|
|
Location of Gains (Losses)
Recognized in Income on Derivatives
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||||||
Foreign currency contracts
|
|
Interest and other, net
|
|
$
|
(271
|
)
|
|
$
|
64
|
|
|
$
|
(430
|
)
|
|
$
|
(174
|
)
|
Interest rate contracts
|
|
Interest and other, net
|
|
1
|
|
|
(8
|
)
|
|
(1
|
)
|
|
(15
|
)
|
||||
Other
|
|
Various
|
|
38
|
|
|
6
|
|
|
95
|
|
|
18
|
|
||||
Total
|
|
|
|
$
|
(232
|
)
|
|
$
|
62
|
|
|
$
|
(336
|
)
|
|
$
|
(171
|
)
|
|
|
Number of
RSUs
(In Millions)
|
|
Weighted Average
Grant-Date
Fair Value
|
|||
December 31, 2016
|
|
106.8
|
|
|
$
|
28.99
|
|
Granted
|
|
39.8
|
|
|
$
|
34.51
|
|
Vested
|
|
(36.6
|
)
|
|
$
|
27.15
|
|
Forfeited
|
|
(9.3
|
)
|
|
$
|
29.82
|
|
July 1, 2017
|
|
100.7
|
|
|
$
|
31.76
|
|
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 and six
months ended
July 1, 2017
to the
three and six
months ended
July 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
.
|
•
|
CCG had revenue of
$8.2 billion
,
up
12%
with platform volumes
up
3%
and platform average selling prices
up
8%
compared to
Q2 2016
. The PC market is slightly ahead of our expectations and we continue to see the worldwide supply chain operate at healthy levels.
|
•
|
Data Center Group (DCG) had revenue of
$4.4 billion
,
up
9%
with platform volumes
up
7%
and platform average selling prices
up
1%
compared to
Q2 2016
.
|
•
|
Gross margin of
61.6%
was
up 2.7 points
compared to
Q2 2016
.
|
•
|
Research and development (R&D) plus marketing, general, and administrative (MG&A) spending for the quarter was
$5.1 billion
,
flat
from a year ago. R&D and MG&A were
34.7%
of revenue, down approximately
3
points from Q2 2016. To increase efficiency as a company, we expect to continue reducing our spending as a percent of revenue and reach a spending target of approximately 30% of revenue by 2020.
|
•
|
Operating income for
Q2 2017
was
$3.8 billion
,
up
190%
on a year-on-year basis. The tax rate for the quarter was
38.6%
, up
18.2%
compared to
Q2 2016
due to the tax expense related to the divestiture of ISecG. Net income for
Q2 2017
was
$2.8 billion
,
up
111%
from
Q2 2016
.
|
•
|
Our business continues to generate healthy cash flow with
$4.7 billion
of cash from operations in
Q2 2017
. During
Q2 2017
, we purchased
$2.8 billion
in capital assets, paid
$1.3 billion
in dividends, and used
$1.3 billion
to repurchase
36 million
shares of stock.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
|
Q2 2017
|
|
Q2 2016
|
|
YTD 2017
|
|
YTD 2016
|
||||||||||||||||||||
(Dollars in Millions, Except Per Share Amounts)
|
|
Dollars
|
|
% of Net
Revenue |
|
Dollars
|
|
% of Net
Revenue |
|
Dollars
|
|
% of Net
Revenue |
|
Dollars
|
|
% of Net
Revenue |
||||||||||||
Net revenue
|
|
$
|
14,763
|
|
|
100.0
|
%
|
|
$
|
13,533
|
|
|
100.0
|
%
|
|
$
|
29,559
|
|
|
100.0
|
%
|
|
$
|
27,235
|
|
|
100.0
|
%
|
Cost of sales
|
|
5,665
|
|
|
38.4
|
%
|
|
5,560
|
|
|
41.1
|
%
|
|
11,314
|
|
|
38.3
|
%
|
|
11,132
|
|
|
40.9
|
%
|
||||
Gross margin
|
|
9,098
|
|
|
61.6
|
%
|
|
7,973
|
|
|
58.9
|
%
|
|
18,245
|
|
|
61.7
|
%
|
|
16,103
|
|
|
59.1
|
%
|
||||
Research and development
|
|
3,275
|
|
|
22.2
|
%
|
|
3,145
|
|
|
23.2
|
%
|
|
6,601
|
|
|
22.3
|
%
|
|
6,391
|
|
|
23.5
|
%
|
||||
Marketing, general and administrative
|
|
1,854
|
|
|
12.6
|
%
|
|
2,007
|
|
|
14.8
|
%
|
|
3,958
|
|
|
13.4
|
%
|
|
4,233
|
|
|
15.5
|
%
|
||||
Restructuring and other charges
|
|
105
|
|
|
0.6
|
%
|
|
1,414
|
|
|
10.5
|
%
|
|
185
|
|
|
0.6
|
%
|
|
1,414
|
|
|
5.1
|
%
|
||||
Amortization of acquisition-related intangibles
|
|
37
|
|
|
0.3
|
%
|
|
89
|
|
|
0.7
|
%
|
|
75
|
|
|
0.3
|
%
|
|
179
|
|
|
0.7
|
%
|
||||
Operating income
|
|
3,827
|
|
|
25.9
|
%
|
|
1,318
|
|
|
9.7
|
%
|
|
7,426
|
|
|
25.1
|
%
|
|
3,886
|
|
|
14.3
|
%
|
||||
Gains (losses) on equity investments, net
|
|
342
|
|
|
2.3
|
%
|
|
478
|
|
|
3.5
|
%
|
|
594
|
|
|
2.0
|
%
|
|
500
|
|
|
1.8
|
%
|
||||
Interest and other, net
|
|
403
|
|
|
2.8
|
%
|
|
(126
|
)
|
|
(0.9
|
)%
|
|
367
|
|
|
1.3
|
%
|
|
(208
|
)
|
|
(0.8
|
)%
|
||||
Income before taxes
|
|
4,572
|
|
|
31.0
|
%
|
|
1,670
|
|
|
12.3
|
%
|
|
8,387
|
|
|
28.4
|
%
|
|
4,178
|
|
|
15.3
|
%
|
||||
Provision for taxes
|
|
1,764
|
|
|
12.0
|
%
|
|
340
|
|
|
2.5
|
%
|
|
2,615
|
|
|
8.9
|
%
|
|
802
|
|
|
2.9
|
%
|
||||
Net income
|
|
$
|
2,808
|
|
|
19.0
|
%
|
|
$
|
1,330
|
|
|
9.8
|
%
|
|
$
|
5,772
|
|
|
19.5
|
%
|
|
$
|
3,376
|
|
|
12.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Diluted earnings per common share
|
|
$
|
0.58
|
|
|
|
|
$
|
0.27
|
|
|
|
|
$
|
1.19
|
|
|
|
|
$
|
0.69
|
|
|
|
(In Millions)
|
|
Gross Margin Reconciliation
|
||
$
|
9,098
|
|
|
Q2 2017 Gross Margin
|
990
|
|
|
Higher gross margin from platform revenue
|
|
370
|
|
|
Lower platform unit cost, primarily on 14nm cost improvement
|
|
200
|
|
|
Lower Altera and other acquisition-related charges
|
|
(305
|
)
|
|
Higher factory start-up costs, primarily driven by the ramp of our 10nm process technology
|
|
(130
|
)
|
|
Other
|
|
$
|
7,973
|
|
|
Q2 2016 Gross Margin
|
(In Millions)
|
|
Gross Margin Reconciliation
|
||
$
|
18,245
|
|
|
YTD 2017 Gross Margin
|
1,500
|
|
|
Higher gross margin from platform revenue
|
|
655
|
|
|
Lower platform unit cost, primarily on 14nm cost improvement
|
|
515
|
|
|
Lower Altera and other acquisition-related charges
|
|
(530
|
)
|
|
Higher factory start-up costs, primarily driven by the ramp of our 10nm process technology
|
|
2
|
|
|
Other
|
|
$
|
16,103
|
|
|
YTD 2016 Gross Margin
|
(Dollars in Millions)
|
|
Q2 2017
|
|
Q2 2016
|
|
% Change
|
|
YTD 2017
|
|
YTD 2016
|
|
% Change
|
||||||||||
Platform revenue
|
|
$
|
7,634
|
|
|
$
|
6,938
|
|
|
10
|
%
|
|
$
|
15,031
|
|
|
$
|
14,137
|
|
|
6
|
%
|
Other revenue
|
|
579
|
|
|
400
|
|
|
45
|
%
|
|
1,158
|
|
|
750
|
|
|
54
|
%
|
||||
Net revenue
|
|
$
|
8,213
|
|
|
$
|
7,338
|
|
|
12
|
%
|
|
$
|
16,189
|
|
|
$
|
14,887
|
|
|
9
|
%
|
Operating income
|
|
$
|
3,025
|
|
|
$
|
1,911
|
|
|
58
|
%
|
|
$
|
6,056
|
|
|
$
|
3,796
|
|
|
60
|
%
|
CCG platform unit sales
|
|
|
|
|
|
3
|
%
|
|
|
|
|
|
—
|
%
|
||||||||
CCG platform average selling prices
|
|
|
|
|
|
8
|
%
|
|
|
|
|
|
7
|
%
|
(In Millions)
|
|
Revenue Reconciliation
|
||
$
|
8,213
|
|
|
Q2 2017 CCG Revenue
|
541
|
|
|
Higher notebook platform unit sales, up 14%
|
|
251
|
|
|
Higher notebook platform average selling prices, up 6%, from mix of products
|
|
179
|
|
|
Higher CCG non-platform revenue, including modem products
|
|
(96
|
)
|
|
Other
|
|
$
|
7,338
|
|
|
Q2 2016 CCG Revenue
|
(In Millions)
|
|
Revenue Reconciliation
|
||
$
|
16,189
|
|
|
YTD 2017 CCG Revenue
|
595
|
|
|
Higher notebook platform unit sales, up 7%
|
|
555
|
|
|
Higher notebook platform average selling prices, up 6%, from mix of products
|
|
408
|
|
|
Higher CCG non-platform revenue, including modem products
|
|
(290
|
)
|
|
Lower desktop platform unit sales, down 4%
|
|
34
|
|
|
Other
|
|
$
|
14,887
|
|
|
YTD 2016 CCG Revenue
|
(In Millions)
|
|
Operating Income Reconciliation
|
||
$
|
3,025
|
|
|
Q2 2017 CCG Operating Income
|
615
|
|
|
Higher gross margin from CCG platform revenue
|
|
365
|
|
|
Lower CCG platform unit cost, primarily on 14nm cost improvement
|
|
145
|
|
|
Lower CCG spending and share of technology development and MG&A costs
|
|
(11
|
)
|
|
Other
|
|
$
|
1,911
|
|
|
Q2 2016 CCG Operating Income
|
(In Millions)
|
|
Operating Income Reconciliation
|
||
$
|
6,056
|
|
|
YTD 2017 CCG Operating Income
|
870
|
|
|
Higher gross margin from CCG platform revenue
|
|
765
|
|
|
Lower CCG platform unit cost, primarily on 14nm cost improvement
|
|
450
|
|
|
Lower CCG spending and share of technology development and MG&A costs
|
|
175
|
|
|
Other
|
|
$
|
3,796
|
|
|
YTD 2016 CCG Operating Income
|
(Dollars in Millions)
|
|
Q2 2017
|
|
Q2 2016
|
|
% Change
|
|
YTD 2017
|
|
YTD 2016
|
|
% Change
|
||||||||||
Platform revenue
|
|
$
|
4,026
|
|
|
$
|
3,718
|
|
|
8
|
%
|
|
$
|
7,905
|
|
|
$
|
7,425
|
|
|
6
|
%
|
Other revenue
|
|
346
|
|
|
309
|
|
|
12
|
%
|
|
699
|
|
|
601
|
|
|
16
|
%
|
||||
Net revenue
|
|
$
|
4,372
|
|
|
$
|
4,027
|
|
|
9
|
%
|
|
$
|
8,604
|
|
|
$
|
8,026
|
|
|
7
|
%
|
Operating income
|
|
$
|
1,661
|
|
|
$
|
1,765
|
|
|
(6
|
)%
|
|
$
|
3,148
|
|
|
$
|
3,529
|
|
|
(11
|
)%
|
DCG platform unit sales
|
|
|
|
|
|
7
|
%
|
|
|
|
|
|
3
|
%
|
||||||||
DCG platform average selling prices
|
|
|
|
|
|
1
|
%
|
|
|
|
|
|
4
|
%
|
(In Millions)
|
|
Revenue Reconciliation
|
||
$
|
4,372
|
|
|
Q2 2017 DCG Revenue
|
259
|
|
|
Higher DCG platform unit sales, up 7%
|
|
86
|
|
|
Other
|
|
$
|
4,027
|
|
|
Q2 2016 DCG Revenue
|
(In Millions)
|
|
Revenue Reconciliation
|
||
$
|
8,604
|
|
|
YTD 2017 DCG Revenue
|
271
|
|
|
Higher DCG platform average selling prices, up 4%, from mix of processors
|
|
209
|
|
|
Higher DCG platform unit sales, up 3%
|
|
98
|
|
|
Other
|
|
$
|
8,026
|
|
|
YTD 2016 DCG Revenue
|
(In Millions)
|
|
Operating Income Reconciliation
|
||
$
|
1,661
|
|
|
Q2 2017 DCG Operating Income
|
275
|
|
|
Higher gross margin from DCG platform revenue
|
|
(210
|
)
|
|
Higher DCG operating expense, primarily on increased share of technology development and MG&A costs
|
|
(220
|
)
|
|
Higher factory start-up costs, primarily driven by the ramp of our 10nm process technology
|
|
51
|
|
|
Other
|
|
$
|
1,765
|
|
|
Q2 2016 DCG Operating Income
|
(In Millions)
|
|
Operating Income Reconciliation
|
||
$
|
3,148
|
|
|
YTD 2017 DCG Operating Income
|
455
|
|
|
Higher gross margin from DCG platform revenue
|
|
(370
|
)
|
|
Higher DCG operating expense, primarily on increased share of technology development and MG&A costs
|
|
(410
|
)
|
|
Higher factory start-up costs, primarily driven by the ramp of our 10nm process technology
|
|
(56
|
)
|
|
Other
|
|
$
|
3,529
|
|
|
YTD 2016 DCG Operating Income
|
(Dollars in Millions)
|
|
Q2 2017
|
|
Q2 2016
|
|
% Change
|
|
YTD 2017
|
|
YTD 2016
|
|
% Change
|
||||||||||
Platform revenue
|
|
$
|
614
|
|
|
$
|
497
|
|
|
24
|
%
|
|
$
|
1,246
|
|
|
$
|
1,068
|
|
|
17
|
%
|
Other revenue
|
|
106
|
|
|
75
|
|
|
41
|
%
|
|
195
|
|
|
155
|
|
|
26
|
%
|
||||
Net revenue
|
|
$
|
720
|
|
|
$
|
572
|
|
|
26
|
%
|
|
$
|
1,441
|
|
|
$
|
1,223
|
|
|
18
|
%
|
Operating income
|
|
$
|
139
|
|
|
$
|
89
|
|
|
56
|
%
|
|
$
|
244
|
|
|
$
|
212
|
|
|
15
|
%
|
(Dollars in Millions)
|
|
Q2 2017
|
|
Q2 2016
|
|
% Change
|
|
YTD 2017
|
|
YTD 2016
|
|
% Change
|
||||||||||
Net revenue
|
|
$
|
874
|
|
|
$
|
554
|
|
|
58
|
%
|
|
$
|
1,740
|
|
|
$
|
1,111
|
|
|
57
|
%
|
Operating income (loss)
|
|
$
|
(110
|
)
|
|
$
|
(224
|
)
|
|
51
|
%
|
|
$
|
(239
|
)
|
|
$
|
(319
|
)
|
|
25
|
%
|
(Dollars in Millions)
|
|
Q2 2017
|
|
Q2 2016
|
|
% Change
|
|
YTD 2017
|
|
YTD 2016
|
|
% Change
|
||||||||||
Net revenue
|
|
$
|
440
|
|
|
$
|
465
|
|
|
(5
|
)%
|
|
$
|
865
|
|
|
$
|
824
|
|
|
5
|
%
|
Operating income (loss)
|
|
$
|
97
|
|
|
$
|
(62
|
)
|
|
n/m
|
|
|
$
|
189
|
|
|
$
|
(262
|
)
|
|
172
|
%
|
(Dollars in Millions)
|
|
Q2 2017
|
|
Q2 2016
|
|
YTD 2017
|
|
YTD 2016
|
||||||||
Research and development (R&D)
|
|
$
|
3,275
|
|
|
$
|
3,145
|
|
|
$
|
6,601
|
|
|
$
|
6,391
|
|
Marketing, general and administrative (MG&A)
|
|
$
|
1,854
|
|
|
$
|
2,007
|
|
|
$
|
3,958
|
|
|
$
|
4,233
|
|
R&D and MG&A as percentage of net revenue
|
|
34.7
|
%
|
|
38.1
|
%
|
|
35.7
|
%
|
|
39.0
|
%
|
||||
Restructuring and other charges
|
|
$
|
105
|
|
|
$
|
1,414
|
|
|
$
|
185
|
|
|
$
|
1,414
|
|
Amortization of acquisition-related intangibles
|
|
$
|
37
|
|
|
$
|
89
|
|
|
$
|
75
|
|
|
$
|
179
|
|
(In Millions)
|
|
Q2 2017
|
|
Q2 2016
|
|
YTD 2017
|
|
YTD 2016
|
||||||||
2016 Restructuring Program
|
|
$
|
(42
|
)
|
|
$
|
1,414
|
|
|
$
|
(53
|
)
|
|
$
|
1,414
|
|
Other charges
|
|
147
|
|
|
—
|
|
|
238
|
|
|
—
|
|
||||
Total restructuring and other charges
|
|
$
|
105
|
|
|
$
|
1,414
|
|
|
$
|
185
|
|
|
$
|
1,414
|
|
(In Millions)
|
|
Q2 2017
|
|
Q2 2016
|
|
YTD 2017
|
|
YTD 2016
|
||||||||
Gains (losses) on equity investments, net
|
|
$
|
342
|
|
|
$
|
478
|
|
|
$
|
594
|
|
|
$
|
500
|
|
Interest and other, net
|
|
$
|
403
|
|
|
$
|
(126
|
)
|
|
$
|
367
|
|
|
$
|
(208
|
)
|
(Dollars in Millions)
|
|
Q2 2017
|
|
Q2 2016
|
|
YTD 2017
|
|
YTD 2016
|
||||||||
Income before taxes
|
|
$
|
4,572
|
|
|
$
|
1,670
|
|
|
$
|
8,387
|
|
|
$
|
4,178
|
|
Provision for taxes
|
|
$
|
1,764
|
|
|
$
|
340
|
|
|
$
|
2,615
|
|
|
$
|
802
|
|
Effective tax rate
|
|
38.6
|
%
|
|
20.4
|
%
|
|
31.2
|
%
|
|
19.2
|
%
|
(Dollars in Millions)
|
|
Jul 1,
2017 |
|
Dec 31,
2016 |
||||
Cash and cash equivalents, short-term investments, and trading assets
|
|
$
|
25,929
|
|
|
$
|
17,099
|
|
Other long-term investments
|
|
$
|
4,481
|
|
|
$
|
4,716
|
|
Loans receivable and other
|
|
$
|
3,355
|
|
|
$
|
996
|
|
Reverse repurchase agreements with original maturities greater than three months
|
|
$
|
250
|
|
|
$
|
250
|
|
Short-term and long-term debt
|
|
$
|
31,985
|
|
|
$
|
25,283
|
|
Temporary equity
|
|
$
|
874
|
|
|
$
|
882
|
|
Debt as percentage of permanent stockholders’ equity
|
|
46.6
|
%
|
|
38.2
|
%
|
|
|
Six Months Ended
|
||||||
(In Millions)
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||
Net cash provided by operating activities
|
|
$
|
8,605
|
|
|
$
|
7,900
|
|
Net cash used for investing activities
|
|
(4,216
|
)
|
|
(19,690
|
)
|
||
Net cash provided by (used for) financing activities
|
|
1,738
|
|
|
367
|
|
||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
6,127
|
|
|
$
|
(11,423
|
)
|
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) |
|||||
April 2, 2017 - April 29, 2017
|
|
10.2
|
|
|
$
|
36.14
|
|
|
$
|
15,168
|
|
April 30, 2017 - May 27, 2017
|
|
11.1
|
|
|
$
|
36.06
|
|
|
$
|
14,768
|
|
May 28, 2017 - July 1, 2017
|
|
16.3
|
|
|
$
|
35.08
|
|
|
$
|
14,198
|
|
Total
|
|
37.6
|
|
|
$
|
35.66
|
|
|
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
Incorporated by Reference
|
|
|
||||||
Exhibit
Number
|
|
Exhibit Description
|
|
Form
|
|
File Number
|
|
Exhibit
|
|
Filing
Date
|
|
Filed or
Furnished
Herewith
|
3.1
|
|
|
8-K
|
|
000-06217
|
|
3.1
|
|
5/22/2006
|
|
|
|
3.2
|
|
|
8-K
|
|
000-06217
|
|
3.2
|
|
1/26/2016
|
|
|
|
4.1
|
|
|
|
8-K
|
|
000-06217
|
|
4.1
|
|
5/11/2017
|
|
|
4.2
|
|
|
|
8-K
|
|
000-06217
|
|
4.1
|
|
6/16/2017
|
|
|
10.1*
|
|
|
|
|
|
|
|
|
|
|
X
|
|
12.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
|
31.2
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X
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32.1
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X
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101.INS
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XBRL Instance Document
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X
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101.SCH
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XBRL Taxonomy Extension Schema Document
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X
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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X
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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X
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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X
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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X
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INTEL CORPORATION
(Registrant) |
||
|
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|
Date:
|
July 27, 2017
|
|
By:
|
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/s/ R
OBERT
H. S
WAN
|
|
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|
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Robert H. Swan
|
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Executive Vice President, Chief Financial Officer, and Principal Accounting Officer
|
|
|
|
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Six Months Ended
|
||||||
(Dollars in Millions)
|
|
Jul 1,
2017 |
|
Jul 2,
2016 |
||||||
Earnings
1
|
|
$
|
8,443
|
|
|
$
|
4,229
|
|
||
Adjustments:
|
|
|
|
|
||||||
|
Add - Fixed charges
|
|
457
|
|
|
461
|
|
|||
|
Subtract - Capitalized interest
|
|
(136
|
)
|
|
(46
|
)
|
|||
Earnings and fixed charges (net of capitalized interest)
|
|
$
|
8,764
|
|
|
$
|
4,644
|
|
||
|
|
|
|
|
|
|
||||
Fixed charges:
|
|
|
|
|
||||||
|
Interest
2
|
|
$
|
302
|
|
|
$
|
395
|
|
|
|
Capitalized interest
|
|
136
|
|
|
46
|
|
|||
|
Estimated interest component of rental expense
|
|
19
|
|
|
20
|
|
|||
Total
|
|
$
|
457
|
|
|
$
|
461
|
|
||
|
|
|
|
|
|
|
||||
Ratio of earnings before taxes and fixed charges, to fixed charges
|
|
19x
|
|
|
10x
|
|
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:
|
July 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:
|
July 27, 2017
|
|
By:
|
|
/s/ ROBERT H. SWAN
|
|
|
|
|
|
Robert H. Swan
Executive Vice President, Chief Financial Officer, and Principal Accounting Officer |
Date:
|
July 27, 2017
|
|
By:
|
|
/s/ BRIAN M. KRZANICH
|
|
|
|
|
|
Brian M. Krzanich
Chief Executive Officer |
|
|
|
|
|
|
Date:
|
July 27, 2017
|
|
By:
|
|
/s/ ROBERT H. SWAN
|
|
|
|
|
|
Robert H. Swan
Executive Vice President, Chief Financial Officer, and Principal Accounting Officer |