☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||||||||
For the quarterly period ended | June 26, 2021 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
For the transition period from to
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Delaware | 94-1672743 | |||||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
2200 Mission College Boulevard, | Santa Clara, | California | 95054-1549 | |||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Common stock, $0.001 par value | INTC | Nasdaq Global Select Market |
Large Accelerated Filer | Accelerated filer | Non-accelerated filer | Smaller reporting company | Emerging growth company | |||||||||||||||||||
☑
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¨ | ¨ | ☐ | ☐ | |||||||||||||||||||
Page | |||||||||||
Forward-Looking Statements
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A Quarter in Review
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Consolidated Condensed Financial Statements and Supplemental Details
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Consolidated Condensed Statements of Income | |||||||||||
Consolidated Condensed Statements of Comprehensive Income | |||||||||||
Consolidated Condensed Balance Sheets | |||||||||||
Consolidated Condensed Statements of Cash Flows | |||||||||||
Consolidated Condensed Statements of Stockholders' Equity | |||||||||||
Notes to Consolidated Condensed Financial Statements | |||||||||||
Key Terms | |||||||||||
Management's Discussion and Analysis
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Segment Trends and Results | |||||||||||
Consolidated Results of Operations | |||||||||||
Liquidity and Capital Resources | |||||||||||
Non-GAAP Financial Measures | |||||||||||
Other Key Information
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Quantitative and Qualitative Disclosures about Market Risk | |||||||||||
Risk Factors | |||||||||||
Controls and Procedures | |||||||||||
Issuer Purchases of Equity Securities | |||||||||||
Disclosure Pursuant to Section 13(r)(of the Securities Exchange Act of 1934 | |||||||||||
Exhibits | |||||||||||
Form 10-Q Cross-Reference Index |
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1
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A Quarter in Review
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Revenue | Operating Income | Diluted EPS | Cash Flows | |||||||||||||||||
■ GAAP $B ■ Non-GAAP $B
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■ GAAP $B ■ Non-GAAP $B
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■ GAAP ■ Non-GAAP
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■ Operating Cash Flow $B
■ Free Cash Flow $B
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A Quarter in Review |
2
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Consolidated Condensed Statements of Income
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Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions, Except Per Share Amounts; Unaudited)
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Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | ||||||||||||||||||||||
Net revenue | $ | 19,631 | $ | 19,728 | $ | 39,304 | $ | 39,556 | ||||||||||||||||||
Cost of sales | 8,425 | 9,221 | 17,244 | 17,033 | ||||||||||||||||||||||
Gross margin | 11,206 | 10,507 | 22,060 | 22,523 | ||||||||||||||||||||||
Research and development | 3,715 | 3,354 | 7,338 | 6,629 | ||||||||||||||||||||||
Marketing, general and administrative | 1,599 | 1,447 | 2,927 | 2,988 | ||||||||||||||||||||||
Restructuring and other charges | 346 | 9 | 2,555 | 171 | ||||||||||||||||||||||
Operating expenses | 5,660 | 4,810 | 12,820 | 9,788 | ||||||||||||||||||||||
Operating income | 5,546 | 5,697 | 9,240 | 12,735 | ||||||||||||||||||||||
Gains (losses) on equity investments, net | 295 | 267 | 663 | 156 | ||||||||||||||||||||||
Interest and other, net | (96) | (29) | (252) | (342) | ||||||||||||||||||||||
Income before taxes | 5,745 | 5,935 | 9,651 | 12,549 | ||||||||||||||||||||||
Provision for taxes | 684 | 830 | 1,229 | 1,783 | ||||||||||||||||||||||
Net income | $ | 5,061 | $ | 5,105 | $ | 8,422 | $ | 10,766 | ||||||||||||||||||
Earnings per share—basic | $ | 1.25 | $ | 1.20 | $ | 2.08 | $ | 2.53 | ||||||||||||||||||
Earnings per share—diluted | $ | 1.24 | $ | 1.19 | $ | 2.06 | $ | 2.50 | ||||||||||||||||||
Weighted average shares of common stock outstanding: | ||||||||||||||||||||||||||
Basic | 4,049 | 4,246 | 4,053 | 4,256 | ||||||||||||||||||||||
Diluted | 4,084 | 4,284 | 4,090 | 4,298 |
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Financial Statements | Consolidated Condensed Statements of Income |
3
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Consolidated Condensed Statements of Comprehensive Income
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Three Months Ended
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Six Months Ended | |||||||||||||||||||||||||
(In Millions; Unaudited)
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Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | ||||||||||||||||||||||
Net income | $ | 5,061 | $ | 5,105 | $ | 8,422 | $ | 10,766 | ||||||||||||||||||
Changes in other comprehensive income, net of tax: | ||||||||||||||||||||||||||
Net unrealized holding gains (losses) on derivatives | 6 | 319 | (344) | 51 | ||||||||||||||||||||||
Actuarial valuation and other pension benefits (expenses), net | 12 | 11 | 25 | 23 | ||||||||||||||||||||||
Translation adjustments and other | (10) | 59 | (25) | 54 | ||||||||||||||||||||||
Other comprehensive income (loss) | 8 | 389 | (344) | 128 | ||||||||||||||||||||||
Total comprehensive income | $ | 5,069 | $ | 5,494 | $ | 8,078 | $ | 10,894 |
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Financial Statements | Consolidated Condensed Statements of Comprehensive Income |
4
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Consolidated Condensed Balance Sheets
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(In Millions)
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Jun 26, 2021 | Dec 26, 2020 | ||||||||||||
(unaudited) | ||||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 4,746 | $ | 5,865 | ||||||||||
Short-term investments | 3,014 | 2,292 | ||||||||||||
Trading assets | 17,097 | 15,738 | ||||||||||||
Accounts receivable | 7,460 | 6,782 | ||||||||||||
Inventories | 8,817 | 8,427 | ||||||||||||
Assets held for sale | 5,817 | 5,400 | ||||||||||||
Other current assets | 2,421 | 2,745 | ||||||||||||
Total current assets | 49,372 | 47,249 | ||||||||||||
Property, plant and equipment, net of accumulated depreciation of $81,558 ($77,645 as of December 26, 2020) | 58,166 | 56,584 | ||||||||||||
Equity investments | 5,655 | 5,152 | ||||||||||||
Other long-term investments | 1,262 | 2,192 | ||||||||||||
Goodwill | 26,768 | 26,971 | ||||||||||||
Identified intangible assets, net | 8,018 | 9,026 | ||||||||||||
Other long-term assets | 5,356 | 5,917 | ||||||||||||
Total assets | $ | 154,597 | $ | 153,091 | ||||||||||
Liabilities and stockholders’ equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Short-term debt | $ | 3,695 | $ | 2,504 | ||||||||||
Accounts payable | 5,917 | 5,581 | ||||||||||||
Accrued compensation and benefits | 3,176 | 3,999 | ||||||||||||
Other accrued liabilities | 12,048 | 12,670 | ||||||||||||
Total current liabilities | 24,836 | 24,754 | ||||||||||||
Debt | 31,714 | 33,897 | ||||||||||||
Contract liabilities | 68 | 1,367 | ||||||||||||
Income taxes payable | 4,172 | 4,578 | ||||||||||||
Deferred income taxes | 3,271 | 3,843 | ||||||||||||
Other long-term liabilities | 5,329 | 3,614 | ||||||||||||
Contingencies (Note 13) | ||||||||||||||
Stockholders’ equity: | ||||||||||||||
Common stock and capital in excess of par value, 4,057 issued and outstanding (4,062 issued and outstanding as of December 26, 2020) | 26,655 | 25,556 | ||||||||||||
Accumulated other comprehensive income (loss) | (1,095) | (751) | ||||||||||||
Retained earnings | 59,647 | 56,233 | ||||||||||||
Total stockholders’ equity | 85,207 | 81,038 | ||||||||||||
Total liabilities and stockholders’ equity | $ | 154,597 | $ | 153,091 |
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Financial Statements | Consolidated Condensed Balance Sheets |
5
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Consolidated Condensed Statements of Cash Flows
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Six Months Ended | |||||||||||||
(In Millions; Unaudited)
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Jun 26, 2021 | Jun 27, 2020 | ||||||||||||
Cash and cash equivalents, beginning of period | $ | 5,865 | $ | 4,194 | ||||||||||
Cash flows provided by (used for) operating activities: | ||||||||||||||
Net income | 8,422 | 10,766 | ||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
Depreciation | 4,862 | 5,248 | ||||||||||||
Share-based compensation | 1,044 | 941 | ||||||||||||
Restructuring and other charges | 2,555 | 171 | ||||||||||||
Amortization of intangibles | 897 | 865 | ||||||||||||
(Gains) losses on equity investments, net | (555) | (92) | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||
Accounts receivable | (678) | 224 | ||||||||||||
Inventories | (126) | (271) | ||||||||||||
Accounts payable | 425 | 208 | ||||||||||||
Accrued compensation and benefits | (836) | (1,025) | ||||||||||||
Prepaid supply agreements | (1,571) | (161) | ||||||||||||
Income taxes | 114 | 1,203 | ||||||||||||
Other assets and liabilities | (259) | (762) | ||||||||||||
Total adjustments | 5,872 | 6,549 | ||||||||||||
Net cash provided by operating activities | 14,294 | 17,315 | ||||||||||||
Cash flows provided by (used for) investing activities: | ||||||||||||||
Additions to property, plant and equipment | (7,574) | (6,676) | ||||||||||||
Additions to held for sale NAND property, plant and equipment | (682) | — | ||||||||||||
Purchases of available-for-sale debt investments | (2,000) | (4,558) | ||||||||||||
Maturities and sales of available-for-sale debt investments | 2,126 | 1,303 | ||||||||||||
Purchases of trading assets | (14,637) | (11,429) | ||||||||||||
Maturities and sales of trading assets | 12,936 | 7,430 | ||||||||||||
Other investing | 380 | (416) | ||||||||||||
Net cash used for investing activities | (9,451) | (14,346) | ||||||||||||
Cash flows provided by (used for) financing activities: | ||||||||||||||
Issuance of long-term debt, net of issuance costs | — | 10,247 | ||||||||||||
Repayment of debt and debt conversion | (500) | (2,775) | ||||||||||||
Proceeds from sales of common stock through employee equity incentive plans | 589 | 512 | ||||||||||||
Repurchase of common stock | (2,415) | (4,229) | ||||||||||||
Payment of dividends to stockholders | (2,821) | (2,811) | ||||||||||||
Other financing | (815) | 629 | ||||||||||||
Net cash provided by (used for) financing activities | (5,962) | 1,573 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | (1,119) | 4,542 | ||||||||||||
Cash and cash equivalents, end of period | $ | 4,746 | $ | 8,736 | ||||||||||
Supplemental disclosures of noncash investing activities and cash flow information: | ||||||||||||||
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities | $ | 2,426 | $ | 2,836 | ||||||||||
Cash paid during the period for: | ||||||||||||||
Interest, net of capitalized interest | $ | 283 | $ | 252 | ||||||||||
Income taxes, net of refunds | $ | 1,110 | $ | 574 |
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Financial Statements | Consolidated Condensed Statements of Cash Flows |
6
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Consolidated Condensed Statements of Stockholders' Equity
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Common Stock and Capital in Excess of Par Value
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Accumulated Other Comprehensive Income (Loss) |
Retained Earnings1
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Total | |||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts; Unaudited) | Shares | Amount | ||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||
Balance as of March 27, 2021 | 4,038 | $ | 26,272 | $ | (1,103) | $ | 54,638 | $ | 79,807 | |||||||||||||||||||||||
Net income | — | — | — | 5,061 | 5,061 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | 8 | — | 8 | |||||||||||||||||||||||||||
Employee equity incentive plans and other | 24 | 23 | — | — | 23 | |||||||||||||||||||||||||||
Share-based compensation | — | 619 | — | — | 619 | |||||||||||||||||||||||||||
Restricted stock unit withholdings | (5) | (259) | — | (52) | (311) | |||||||||||||||||||||||||||
Balance as of June 26, 2021 | 4,057 | $ | 26,655 | $ | (1,095) | $ | 59,647 | $ | 85,207 | |||||||||||||||||||||||
Balance as of March 28, 2020 | 4,234 | $ | 25,251 | $ | (1,541) | $ | 52,644 | $ | 76,354 | |||||||||||||||||||||||
Net income | — | — | — | 5,105 | 5,105 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | 389 | — | 389 | |||||||||||||||||||||||||||
Employee equity incentive plans and other | 25 | 9 | — | — | 9 | |||||||||||||||||||||||||||
Share-based compensation | — | 492 | — | — | 492 | |||||||||||||||||||||||||||
Restricted stock unit withholdings | (6) | (236) | — | (103) | (339) | |||||||||||||||||||||||||||
Balance as of June 27, 2020 | 4,253 | $ | 25,516 | $ | (1,152) | $ | 57,646 | $ | 82,010 | |||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||||||
Balance as of December 26, 2020 | 4,062 | $ | 25,556 | $ | (751) | $ | 56,268 | $ | 81,073 | |||||||||||||||||||||||
Net income | — | — | — | 8,422 | 8,422 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | (344) | — | (344) | |||||||||||||||||||||||||||
Employee equity incentive plans and other | 41 | 588 | — | — | 588 | |||||||||||||||||||||||||||
Share-based compensation | — | 1,044 | — | — | 1,044 | |||||||||||||||||||||||||||
Temporary equity reduction | — | — | — | — | — | |||||||||||||||||||||||||||
Convertible debt | — | — | — | — | — | |||||||||||||||||||||||||||
Repurchase of common stock | (40) | (249) | — | (2,166) | (2,415) | |||||||||||||||||||||||||||
Restricted stock unit withholdings | (6) | (284) | — | (56) | (340) | |||||||||||||||||||||||||||
Cash dividends declared ($0.695 per share) | — | — | — | (2,821) | (2,821) | |||||||||||||||||||||||||||
Balance as of June 26, 2021 | 4,057 | $ | 26,655 | $ | (1,095) | $ | 59,647 | $ | 85,207 | |||||||||||||||||||||||
Balance as of December 28, 2019 | 4,290 | $ | 25,261 | $ | (1,280) | $ | 53,523 | $ | 77,504 | |||||||||||||||||||||||
Net income | — | — | — | 10,766 | 10,766 | |||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | 128 | — | 128 | |||||||||||||||||||||||||||
Employee equity incentive plans and other | 42 | 629 | — | — | 629 | |||||||||||||||||||||||||||
Share-based compensation | — | 941 | — | — | 941 | |||||||||||||||||||||||||||
Temporary equity reduction | — | 155 | — | — | 155 | |||||||||||||||||||||||||||
Convertible debt | — | (750) | — | — | (750) | |||||||||||||||||||||||||||
Repurchase of common stock | (71) | (420) | — | (3,689) | (4,109) | |||||||||||||||||||||||||||
Restricted stock unit withholdings | (8) | (300) | — | (135) | (435) | |||||||||||||||||||||||||||
Cash dividends declared ($0.66 per share) | — | — | — | (2,819) | (2,819) | |||||||||||||||||||||||||||
Balance as of June 27, 2020 | 4,253 | $ | 25,516 | $ | (1,152) | $ | 57,646 | $ | 82,010 |
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Financial Statements | Consolidated Condensed Statements of Stockholders' Equity |
7
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Notes to Consolidated Condensed Financial Statements
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Note 1 : | Basis of Presentation |
Note 2 : | Operating Segments |
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Financial Statements | Notes to Financial Statements |
8
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Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions)
|
Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | ||||||||||||||||||||||
Net revenue: | ||||||||||||||||||||||||||
Client Computing Group | ||||||||||||||||||||||||||
Platform | $ | 9,397 | $ | 8,229 | $ | 19,014 | $ | 16,941 | ||||||||||||||||||
Adjacent | 712 | 1,267 | 1,700 | 2,330 | ||||||||||||||||||||||
10,109 | 9,496 | 20,714 | 19,271 | |||||||||||||||||||||||
Data Center Group | ||||||||||||||||||||||||||
Platform | 5,703 | 6,181 | 10,514 | 12,608 | ||||||||||||||||||||||
Adjacent | 752 | 936 | 1,505 | 1,502 | ||||||||||||||||||||||
6,455 | 7,117 | 12,019 | 14,110 | |||||||||||||||||||||||
Internet of Things | ||||||||||||||||||||||||||
IOTG | 984 | 670 | 1,898 | 1,553 | ||||||||||||||||||||||
Mobileye | 327 | 146 | 704 | 400 | ||||||||||||||||||||||
1,311 | 816 | 2,602 | 1,953 | |||||||||||||||||||||||
Non-Volatile Memory Solutions Group | 1,098 | 1,659 | 2,205 | 2,997 | ||||||||||||||||||||||
Programmable Solutions Group | 486 | 501 | 972 | 1,020 | ||||||||||||||||||||||
All other | 172 | 139 | 792 | 205 | ||||||||||||||||||||||
Total net revenue | $ | 19,631 | $ | 19,728 | $ | 39,304 | $ | 39,556 | ||||||||||||||||||
Operating income (loss): | ||||||||||||||||||||||||||
Client Computing Group | $ | 3,760 | $ | 2,842 | $ | 7,880 | $ | 7,067 | ||||||||||||||||||
Data Center Group | 1,941 | 3,099 | 3,214 | 6,591 | ||||||||||||||||||||||
Internet of Things | ||||||||||||||||||||||||||
IOTG | 287 | 70 | 499 | 313 | ||||||||||||||||||||||
Mobileye | 109 | (4) | 256 | 84 | ||||||||||||||||||||||
396 | 66 | 755 | 397 | |||||||||||||||||||||||
Non-Volatile Memory Solutions Group | 402 | 322 | 573 | 256 | ||||||||||||||||||||||
Programmable Solutions Group | 82 | 80 | 170 | 177 | ||||||||||||||||||||||
All other | (1,035) | (712) | (3,352) | (1,753) | ||||||||||||||||||||||
Total operating income | $ | 5,546 | $ | 5,697 | $ | 9,240 | $ | 12,735 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions)
|
Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | ||||||||||||||||||||||
Platform revenue | ||||||||||||||||||||||||||
CCG desktop platform | $ | 2,635 | $ | 2,368 | $ | 5,279 | $ | 5,208 | ||||||||||||||||||
CCG notebook platform | 6,743 | 5,844 | 13,702 | 11,701 | ||||||||||||||||||||||
CCG other platform1
|
19 | 16 | 33 | 31 | ||||||||||||||||||||||
DCG platform | 5,703 | 6,181 | 10,514 | 12,608 | ||||||||||||||||||||||
IOTG platform | 891 | 619 | 1,731 | 1,414 | ||||||||||||||||||||||
15,991 | 15,028 | 31,259 | 30,962 | |||||||||||||||||||||||
Adjacent revenue2
|
3,640 | 4,700 | 8,045 | 8,594 | ||||||||||||||||||||||
Total revenue | $ | 19,631 | $ | 19,728 | $ | 39,304 | $ | 39,556 |
|
Financial Statements | Notes to Financial Statements |
9
|
Note 3 : | Earnings Per Share |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | ||||||||||||||||||||||
Net income available to common stockholders | $ | 5,061 | $ | 5,105 | $ | 8,422 | $ | 10,766 | ||||||||||||||||||
Weighted average shares of common stock outstanding—basic | 4,049 | 4,246 | 4,053 | 4,256 | ||||||||||||||||||||||
Dilutive effect of employee equity incentive plans | 35 | 38 | 37 | 42 | ||||||||||||||||||||||
Weighted average shares of common stock outstanding—diluted | 4,084 | 4,284 | 4,090 | 4,298 | ||||||||||||||||||||||
Earnings per share—basic
|
$ | 1.25 | $ | 1.20 | $ | 2.08 | $ | 2.53 | ||||||||||||||||||
Earnings per share—diluted
|
$ | 1.24 | $ | 1.19 | $ | 2.06 | $ | 2.50 |
Note 4 : | Contract Liabilities |
(In Millions) | ||||||||
Prepaid supply agreements balance as of December 26, 2020 | $ | 1,625 | ||||||
Concession payment | (950) | |||||||
Prepaids utilized | (621) | |||||||
Prepaid supply agreements balance as of June 26, 2021 | $ | 54 |
Note 5 : | Other Financial Statement Details |
(In Millions)
|
Jun 26, 2021 | Dec 26, 2020 | ||||||||||||
Raw materials
|
$ | 1,010 | $ | 908 | ||||||||||
Work in process
|
5,968 | 5,693 | ||||||||||||
Finished goods
|
1,839 | 1,826 | ||||||||||||
Total inventories | $ | 8,817 | $ | 8,427 |
|
Financial Statements | Notes to Financial Statements |
10
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Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
(In Millions)
|
Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | ||||||||||||||||||||||
Interest income
|
$ | 37 | $ | 83 | $ | 74 | $ | 176 | ||||||||||||||||||
Interest expense
|
(129) | (186) | (319) | (321) | ||||||||||||||||||||||
Other, net
|
(4) | 74 | (7) | (197) | ||||||||||||||||||||||
Total interest and other, net | $ | (96) | $ | (29) | $ | (252) | $ | (342) |
Note 6 : | Restructuring and Other Charges |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
(In Millions) | Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | |||||||||||||||||||||||||
Employee severance and benefit arrangements | $ | 15 | $ | 1 | $ | 22 | $ | 106 | |||||||||||||||||||||
Litigation charges and other | 49 | — | 2,251 | 57 | |||||||||||||||||||||||||
Asset impairment charges | 282 | 8 | 282 | 8 | |||||||||||||||||||||||||
Total restructuring and other charges | $ | 346 | $ | 9 | $ | 2,555 | $ | 171 |
Note 7 : | Investments |
|
Financial Statements | Notes to Financial Statements |
11
|
(In Millions)
|
Fair Value | |||||||
Due in 1 year or less
|
$ | 4,826 | ||||||
Due in 1–2 years
|
247 | |||||||
Due in 2–5 years
|
1,015 | |||||||
Due after 5 years
|
— | |||||||
Instruments not due at a single maturity date
|
829 | |||||||
Total | $ | 6,917 |
(In Millions)
|
Jun 26, 2021 | Dec 26, 2020 | ||||||||||||
Marketable equity securities
|
$ | 1,615 | $ | 1,830 | ||||||||||
Non-marketable equity securities
|
4,023 | 3,304 | ||||||||||||
Equity method investments
|
17 | 18 | ||||||||||||
Total | $ | 5,655 | $ | 5,152 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
(In Millions)
|
Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | ||||||||||||||||||||||||||||||||||
Ongoing mark-to-market adjustments on marketable equity securities
|
$ | 138 | $ | 165 | $ | (153) | $ | 62 | ||||||||||||||||||||||||||||||
Observable price adjustments on non-marketable equity securities
|
72 | 58 | 623 | 137 | ||||||||||||||||||||||||||||||||||
Impairment charges
|
(35) | (51) | (73) | (193) | ||||||||||||||||||||||||||||||||||
Sale of equity investments and other¹ | 120 | 95 | 266 | 150 | ||||||||||||||||||||||||||||||||||
Total gains (losses) on equity investments, net | $ | 295 | $ | 267 | $ | 663 | $ | 156 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
(In Millions)
|
Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | |||||||||||||||||||||||||
Net gains (losses) recognized during the period on equity securities
|
$ | 226 | $ | 223 | $ | 537 | $ | 83 | |||||||||||||||||||||
Less: Net (gains) losses recognized during the period on equity securities sold during the period | (26) | (55) | (125) | (58) | |||||||||||||||||||||||||
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date | $ | 200 | $ | 168 | $ | 412 | $ | 25 |
Note 8 : | Acquisitions and Divestitures |
|
Financial Statements | Notes to Financial Statements |
12
|
(In Millions) | Jun 26, 2021 | Dec 26, 2020 | ||||||||||||
Inventories | $ | 699 | $ | 962 | ||||||||||
Property, plant and equipment, net | 5,118 | 4,363 | ||||||||||||
Total assets held for sale | $ | 5,817 | $ | 5,325 |
Note 9 : | Borrowings |
|
Financial Statements | Notes to Financial Statements |
13
|
Note 10 : | Fair Value |
Jun 26, 2021 | Dec 26, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | $ | — | $ | 648 | $ | — | $ | 648 | $ | — | $ | 50 | $ | — | $ | 50 | ||||||||||||||||||||||||||||||||||||||||
Financial institution instruments¹ | 829 | 1,064 | — | 1,893 | 2,781 | 636 | — | 3,417 | ||||||||||||||||||||||||||||||||||||||||||||||||
Government debt² | — | 100 | — | 100 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Reverse repurchase agreements | — | 1,350 | — | 1,350 | — | 1,900 | — | 1,900 | ||||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | — | 960 | — | 960 | — | 428 | — | 428 | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments¹ | — | 1,484 | — | 1,484 | — | 1,179 | — | 1,179 | ||||||||||||||||||||||||||||||||||||||||||||||||
Government debt² | — | 570 | — | 570 | — | 685 | — | 685 | ||||||||||||||||||||||||||||||||||||||||||||||||
Trading assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | — | 4,537 | — | 4,537 | — | 3,815 | — | 3,815 | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments¹ | 218 | 3,568 | — | 3,786 | 131 | 2,847 | — | 2,978 | ||||||||||||||||||||||||||||||||||||||||||||||||
Government debt² | — | 8,774 | — | 8,774 | — | 8,945 | — | 8,945 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other current assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets | 39 | 300 | — | 339 | 48 | 644 | — | 692 | ||||||||||||||||||||||||||||||||||||||||||||||||
Loans receivable³ | — | 213 | — | 213 | — | 439 | — | 439 | ||||||||||||||||||||||||||||||||||||||||||||||||
Marketable equity securities | 90 | 1,525 | — | 1,615 | 136 | 1,694 | — | 1,830 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other long-term investments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | — | 892 | — | 892 | — | 1,520 | — | 1,520 | ||||||||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments¹ | — | 216 | — | 216 | — | 257 | — | 257 | ||||||||||||||||||||||||||||||||||||||||||||||||
Government debt² | — | 154 | — | 154 | — | 415 | — | 415 | ||||||||||||||||||||||||||||||||||||||||||||||||
Other long-term assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets | — | 1,029 | 16 | 1,045 | — | 1,520 | 30 | 1,550 | ||||||||||||||||||||||||||||||||||||||||||||||||
Loans receivable³ | — | — | — | — | — | 157 | — | 157 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total assets measured and recorded at fair value | $ | 1,176 | $ | 27,384 | $ | 16 | $ | 28,576 | $ | 3,096 | $ | 27,131 | $ | 30 | $ | 30,257 | ||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other accrued liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities | $ | 5 | $ | 613 | $ | — | $ | 618 | $ | — | $ | 810 | $ | — | $ | 810 | ||||||||||||||||||||||||||||||||||||||||
Other long-term liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities | — | 4 | — | 4 | — | 5 | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities measured and recorded at fair value | $ | 5 | $ | 617 | $ | — | $ | 622 | $ | — | $ | 815 | $ | — | $ | 815 |
|
Financial Statements | Notes to Financial Statements |
14
|
Note 11 : | Other Comprehensive Income (Loss) |
(In Millions) | Unrealized Holding Gains (Losses) on Derivatives | Actuarial Valuation and Other Pension Expenses | Translation Adjustments and Other | Total | ||||||||||||||||||||||||||||||||||
Balance as of December 26, 2020 | $ | 731 | $ | (1,565) | $ | 83 | $ | (751) | ||||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | (285) | 3 | (32) | (314) | ||||||||||||||||||||||||||||||||||
Amounts reclassified out of accumulated other comprehensive income (loss) | (161) | 31 | — | (130) | ||||||||||||||||||||||||||||||||||
Tax effects | 102 | (9) | 7 | 100 | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | (344) | 25 | (25) | (344) | ||||||||||||||||||||||||||||||||||
Balance as of June 26, 2021 | $ | 387 | $ | (1,540) | $ | 58 | $ | (1,095) |
Note 12 : | Derivative Financial Instruments |
(In Millions)
|
Jun 26, 2021 | Dec 26, 2020 | ||||||||||||||||||
Foreign currency contracts
|
$ | 30,726 | $ | 31,209 | ||||||||||||||||
Interest rate contracts
|
14,652 | 14,461 | ||||||||||||||||||
Other
|
2,274 | 2,026 | ||||||||||||||||||
Total | $ | 47,652 | $ | 47,696 |
|
Financial Statements | Notes to Financial Statements |
15
|
|
Jun 26, 2021 | Dec 26, 2020 | ||||||||||||||||||||||||
(In Millions)
|
Assets1
|
Liabilities2
|
Assets1
|
Liabilities2
|
||||||||||||||||||||||
Derivatives designated as hedging instruments:
|
||||||||||||||||||||||||||
Foreign currency contracts3
|
$ | 143 | $ | 95 | $ | 551 | $ | 2 | ||||||||||||||||||
Interest rate contracts
|
1,021 | — | 1,498 | — | ||||||||||||||||||||||
Total derivatives designated as hedging instruments
|
1,164 | 95 | 2,049 | 2 | ||||||||||||||||||||||
Derivatives not designated as hedging instruments:
|
||||||||||||||||||||||||||
Foreign currency contracts3
|
173 | 428 | 142 | 685 | ||||||||||||||||||||||
Interest rate contracts
|
8 | 94 | 3 | 128 | ||||||||||||||||||||||
Equity contracts
|
39 | 5 | 48 | — | ||||||||||||||||||||||
Total derivatives not designated as hedging instruments | 220 | 527 | 193 | 813 | ||||||||||||||||||||||
Total derivatives | $ | 1,384 | $ | 622 | $ | 2,242 | $ | 815 |
Jun 26, 2021 | ||||||||||||||||||||||||||||||||||||||
Gross Amounts Not Offset in the Balance Sheet | ||||||||||||||||||||||||||||||||||||||
(In Millions)
|
Gross Amounts Recognized
|
Gross Amounts Offset in the Balance Sheet
|
Net Amounts Presented in the Balance Sheet
|
Financial Instruments | Cash and Non-Cash Collateral Received or Pledged | Net Amount | ||||||||||||||||||||||||||||||||
Assets:
|
||||||||||||||||||||||||||||||||||||||
Derivative assets subject to master netting arrangements | $ | 1,378 | $ | 1,378 | $ | (343) | $ | (1,033) | $ | 2 | ||||||||||||||||||||||||||||
Reverse repurchase agreements
|
1,350 | — | 1,350 | — | (1,350) | — | ||||||||||||||||||||||||||||||||
Total assets | 2,728 | — | 2,728 | (343) | (2,383) | 2 | ||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||
Derivative liabilities subject to master netting arrangements | 495 | — | 495 | (343) | (152) | — | ||||||||||||||||||||||||||||||||
Total liabilities | $ | 495 | $ | — | $ | 495 | $ | (343) | $ | (152) | $ | — |
|
Financial Statements | Notes to Financial Statements |
16
|
Dec 26, 2020 | ||||||||||||||||||||||||||||||||||||||
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 | $ | 2,235 | $ | — | $ | 2,235 | $ | (264) | $ | (1,904) | $ | 67 | ||||||||||||||||||||||||||
Reverse repurchase agreements | 1,900 | — | 1,900 | — | (1,900) | — | ||||||||||||||||||||||||||||||||
Total assets | 4,135 | — | 4,135 | (264) | (3,804) | 67 | ||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||
Derivative liabilities subject to master netting arrangements | 711 | — | 711 | (264) | (447) | — | ||||||||||||||||||||||||||||||||
Total liabilities | $ | 711 | $ | — | $ | 711 | $ | (264) | $ | (447) | $ | — |
Gains (Losses) Recognized in Consolidated Condensed Statements of Income on Derivatives | ||||||||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
(In Millions)
|
Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | ||||||||||||||||||||||||||||||||||
Interest rate contracts
|
$ | 35 | $ | 78 | $ | (477) | $ | 1,032 | ||||||||||||||||||||||||||||||
Hedged items
|
(35) | (78) | 477 | (1,032) | ||||||||||||||||||||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — |
|
Financial Statements | Notes to Financial Statements |
17
|
|
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||
(In Millions)
|
Location of Gains (Losses)
Recognized in Income on Derivatives |
Jun 26, 2021 | Jun 27, 2020 | Jun 26, 2021 | Jun 27, 2020 | |||||||||||||||||||||||||||||||||||||||
Foreign currency contracts
|
Interest and other, net
|
$ | (22) | $ | (216) | $ | 212 | $ | (62) | |||||||||||||||||||||||||||||||||||
Interest rate contracts
|
Interest and other, net
|
(2) | (14) | 21 | (91) | |||||||||||||||||||||||||||||||||||||||
Other
|
Various
|
140 | 225 | 195 | (43) | |||||||||||||||||||||||||||||||||||||||
Total | $ | 116 | $ | (5) | $ | 428 | $ | (196) |
Note 13 : | Contingencies |
|
Financial Statements | Notes to Financial Statements |
18
|
|
Financial Statements | Notes to Financial Statements |
19
|
|
Financial Statements | Notes to Financial Statements |
20
|
|
Financial Statements | Notes to Financial Statements |
21
|
|
Financial Statements | Notes to Financial Statements |
22
|
Key Terms
|
|||||
Term | Definition | |||||||
2009 Debentures | 3.25% junior subordinated convertible debentures due 2039 | |||||||
5G | The fifth-generation mobile network, which is expected to bring dramatic improvements in network speeds and latency, and which we view as a transformative technology and opportunity for many industries | |||||||
ADAS | Advanced driver-assistance systems | |||||||
Adjacent products | All of our non-platform products for CCG, DCG, and IOTG, such as modem, Ethernet and silicon photonics, as well as Mobileye, NSG, and PSG products. Combined with our platform products, adjacent products form comprehensive platform solutions to meet customer needs | |||||||
ASIC | Application-specific integrated circuit | |||||||
ASP | Average selling price | |||||||
AV | Autonomous vehicle | |||||||
CCG | Client Computing Group operating segment | |||||||
CODM | Chief operating decision maker | |||||||
COVID-19 | The infectious disease caused by the most recently discovered coronavirus (aka SARS-CoV-2), which was declared a global pandemic by the World Health Organization | |||||||
CPU | Processor or central processing unit | |||||||
DCG | Data Center Group operating segment | |||||||
EC | European Commission | |||||||
Form 10-K | Annual Report on Form 10-K | |||||||
Form 10-Q | Quarterly Report on Form 10-Q | |||||||
FPGA | Field-programmable gate array | |||||||
Internet of Things | The Internet of Things market in which we sell our IOTG and Mobileye products | |||||||
IOTG | Internet of Things Group operating segment | |||||||
IP | Intellectual property | |||||||
MD&A | Management's Discussion & Analysis | |||||||
MG&A | Marketing, general and administrative | |||||||
NAND | NAND flash memory | |||||||
nm | Nanometer | |||||||
NSG | Non-Volatile Memory Solutions Group operating segment | |||||||
OEM | Original equipment manufacturer | |||||||
Platform products | A microprocessor (CPU) and chipset, a stand-alone SoC, or a multichip package, based on Intel architecture. Platform products are primarily used in solutions sold through the CCG, DCG, and IOTG segments | |||||||
PSG | Programmable Solutions Group operating segment | |||||||
R&D | Research and development | |||||||
RSU | Restricted stock unit | |||||||
SEC | U.S. Securities and Exchange Commission | |||||||
SoC | A System-on-a-Chip, which integrates most of the components of a computer or other electronic system into a single silicon chip. We offer a range of SoC platform products in CCG, DCG, and IOTG. In our DCG business, we offer SoCs across many market segments for a variety of applications, including products targeted for 5G base stations and network infrastructure | |||||||
SSD | Solid-state drive | |||||||
U.S. GAAP | U.S. Generally Accepted Accounting Principles | |||||||
VLSI | VLSI Technology LLC | |||||||
|
Financial Statements | Notes to Financial Statements |
23
|
Management's Discussion and Analysis | |||||
CCG Revenue $B
|
CCG Operating Income $B |
■ Platform
|
■ Adjacent
|
Revenue Summary |
Q2 2021 vs. Q2 2020 | YTD 2021 vs. YTD 2020 | |||||||||||||||||||||||||||||||
(In Millions) | % | $ Impact | % | $ Impact | ||||||||||||||||||||||||||||
Desktop platform volume
|
up | 15% | $ | 391 | up | 5% | $ | 337 | ||||||||||||||||||||||||
Desktop platform ASP
|
down | (5)% | (124) | down | (5)% | (266) | ||||||||||||||||||||||||||
Notebook platform volume
|
up | 40% | 2,303 | up | 47% | 5,490 | ||||||||||||||||||||||||||
Notebook platform ASP
|
down | (17)% | (1,404) | down | (20)% | (3,489) | ||||||||||||||||||||||||||
Adjacent products and other
|
(553) | (629) | ||||||||||||||||||||||||||||||
Total change in revenue | $ | 613 | $ | 1,443 |
|
MD&A |
24
|
Operating Income Summary |
(In Millions) | ||||||||
$ | 3,760 | Q2 2021 CCG Operating Income | ||||||
540 | Lower platform unit cost due to cost improvements in 10nm | |||||||
530 | Lower period charges driven by absence of reserves taken on non-qualified platform products in Q2 2020, partially offset by sell-through of other reserves in 2020 | |||||||
185 | Higher gross margin from platform revenue | |||||||
(210) | Higher operating expenses | |||||||
(65) | Higher period charges primarily associated with the ramp down of 14nm | |||||||
(55) |
Lower adjacent product margin driven by exit of our 5G smartphone modem and Home Gateway Platform businesses
|
|||||||
(7) | Other | |||||||
$ | 2,842 | Q2 2020 CCG Operating Income | ||||||
$ | 7,880 | YTD 2021 CCG Operating Income | ||||||
615 | Lower period charges driven by absence of reserves, including reserves taken on non-qualified platform products in 2020, partially offset by sell-through of other reserves in 2020 | |||||||
540 | Lower platform unit cost due to cost improvements in 10nm | |||||||
75 | Higher adjacent product margin | |||||||
70 | Higher gross margin from platform revenue | |||||||
(320) | Higher operating expenses | |||||||
(165) | Higher period charges primarily associated with the ramp down of 14nm | |||||||
(2) | Other | |||||||
$ | 7,067 | YTD 2020 CCG Operating Income |
|
MD&A |
25
|
DCG Revenue $B | DCG Operating Income $B |
■ Platform
|
■ Adjacent
|
Revenue Summary
|
Q2 2021 vs. Q2 2020 | YTD 2021 vs. YTD 2020 | |||||||||||||||||||||||||||||||
(In Millions) | % | $ Impact | % | $ Impact | ||||||||||||||||||||||||||||
Platform volume | down | (1)% | $ | (72) | down | (7)% | $ | (893) | ||||||||||||||||||||||||
Platform ASP | down | (7)% | (406) | down | (10)% | (1,201) | ||||||||||||||||||||||||||
Adjacent products | down | (20)% | (184) | up | —% | 3 | ||||||||||||||||||||||||||
Total change in revenue | $ | (662) | $ | (2,091) | ||||||||||||||||||||||||||||
|
MD&A |
26
|
Operating Income Summary
|
(In Millions)
|
||||||||
$ | 1,941 | Q2 2021 DCG Operating Income | ||||||
(465) | Lower gross margin from platform revenue | |||||||
(375) | Higher operating expenses | |||||||
(165) | Higher platform unit cost primarily from increased mix of 10nm products | |||||||
(115) | Higher period charges primarily associated with the ramp up of 7nm | |||||||
(75) | Higher period charges primarily associated with the ramp down of 14nm | |||||||
40 | Higher adjacent gross margin | |||||||
(3) | Other | |||||||
$ | 3,099 | Q2 2020 DCG Operating Income | ||||||
$ | 3,214 | YTD 2021 DCG Operating Income | ||||||
(1,975) | Lower gross margin from platform revenue | |||||||
(615) | Higher operating expenses | |||||||
(360) | Higher platform unit cost primarily from increased mix of 10nm products | |||||||
(240) | Higher period charges primarily associated with ramp up of 7nm | |||||||
(180) | Higher period charges primarily associated with the ramp down of 14nm | |||||||
(7) | Other | |||||||
$ | 6,591 | YTD 2020 DCG Operating Income |
|
MD&A |
27
|
Internet of Things Revenue $B | Internet of Things Operating Income $B |
■ IOTG
|
■ Mobileye
|
■ IOTG
|
■ Mobileye
|
Revenue and Operating Income Summary
|
Q2 2021 vs. Q2 2020 |
YTD 2021 vs. YTD 2020 |
|
MD&A |
28
|
NSG Revenue $B | NSG Operating Income $B |
Revenue and Operating Income Summary
|
Q2 2021 vs. Q2 2020 |
YTD 2021 vs. YTD 2020 |
|
MD&A |
29
|
PSG Revenue $B | PSG Operating Income $B |
Revenue and Operating Income Summary
|
Q2 2021 vs. Q2 2020 |
YTD 2021 vs. YTD 2020 |
|
MD&A |
30
|
Consolidated Results of Operations | |||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | |||||||||||||||||||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | Amount |
% of Net
Revenue |
Amount |
% of Net
Revenue |
Amount |
% of Net
Revenue |
Amount |
% of Net
Revenue |
||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 19,631 | 100.0 | % | $ | 19,728 | 100.0 | % | $ | 39,304 | 100.0 | % | $ | 39,556 | 100.0 | % | ||||||||||||||||||||||||||||||||||
Cost of sales | 8,425 | 42.9 | % | 9,221 | 46.7 | % | 17,244 | 43.9 | % | 17,033 | 43.1 | % | ||||||||||||||||||||||||||||||||||||||
Gross margin | 11,206 | 57.1 | % | 10,507 | 53.3 | % | 22,060 | 56.1 | % | 22,523 | 56.9 | % | ||||||||||||||||||||||||||||||||||||||
Research and development | 3,715 | 18.9 | % | 3,354 | 17.0 | % | 7,338 | 18.7 | % | 6,629 | 16.8 | % | ||||||||||||||||||||||||||||||||||||||
Marketing, general and administrative | 1,599 | 8.1 | % | 1,447 | 7.3 | % | 2,927 | 7.4 | % | 2,988 | 7.6 | % | ||||||||||||||||||||||||||||||||||||||
Restructuring and other charges | 346 | 1.8 | % | 9 | — | % | 2,555 | 6.5 | % | 171 | 0.4 | % | ||||||||||||||||||||||||||||||||||||||
Operating income | 5,546 | 28.3 | % | 5,697 | 28.9 | % | 9,240 | 23.5 | % | 12,735 | 32.2 | % | ||||||||||||||||||||||||||||||||||||||
Gains (losses) on equity investments, net | 295 | 1.5 | % | 267 | 1.4 | % | 663 | 1.7 | % | 156 | 0.4 | % | ||||||||||||||||||||||||||||||||||||||
Interest and other, net | (96) | (0.5) | % | (29) | (0.1) | % | (252) | (0.6) | % | (342) | (0.9) | % | ||||||||||||||||||||||||||||||||||||||
Income before taxes | 5,745 | 29.3 | % | 5,935 | 30.1 | % | 9,651 | 24.6 | % | 12,549 | 31.7 | % | ||||||||||||||||||||||||||||||||||||||
Provision for taxes | 684 | 3.5 | % | 830 | 4.2 | % | 1,229 | 3.1 | % | 1,783 | 4.5 | % | ||||||||||||||||||||||||||||||||||||||
Net income | $ | 5,061 | 25.8 | % | $ | 5,105 | 25.9 | % | $ | 8,422 | 21.4 | % | $ | 10,766 | 27.2 | % | ||||||||||||||||||||||||||||||||||
Earnings per share—diluted | $ | 1.24 | $ | 1.19 | $ | 2.06 | $ | 2.50 |
|
MD&A |
31
|
Segment Revenue Walk $B
|
||||||||||||||
|
MD&A |
32
|
Gross Margin $B
|
||
(In Millions) | ||||||||
$ | 11,206 | Q2 2021 Gross Margin | ||||||
590 | Lower period charges driven by absence of reserves taken on non-qualified platform products in Q2 2020, partially offset by sell-through of other reserves | |||||||
380 | Lower platform unit cost due to cost improvements in 10nm | |||||||
180 | Higher gross margin from adjacent businesses primarily due to increased volume amidst improvement in global vehicle production | |||||||
(145) | Higher period charges primarily associated with the ramp up of 7nm | |||||||
(140) | Higher period charges associated with the ramp down of 14nm | |||||||
(95) | Lower gross margin from platform revenue | |||||||
(71) | Other | |||||||
$ | 10,507 | Q2 2020 Gross Margin | ||||||
$ | 22,060 | YTD 2021 Gross Margin | ||||||
(1,720) | Lower gross margin from platform revenue | |||||||
(350) | Higher period charges associated with the ramp down of 14nm | |||||||
(260) | Higher period charges primarily associated with the ramp up of 7nm | |||||||
675 | Lower period charges driven by absence of reserves taken on non-qualified platform products in Q2 2020, partially offset by sell-through of other reserves | |||||||
585 | Prepaid supply agreement settled and recognized to revenue in Q1 2021 | |||||||
530 | Higher gross margin from adjacent businesses primarily due to higher margins on wireless and connectivity, improved NAND unit cost and increased volume amidst improvement in global vehicle production | |||||||
175 | Lower platform unit cost due to cost improvements in 10nm | |||||||
(98) | Other | |||||||
$ | 22,523 | YTD 2020 Gross Margin |
|
MD&A |
33
|
Research and Development $B
|
Marketing, General, and Administrative $B
|
||||||||||
Research and Development
|
R&D increased by $361 million, or 10.8%, driven by the following: | |||||
+ | Investments in CCG, DCG, and Mobileye | ||||
+ | Investments in our process technology | ||||
- | Incentive-based cash compensation | ||||
R&D spending increased by $709 million, or 10.7%, driven by the following: | |||||||||||
+ | Investments in CCG, DCG, and Mobileye | ||||||||||
+ | Investments in our process technology | ||||||||||
- | Incentive-based cash compensation | ||||||||||
Marketing, General, and Administrative
|
MG&A increased by $152 million, or 10.5%, driven by the following: | |||||
+ | Increase in corporate spending | ||||
- | Incentive-based cash compensation | ||||
MG&A spending decreased by $61 million, or 2.0%, driven by the following: | |||||||||||
- | Corporate spending efficiencies | ||||||||||
- | Incentive-based cash compensation | ||||||||||
|
MD&A |
34
|
(In Millions) | Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | |||||||||||||||||||||||||
Employee severance and benefit arrangements | $ | 15 | $ | 1 | $ | 22 | $ | 106 | |||||||||||||||||||||
Litigation charges and other | 49 | — | 2,251 | 57 | |||||||||||||||||||||||||
Asset impairment charges | 282 | 8 | 282 | 8 | |||||||||||||||||||||||||
Total restructuring and other charges | $ | 346 | $ | 9 | $ | 2,555 | $ | 171 |
(In Millions)
|
Q2 2021 | Q2 2020 | YTD 2021 | YTD 2020 | ||||||||||||||||||||||
Income before taxes
|
$ | 5,745 | $ | 5,935 | $ | 9,651 | $ | 12,549 | ||||||||||||||||||
Provision for taxes
|
$ | 684 | $ | 830 | $ | 1,229 | $ | 1,783 | ||||||||||||||||||
Effective tax rate
|
11.9 | % | 14.0 | % | 12.7 | % | 14.2 | % |
|
MD&A |
35
|
(In Millions)
|
Jun 26, 2021 | Dec 26, 2020 | ||||||||||||
Cash and cash equivalents
|
$ | 4,746 | $ | 5,865 | ||||||||||
Short-term investments | 3,014 | 2,292 | ||||||||||||
Trading assets | 17,097 | 15,738 | ||||||||||||
Other long-term investments | 1,262 | 2,192 | ||||||||||||
Loans receivable and other | 374 | 947 | ||||||||||||
Total cash and investments1
|
$ | 26,493 | $ | 27,034 | ||||||||||
Total debt | $ | 35,409 | $ | 36,401 |
Cash from Operations $B
|
Capital Expenditures $B
|
Cash to Stockholders $B
|
■ Dividends ■ Buybacks
|
Six Months Ended | ||||||||||||||
(In Millions)
|
Jun 26, 2021 | Jun 27, 2020 | ||||||||||||
Net cash provided by operating activities | $ | 14,294 | $ | 17,315 | ||||||||||
Net cash used for investing activities
|
(9,451) | (14,346) | ||||||||||||
Net cash provided by (used for) financing activities
|
(5,962) | 1,573 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | (1,119) | $ | 4,542 |
|
MD&A |
36
|
|
MD&A |
37
|
Non-GAAP adjustment or measure | Definition | Usefulness to management and investors | ||||||
NAND memory business | Our NAND memory business is subject to a pending sale to SK hynix, as announced in October 2020. |
We exclude the impact of our NAND memory business in certain non-GAAP measures because these adjustments reflect how management currently views the core operations of the company. While the sale of the NAND memory business is still pending and subject to closing conditions, management does not currently view the business as part of the company’s core operations or its long-term strategic direction. We believe these adjustments provide investors with a useful view, through the eyes of management, of the company’s core business model and how management currently evaluates core operational performance. We believe they also provide investors with an additional means to understand the potential impact of the divestiture over time. In making these adjustments, we have not made any changes to our methods for measuring and calculating revenue or other financial statement amounts.
|
||||||
Acquisition-related adjustments | Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology, brands, and customer relationships acquired in connection with business combinations. Charges related to the amortization of these intangibles are recorded within both cost of sales and MG&A in our U.S. GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years. | We exclude amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. These adjustments facilitate a useful evaluation of our current operating performance and comparison to our past operating performance and provide investors with additional means to evaluate cost and expense trends. | ||||||
Restructuring and other charges | Restructuring charges are costs associated with a formal restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges include goodwill and asset impairments, pension charges, and costs associated with restructuring activity. | We exclude restructuring and other charges, including any adjustments to charges recorded in prior periods, for purposes of calculating certain non-GAAP measures because these costs do not reflect our core operating performance. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. | ||||||
Ongoing mark-to-market on marketable equity securities | After the initial mark-to-market adjustment is recorded upon a security becoming marketable, gains and losses are recognized from ongoing mark-to-market adjustments of our marketable equity securities. | We exclude these ongoing gains and losses for purposes of calculating certain non-GAAP measures because we do not believe this volatility correlates to our core operational performance. These adjustments facilitate a useful evaluation of our current operating performance and comparisons to past operating results. | ||||||
Free cash flow | We reference a non-GAAP financial measure of free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and quality of earnings. Free cash flow is operating cash flow adjusted to exclude additions to property, plant and equipment. |
This non-GAAP financial measure is helpful in understanding our capital requirements and provides an additional means to evaluate the cash flow trends of our business. In calculating free cash flow, we do not subtract additions to held for sale NAND property, plant and equipment because the additions are not representative of our long-term capital requirements and we expect these assets to be sold.
|
||||||
Total cash and investments | Total cash and investments is used by management when assessing our sources of liquidity, which includes cash and cash equivalents, short-term investments, trading assets, other long-term investments, and loans receivable and other. |
This non-GAAP measure is helpful in understanding our capital resources and liquidity position.
|
|
MD&A |
38
|
Three Months Ended | ||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts)
|
Jun 26, 2021 | Jun 27, 2020 | ||||||||||||||||||||||||
Net revenue | $ | 19,631 | $ | 19,728 | ||||||||||||||||||||||
NAND memory business | (1,098) | (1,544) | ||||||||||||||||||||||||
Non-GAAP net revenue | $ | 18,533 | $ | 18,184 | ||||||||||||||||||||||
Operating income | $ | 5,546 | $ | 5,697 | ||||||||||||||||||||||
Acquisition-related adjustments | 366 | 352 | ||||||||||||||||||||||||
Restructuring and other charges | 346 | 9 | ||||||||||||||||||||||||
NAND memory business | (402) | (423) | ||||||||||||||||||||||||
Non-GAAP operating income | $ | 5,856 | $ | 5,635 | ||||||||||||||||||||||
Operating margin | 28.3 | % | 28.9 | % | ||||||||||||||||||||||
Acquisition-related adjustments | 1.9 | % | 1.8 | % | ||||||||||||||||||||||
Restructuring and other charges | 1.8 | % | — | % | ||||||||||||||||||||||
NAND memory business | (0.3) | % | 0.4 | % | ||||||||||||||||||||||
Non-GAAP operating margin1
|
31.6 | % | 31.0 | % | ||||||||||||||||||||||
Earnings per share—diluted | $ | 1.24 | $ | 1.19 | ||||||||||||||||||||||
Acquisition-related adjustments | 0.09 | 0.08 | ||||||||||||||||||||||||
Restructuring and other charges | 0.08 | — | ||||||||||||||||||||||||
Ongoing mark-to-market on marketable equity securities | (0.03) | (0.04) | ||||||||||||||||||||||||
NAND memory business | (0.09) | (0.10) | ||||||||||||||||||||||||
Income tax effects | (0.01) | 0.01 | ||||||||||||||||||||||||
Non-GAAP earnings per share—diluted | $ | 1.28 | $ | 1.14 |
Six Months Ended | ||||||||||||||
(In Millions) | Jun 26, 2021 | Jun 27, 2020 | ||||||||||||
Net cash provided by operating activities | $ | 14,294 | $ | 17,315 | ||||||||||
Additions to property, plant and equipment | (7,574) | (6,676) | ||||||||||||
Free cash flow | $ | 6,720 | $ | 10,639 | ||||||||||
Net cash used for investing activities | $ | (9,451) | $ | (14,346) | ||||||||||
Net cash provided by (used for) financing activities | $ | (5,962) | $ | 1,573 | ||||||||||
|
MD&A |
39
|
Other Key Information | |||||
|
Other Key Information |
40
|
|
Other Key Information |
41
|
Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||
Exhibit
Number |
Exhibit Description | Form | File Number | Exhibit |
Filing
Date |
Filed or
Furnished Herewith |
||||||||||||||||||||||||||||||||
3.1 | 8-K | 000-06217 | 3.1 | 5/22/2006 | ||||||||||||||||||||||||||||||||||
3.2 | 8-K | 000-06217 | 3.2 | 3/16/2021 | ||||||||||||||||||||||||||||||||||
10.1†
|
X | |||||||||||||||||||||||||||||||||||||
31.1 | X | |||||||||||||||||||||||||||||||||||||
31.2 | X | |||||||||||||||||||||||||||||||||||||
32.1 | X | |||||||||||||||||||||||||||||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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 | ||||||||||||||||||||||||||||||||||||
104 | Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101 | X |
|
Other Key Information |
42
|
Item Number | Item | |||||||
Part I - Financial Information | ||||||||
Item 1. | Financial Statements | |||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations: | |||||||
Results of operations | ||||||||
Liquidity and capital resources | ||||||||
Off-balance sheet arrangements | (a) | |||||||
Contractual obligations | (b) | |||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Page 40
|
||||||
Item 4. | Controls and Procedures |
Page 40
|
||||||
Part II - Other Information | ||||||||
Item 1. | Legal Proceedings | |||||||
Item 1A. | Risk Factors |
Page 40
|
||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Page 40
|
||||||
Item 3. | Defaults Upon Senior Securities | Not applicable | ||||||
Item 4. | Mine Safety Disclosures | Not applicable | ||||||
Item 5. | Other Information | |||||||
Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934 |
Page 41
|
|||||||
Item 6. | Exhibits | |||||||
Signatures |
Page 44
|
|
Other Key Information |
43
|
INTEL CORPORATION
(Registrant) |
|||||||||||||||||
Date: | July 22, 2021 | By: | /s/ GEORGE S. DAVIS | ||||||||||||||
George S. Davis | |||||||||||||||||
Executive Vice President, Chief Financial Officer and Principal Financial Officer | |||||||||||||||||
Date: | July 22, 2021 | By: | /s/ KEVIN T. MCBRIDE | ||||||||||||||
Kevin T. McBride | |||||||||||||||||
Vice President of Finance, Corporate Controller and Principal Accounting Officer |
|
44
|
Date: | July 22, 2021 | By: | /s/ PATRICK P. GELSINGER | |||||||||||
Patrick P. Gelsinger | ||||||||||||||
Chief Executive Officer, Director and Principal Executive Officer |
Date: | July 22, 2021 | By: | /s/ GEORGE S. DAVIS | |||||||||||
George S. Davis | ||||||||||||||
Executive Vice President, Chief Financial Officer and Principal Financial Officer |
Date: | July 22, 2021 | By: | /s/ PATRICK P. GELSINGER | |||||||||||
Patrick P. Gelsinger | ||||||||||||||
Chief Executive Officer, Director and Principal Executive Officer | ||||||||||||||
Date: | July 22, 2021 | By: | /s/ GEORGE S. DAVIS | |||||||||||
George S. Davis | ||||||||||||||
Executive Vice President, Chief Financial Officer and Principal Financial Officer |