News Summary
- Fourth-quarter revenue was $15.4 billion, up 10 percent
year-over-year (YoY). Full-year revenue was $54.2 billion, down 14
percent YoY.
- Fourth-quarter earnings per share (EPS) attributable to Intel
was $0.63; non-GAAP EPS attributable to Intel was $0.54. Full-year
EPS attributable to Intel was $0.40; non-GAAP EPS attributable to
Intel was $1.05.
- Forecasting first-quarter 2024 revenue of $12.2 billion to
$13.2 billion; expecting first-quarter EPS attributable to Intel of
$(0.25) (non-GAAP EPS attributable to Intel of $0.13).
Intel Corporation today reported fourth-quarter and full-year
2023 financial results.
“We delivered strong Q4 results, surpassing expectations for the
fourth consecutive quarter with revenue at the higher end of our
guidance,” said Pat Gelsinger, Intel CEO. “The quarter capped a
year of tremendous progress on Intel's transformation, where we
consistently drove execution and accelerated innovation, resulting
in strong customer momentum for our products. In 2024, we remain
relentlessly focused on achieving process and product leadership,
continuing to build our external foundry business and at-scale
global manufacturing, and executing our mission to bring AI
everywhere as we drive long-term value for stakeholders.”
David Zinsner, Intel CFO, said, “We continued to drive
operational efficiencies in the fourth quarter, and comfortably
achieved our commitment to deliver $3 billion in cost savings in
2023. We expect to unlock further efficiencies in 2024 and beyond
as we implement our new internal foundry model, which is designed
to drive greater transparency and accountability and higher returns
on our owners’ capital.”
Q4 2023 Financial Results
GAAP
Non-GAAP
Q4 2023
Q4 2022
vs. Q4 2022
Q4 2023
Q4 2022
vs. Q4 2022
Revenue ($B)
$15.4
$14.0
up 10%
Gross margin
45.7%
39.2%
up 6.5 ppts
48.8%
43.8%
up 5 ppts
R&D and MG&A ($B)
$5.6
$6.2
down 9%
$4.9
$5.5
down 11%
Operating margin (loss)
16.8%
(8.1)%
up 24.9 ppts
16.7%
4.3%
up 12.4 ppts
Tax rate
4.6%
17.0%
down 12.4 ppts
13.0%
13.0%
—
Net income (loss) attributable to Intel
($B)
$2.7
$(0.7)
n/m*
$2.3
$0.6
up 263%
Earnings (loss) per share attributable to
Intel—diluted
$0.63
$(0.16)
n/m*
$0.54
$0.15
up 260%
In the fourth quarter, the company generated $4.6 billion in
cash from operations and paid dividends of $0.5 billion.
*Not meaningful Full reconciliations between GAAP and non-GAAP
measures are provided below.
Full-Year 2023 Financial
Results
GAAP
Non-GAAP
2023
2022
vs. 2022
2023
2022
vs. 2022
Revenue ($B)
$54.2
$63.1
down 14%
Gross margin
40.0%
42.6%
down 2.6 ppts
43.6%
47.3%
down 3.7 ppts
R&D and MG&A ($B)
$21.7
$24.5
down 12%
$19.0
$21.9
down 13%
Operating margin
0.2%
3.7%
down 3.5 ppts
8.6%
12.6%
down 4 ppts
Tax rate
(119.8)%
(3.2)%
down 116.6 ppts
13.0%
13.0%
—
Net income attributable to Intel ($B)
$1.7
$8.0
down 79%
$4.4
$6.9
down 36%
Earnings per share attributable to
Intel—diluted
$0.40
$1.94
down 79%
$1.05
$1.67
down 37%
For the full year, the company generated $11.5 billion in cash
from operations and paid dividends of $3.1 billion.
Business Unit Summary
Intel previously announced the organizational change to
integrate its Accelerated Computing Systems and Graphics Group into
its Client Computing Group and Data Center and AI Group. This
change is intended to drive a more effective go-to-market
capability and to accelerate the scale of these businesses, while
also reducing costs. As a result, the company modified its segment
reporting in the first quarter of 2023 to align to this and certain
other business reorganizations. All prior-period segment data has
been retrospectively adjusted to reflect the way the company
internally receives information and manages and monitors operating
segment performance starting in fiscal year 2023.
Business Unit Revenue and
Trends
Q4 2023
vs. Q4 2022
2023
vs. 2022
Client Computing Group (CCG)
$8.8 billion
up
33%
$29.3 billion
down
8%
Data Center and AI (DCAI)
$4.0 billion
down
10%
$15.5 billion
down
20%
Network and Edge (NEX)
$1.5 billion
down
24%
$5.8 billion
down
31%
Mobileye
$637 million
up
13%
$2.1 billion
up
11%
Intel Foundry Services (IFS)
$291 million
up
63%
$952 million
up
103%
Business Highlights
- Intel remains on track to meet its goal of achieving five nodes
in four years and regain transistor performance and power
performance leadership by 2025. Intel 3 became Intel's first
advanced node offered to IFS customers, with solid performance and
yield progression. Aimed at addressing challenges beyond Intel 18A,
Intel began installation of the industry’s first on-site High-NA
EUV tool in Oregon, one of the world’s leading semiconductor
innovation and productization centers.
- IFS won a key design award with a new high-performance
computing customer, its fourth external Intel 18A customer win in
2023. IFS has taped out more than 75 ecosystem and customers test
chips and has more than 50 test chips in the pipeline across 2024
and 2025, 75% of which are on Intel 18A. Intel also won three
additional advanced packaging design wins during the fourth
quarter. Intel and UMC also announced a collaboration on the
development of a 12-nanometer process platform to address
high-growth markets, such as mobile, communication infrastructure
and networking.
- In DCAI, momentum with Intel’s 4th Gen Intel® Xeon® Scalable
processor remains strong, with more than 2.5 million units shipped
since its introduction in January 2023. In the fourth quarter, DCAI
launched its 5th Gen Intel® Xeon® processor, which is optimized for
AI workloads and provides up to 42% higher AI inference performance
compared to the industry-leading 4th Gen Intel Xeon processor. 5th
Gen Intel Xeon has reached general availability at Alibaba Cloud,
is entering public and private preview with several cloud service
providers, and is on track to ship with OEMs early next month.
- In client computing, Intel ushered in the age of the AI PC with
Intel® Core™ Ultra processors. Built on Intel 4, the Intel Core
Ultra processor is Intel’s most AI-capable and power-efficient
client processor with dedicated acceleration capabilities across
the CPU, GPU and NPU. Intel announced at CES 2024 the full Intel®
Core™ 14th Gen mobile and desktop processor lineup, as well as the
new Intel® Core™ mobile processor Series 1 family for performant
mainstream thin-and-light mobile systems.
- In network and edge, OpenVINO™ adoption grew by 60%
sequentially in the fourth quarter as it became a core software
layer for AI inference on the edge, on the PC and in the data
center. Additionally, AT&T and Ericsson announced plans to lead
the U.S. in commercial scale Open RAN deployment in collaboration
with Intel and others as it plans for 70% of its wireless network
traffic to flow across open-capable platforms by late 2026. Cisco
is working with Intel and others to create solutions including
Ethernet technologies, GPU-enabled infrastructure, and jointly
tested and validated reference architectures with a commitment to
advancing AI networking.
- Mobileye announced that it was awarded a series of production
design wins by a major western automaker across the company’s three
key platforms: Mobileye SuperVision™, Mobileye Chauffeur™ and
Mobileye Drive™. In addition, Intel Automotive announced the launch
of AI-enhanced software-defined vehicle SoCs, with Geely’s Zeekr
brand as its first OEM partner, and Intel’s agreement to acquire
Silicon Mobility, a fabless silicon and software company
specializing in power management SoCs focused on EVs, subject to
necessary approvals. These announcements build on shared IP across
client and data center and on Intel’s existing SoC footprint of
more than 50 million vehicles worldwide.
IFS Direct Connect Event
On Feb. 21, Intel will host its annual flagship foundry event,
IFS Direct Connect, in San Jose, California. CEO Pat Gelsinger,
Stuart Pann, senior vice president and general manager of Intel
Foundry Services, and other leaders will deliver keynotes and news
that showcase the breadth of Intel’s foundry ecosystem and define
the next era of silicon design, development and manufacturing. For
information about the event, please visit the event page.
Q1 2024 Dividend
The company announced that its board of directors has declared a
quarterly dividend of $0.125 per share on the company’s common
stock, which will be payable March 1, 2024, to shareholders of
record as of Feb. 7, 2024.
Business Outlook
Intel's guidance for the first quarter of 2024 includes both
GAAP and non-GAAP estimates. Reconciliations between GAAP and
non-GAAP financial measures are included below.
Q1 2024
GAAP
Non-GAAP
Revenue
$12.2-13.2 billion
$12.2-13.2 billion^
Gross Margin
40.7%
44.5%
Tax Rate
(43)%
13%
Earnings (Loss) Per Share Attributable to
Intel—Diluted
$(0.25)
$0.13
^ No adjustment on a non-GAAP basis.
Actual results may differ materially from Intel’s Business
Outlook as a result of, among other things, the factors described
under “Forward-Looking Statements” below. The gross margin and EPS
outlook are based on the mid-point of the revenue range.
Earnings Webcast
Intel will hold a public webcast at 2 p.m. PST today to discuss
the results for its fourth-quarter and full-year 2023. The live
public webcast can be accessed on Intel's Investor Relations
website at www.intc.com. The corresponding earnings presentation
and webcast replay will also be available on the site.
Forward-Looking Statements
This release contains forward-looking statements that involve a
number of risks and uncertainties. Words such as "accelerate",
"achieve", "aim", "ambitions", "anticipate", "believe",
"committed", "continue", "could", "designed", "estimate", "expect",
"forecast", "future", "goals", "grow", "guidance", "intend",
"likely", "may", "might", "milestones", "next generation",
"objective", "on track", "opportunity", "outlook", "pending",
"plan", "position", "possible", "potential", "predict", "progress",
"ramp", "roadmap", "seek", "should", "strive", "targets", "to be",
"upcoming", "will", "would", and variations of such words and
similar expressions are intended to identify such forward-looking
statements, which may include statements regarding:
- our business plans and strategy and anticipated benefits
therefrom, including with respect to our IDM 2.0 strategy, our
Smart Capital strategy, our partnership with Brookfield, the
transition to an internal foundry model, updates to our reporting
structure, and our AI strategy;
- projections of our future financial performance, including
future revenue, gross margins, capital expenditures, and cash
flows;
- projected costs and yield trends;
- future cash requirements, the availability, uses, sufficiency,
and cost of capital resources, and sources of funding, including
for future capital and R&D investments and for returns to
stockholders, such as stock repurchases and dividends, and credit
ratings expectations;
- future products, services, and technologies, and the expected
goals, timeline, ramps, progress, availability, production,
regulation, and benefits of such products, services, and
technologies, including future process nodes and packaging
technology, product roadmaps, schedules, future product
architectures, expectations regarding process performance, per-watt
parity, and metrics, and expectations regarding product and process
leadership;
- investment plans and impacts of investment plans, including in
the US and abroad;
- internal and external manufacturing plans, including future
internal manufacturing volumes, manufacturing expansion plans and
the financing therefor, and external foundry usage;
- future production capacity and product supply;
- supply expectations, including regarding constraints,
limitations, pricing, and industry shortages;
- plans and goals related to Intel's foundry business, including
with respect to anticipated customers, future manufacturing
capacity and service, technology, and IP offerings;
- expected timing and impact of acquisitions, divestitures, and
other significant transactions, including the sale of our NAND
memory business;
- expected completion and impacts of restructuring activities and
cost-saving or efficiency initiatives
- future social and environmental performance goals, measures,
strategies, and results;
- our anticipated growth, future market share, and trends in our
businesses and operations;
- projected growth and trends in markets relevant to our
businesses;
- anticipated trends and impacts related to industry component,
substrate, and foundry capacity utilization, shortages, and
constraints;
- expectations regarding government incentives;
- future technology trends and developments, such as AI;
- future macro environmental and economic conditions;
- geopolitical tensions and conflicts and their potential impact
on our business;
- tax- and accounting-related expectations;
- expectations regarding our relationships with certain
sanctioned parties; and
- other characterizations of future events or circumstances.
Such statements involve many risks and uncertainties that could
cause our actual results to differ materially from those expressed
or implied, including those associated with:
- the high level of competition and rapid technological change in
our industry;
- the significant long-term and inherently risky investments we
are making in R&D and manufacturing facilities that may not
realize a favorable return;
- the complexities and uncertainties in developing and
implementing new semiconductor products and manufacturing process
technologies;
- our ability to time and scale our capital investments
appropriately and successfully secure favorable alternative
financing arrangements and government grants;
- implementing new business strategies and investing in new
businesses and technologies;
- changes in demand for our products;
- macroeconomic conditions and geopolitical tensions and
conflicts, including geopolitical and trade tensions between the US
and China, the impacts of Russia's war on Ukraine, tensions and
conflict affecting Israel, and rising tensions between the US and
Taiwan;
- the evolving market for products with AI capabilities;
- our complex global supply chain, including from disruptions,
delays, trade tensions and conflicts, or shortages;
- product defects, errata and other product issues, particularly
as we develop next-generation products and implement
next-generation manufacturing process technologies;
- potential security vulnerabilities in our products;
- increasing and evolving cybersecurity threats and privacy
risks;
- IP risks including related litigation and regulatory
proceedings;
- the need to attract, retain, and motivate key talent;
- strategic transactions and investments;
- sales-related risks, including customer concentration and the
use of distributors and other third parties;
- our significantly reduced return of capital in recent
years;
- our debt obligations and our ability to access sources of
capital;
- complex and evolving laws and regulations across many
jurisdictions;
- fluctuations in currency exchange rates;
- changes in our effective tax rate;
- catastrophic events;
- environmental, health, safety, and product regulations;
- our initiatives and new legal requirements with respect to
corporate responsibility matters; and
- other risks and uncertainties described in this release, our
most recent Annual Report on Form 10-K and our other filings with
the U.S. Securities and Exchange Commission (SEC).
Given these risks and uncertainties, readers are cautioned not
to place undue reliance on such forward-looking statements. Readers
are urged to carefully review and consider the various disclosures
made in this release and in other documents we file from time to
time with the SEC that disclose risks and uncertainties that may
affect our business.
Unless specifically indicated otherwise, the forward-looking
statements in this release do not reflect the potential impact of
any divestitures, mergers, acquisitions, or other business
combinations that have not been completed as of the date of this
filing. In addition, the forward-looking statements in this release
are based on management's expectations as of the date of this
release, unless an earlier date is specified, including
expectations based on third-party information and projections that
management believes to be reputable. We do not undertake, and
expressly disclaim any duty, to update such statements, whether as
a result of new information, new developments, or otherwise, except
to the extent that disclosure may be required by law.
About Intel
Intel (Nasdaq: INTC) is an industry leader, creating
world-changing technology that enables global progress and enriches
lives. Inspired by Moore’s Law, we continuously work to advance the
design and manufacturing of semiconductors to help address our
customers’ greatest challenges. By embedding intelligence in the
cloud, network, edge and every kind of computing device, we unleash
the potential of data to transform business and society for the
better. To learn more about Intel’s innovations, go to
newsroom.intel.com and intel.com.
© Intel Corporation. Intel, the Intel logo, and other Intel
marks are trademarks of Intel Corporation or its subsidiaries.
Other names and brands may be claimed as the property of
others.
Intel Corporation
Consolidated Statements of Income
and Other Information
Three Months Ended
Twelve Months Ended
(In Millions, Except Per Share
Amounts)
Dec 30, 2023
Dec 31, 2022
Dec 30, 2023
Dec 31, 2022
Net revenue
$
15,406
$
14,042
$
54,228
$
63,054
Cost of sales
8,359
8,542
32,517
36,188
Gross margin
7,047
5,500
21,711
26,866
Research and development
3,987
4,464
16,046
17,528
Marketing, general, and administrative
1,617
1,706
5,634
7,002
Restructuring and other charges
(1,142
)
462
(62
)
2
Operating expenses
4,462
6,632
21,618
24,532
Operating income (loss)
2,585
(1,132
)
93
2,334
Gains (losses) on equity investments,
net
86
186
40
4,268
Interest and other, net
117
150
629
1,166
Income (loss) before taxes
2,788
(796
)
762
7,768
Provision for (benefit from) taxes
128
(135
)
(913
)
(249
)
Net income (loss)
2,660
(661
)
1,675
8,017
Less: Net income (loss) attributable to
non-controlling interests
(9
)
3
(14
)
3
Net income (loss) attributable to
Intel
$
2,669
$
(664
)
$
1,689
$
8,014
Earnings (loss) per share attributable
to Intel—basic
$
0.63
$
(0.16
)
$
0.40
$
1.95
Earnings (loss) per share attributable
to Intel—diluted
$
0.63
$
(0.16
)
$
0.40
$
1.94
Weighted average shares of common stock
outstanding:
Basic
4,222
4,133
4,190
4,108
Diluted
4,260
4,133
4,212
4,123
Three Months Ended
(In Millions)
Dec 30, 2023
Dec 31, 2022
Earnings per share of common stock
information:
Weighted average shares of common stock
outstanding—basic
4,222
4,133
Dilutive effect of employee equity
incentive plans
38
—
Weighted average shares of common stock
outstanding—diluted
4,260
4,133
Other information:
Employees (in thousands)
124.8
131.9
Effective January 2023, Intel increased
the estimated useful life of certain production machinery and
equipment from five years to eight years. When compared to the
estimated useful life in place as of the end of 2022, Intel
estimates total depreciation expense in 2023 was reduced by $4.2
billion. Intel estimates this change resulted in an approximately
$2.5 billion increase to gross margin, a $400 million decrease in
R&D expenses and a $1.3 billion decrease in ending inventory
values.
Intel Corporation
Consolidated Balance Sheets
(In Millions, Except Par Value)
Dec 30, 2023
Dec 31, 2022
Assets
Current assets:
Cash and cash equivalents
$
7,079
$
11,144
Short-term investments
17,955
17,194
Accounts receivable, net
3,402
4,133
Inventories
Raw materials
1,166
1,517
Work in process
6,203
7,565
Finished goods
3,758
4,142
11,127
13,224
Other current assets
3,706
4,712
Total current assets
43,269
50,407
Property, plant, and equipment,
net
96,647
80,860
Equity investments
5,829
5,912
Goodwill
27,591
27,591
Identified intangible assets,
net
4,589
6,018
Other long-term assets
13,647
11,315
Total assets
$
191,572
$
182,103
Liabilities and stockholders’
equity
Current liabilities:
Short-term debt
$
2,288
$
4,367
Accounts payable
8,578
9,595
Accrued compensation and benefits
3,655
4,084
Income taxes payable
1,107
2,251
Other accrued liabilities
12,425
11,858
Total current liabilities
28,053
32,155
Debt
46,978
37,684
Other long-term liabilities
6,576
8,978
Stockholders’ equity:
Preferred stock, $0.001 par value, 50
shares authorized; none issued
—
—
Common stock, $0.001 par value, 10,000
shares authorized; 4,228 shares issued and outstanding (4,137
issued and outstanding in 2022) and capital in excess of par
value
36,649
31,580
Accumulated other comprehensive income
(loss)
(215
)
(562
)
Retained earnings
69,156
70,405
Total Intel stockholders'
equity
105,590
101,423
Non-controlling interests
4,375
1,863
Total stockholders' equity
109,965
103,286
Total liabilities and stockholders’
equity
$
191,572
$
182,103
Intel Corporation
Consolidated Statements of Cash
Flows
Twelve Months Ended
(In Millions)
Dec 30, 2023
Dec 31, 2022
Cash and cash equivalents, beginning of
period
$
11,144
$
4,827
Cash flows provided by (used for)
operating activities:
Net income (loss)
1,675
8,017
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation
7,847
11,128
Share-based compensation
3,229
3,128
Restructuring and other charges
(424
)
1,074
Amortization of intangibles
1,755
1,907
(Gains) losses on equity investments,
net
(42
)
(4,254
)
(Gains) losses on divestitures
—
(1,059
)
Changes in assets and liabilities:
Accounts receivable
731
5,327
Inventories
2,097
(2,436
)
Accounts payable
(801
)
(29
)
Accrued compensation and benefits
(614
)
(1,533
)
Prepaid customer supply agreements
—
(24
)
Income taxes
(3,531
)
(4,535
)
Other assets and liabilities
(451
)
(1,278
)
Total adjustments
9,796
7,416
Net cash provided by (used for)
operating activities
11,471
15,433
Cash flows provided by (used for)
investing activities:
Additions to property, plant, and
equipment
(25,750
)
(24,844
)
Additions to held for sale NAND property,
plant, and equipment
—
(206
)
Proceeds from capital-related government
incentives
1,011
246
Purchases of short-term investments
(44,414
)
(43,647
)
Maturities and sales of short-term
investments
44,077
48,730
Purchases of equity investments
(399
)
(510
)
Sales of equity investments
472
4,961
Proceeds from divestitures
—
6,579
Other investing
962
(1,540
)
Net cash used for investing
activities
(24,041
)
(10,231
)
Cash flows provided by (used for)
financing activities:
Issuance of commercial paper, net of
issuance costs
—
3,945
Repayment of commercial paper
(3,944
)
—
Payments on finance leases
(96
)
(345
)
Partner contributions
1,511
874
Proceeds from sales of subsidiary
shares
2,959
1,032
Issuance of long-term debt, net of
issuance costs
11,391
6,548
Repayment of debt
(423
)
(4,984
)
Proceeds from sales of common stock
through employee equity incentive plans
1,042
977
Payment of dividends to stockholders
(3,088
)
(5,997
)
Other financing
(847
)
(935
)
Net cash provided by (used for)
financing activities
8,505
1,115
Net increase (decrease) in cash and
cash equivalents
(4,065
)
6,317
Cash and cash equivalents, end of
period
$
7,079
$
11,144
Intel Corporation
Supplemental Operating Segment
Results
Three Months Ended
Twelve Months Ended
(In Millions)
Dec 30, 2023
Dec 31, 2022
Dec 30, 2023
Dec 31, 2022
Net revenue:
Client Computing
Desktop
$
3,164
$
2,509
$
10,166
$
10,661
Notebook
5,185
3,663
16,990
18,781
Other
495
473
2,102
2,331
8,844
6,645
29,258
31,773
Data Center and AI
3,985
4,421
15,521
19,445
Network and Edge
1,471
1,926
5,774
8,409
Mobileye
637
565
2,079
1,869
Intel Foundry Services
291
178
952
469
All other
178
307
644
1,089
Total net revenue
$
15,406
$
14,042
$
54,228
$
63,054
Operating income (loss):
Client Computing
$
2,888
$
524
$
6,520
$
5,569
Data Center and AI
78
126
(530
)
1,300
Network and Edge
(12
)
126
(482
)
1,033
Mobileye
242
210
664
690
Intel Foundry Services
(113
)
(34
)
(482
)
(281
)
All other
(498
)
(2,084
)
(5,597
)
(5,977
)
Total operating income (loss)
$
2,585
$
(1,132
)
$
93
$
2,334
We derive a substantial majority of our revenue from our
principal products that incorporate various components and
technologies, including a microprocessor and chipset, a stand-alone
system-on-chip or a multichip package, which are based on Intel
architecture.
Revenue for our reportable and non-reportable operating segments
is primarily related to the following product lines:
- CCG includes products designed for end-user form factors,
focusing on higher growth segments of 2 in 1, thin-and-light,
commercial and gaming, and growing other products such as
connectivity and graphics.
- DCAI includes a broad portfolio of central processing units,
domain-specific accelerators and field programmable gate arrays,
designed to empower data center and hyperscale solutions for
diverse computing needs.
- NEX includes programmable platforms and high-performance
connectivity and compute solutions designed for market segments
such as cloud networking, telecommunications networks, on-premises
edge, software and platforms.
- Mobileye includes the development and deployment of advanced
driver-assistance systems (ADAS) and autonomous driving
technologies and solutions.
- IFS provides differentiated full-stack solutions, including
wafer fabrication, packaging, chiplet standard and software.
We have sales and marketing, manufacturing, engineering, finance
and administration groups. Expenses for these groups are generally
allocated to the operating segments.
We have an "all other" category that includes revenue, expenses
and charges such as:
- results of operations from non-reportable segments not
otherwise presented, and from start-up businesses that support our
initiatives;
- historical results of operations from divested businesses;
- amounts included within restructuring and other charges;
- employee benefits, compensation, impairment charges, and other
expenses not allocated to the operating segments; and
- acquisition-related costs, including amortization and any
impairment of acquisition-related intangibles and goodwill.
Intel Corporation Explanation of Non-GAAP
Measures
In addition to disclosing financial results in accordance with
US GAAP, this document contains references to the non-GAAP
financial measures below. We believe these non-GAAP financial
measures provide investors with useful supplemental information
about our operating performance, enable comparison of financial
trends and results between periods where certain items may vary
independent of business performance, and allow for greater
transparency with respect to key metrics used by management in
operating our business and measuring our performance. These
non-GAAP financial measures are used in our performance-based RSUs
and our cash bonus plans.
Our non-GAAP financial measures reflect adjustments based on one
or more of the following items, as well as the related income tax
effects. Beginning in 2023, income tax effects are calculated using
a fixed long-term projected tax rate of 13% across all adjustments.
We project this long-term non-GAAP tax rate on an annual basis
using a five-year non-GAAP financial projection that excludes the
income tax effects of each adjustment. The projected non-GAAP tax
rate also considers factors such as our tax structure, our tax
positions in various jurisdictions, and key legislation in
significant jurisdictions where we operate. This long-term non-GAAP
tax rate may be subject to change for a variety of reasons,
including the rapidly evolving global tax environment, significant
changes in our geographic earnings mix, or changes to our strategy
or business operations. Management uses this non-GAAP tax rate in
managing internal short- and long-term operating plans and in
evaluating our performance; we believe this approach facilitates
comparison of our operating results and provides useful evaluation
of our current operating performance. Prior-period non-GAAP
financial measures have been retroactively adjusted to reflect this
updated approach.
Our non-GAAP financial measures should not be considered a
substitute for, or superior to, financial measures calculated in
accordance with US GAAP, and the financial results calculated in
accordance with US GAAP and reconciliations from these results
should be carefully evaluated.
Non-GAAP adjustment or
measure
Definition
Usefulness to management and
investors
Acquisition-related adjustments
Amortization of acquisition-related
intangible assets consists of amortization of intangible assets
such as developed technology, brands, and customer relationships
acquired in connection with business combinations. Charges related
to the amortization of these intangibles are recorded within both
cost of sales and MG&A in our US GAAP financial statements.
Amortization charges are recorded over the estimated useful life of
the related acquired intangible asset, and thus are generally
recorded over multiple years.
We exclude amortization charges for our
acquisition-related intangible assets for purposes of calculating
certain non-GAAP measures because these charges are inconsistent in
size and are significantly impacted by the timing and valuation of
our acquisitions. These adjustments facilitate a useful evaluation
of our current operating performance and comparison to our past
operating performance and provide investors with additional means
to evaluate cost and expense trends.
Share-based compensation
Share-based compensation consists of
charges related to our employee equity incentive plans.
We exclude charges related to share-based
compensation for purposes of calculating certain non-GAAP measures
because we believe these adjustments provide better comparability
to peer company results and because these charges are not viewed by
management as part of our core operating performance. We believe
these adjustments provide investors with a useful view, through the
eyes of management, of our core business model, how management
currently evaluates core operational performance, and additional
means to evaluate expense trends, including in comparison to other
peer companies.
Patent settlement
A portion of the charge from our IP
settlements represents a catch-up of cumulative amortization that
would have been incurred for the right to use the related patents
in prior periods. This charge related to prior periods is excluded
from our non-GAAP results; amortization related to the right to use
the patents in the current and ongoing periods is included.
We exclude the catch-up charge related to
prior periods for purposes of calculating certain non-GAAP measures
because this adjustment facilitates comparison to past operating
results and provides a useful evaluation of our current operating
performance.
Optane inventory impairment
A charge in 2022 as we initiated the
wind-down of our Intel Optane memory business.
We exclude these impairments for purposes
of calculating certain non-GAAP measures because these charges do
not reflect our current operating performance. This adjustment
facilitates a useful evaluation of our current operating
performance and comparisons to past operating results.
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 may
include periodic goodwill and asset impairments, certain pension
charges, and costs associated with restructuring activity. 2023
includes a benefit as a result of developments in the VLSI
litigation in Q4 2023, an EC-imposed fine, and a fee related to the
termination of our agreement to acquire Tower. 2022 includes a
benefit related to the annulled EC fine and 2021 includes a charge
related to the VLSI litigation.
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.
(Gains) losses on equity investments,
net
(Gains) losses on equity investments, net
consists of ongoing mark-to-market adjustments on marketable equity
securities, observable price adjustments on non-marketable equity
securities, related impairment charges, and the sale of equity
investments and other.
We exclude these non-operating gains and
losses for purposes of calculating certain non-GAAP measures
because it provides better comparability between periods. The
exclusion reflects how management evaluates the core operations of
the business.
(Gains) losses from divestiture
(Gains) losses are recognized at the close
of a divestiture, or over a specified deferral period when deferred
consideration is received at the time of closing. Based on our
ongoing obligation under the NAND wafer manufacturing and sale
agreement entered into in connection with the first closing of the
sale of our NAND memory business on December 29, 2021, a portion of
the initial closing consideration was deferred and will be
recognized between first and second closing.
We exclude gains or losses resulting from
divestitures for purposes of calculating certain non-GAAP measures
because they do not reflect our current operating performance.
These adjustments facilitate a useful evaluation of our current
operating performance and comparisons to past operating
results.
Adjusted free cash flow
We reference a non-GAAP financial measure
of adjusted free cash flow, which is used by management when
assessing our sources of liquidity, capital resources, and quality
of earnings. Adjusted free cash flow is operating cash flow
adjusted for 1) additions to property, plant and equipment, net of
proceeds from capital grants and partner contributions, 2) payments
on finance leases, and 3) proceeds from the McAfee equity sale.
This non-GAAP financial measure is helpful
in understanding our capital requirements and sources of liquidity
by providing an additional means to evaluate the cash flow trends
of our business. Since the 2017 divestiture, McAfee equity
distributions and sales contributed to prior operating and free
cash flow, and while the McAfee equity sale in Q1 2022 would have
typically been excluded from adjusted free cash flow as an equity
sale, we believe including the sale proceeds in adjusted free cash
flow facilitate a better, more consistent comparison to current and
past presentations of liquidity.
Intel Corporation Supplemental Reconciliations
of GAAP Actuals to Non-GAAP Actuals
Set forth below are reconciliations of the non-GAAP financial
measure to the most directly comparable US GAAP financial measure.
These non-GAAP financial measures should not be considered a
substitute for, or superior to, financial measures calculated in
accordance with US GAAP, and the reconciliations from US GAAP to
Non-GAAP actuals should be carefully evaluated. Please refer to
"Explanation of Non-GAAP Measures" in this document for a detailed
explanation of the adjustments made to the comparable US GAAP
measures, the ways management uses the non-GAAP measures, and the
reasons why management believes the non-GAAP measures provide
useful information for investors.
Three Months Ended
Twelve Months Ended
(In Millions, Except Per Share
Amounts)
Dec 30, 2023
Dec 31, 2022
Dec 30, 2023
Dec 31, 2022
GAAP gross margin
$
7,047
$
5,500
$
21,711
$
26,866
Acquisition-related adjustments
300
329
1,235
1,341
Share-based compensation
172
152
705
663
Patent settlement
—
—
—
204
Optane inventory impairment
—
164
—
723
Non-GAAP gross margin
$
7,519
$
6,145
$
23,651
$
29,797
GAAP gross margin percentage
45.7
%
39.2
%
40.0
%
42.6
%
Acquisition-related adjustments
1.9
%
2.3
%
2.3
%
2.1
%
Share-based compensation
1.1
%
1.1
%
1.3
%
1.0
%
Patent settlement
—
%
—
%
—
%
0.3
%
Optane inventory impairment
—
%
1.2
%
—
%
1.1
%
Non-GAAP gross margin
percentage
48.8
%
43.8
%
43.6
%
47.3
%
GAAP R&D and MG&A
$
5,604
$
6,170
$
21,680
$
24,530
Acquisition-related adjustments
(42
)
(43
)
(172
)
(185
)
Share-based compensation
(623
)
(584
)
(2,524
)
(2,465
)
Non-GAAP R&D and MG&A
$
4,939
$
5,543
$
18,984
$
21,880
GAAP operating income (loss)
$
2,585
$
(1,132
)
$
93
$
2,334
Acquisition-related adjustments
342
372
1,407
1,526
Share-based compensation
795
736
3,229
3,128
Patent settlement
—
—
—
204
Optane inventory impairment
—
164
—
723
Restructuring and other charges
(1,142
)
462
(62
)
2
Non-GAAP operating income
$
2,580
$
602
$
4,667
$
7,917
GAAP operating margin (loss)
16.8
%
(8.1
)%
0.2
%
3.7
%
Acquisition-related adjustments
2.2
%
2.6
%
2.6
%
2.4
%
Share-based compensation
5.2
%
5.2
%
6.0
%
5.0
%
Patent settlement
—
%
—
%
—
%
0.3
%
Optane inventory impairment
—
%
1.2
%
—
%
1.1
%
Restructuring and other charges
(7.4
)%
3.3
%
(0.1
)%
—
%
Non-GAAP operating margin
16.7
%
4.3
%
8.6
%
12.6
%
GAAP tax rate
4.6
%
17.0
%
(119.8
)%
(3.2
)%
Income tax effects
8.4
%
(4.0
)%
132.8
%
16.2
%
Non-GAAP tax rate
13.0
%
13.0
%
13.0
%
13.0
%
(In Millions, Except Per Share
Amounts)
Dec 30, 2023
Dec 31, 2022
Dec 30, 2023
Dec 31, 2022
GAAP net income (loss) attributable to
Intel
$
2,669
$
(664
)
$
1,689
$
8,014
Acquisition-related adjustments
342
372
1,407
1,526
Share-based compensation
795
736
3,229
3,128
Patent settlement
—
—
—
204
Optane inventory impairment
—
164
—
723
Restructuring and other charges
(1,142
)
462
(62
)
2
(Gains) losses on equity investments,
net
(86
)
(186
)
(40
)
(4,268
)
(Gains) losses from divestiture
(39
)
(26
)
(153
)
(1,166
)
Adjustments attributable to
non-controlling interest
(18
)
6
(66
)
6
Income tax effects
(218
)
(229
)
(1,581
)
(1,278
)
Non-GAAP net income attributable to
Intel
$
2,303
$
635
$
4,423
$
6,891
GAAP earnings (loss) per share
attributable to Intel—diluted
$
0.63
$
(0.16
)
$
0.40
$
1.94
Acquisition-related adjustments
0.08
0.09
0.33
0.37
Share-based compensation
0.18
0.18
0.77
0.76
Patent settlement
—
—
—
0.05
Optane inventory impairment
—
0.04
—
0.18
Restructuring and other charges
(0.27
)
0.11
(0.01
)
—
(Gains) losses on equity investments,
net
(0.02
)
(0.04
)
(0.01
)
(1.04
)
(Gains) losses from divestiture
(0.01
)
(0.01
)
(0.04
)
(0.28
)
Adjustments attributable to
non-controlling interest
—
—
(0.02
)
—
Income tax effects
(0.05
)
(0.06
)
(0.37
)
(0.31
)
Non-GAAP earnings per share
attributable to Intel—diluted
$
0.54
$
0.15
$
1.05
$
1.67
GAAP net cash provided by operating
activities
$
4,624
$
7,703
$
11,471
$
15,433
Net additions to property, plant, and
equipment
(5,929
)
(4,635
)
(23,228
)
(23,724
)
Payments on finance leases
—
(4
)
(96
)
(345
)
Sale of equity investment
—
—
—
4,561
Adjusted free cash flow
$
(1,305
)
$
3,064
$
(11,853
)
$
(4,075
)
GAAP net cash used for investing
activities
$
(5,318
)
$
(3,241
)
$
(24,041
)
$
(10,231
)
GAAP net cash provided by financing
activities
$
152
$
2,153
$
8,505
$
1,115
Intel Corporation Supplemental Reconciliations
of GAAP Outlook to Non-GAAP Outlook
Set forth below are reconciliations of the non-GAAP financial
measure to the most directly comparable US GAAP financial measure.
These non-GAAP financial measures should not be considered a
substitute for, or superior to, financial measures calculated in
accordance with US GAAP, and the financial outlook prepared in
accordance with US GAAP and the reconciliations from this Business
Outlook should be carefully evaluated.
Please refer to "Explanation of Non-GAAP Measures" in this
document for a detailed explanation of the adjustments made to the
comparable US GAAP measures, the ways management uses the non-GAAP
measures, and the reasons why management believes the non-GAAP
measures provide useful information for investors.
Q1 2024 Outlook1
Approximately
GAAP gross margin percentage
40.7
%
Acquisition-related adjustments
1.8
%
Share-based compensation
2.0
%
Non-GAAP gross margin
percentage
44.5
%
GAAP tax rate
(43
)%
Income tax effects
56
%
Non-GAAP tax rate
13
%
GAAP earnings (loss) per share
attributable to Intel—diluted
$
(0.25
)
Acquisition-related adjustments
0.06
Share-based compensation
0.28
(Gains) losses on equity investments,
net
(0.01
)
(Gains) losses from divestiture
(0.01
)
Adjustments attributable to
non-controlling interest
—
Income tax effects
0.06
Non-GAAP earnings per share
attributable to Intel—diluted
$
0.13
1Non-GAAP gross margin percentage and
non-GAAP EPS outlook based on the mid-point of the revenue
range
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240125521776/en/
Kylie Altman Investor Relations 1-916-356-0320
kylie.altman@intel.com
Sophie Won Media Relations 1-408-653-0475
sophie.won@intel.com
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