2012 Q1 Form 10-Q Financial Statement

#000119312512212253 Filed on May 04, 2012

View on sec.gov

Income Statement

Concept 2012 Q1 2011 Q2
Revenue $12.91B $12.85B
YoY Change 19.34%
Cost Of Revenue $4.641B $4.962B
YoY Change 40.57%
Gross Profit $8.265B $7.885B
YoY Change 8.98%
Gross Profit Margin 64.04% 61.38%
Selling, General & Admin $1.973B $1.775B
YoY Change 12.06%
% of Gross Profit 23.87% 22.51%
Research & Development $2.401B $1.916B
YoY Change 15.01%
% of Gross Profit 29.05% 24.3%
Depreciation & Amortization $1.519B $1.442B
YoY Change 25.5%
% of Gross Profit 18.38% 18.29%
Operating Expenses $4.455B $3.727B
YoY Change 14.54%
Operating Profit $3.810B $4.158B
YoY Change 4.45%
Interest Expense $31.00M $25.00M
YoY Change -80.92%
% of Operating Profit 0.81% 0.6%
Other Income/Expense, Net $55.00M $202.0M
YoY Change 124.44%
Pretax Income $3.814B $4.371B
YoY Change 4.44%
Income Tax $1.076B $1.211B
% Of Pretax Income 28.21% 27.71%
Net Earnings $2.738B $3.160B
YoY Change 9.46%
Net Earnings / Revenue 21.21% 24.6%
Basic Earnings Per Share $0.55
Diluted Earnings Per Share $0.53 $563.7K
COMMON SHARES
Basic Shares Outstanding 4.999B shares
Diluted Shares Outstanding 5.192B shares

Balance Sheet

Concept 2012 Q1 2011 Q2
SHORT-TERM ASSETS
Cash & Short-Term Investments $9.441B $11.98B
YoY Change -34.56%
Cash & Equivalents $4.429B $4.188B
Short-Term Investments $5.012B $7.790B
Other Short-Term Assets $1.348B $3.176B
YoY Change 33.11%
Inventory $4.489B $4.099B
Prepaid Expenses
Receivables $4.037B $3.542B
Other Receivables $0.00 $0.00
Total Short-Term Assets $25.42B $22.80B
YoY Change -13.86%
LONG-TERM ASSETS
Property, Plant & Equipment $25.03B $19.56B
YoY Change 15.42%
Goodwill $9.388B
YoY Change
Intangibles $6.064B
YoY Change
Long-Term Investments $1.602B $5.625B
YoY Change -26.37%
Other Assets $4.600B $1.632B
YoY Change 18.43%
Total Long-Term Assets $46.40B $42.76B
YoY Change 36.92%
TOTAL ASSETS
Total Short-Term Assets $25.42B $22.80B
Total Long-Term Assets $46.40B $42.76B
Total Assets $71.82B $65.55B
YoY Change 13.63%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $2.993B $2.757B
YoY Change 29.68%
Accrued Expenses $6.585B $6.212B
YoY Change 23.89%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00
YoY Change
Long-Term Debt Due $362.0M $54.00M
YoY Change -74.88%
Total Short-Term Liabilities $11.94B $11.57B
YoY Change 45.71%
LONG-TERM LIABILITIES
Long-Term Debt $7.088B $2.083B
YoY Change 1.21%
Other Long-Term Liabilities $3.235B $2.772B
YoY Change 118.44%
Total Long-Term Liabilities $10.32B $4.855B
YoY Change 45.93%
TOTAL LIABILITIES
Total Short-Term Liabilities $11.94B $11.57B
Total Long-Term Liabilities $10.32B $4.855B
Total Liabilities $22.26B $18.20B
YoY Change 53.61%
SHAREHOLDERS EQUITY
Retained Earnings $28.98B
YoY Change
Common Stock
YoY Change
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity $46.76B $47.35B
YoY Change
Total Liabilities & Shareholders Equity $71.82B $65.55B
YoY Change 13.63%

Cashflow Statement

Concept 2012 Q1 2011 Q2
OPERATING ACTIVITIES
Net Income $2.738B $3.160B
YoY Change 9.46%
Depreciation, Depletion And Amortization $1.519B $1.442B
YoY Change 25.5%
Cash From Operating Activities $2.972B $4.013B
YoY Change 15.12%
INVESTING ACTIVITIES
Capital Expenditures $2.974B -$2.723B
YoY Change 159.83%
Acquisitions $176.0M
YoY Change
Other Investing Activities -$63.00M $2.079B
YoY Change -325.49%
Cash From Investing Activities -$2.111B -$644.0M
YoY Change -67.31%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $1.519B
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -$1.495B -4.688B
YoY Change 373.54%
NET CHANGE
Cash From Operating Activities $2.972B 4.013B
Cash From Investing Activities -$2.111B -644.0M
Cash From Financing Activities -$1.495B -4.688B
Net Change In Cash -$634.0M -1.319B
YoY Change -350.76%
FREE CASH FLOW
Cash From Operating Activities $2.972B $4.013B
Capital Expenditures $2.974B -$2.723B
Free Cash Flow -$2.000M $6.736B
YoY Change 48.57%

Facts In Submission

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<p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;font-weight:bold;margin-left:0px;">Note </font><font style="font-family:Times;font-size:10pt;font-weight:bold;">20</font><font style="font-family:Times;font-size:10pt;font-weight:bold;">: Contingencies</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;font-weight:bold;font-style:italic;margin-left:0px;">Legal Proceedings</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;margin-left:0px;">We are currently a party to various legal proceedings, including those noted in this section. While management presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm the company's financial position, results of operations, cash flows, or overall trends, legal proceedings and related government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could include substantial monetary damages, and in matters for which injunctive relief or other conduct remedies are sought, an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices, or requiring other remedies such as compulsory licensing of intellectual property rights (IP). Were unfavorable final outcomes to occur, there exists the possibility of a material adverse impact on our business, results of operations, financial position, and overall trends. </font><font style="font-family:Times;font-size:10pt;">It is also possible that we could conclude it is in the best interests of our stockholders, employees, and customers to settle one or more such matters, and any such settlement could include substantial payments; however, we have not reached this conclusion with respect to any particular matter at this time.</font><font style="font-family:Times;font-size:10pt;"> </font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;margin-left:0px;">A number of proceedings generally have challenged and continue to challenge certain of our competitive practices. The allegations in these proceedings vary and are described in more detail in the following paragraphs, but in general contend that we improperly condition price rebates and other discounts on our microprocessors on exclusive or near-exclusive dealing by some of our customers; claim that our software compiler business unfairly prefers Intel microprocessors over competing microprocessors and that, through the use of our compiler and other means, we have caused inaccurate and misleading benchmark results concerning our microprocessors to be disseminated; allege that we unfairly controlled the content and timing of release of various standard computer interfaces developed by Intel in cooperation with other industry participants; and accuse us of engaging in various acts of improper competitive activity in competing against what is referred to as general-purpose graphics processing units, including certain licensing practices and our actions in connection with developing and disclosing potentially competitive technology. </font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;margin-left:0px;">We believe that we compete lawfully and that our marketing, business, IP, and other challenged practices benefit our customers and our stockholders, and we will continue to conduct a vigorous defense in these proceedings. While we have settled some of these matters, the distractions caused by challenges to our conduct from the remaining matters are undesirable, and the legal and other costs associated with defending and resolving our position have been and continue to be significant. We assume that these challenges could continue for a number of years and may require the investment of substantial additional management time and substantial financial resources to explain and defend our position. </font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;font-style:italic;margin-left:0px;">Government Competition Matters and Related Consumer Class&#160;Actions</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;margin-left:0px;">In 2001, the European Commission (EC) commenced an investigation regarding claims by Advanced Micro Devices, Inc. (AMD) that we used unfair business practices to persuade customers to buy our microprocessors. We have received numerous requests for information and documents from the EC, and we have responded to each of those requests. The EC issued a Statement of Objections in July 2007 and held a hearing on that Statement in March 2008. The EC issued a Supplemental Statement of Objections in July 2008.</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;margin-left:0px;">In May 2009, the EC issued a decision finding that we had violated Article 82 of the EC Treaty and Article 54 of the European Economic Area Agreement. In general, the EC found that we violated Article 82 (later renumbered as Article 102 by a new treaty) by offering alleged &#8220;conditional rebates and payments&#8221; that required our customers to purchase all or most of their x86 microprocessors from us. The EC also found that we violated Article 82 by making alleged &#8220;payments to prevent sales of specific rival products.&#8221; The EC imposed a fine in the amount of &#8364;</font><font style="font-family:Times;font-size:10pt;">1.06</font><font style="font-family:Times;font-size:10pt;"> billion ($</font><font style="font-family:Times;font-size:10pt;">1.447</font><font style="font-family:Times;font-size:10pt;"> billion as of May 2009), which we subsequently paid during the third quarter of 2009, and also ordered us to &#8220;immediately bring to an end the infringement referred to in&#8221; the EC decision. In the second quarter of 2009, </font><font style="font-family:Times;font-size:10pt;">we recorded the related charge within marketing, general and administrative. </font><font style="font-family:Times;font-size:10pt;">We strongly disagree with the EC's decision, and we appealed the decision to the Court of First Instance (which has been renamed the General Court) in July 2009. </font><font style="font-family:Times;font-size:10pt;">A hearing of Intel's appeal has been set to commence </font><font style="font-family:Times;font-size:10pt;">i</font><font style="font-family:Times;font-size:10pt;">n July 2012. </font><font style="font-family:Times;font-size:10pt;">The court's decision, after oral argument, is expected in late 2012 or early 2013. </font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;margin-left:0px;">The EC decision exceeds 500 pages and does not contain specific direction on whether or how we should modify our business practices. Instead, the decision states that we should &#8220;cease and desist&#8221; from further conduct that, in the EC's opinion, would violate applicable law. We have taken steps, which are subject to the EC's ongoing review, to comply with that decision pending appeal. We opened discussions with the EC to better understand the decision and to explain changes to our business practices. Based on our current understanding and expectations, we do not believe that any such changes will be material to our financial position, results, or cash flows. </font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;margin-left:0px;">In June&#160;2005, we received an inquiry from the Korea Fair Trade Commission (KFTC) requesting documents from our Korean subsidiary related to marketing and rebate programs that we entered into with Korean PC manufacturers. In February 2006, the KFTC initiated an inspection of documents at our offices in Korea. In September 2007, the KFTC served on us an Examination Report alleging that sales to two customers during parts of 2002&#8211;2005 violated Korea's Monopoly Regulation and Fair Trade Act. In December 2007, we submitted our written response to the KFTC. In February 2008, the KFTC's examiner submitted a written reply to our response. In March 2008, we submitted a further response. In April 2008, we participated in a pre-hearing conference before the KFTC, and we participated in formal hearings in May and June 2008. In June 2008, the KFTC announced its intent to fine us approximately $</font><font style="font-family:Times;font-size:10pt;">25</font><font style="font-family:Times;font-size:10pt;"> million for providing discounts to Samsung Electronics Co., Ltd. and TriGem Computer Inc. In November 2008, the KFTC issued a final written decision concluding that our discounts had violated Korean antitrust law and imposing a fine on us of approximately $</font><font style="font-family:Times;font-size:10pt;">20</font><font style="font-family:Times;font-size:10pt;"> million, which we paid in January 2009. In December 2008, we appealed this decision by filing a lawsuit in the Seoul High Court seeking to overturn the KFTC's decision. We expect a decision from the court in 2012.</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;margin-left:0px;">At least 82 separate class actions have been filed in the U.S. District Courts for the Northern District of California, Southern District of California, District of Idaho, District of Nebraska, District of New Mexico, District of Maine, and District of Delaware, as well as in various California, Kansas, and Tennessee state courts. These actions generally repeat </font><font style="font-family:Times;font-size:10pt;">the allegations made in a now-settled lawsuit filed against Intel by AMD in June 2005 in the U.S. District Court for the District of Delaware (AMD litigation). Like the AMD litigation, these class-action suits allege that Intel engaged in various actions in violation of the Sherman Act and other laws by, among other things, providing discounts and rebates to our manufacturer and distributor customers conditioned on exclusive or near-exclusive dealings that allegedly unfairly interfered with AMD's ability to sell its microprocessors, interfering with certain AMD product launches, and interfering with AMD's participation in certain industry standards-setting groups. </font><font style="font-family:Times;font-size:10pt;">The </font><font style="font-family:Times;font-size:10pt;">class actions allege </font><font style="font-family:Times;font-size:10pt;">various consumer injuries, including that consumers in various states have been injured by paying higher prices for computers containing our microprocessors. </font><font style="font-family:Times;font-size:10pt;">We dispute the class-action claims and intend to defend the lawsuits vigorously.</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;margin-left:0px;">All of the federal class actions and the Kansas and Tennessee state court class actions have been transferred by the Multidistrict Litigation Panel to the U.S. District Court in Delaware for all pre-trial proceedings and discovery (MDL proceedings). The Delaware district court has appointed a Special Master to address issues in the MDL proceedings, as assigned by the court. In January 2010, the plaintiffs in the Delaware action filed a motion for sanctions for our alleged failure to preserve evidence. This motion largely copies a motion previously filed by AMD in the AMD litigation, which has settled. The plaintiffs in the MDL proceedings also moved for certification of a class of members who purchased certain PCs containing products sold by Intel. In July 2010, the Special Master issued a Report and Recommendation (Class Report) denying the motion to certify a class. The MDL plaintiffs filed objections to the Special Master's Class Report, and a hearing on these objections was held in March 2011. </font><font style="font-family:Times;font-size:10pt;">The Delaware district court has not yet ruled on those objections. </font><font style="font-family:Times;font-size:10pt;">All California class actions have been consolidated in the Superior Court of California in Santa Clara County. The plaintiffs in the California actions have moved for class certification, which we are in the process of opposing. At our request, the court in the California actions has agreed to delay ruling on this motion until after the Delaware district court rules on the similar motion in the MDL proceedings. Based on the procedural posture and the nature of the cases, including, but not limited to, the fact that the Special Master's Class Report is on review in the Delaware district court, we are unable to make a reasonable estimate of the potential loss or range of losses, if any, arising from these matters.</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;font-style:italic;margin-left:0px;">Lehman Matter</font></p><p style='margin-top:0pt; margin-bottom:0pt'>&#160;</p><p style='margin-top:0pt; margin-bottom:0pt'><font style="font-family:Times;font-size:10pt;margin-left:0px;">In November 2009, representatives of the Lehman Brothers OTC Derivatives Inc. (LOTC) bankruptcy estate advised us informally that the estate was considering a claim against us arising from a 2008 contract between Intel and LOTC. Under the terms of the 2008 contract, Intel prepaid $</font><font style="font-family:Times;font-size:10pt;">1.0</font><font style="font-family:Times;font-size:10pt;"> billion to LOTC, in exchange for which LOTC was required to purchase and deliver to Intel the number of shares of Intel common stock that could be purchased for $</font><font style="font-family:Times;font-size:10pt;">1.0</font><font style="font-family:Times;font-size:10pt;"> billion at the discounted volume-weighted average price specified in the contract for the period September 2, 2008 to September 26, 2008. LOTC's performance under the contract was secured by $</font><font style="font-family:Times;font-size:10pt;">1.0</font><font style="font-family:Times;font-size:10pt;"> billion of cash collateral. Under the terms of the contract, LOTC was obligated to deliver approximately </font><font style="font-family:Times;font-size:10pt;">50</font><font style="font-family:Times;font-size:10pt;"> million shares of our common stock to us on September 29, 2008. LOTC failed to deliver any shares of our common stock, and we exercised our right to setoff against the $</font><font style="font-family:Times;font-size:10pt;">1.0</font><font style="font-family:Times;font-size:10pt;"> billion collateral. LOTC has not initiated any action against us to date, but in February&#160;2010, LOTC served a subpoena on us in connection with this transaction.&#160;In October 2010, LOTC demanded that Intel pay it at least $</font><font style="font-family:Times;font-size:10pt;">417</font><font style="font-family:Times;font-size:10pt;"> million. In September 2010, we entered into an agreement with LOTC that tolled any applicable statutes of limitations for 90 days and precluded the parties from commencing any formal proceedings to prosecute any claims against each other in any forum during that period. The tolling agreement with LOTC was extended several times, but lapsed in June 2011. We continue to believe that we acted appropriately under our agreement with LOTC, and we intend to defend any claim to the contrary. </font><font style="font-family:Times;font-size:10pt;">No complaint has been filed and we are in </font><font style="font-family:Times;font-size:10pt;">the</font><font style="font-family:Times;font-size:10pt;"> early stages of evaluating this dispute, and accordingly </font><font style="font-family:Times;font-size:10pt;">are unable </font><font style="font-family:Times New Roman;font-size:10pt;">to make a reasonable estimate of the potential loss or range of losses, if any, arising from this matter</font><font style="font-family:Times;font-size:10pt;">.</font></p>

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