☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||||||||
For the quarterly period ended | June |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||||
For the transition period from to |
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 | |||||||||||||||||||
☑ | ¨ | ¨ | ☐ | ☐ | |||||||||||||||||||
Page | |||||||||||||||||
FORWARD-LOOKING STATEMENTS | |||||||||||||||||
OUR PANDEMIC RESPONSE | |||||||||||||||||
A QUARTER IN REVIEW | |||||||||||||||||
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS AND SUPPLEMENTAL DETAILS | |||||||||||||||||
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 | |||||||||||||||||
Consolidated Results of Operations | |||||||||||||||||
Liquidity and Capital Resources | |||||||||||||||||
Contractual Obligations | |||||||||||||||||
Quantitative and Qualitative Disclosures about Market Risk | |||||||||||||||||
Non-GAAP Financial Measures | |||||||||||||||||
OTHER KEY INFORMATION | |||||||||||||||||
Risk Factors | |||||||||||||||||
Controls and Procedures | |||||||||||||||||
Issuer Purchases of Equity Securities | |||||||||||||||||
Exhibits | |||||||||||||||||
Form 10-Q Cross-Reference Index |
1 |
OUR PANDEMIC RESPONSE |
OUR PANDEMIC RESPONSE |
A QUARTER IN REVIEW |
REVENUE | OPERATING INCOME | DILUTED EPS | CASH FLOWS | |||||||||||||||||
■ PC-CENTRIC $B ■ DATA-CENTRIC $B | ■ GAAP $B ■ NON-GAAP $B | ■ GAAP ■ NON-GAAP |
$16.5B | $4.6B | $5.1B | $0.92 | $1.06 | ||||||
GAAP | GAAP | non-GAAP1 | GAAP | non-GAAP1 | ||||||
down $457M or 3% from Q2 2018 | down $656M or 12% from Q2 2018 | down $460M or 8% from Q2 2018 | down $0.13 or 12% from Q2 2018 | up $0.02 or 2% from Q2 2018 | ||||||
Declines in data-centric businesses generally, partially offset by growth in PC-centric business and Internet of Things | Lower gross margin from decrease in platform unit sales and NAND pricing degradation, partially offset by CPU ASP strength | Impact from lower platform volume, and NAND pricing pressure, partially offset by the receipt of McAfee, Inc. dividend, as well as lower shares outstanding |
■FREE CASH FLOW $B |
$19.7B | $5.7B | $6.1B | $1.19 | $1.23 | $17.3B | $10.6B | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP | GAAP | non-GAAP2 | GAAP | non-GAAP2 | GAAP | non-GAAP2 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue up $3.2B or 20% from Q2 2019 | Operating income up $1.1B or 23% from Q2 2019; Q2 2020 operating margin at 29% | Operating income up $0.9B or 18% from Q2 2019; Q2 2020 operating margin at 31% | Diluted EPS up $0.27 or 29% from Q2 2019 | Diluted EPS up $0.17 or 16% from Q2 2019 | Operating cash flow up $4.8B or 38% from Q2 2019 | Free cash flow up $5B or 88% from Q2 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Growth in data-centric businesses primarily driven by DCG and NSG and growth in the PC-centric business | Higher gross margin dollars from increase in platform unit sales and platform ASP strength, NAND market recovery and bit growth, partially offset by increase in platform unit cost and higher platform reserves | Higher platform volume, platform ASP strength, NAND market recovery and bit growth, adjacency1 strength, lower period charges, and lower shares outstanding, partially offset by higher platform unit cost, and higher platform reserves | Higher net income and working capital changes driven by inventory and income taxes, offset by other assets and liabilities |
A QUARTER IN REVIEW |
Three Months Ended | Six Months Ended | |||||||||||||||
(In Millions, Except Per Share Amounts; Unaudited) | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | ||||||||||||
Net revenue | $ | 16,505 | $ | 16,962 | $ | 32,566 | $ | 33,028 | ||||||||
Cost of sales | 6,627 | 6,543 | 13,599 | 12,878 | ||||||||||||
Gross margin | 9,878 | 10,419 | 18,967 | 20,150 | ||||||||||||
Research and development | 3,438 | 3,371 | 6,770 | 6,682 | ||||||||||||
Marketing, general and administrative | 1,589 | 1,725 | 3,122 | 3,625 | ||||||||||||
Restructuring and other charges | 184 | — | 184 | — | ||||||||||||
Amortization of acquisition-related intangibles | 50 | 50 | 100 | 100 | ||||||||||||
Operating expenses | 5,261 | 5,146 | 10,176 | 10,407 | ||||||||||||
Operating income | 4,617 | 5,273 | 8,791 | 9,743 | ||||||||||||
Gains (losses) on equity investments, net | 170 | (203 | ) | 604 | 440 | |||||||||||
Interest and other, net | (63 | ) | 459 | (124 | ) | 357 | ||||||||||
Income before taxes | 4,724 | 5,529 | 9,271 | 10,540 | ||||||||||||
Provision for taxes | 545 | 523 | 1,118 | 1,080 | ||||||||||||
Net income | $ | 4,179 | $ | 5,006 | $ | 8,153 | $ | 9,460 | ||||||||
Earnings per share – basic | $ | 0.94 | $ | 1.08 | $ | 1.82 | $ | 2.03 | ||||||||
Earnings per share – diluted | $ | 0.92 | $ | 1.05 | $ | 1.79 | $ | 1.98 | ||||||||
Weighted average shares of common stock outstanding: | ||||||||||||||||
Basic | 4,466 | 4,649 | 4,479 | 4,661 | ||||||||||||
Diluted | 4,523 | 4,747 | 4,543 | 4,768 |
CONSOLIDATED CONDENSED STATEMENTS OF |
Three Months Ended | Six Months Ended | |||||||||||||||
(In Millions; Unaudited) | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | ||||||||||||
Net income | $ | 4,179 | $ | 5,006 | $ | 8,153 | $ | 9,460 | ||||||||
Changes in other comprehensive income, net of tax: | ||||||||||||||||
Net unrealized holding gains (losses) on derivatives | 151 | (293 | ) | 253 | (174 | ) | ||||||||||
Actuarial valuation and other pension benefits (expenses), net | 8 | (122 | ) | 17 | 26 | |||||||||||
Translation adjustments and other | 32 | 9 | 82 | (13 | ) | |||||||||||
Other comprehensive income (loss) | 191 | (406 | ) | 352 | (161 | ) | ||||||||||
Total comprehensive income | $ | 4,370 | $ | 4,600 | $ | 8,505 | $ | 9,299 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts; Unaudited) | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||||||
Net revenue | $ | 19,728 | $ | 16,505 | $ | 39,556 | $ | 32,566 | ||||||||||||||||||||||||||||||
Cost of sales | 9,221 | 6,627 | 17,033 | 13,599 | ||||||||||||||||||||||||||||||||||
Gross margin | 10,507 | 9,878 | 22,523 | 18,967 | ||||||||||||||||||||||||||||||||||
Research and development | 3,354 | 3,438 | 6,629 | 6,770 | ||||||||||||||||||||||||||||||||||
Marketing, general and administrative | 1,447 | 1,639 | 2,988 | 3,222 | ||||||||||||||||||||||||||||||||||
Restructuring and other charges | 9 | 184 | 171 | 184 | ||||||||||||||||||||||||||||||||||
Operating expenses | 4,810 | 5,261 | 9,788 | 10,176 | ||||||||||||||||||||||||||||||||||
Operating income | 5,697 | 4,617 | 12,735 | 8,791 | ||||||||||||||||||||||||||||||||||
Gains (losses) on equity investments, net | 267 | 170 | 156 | 604 | ||||||||||||||||||||||||||||||||||
Interest and other, net | (29) | (63) | (342) | (124) | ||||||||||||||||||||||||||||||||||
Income before taxes | 5,935 | 4,724 | 12,549 | 9,271 | ||||||||||||||||||||||||||||||||||
Provision for taxes | 830 | 545 | 1,783 | 1,118 | ||||||||||||||||||||||||||||||||||
Net income | $ | 5,105 | $ | 4,179 | $ | 10,766 | $ | 8,153 | ||||||||||||||||||||||||||||||
Earnings per share—basic | $ | 1.20 | $ | 0.94 | $ | 2.53 | $ | 1.82 | ||||||||||||||||||||||||||||||
Earnings per share—diluted | $ | 1.19 | $ | 0.92 | $ | 2.50 | $ | 1.79 | ||||||||||||||||||||||||||||||
Weighted average shares of common stock outstanding: | ||||||||||||||||||||||||||||||||||||||
Basic | 4,246 | 4,466 | 4,256 | 4,479 | ||||||||||||||||||||||||||||||||||
Diluted | 4,284 | 4,523 | 4,298 | 4,543 |
FINANCIAL STATEMENTS | Consolidated Condensed Statements of Income | 5 |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
(In Millions; Unaudited) | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||||||
Net income | $ | 5,105 | $ | 4,179 | $ | 10,766 | $ | 8,153 | ||||||||||||||||||||||||||||||
Changes in other comprehensive income, net of tax: | ||||||||||||||||||||||||||||||||||||||
Net unrealized holding gains (losses) on derivatives | 319 | 151 | 51 | 253 | ||||||||||||||||||||||||||||||||||
Actuarial valuation and other pension benefits (expenses), net | 11 | 8 | 23 | 17 | ||||||||||||||||||||||||||||||||||
Translation adjustments and other | 59 | 32 | 54 | 82 | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | 389 | 191 | 128 | 352 | ||||||||||||||||||||||||||||||||||
Total comprehensive income | $ | 5,494 | $ | 4,370 | $ | 10,894 | $ | 8,505 |
FINANCIAL STATEMENTS | Consolidated Condensed Statements of Comprehensive Income |
CONSOLIDATED CONDENSED BALANCE SHEETS |
(In Millions) | Jun 29, 2019 | Dec 29, 2018 | (In Millions) | Jun 27, 2020 | Dec 28, 2019 | |||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||
Assets | Assets | |||||||||||||||||||||
Current assets: | Current assets: | |||||||||||||||||||||
Cash and cash equivalents | $ | 2,867 | $ | 3,019 | Cash and cash equivalents | $ | 8,736 | $ | 4,194 | |||||||||||||
Short-term investments | 2,414 | 2,788 | Short-term investments | 4,791 | 1,082 | |||||||||||||||||
Trading assets | 6,663 | 5,843 | Trading assets | 12,288 | 7,847 | |||||||||||||||||
Accounts receivable | 6,233 | 6,722 | Accounts receivable | 7,441 | 7,659 | |||||||||||||||||
Inventories | 8,696 | 7,253 | Inventories | 8,969 | 8,744 | |||||||||||||||||
Other current assets | 2,366 | 3,162 | Other current assets | 2,165 | 1,713 | |||||||||||||||||
Total current assets | 29,239 | 28,787 | Total current assets | 44,390 | 31,239 | |||||||||||||||||
Property, plant and equipment, net of accumulated depreciation of $69,227 ($65,342 as of December 29, 2018) | 51,377 | 48,976 | ||||||||||||||||||||
Property, plant and equipment, net of accumulated depreciation of $77,988 ($73,321 as of December 28, 2019) | Property, plant and equipment, net of accumulated depreciation of $77,988 ($73,321 as of December 28, 2019) | 58,036 | 55,386 | |||||||||||||||||||
Equity investments | 4,629 | 6,042 | Equity investments | 3,901 | 3,967 | |||||||||||||||||
Other long-term investments | 3,577 | 3,388 | Other long-term investments | 2,884 | 3,276 | |||||||||||||||||
Goodwill | 24,583 | 24,513 | Goodwill | 26,943 | 26,276 | |||||||||||||||||
Identified intangible assets, net | 11,249 | 11,836 | Identified intangible assets, net | 10,303 | 10,827 | |||||||||||||||||
Other long-term assets | 6,105 | 4,421 | Other long-term assets | 6,082 | 5,553 | |||||||||||||||||
Total assets | $ | 130,759 | $ | 127,963 | Total assets | $ | 152,539 | $ | 136,524 | |||||||||||||
Liabilities, temporary equity, and stockholders’ equity | Liabilities, temporary equity, and stockholders’ equity | |||||||||||||||||||||
Current liabilities: | Current liabilities: | |||||||||||||||||||||
Short-term debt | $ | 3,726 | $ | 1,261 | Short-term debt | $ | 2,254 | $ | 3,693 | |||||||||||||
Accounts payable | 4,682 | 3,824 | Accounts payable | 5,045 | 4,128 | |||||||||||||||||
Accrued compensation and benefits | 2,554 | 3,622 | Accrued compensation and benefits | 2,833 | 3,853 | |||||||||||||||||
Other accrued liabilities | 8,743 | 7,919 | Other accrued liabilities | 12,349 | 10,636 | |||||||||||||||||
Total current liabilities | 19,705 | 16,626 | Total current liabilities | 22,481 | 22,310 | |||||||||||||||||
Debt | 25,089 | 25,098 | Debt | 36,093 | 25,308 | |||||||||||||||||
Contract liabilities | 1,558 | 2,049 | Contract liabilities | 1,329 | 1,368 | |||||||||||||||||
Income taxes payable, non-current | 4,847 | 4,897 | Income taxes payable, non-current | 4,795 | 4,919 | |||||||||||||||||
Deferred income taxes | 1,783 | 1,665 | Deferred income taxes | 2,723 | 2,044 | |||||||||||||||||
Other long-term liabilities | 2,583 | 2,646 | Other long-term liabilities | 3,108 | 2,916 | |||||||||||||||||
Contingencies (Note 12) | ||||||||||||||||||||||
Contingencies (Note 13) | Contingencies (Note 13) | |||||||||||||||||||||
Temporary equity | 247 | 419 | Temporary equity | — | 155 | |||||||||||||||||
Stockholders’ equity: | Stockholders’ equity: | |||||||||||||||||||||
Preferred stock | — | — | Preferred stock | — | — | |||||||||||||||||
Common stock and capital in excess of par value, 4,430 issued and outstanding (4,516 issued and outstanding as of December 29, 2018) | 25,140 | 25,365 | ||||||||||||||||||||
Common stock and capital in excess of par value, 4,253 issued and outstanding (4,290 issued and outstanding as of December 28, 2019) | Common stock and capital in excess of par value, 4,253 issued and outstanding (4,290 issued and outstanding as of December 28, 2019) | 25,516 | 25,261 | |||||||||||||||||||
Accumulated other comprehensive income (loss) | (622 | ) | (974 | ) | Accumulated other comprehensive income (loss) | (1,152) | (1,280) | |||||||||||||||
Retained earnings | 50,429 | 50,172 | Retained earnings | 57,646 | 53,523 | |||||||||||||||||
Total stockholders’ equity | 74,947 | 74,563 | Total stockholders’ equity | 82,010 | 77,504 | |||||||||||||||||
Total liabilities, temporary equity, and stockholders’ equity | $ | 130,759 | $ | 127,963 | Total liabilities, temporary equity, and stockholders’ equity | $ | 152,539 | $ | 136,524 |
FINANCIAL STATEMENTS | Consolidated Condensed Balance Sheets |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS |
Six Months Ended | Six Months Ended | |||||||||||||||||||||||||||
(In Millions; Unaudited) | Jun 29, 2019 | Jun 30, 2018 | (In Millions; Unaudited) | Jun 27, 2020 | Jun 29, 2019 | |||||||||||||||||||||||
Cash and cash equivalents, beginning of period | $ | 3,019 | $ | 3,433 | Cash and cash equivalents, beginning of period | $ | 4,194 | $ | 3,019 | |||||||||||||||||||
Cash flows provided by (used for) operating activities: | Cash flows provided by (used for) operating activities: | |||||||||||||||||||||||||||
Net income | 8,153 | 9,460 | Net income | 10,766 | 8,153 | |||||||||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||||||||||||||
Depreciation | 4,379 | 3,536 | Depreciation | 5,248 | 4,379 | |||||||||||||||||||||||
Share-based compensation | 859 | 820 | Share-based compensation | 941 | 859 | |||||||||||||||||||||||
Amortization of intangibles | 800 | 782 | Amortization of intangibles | 865 | 800 | |||||||||||||||||||||||
(Gains) losses on equity investments, net | (100 | ) | (401 | ) | (Gains) losses on equity investments, net | (92) | (100) | |||||||||||||||||||||
Changes in assets and liabilities: | Changes in assets and liabilities: | |||||||||||||||||||||||||||
Accounts receivable | 490 | 369 | Accounts receivable | 224 | 490 | |||||||||||||||||||||||
Inventories | (1,443 | ) | (303 | ) | Inventories | (271) | (1,443) | |||||||||||||||||||||
Accounts payable | 431 | 274 | Accounts payable | 208 | 431 | |||||||||||||||||||||||
Accrued compensation and benefits | (1,012 | ) | (884 | ) | Accrued compensation and benefits | (919) | (1,012) | |||||||||||||||||||||
Customer deposits and prepaid supply agreements | (444 | ) | 1,580 | |||||||||||||||||||||||||
Prepaid supply agreements | Prepaid supply agreements | (161) | (444) | |||||||||||||||||||||||||
Income taxes | (15 | ) | (1,133 | ) | Income taxes | 1,203 | (15) | |||||||||||||||||||||
Other assets and liabilities | 448 | (403 | ) | Other assets and liabilities | (697) | 448 | ||||||||||||||||||||||
Total adjustments | 4,393 | 4,237 | Total adjustments | 6,549 | 4,393 | |||||||||||||||||||||||
Net cash provided by operating activities | 12,546 | 13,697 | Net cash provided by operating activities | 17,315 | 12,546 | |||||||||||||||||||||||
Cash flows provided by (used for) investing activities: | Cash flows provided by (used for) investing activities: | |||||||||||||||||||||||||||
Additions to property, plant and equipment | (6,875 | ) | (7,440 | ) | Additions to property, plant and equipment | (6,676) | (6,875) | |||||||||||||||||||||
Purchases of available-for-sale debt investments | (1,721 | ) | (1,578 | ) | Purchases of available-for-sale debt investments | (4,558) | (1,721) | |||||||||||||||||||||
Maturities of available-for-sale debt investments | 1,903 | 1,720 | ||||||||||||||||||||||||||
Maturities and sales of available-for-sale debt investments | Maturities and sales of available-for-sale debt investments | 1,303 | 2,031 | |||||||||||||||||||||||||
Purchases of trading assets | (4,498 | ) | (6,501 | ) | Purchases of trading assets | (11,429) | (4,498) | |||||||||||||||||||||
Maturities and sales of trading assets | 3,808 | 7,691 | Maturities and sales of trading assets | 7,430 | 3,808 | |||||||||||||||||||||||
Sales of equity investments | 1,331 | 215 | Sales of equity investments | 186 | 1,331 | |||||||||||||||||||||||
Other investing | 42 | (91 | ) | Other investing | (602) | (86) | ||||||||||||||||||||||
Net cash used for investing activities | (6,010 | ) | (5,984 | ) | Net cash used for investing activities | (14,346) | (6,010) | |||||||||||||||||||||
Cash flows provided by (used for) financing activities: | Cash flows provided by (used for) financing activities: | |||||||||||||||||||||||||||
Increase (decrease) in short-term debt, net | 996 | 1,991 | Increase (decrease) in short-term debt, net | — | 996 | |||||||||||||||||||||||
Issuance of long-term debt, net of issuance costs | 601 | — | Issuance of long-term debt, net of issuance costs | 10,247 | 601 | |||||||||||||||||||||||
Repayment of debt and debt conversion | (1,033 | ) | (1,169 | ) | Repayment of debt and debt conversion | (2,775) | (1,033) | |||||||||||||||||||||
Proceeds from sales of common stock through employee equity incentive plans | 305 | 320 | Proceeds from sales of common stock through employee equity incentive plans | 512 | 305 | |||||||||||||||||||||||
Repurchase of common stock | (5,579 | ) | (5,807 | ) | Repurchase of common stock | (4,229) | (5,579) | |||||||||||||||||||||
Payment of dividends to stockholders | (2,828 | ) | (2,800 | ) | Payment of dividends to stockholders | (2,811) | (2,828) | |||||||||||||||||||||
Other financing | 850 | (1,067 | ) | Other financing | 629 | 850 | ||||||||||||||||||||||
Net cash provided by (used for) financing activities | (6,688 | ) | (8,532 | ) | Net cash provided by (used for) financing activities | 1,573 | (6,688) | |||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | (152 | ) | (819 | ) | Net increase (decrease) in cash and cash equivalents | 4,542 | (152) | |||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 2,867 | $ | 2,614 | Cash and cash equivalents, end of period | $ | 8,736 | $ | 2,867 | |||||||||||||||||||
Supplemental disclosures of noncash investing activities and cash flow information: | Supplemental disclosures of noncash investing activities and cash flow information: | |||||||||||||||||||||||||||
Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities | $ | 2,678 | $ | 2,789 | Acquisition of property, plant, and equipment included in accounts payable and accrued liabilities | $ | 2,836 | $ | 2,678 | |||||||||||||||||||
Cash paid during the period for: | Cash paid during the period for: | |||||||||||||||||||||||||||
Interest, net of capitalized interest | $ | 243 | $ | 209 | Interest, net of capitalized interest | $ | 252 | $ | 243 | |||||||||||||||||||
Income taxes, net of refunds | $ | 1,112 | $ | 2,196 | Income taxes, net of refunds | $ | 574 | $ | 1,112 |
FINANCIAL STATEMENTS | Consolidated Condensed Statements of Cash Flows |
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY |
Common Stock and Capital in Excess of Par Value | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total | |||||||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts; Unaudited) | Shares | Amount | ||||||||||||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Temporary equity reduction | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Convertible debt | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Repurchase of common stock | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Restricted stock unit withholdings | (6) | (236) | — | (103) | (339) | |||||||||||||||||||||||||||||||||
Balance as of June 27, 2020 | 4,253 | $ | 25,516 | $ | (1,152) | $ | 57,646 | $ | 82,010 | |||||||||||||||||||||||||||||
Balance as of March 30, 2019 | 4,477 | $ | 25,346 | $ | (813) | $ | 49,128 | $ | 73,661 | |||||||||||||||||||||||||||||
Net income | — | — | — | 4,179 | 4,179 | |||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | 191 | — | 191 | |||||||||||||||||||||||||||||||||
Employee equity incentive plans and other | 27 | 31 | — | — | 31 | |||||||||||||||||||||||||||||||||
Share-based compensation | — | 471 | — | — | 471 | |||||||||||||||||||||||||||||||||
Temporary equity reduction | — | 28 | — | — | 28 | |||||||||||||||||||||||||||||||||
Convertible debt | — | (120) | — | — | (120) | |||||||||||||||||||||||||||||||||
Repurchase of common stock | (67) | (381) | — | (2,764) | (3,145) | |||||||||||||||||||||||||||||||||
Restricted stock unit withholdings | (7) | (235) | — | (114) | (349) | |||||||||||||||||||||||||||||||||
Balance as of June 29, 2019 | 4,430 | $ | 25,140 | $ | (622) | $ | 50,429 | $ | 74,947 | |||||||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||
Balance as of December 29, 2018 | 4,516 | $ | 25,365 | $ | (974) | $ | 50,172 | $ | 74,563 | |||||||||||||||||||||||||||||
Net income | — | — | — | 8,153 | 8,153 | |||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | — | 352 | — | 352 | |||||||||||||||||||||||||||||||||
Employee equity incentive plans and other¹ | 38 | 403 | — | — | 403 | |||||||||||||||||||||||||||||||||
Share-based compensation | — | 860 | — | — | 860 | |||||||||||||||||||||||||||||||||
Temporary equity reduction | — | 173 | — | — | 173 | |||||||||||||||||||||||||||||||||
Convertible debt | — | (712) | — | — | (712) | |||||||||||||||||||||||||||||||||
Repurchase of common stock | (116) | (659) | — | (4,936) | (5,595) | |||||||||||||||||||||||||||||||||
Restricted stock unit withholdings | (8) | (290) | — | (131) | (421) | |||||||||||||||||||||||||||||||||
Cash dividends declared ($0.63 per share) | — | — | — | (2,829) | (2,829) | |||||||||||||||||||||||||||||||||
Balance as of June 29, 2019 | 4,430 | $ | 25,140 | $ | (622) | $ | 50,429 | $ | 74,947 |
Common Stock and Capital in Excess of Par Value | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total | ||||||||||||||||
(In Millions, Except Per Share Amounts) | Shares | Amount | |||||||||||||||||
Three Months Ended | |||||||||||||||||||
Balance as of March 30, 2019 | 4,477 | $ | 25,346 | $ | (813 | ) | $ | 49,128 | $ | 73,661 | |||||||||
Net income | — | — | — | 4,179 | 4,179 | ||||||||||||||
Other comprehensive income (loss) | — | — | 191 | — | 191 | ||||||||||||||
Employee equity incentive plans and other | 28 | 31 | — | — | 31 | ||||||||||||||
Share-based compensation | — | 471 | — | — | 471 | ||||||||||||||
Temporary equity reduction | — | 28 | — | — | 28 | ||||||||||||||
Convertible debt | — | (120 | ) | — | — | (120 | ) | ||||||||||||
Repurchase of common stock | (67 | ) | (381 | ) | — | (2,764 | ) | (3,145 | ) | ||||||||||
Restricted stock unit withholdings | (7 | ) | (235 | ) | — | (114 | ) | (349 | ) | ||||||||||
Balance as of June 29, 2019 | 4,430 | $ | 25,140 | $ | (622 | ) | $ | 50,429 | $ | 74,947 | |||||||||
Balance as of March 31, 2018 | 4,660 | $ | 26,430 | $ | (683 | ) | $ | 44,418 | $ | 70,165 | |||||||||
Net income | — | — | — | 5,006 | 5,006 | ||||||||||||||
Other comprehensive income (loss) | — | — | (406 | ) | — | (406 | ) | ||||||||||||
Employee equity incentive plans and other¹ | 31 | 110 | — | — | 110 | ||||||||||||||
Share-based compensation | — | 372 | — | — | 372 | ||||||||||||||
Temporary equity reduction | — | 147 | — | — | 147 | ||||||||||||||
Convertible debt | — | (563 | ) | — | — | (563 | ) | ||||||||||||
Non-controlling interest | — | (375 | ) | — | — | (375 | ) | ||||||||||||
Repurchase of common stock | (76 | ) | (424 | ) | — | (3,589 | ) | (4,013 | ) | ||||||||||
Restricted stock unit withholdings | (8 | ) | (227 | ) | — | (169 | ) | (396 | ) | ||||||||||
Balance as of June 30, 2018 | 4,607 | $ | 25,470 | $ | (1,089 | ) | $ | 45,666 | $ | 70,047 | |||||||||
Six Months Ended | |||||||||||||||||||
Balance as of December 29, 2018 | 4,516 | $ | 25,365 | $ | (974 | ) | $ | 50,172 | $ | 74,563 | |||||||||
Net income | — | — | — | 8,153 | 8,153 | ||||||||||||||
Other comprehensive income (loss) | — | — | 352 | — | 352 | ||||||||||||||
Employee equity incentive plans and other | 39 | 403 | — | — | 403 | ||||||||||||||
Share-based compensation | — | 860 | — | — | 860 | ||||||||||||||
Temporary equity reduction | — | 173 | — | — | 173 | ||||||||||||||
Convertible debt | — | (712 | ) | — | — | (712 | ) | ||||||||||||
Repurchase of common stock | (117 | ) | (659 | ) | — | (4,936 | ) | (5,595 | ) | ||||||||||
Restricted stock unit withholdings | (8 | ) | (290 | ) | — | (131 | ) | (421 | ) | ||||||||||
Cash dividends declared ($0.63 per share) | — | — | — | (2,829 | ) | (2,829 | ) | ||||||||||||
Balance as of June 29, 2019 | 4,430 | $ | 25,140 | $ | (622 | ) | $ | 50,429 | $ | 74,947 | |||||||||
Balance as of December 30, 2017 | 4,687 | $ | 26,074 | $ | 862 | $ | 42,083 | $ | 69,019 | ||||||||||
Adjustment for change in accounting principle | — | — | (1,790 | ) | 2,424 | 634 | |||||||||||||
Opening balance as of December 31, 2017 | 4,687 | 26,074 | (928 | ) | 44,507 | 69,653 | |||||||||||||
Net income | — | — | — | 9,460 | 9,460 | ||||||||||||||
Other comprehensive income (loss) | — | — | (161 | ) | — | (161 | ) | ||||||||||||
Employee equity incentive plans and other¹ | 46 | 433 | — | — | 433 | ||||||||||||||
Share-based compensation | — | 825 | — | — | 825 | ||||||||||||||
Temporary equity reduction | — | 212 | — | — | 212 | ||||||||||||||
Convertible debt | — | (770 | ) | — | — | (770 | ) | ||||||||||||
Non-controlling interest | — | (375 | ) | — | — | (375 | ) | ||||||||||||
Repurchase of common stock | (117 | ) | (649 | ) | — | (5,319 | ) | (5,968 | ) | ||||||||||
Restricted stock unit withholdings | (9 | ) | (280 | ) | — | (181 | ) | (461 | ) | ||||||||||
Cash dividends declared ($0.60 per share) | — | — | — | (2,801 | ) | (2,801 | ) | ||||||||||||
Balance as of June 30, 2018 | 4,607 | $ | 25,470 | $ | (1,089 | ) | $ | 45,666 | $ | 70,047 |
FINANCIAL STATEMENTS | Consolidated Condensed Statements of Stockholders' Equity |
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS |
NOTE 1 : | BASIS OF PRESENTATION |
(In Millions) | Remainder of 2019 | 2020 | 2021 | 2022 | 2023 | 2024 and Thereafter | Total | |||||||||||||||||||||
Lease payments | $ | 93 | $ | 173 | $ | 122 | $ | 96 | $ | 70 | $ | 107 | $ | 661 | ||||||||||||||
Present value of lease payments | $ | 604 |
(In Millions) | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 and Thereafter | Total | |||||||||||||||||||||
Minimum rental commitments under all non-cancelable leases | $ | 229 | $ | 181 | $ | 133 | $ | 101 | $ | 70 | $ | 121 | $ | 835 |
NOTE | OPERATING SEGMENTS |
•historical results of operations from divested businesses; •results of operations of start-up businesses that support our initiatives, including our foundry business; •amounts included within restructuring and other charges; •a portion of employee benefits, compensation, and other expenses not allocated to the operating segments; and • |
FINANCIAL STATEMENTS | Notes to Financial Statements |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
(In Millions) | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||||||
Net revenue: | ||||||||||||||||||||||||||||||||||||||
Data Center Group | ||||||||||||||||||||||||||||||||||||||
Platform | $ | 6,181 | $ | 4,553 | $ | 12,608 | $ | 9,035 | ||||||||||||||||||||||||||||||
Adjacent | 936 | 430 | 1,502 | 850 | ||||||||||||||||||||||||||||||||||
7,117 | 4,983 | 14,110 | 9,885 | |||||||||||||||||||||||||||||||||||
Internet of Things | ||||||||||||||||||||||||||||||||||||||
IOTG | 670 | 986 | 1,553 | 1,896 | ||||||||||||||||||||||||||||||||||
Mobileye | 146 | 201 | 400 | 410 | ||||||||||||||||||||||||||||||||||
816 | 1,187 | 1,953 | 2,306 | |||||||||||||||||||||||||||||||||||
Non-Volatile Memory Solutions Group | 1,659 | 940 | 2,997 | 1,855 | ||||||||||||||||||||||||||||||||||
Programmable Solutions Group | 501 | 489 | 1,020 | 975 | ||||||||||||||||||||||||||||||||||
Client Computing Group | ||||||||||||||||||||||||||||||||||||||
Platform | 8,229 | 7,925 | 16,941 | 15,749 | ||||||||||||||||||||||||||||||||||
Adjacent | 1,267 | 916 | 2,330 | 1,678 | ||||||||||||||||||||||||||||||||||
9,496 | 8,841 | 19,271 | 17,427 | |||||||||||||||||||||||||||||||||||
All other | 139 | 65 | 205 | 118 | ||||||||||||||||||||||||||||||||||
Total net revenue | $ | 19,728 | $ | 16,505 | $ | 39,556 | $ | 32,566 | ||||||||||||||||||||||||||||||
Operating income (loss): | ||||||||||||||||||||||||||||||||||||||
Data Center Group | $ | 3,099 | $ | 1,800 | 6,591 | $ | 3,641 | |||||||||||||||||||||||||||||||
Internet of Things | ||||||||||||||||||||||||||||||||||||||
IOTG | 70 | 294 | 313 | 545 | ||||||||||||||||||||||||||||||||||
Mobileye | (4) | 53 | 84 | 121 | ||||||||||||||||||||||||||||||||||
66 | 347 | 397 | 666 | |||||||||||||||||||||||||||||||||||
Non-Volatile Memory Solutions Group | 322 | (284) | 256 | (581) | ||||||||||||||||||||||||||||||||||
Programmable Solutions Group | 80 | 52 | 177 | 141 | ||||||||||||||||||||||||||||||||||
Client Computing Group | 2,842 | 3,737 | 7,067 | 6,809 | ||||||||||||||||||||||||||||||||||
All other | (712) | (1,035) | (1,753) | (1,885) | ||||||||||||||||||||||||||||||||||
Total operating income | $ | 5,697 | $ | 4,617 | $ | 12,735 | $ | 8,791 |
Three Months Ended | Six Months Ended | |||||||||||||||
(In Millions) | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | ||||||||||||
Net revenue: | ||||||||||||||||
Client Computing Group | ||||||||||||||||
Platform | $ | 7,925 | $ | 8,065 | $ | 15,749 | $ | 15,680 | ||||||||
Adjacent | 916 | 663 | 1,678 | 1,268 | ||||||||||||
8,841 | 8,728 | 17,427 | 16,948 | |||||||||||||
Data Center Group | ||||||||||||||||
Platform | 4,553 | 5,100 | 9,035 | 9,924 | ||||||||||||
Adjacent | 430 | 449 | 850 | 859 | ||||||||||||
4,983 | 5,549 | 9,885 | 10,783 | |||||||||||||
Internet of Things | ||||||||||||||||
IOTG | 986 | 880 | 1,896 | 1,720 | ||||||||||||
Mobileye | 201 | 173 | 410 | 324 | ||||||||||||
1,187 | 1,053 | 2,306 | 2,044 | |||||||||||||
Non-Volatile Memory Solutions Group | 940 | 1,079 | 1,855 | 2,119 | ||||||||||||
Programmable Solutions Group | 489 | 517 | 975 | 1,015 | ||||||||||||
All other | 65 | 36 | 118 | 119 | ||||||||||||
Total net revenue | $ | 16,505 | $ | 16,962 | $ | 32,566 | $ | 33,028 | ||||||||
Operating income (loss): | ||||||||||||||||
Client Computing Group | $ | 3,737 | $ | 3,234 | $ | 6,809 | $ | 6,025 | ||||||||
Data Center Group | 1,800 | 2,737 | 3,641 | 5,339 | ||||||||||||
Internet of Things | ||||||||||||||||
IOTG | 294 | 243 | 545 | 470 | ||||||||||||
Mobileye | 53 | 44 | 121 | 54 | ||||||||||||
347 | 287 | 666 | 524 | |||||||||||||
Non-Volatile Memory Solutions Group | (284 | ) | (65 | ) | (581 | ) | (146 | ) | ||||||||
Programmable Solutions Group | 52 | 101 | 141 | 198 | ||||||||||||
All other | (1,035 | ) | (1,021 | ) | (1,885 | ) | (2,197 | ) | ||||||||
Total operating income | $ | 4,617 | $ | 5,273 | $ | 8,791 | $ | 9,743 |
FINANCIAL STATEMENTS | Notes to Financial Statements |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
(In Millions) | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||||||
Platform revenue | ||||||||||||||||||||||||||||||||||||||
DCG platform | $ | 6,181 | $ | 4,553 | $ | 12,608 | $ | 9,035 | ||||||||||||||||||||||||||||||
IOTG platform | 619 | 891 | 1,414 | 1,716 | ||||||||||||||||||||||||||||||||||
CCG desktop platform | 2,368 | 2,767 | 5,208 | 5,653 | ||||||||||||||||||||||||||||||||||
CCG notebook platform | 5,844 | 5,136 | 11,701 | 10,063 | ||||||||||||||||||||||||||||||||||
CCG other platform1 | 16 | 22 | 31 | 33 | ||||||||||||||||||||||||||||||||||
15,028 | 13,369 | 30,962 | 26,500 | |||||||||||||||||||||||||||||||||||
Adjacent revenue2 | 4,700 | 3,136 | 8,594 | 6,066 | ||||||||||||||||||||||||||||||||||
Total revenue | $ | 19,728 | $ | 16,505 | $ | 39,556 | $ | 32,566 |
Three Months Ended | Six Months Ended | |||||||||||||||
(In Millions) | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | ||||||||||||
Platform revenue | ||||||||||||||||
Desktop platform | $ | 2,767 | $ | 2,954 | $ | 5,653 | $ | 5,861 | ||||||||
Notebook platform | 5,136 | 5,086 | 10,063 | 9,775 | ||||||||||||
DCG platform | 4,553 | 5,100 | 9,035 | 9,924 | ||||||||||||
IOTG platform | 891 | 745 | 1,716 | 1,464 | ||||||||||||
Other platform1 | 22 | 25 | 33 | 44 | ||||||||||||
13,369 | 13,910 | 26,500 | 27,068 | |||||||||||||
Adjacent revenue2 | 3,136 | 3,052 | 6,066 | 5,960 | ||||||||||||
Total revenue | $ | 16,505 | $ | 16,962 | $ | 32,566 | $ | 33,028 |
2 |
Includes all |
NOTE | EARNINGS PER SHARE |
Three Months Ended | Six Months Ended | |||||||||||||||
(In Millions, Except Per Share Amounts) | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | ||||||||||||
Net income available to common stockholders | $ | 4,179 | $ | 5,006 | $ | 8,153 | $ | 9,460 | ||||||||
Weighted average shares of common stock outstanding – basic | 4,466 | 4,649 | 4,479 | 4,661 | ||||||||||||
Dilutive effect of employee equity incentive plans | 40 | 52 | 46 | 59 | ||||||||||||
Dilutive effect of convertible debt | 17 | 46 | 18 | 48 | ||||||||||||
Weighted average shares of common stock outstanding – diluted | 4,523 | 4,747 | 4,543 | 4,768 | ||||||||||||
Earnings per share – basic | $ | 0.94 | $ | 1.08 | $ | 1.82 | $ | 2.03 | ||||||||
Earnings per share – diluted | $ | 0.92 | $ | 1.05 | $ | 1.79 | $ | 1.98 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||||||
Net income available to common stockholders | $ | 5,105 | $ | 4,179 | $ | 10,766 | $ | 8,153 | ||||||||||||||||||||||||||||||
Weighted average shares of common stock outstanding—basic | 4,246 | 4,466 | 4,256 | 4,479 | ||||||||||||||||||||||||||||||||||
Dilutive effect of employee equity incentive plans | 38 | 40 | 42 | 46 | ||||||||||||||||||||||||||||||||||
Dilutive effect of convertible debt | — | 17 | — | 18 | ||||||||||||||||||||||||||||||||||
Weighted average shares of common stock outstanding—diluted | 4,284 | 4,523 | 4,298 | 4,543 | ||||||||||||||||||||||||||||||||||
Earnings per share—basic | $ | 1.20 | $ | 0.94 | $ | 2.53 | $ | 1.82 | ||||||||||||||||||||||||||||||
Earnings per share—diluted | $ | 1.19 | $ | 0.92 | $ | 2.50 | $ | 1.79 |
FINANCIAL STATEMENTS | Notes to Financial Statements |
NOTE | CONTRACT LIABILITIES |
(In Millions) | Jun 29, 2019 | Dec 29, 2018 | ||||||
Prepaid supply agreements | $ | 2,143 | $ | 2,587 | ||||
Other | 162 | 122 | ||||||
Total contract liabilities | $ | 2,305 | $ | 2,709 |
(In Millions) | Jun 27, 2020 | Dec 28, 2019 | ||||||||||||
Prepaid supply agreements | $ | 1,644 | $ | 1,805 | ||||||||||
Other | 279 | 236 | ||||||||||||
Total contract liabilities | $ | 1,923 | $ | 2,041 | ||||||||||
(In Millions) | ||||
Prepaid supply agreements balance as of December 29, 2018 | $ | 2,587 | ||
Prepaids utilized | (444 | ) | ||
Prepaid supply agreements balance as of June 29, 2019 | $ | 2,143 |
(In Millions) | ||||||||
Prepaid supply agreements balance as of December 28, 2019 | $ | 1,805 | ||||||
Prepayments utilized | (161) | |||||||
Prepaid supply agreements balance as of June 27, 2020 | $ | 1,644 |
NOTE | OTHER FINANCIAL STATEMENT DETAILS |
(In Millions) | Jun 29, 2019 | Dec 29, 2018 | ||||||
Raw materials | $ | 808 | $ | 813 | ||||
Work in process | 5,612 | 4,511 | ||||||
Finished goods | 2,276 | 1,929 | ||||||
Total inventories | $ | 8,696 | $ | 7,253 |
(In Millions) | Jun 27, 2020 | Dec 28, 2019 | ||||||||||||
Raw materials | $ | 903 | $ | 840 | ||||||||||
Work in process | 6,093 | 6,225 | ||||||||||||
Finished goods | 1,973 | 1,679 | ||||||||||||
Total inventories | $ | 8,969 | $ | 8,744 |
Three Months Ended | Six Months Ended | |||||||||||||||
(In Millions) | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | ||||||||||||
Interest income | $ | 125 | $ | 108 | $ | 260 | $ | 199 | ||||||||
Interest expense | (135 | ) | (116 | ) | (273 | ) | (228 | ) | ||||||||
Other, net | (53 | ) | 467 | (111 | ) | 386 | ||||||||||
Total interest and other, net | $ | (63 | ) | $ | 459 | $ | (124 | ) | $ | 357 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
(In Millions) | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||||||
Interest income | $ | 83 | $ | 125 | $ | 176 | $ | 260 | ||||||||||||||||||||||||||||||
Interest expense | (186) | (135) | (321) | (273) | ||||||||||||||||||||||||||||||||||
Other, net | 74 | (53) | (197) | (111) | ||||||||||||||||||||||||||||||||||
Total interest and other, net | $ | (29) | $ | (63) | $ | (342) | $ | (124) |
FINANCIAL STATEMENTS | Notes to Financial Statements | 13 |
NOTE | RESTRUCTURING AND OTHER CHARGES |
Three Months Ended | Six Months Ended | |||||||||||||||
(In Millions) | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | ||||||||||||
Employee severance and benefit arrangements | $ | 168 | $ | — | $ | 168 | $ | — | ||||||||
Asset impairment and other charges | 16 | — | 16 | — | ||||||||||||
Total restructuring and other charges | $ | 184 | $ | — | $ | 184 | $ | — |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||
(In Millions) | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | |||||||||||||||||||||||||||||||||||||
Employee severance and benefit arrangements | $ | 1 | $ | 168 | $ | 106 | $ | 168 | |||||||||||||||||||||||||||||||||
Asset impairment and other charges | 8 | 16 | 65 | 16 | |||||||||||||||||||||||||||||||||||||
Total restructuring and other charges | $ | 9 | $ | 184 | $ | 171 | $ | 184 |
NOTE | INVESTMENTS |
June 29, 2019 | December 29, 2018 | |||||||||||||||||||||||||||||||
(In Millions) | Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||||
Corporate debt | $ | 3,160 | $ | 45 | $ | (4 | ) | $ | 3,201 | $ | 3,068 | $ | 2 | $ | (28 | ) | $ | 3,042 | ||||||||||||||
Financial institution instruments | 3,034 | 18 | (1 | ) | 3,051 | 3,076 | 3 | (11 | ) | 3,068 | ||||||||||||||||||||||
Government debt | 903 | 6 | — | 909 | 1,069 | 1 | (9 | ) | 1,061 | |||||||||||||||||||||||
Total available-for-sale debt investments | $ | 7,097 | $ | 69 | $ | (5 | ) | $ | 7,161 | $ | 7,213 | $ | 6 | $ | (48 | ) | $ | 7,171 |
Jun 27, 2020 | Dec 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In Millions) | Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | Adjusted Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | $ | 3,911 | $ | 94 | $ | — | $ | 4,005 | $ | 2,914 | $ | 44 | $ | — | $ | 2,958 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments | 7,985 | 24 | — | 8,009 | 3,007 | 15 | (1) | 3,021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government debt | 2,491 | 12 | — | 2,503 | 560 | 4 | — | 564 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total available-for-sale debt investments | $ | 14,387 | $ | 130 | $ | — | $ | 14,517 | $ | 6,481 | $ | 63 | $ | (1) | $ | 6,543 |
(In Millions) | Fair Value | |||
Due in 1 year or less | $ | 3,174 | ||
Due in 1–2 years | 733 | |||
Due in 2–5 years | 2,722 | |||
Due after 5 years | 122 | |||
Instruments not due at a single maturity date | 410 | |||
Total | $ | 7,161 |
(In Millions) | Fair Value | |||||||
Due in 1 year or less | $ | 7,763 | ||||||
Due in 1–2 years | 1,525 | |||||||
Due in 2–5 years | 1,359 | |||||||
Due after 5 years | — | |||||||
Instruments not due at a single maturity date | 3,870 | |||||||
Total | $ | 14,517 |
(In Millions) | Jun 29, 2019 | Dec 29, 2018 | ||||||
Marketable equity securities | $ | 197 | $ | 1,440 | ||||
Non-marketable equity securities | 3,134 | 2,978 | ||||||
Equity method investments | 1,298 | 1,624 | ||||||
Total | $ | 4,629 | $ | 6,042 |
FINANCIAL STATEMENTS | Notes to Financial Statements |
(In Millions) | Jun 27, 2020 | Dec 28, 2019 | ||||||||||||
Marketable equity securities | $ | 464 | $ | 450 | ||||||||||
Non-marketable equity securities | 3,419 | 3,480 | ||||||||||||
Equity method investments | 18 | 37 | ||||||||||||
Total | $ | 3,901 | $ | 3,967 |
Three Months Ended | Six Months Ended | |||||||||||||||
(In Millions) | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | ||||||||||||
Ongoing mark-to-market adjustments on marketable equity securities | $ | (179 | ) | $ | (235 | ) | $ | 74 | $ | 371 | ||||||
Observable price adjustments on non-marketable equity securities | 8 | 24 | 16 | 148 | ||||||||||||
Impairments | (39 | ) | (26 | ) | (62 | ) | (43 | ) | ||||||||
Sale of equity investments and other¹ | 380 | 34 | 576 | (36 | ) | |||||||||||
Total gains (losses) on equity investments, net | $ | 170 | $ | (203 | ) | $ | 604 | $ | 440 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
(In Millions) | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||||||
Ongoing mark-to-market adjustments on marketable equity securities | $ | 165 | $ | (179) | $ | 62 | $ | 74 | ||||||||||||||||||||||||||||||
Observable price adjustments on non-marketable equity securities | 58 | 8 | 137 | 16 | ||||||||||||||||||||||||||||||||||
Impairment charges | (51) | (39) | (193) | (62) | ||||||||||||||||||||||||||||||||||
Sale of equity investments and other¹ | 95 | 380 | 150 | 576 | ||||||||||||||||||||||||||||||||||
Total gains (losses) on equity investments, net | $ | 267 | $ | 170 | $ | 156 | $ | 604 |
Three Months Ended | Six Months Ended | |||||||||||||||
(In Millions) | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | ||||||||||||
Net gains (losses) recognized during the period on equity securities | $ | (178 | ) | $ | (133 | ) | $ | 84 | $ | 592 | ||||||
Less: Net (gains) losses recognized during the period on equity securities sold during the period | (33 | ) | (11 | ) | (258 | ) | (49 | ) | ||||||||
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date | $ | (211 | ) | $ | (144 | ) | $ | (174 | ) | $ | 543 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||
(In Millions) | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||||||
Net gains (losses) recognized during the period on equity securities | $ | 223 | $ | (178) | $ | 83 | $ | 84 | ||||||||||||||||||||||||||||||
Less: Net (gains) losses recognized during the period on equity securities sold during the period | (55) | (33) | (58) | (258) | ||||||||||||||||||||||||||||||||||
Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date | $ | 168 | $ | (211) | $ | 25 | $ | (174) |
FINANCIAL STATEMENTS | Notes to Financial Statements |
NOTE |
FINANCIAL STATEMENTS | Notes to Financial Statements | 16 |
NOTE 9 : | BORROWINGS |
Jun 27, 2020 | Dec 28, 2019 | |||||||||||||||||||||||||
(In Millions) | Effective Interest Rate | Amount | Amount | |||||||||||||||||||||||
Floating-rate senior notes: | ||||||||||||||||||||||||||
Three-month LIBOR plus 0.08%, due May 2020 | — | % | $ | — | $ | 700 | ||||||||||||||||||||
Three-month LIBOR plus 0.35%, due May 2022 | 1.82 | % | 800 | 800 | ||||||||||||||||||||||
Fixed-rate senior notes: | ||||||||||||||||||||||||||
1.85%, due May 2020 | — | % | — | 1,000 | ||||||||||||||||||||||
2.45%, due July 2020 | 2.48 | % | 1,750 | 1,750 | ||||||||||||||||||||||
1.70%, due May 2021 | 1.78 | % | 500 | 500 | ||||||||||||||||||||||
3.30%, due October 2021 | 2.98 | % | 2,000 | 2,000 | ||||||||||||||||||||||
2.35%, due May 2022 | 1.95 | % | 750 | 750 | ||||||||||||||||||||||
3.10%, due July 2022 | 2.69 | % | 1,000 | 1,000 | ||||||||||||||||||||||
4.00%, due December 2022¹ | 3.11 | % | 379 | 382 | ||||||||||||||||||||||
2.70%, due December 2022 | 2.28 | % | 1,500 | 1,500 | ||||||||||||||||||||||
4.10%, due November 2023 | 3.21 | % | 400 | 400 | ||||||||||||||||||||||
2.88%, due May 2024 | 2.31 | % | 1,250 | 1,250 | ||||||||||||||||||||||
2.70%, due June 2024 | 2.13 | % | 600 | 600 | ||||||||||||||||||||||
3.40%, due March 2025 | 3.46 | % | 1,500 | — | ||||||||||||||||||||||
3.70%, due July 2025 | 3.48 | % | 2,250 | 2,250 | ||||||||||||||||||||||
2.60%, due May 2026 | 1.94 | % | 1,000 | 1,000 | ||||||||||||||||||||||
3.75%, due March 2027 | 3.80 | % | 1,000 | — | ||||||||||||||||||||||
3.15%, due May 2027 | 2.48 | % | 1,000 | 1,000 | ||||||||||||||||||||||
2.45%, due November 2029 | 2.39 | % | 2,000 | 1,250 | ||||||||||||||||||||||
3.90%, due March 2030 | 3.94 | % | 1,500 | — | ||||||||||||||||||||||
4.00%, due December 2032 | 2.30 | % | 750 | 750 | �� | |||||||||||||||||||||
4.60%, due March 2040 | 4.62 | % | 750 | — | ||||||||||||||||||||||
4.80%, due October 2041 | 3.53 | % | 802 | 802 | ||||||||||||||||||||||
4.25%, due December 2042 | 2.48 | % | 567 | 567 | ||||||||||||||||||||||
4.90%, due July 2045 | 3.45 | % | 772 | 772 | ||||||||||||||||||||||
4.10%, due May 2046 | 2.76 | % | 1,250 | 1,250 | ||||||||||||||||||||||
4.10%, due May 2047 | 2.63 | % | 1,000 | 1,000 | ||||||||||||||||||||||
4.10%, due August 2047 | 2.20 | % | 640 | 640 | ||||||||||||||||||||||
3.73%, due December 2047 | 2.89 | % | 1,967 | 1,967 | ||||||||||||||||||||||
3.25%, due November 2049 | 3.19 | % | 2,000 | 1,500 | ||||||||||||||||||||||
4.75%, due March 2050 | 4.76 | % | 2,250 | — | ||||||||||||||||||||||
3.10%, due February 2060 | 3.12 | % | 1,000 | — | ||||||||||||||||||||||
4.95%, due March 2060 | 5.00 | % | 1,000 | — | ||||||||||||||||||||||
Oregon and Arizona bonds: | ||||||||||||||||||||||||||
2.40%-2.70%, due December 2035 - 2040 | 2.49 | % | 423 | 423 | ||||||||||||||||||||||
5.00%, due March 2049 | 2.12 | % | 138 | 138 | ||||||||||||||||||||||
5.00%, due June 2049 | 2.15 | % | 438 | 438 | ||||||||||||||||||||||
Junior Subordinated Convertible Debentures: | ||||||||||||||||||||||||||
3.25%, due August 2039 | — | — | 372 | |||||||||||||||||||||||
Total Senior Notes and Other Borrowings | 36,926 | 28,751 | ||||||||||||||||||||||||
Unamortized Premium/Discount and Issuance Costs | (375) | (529) | ||||||||||||||||||||||||
Hedge Accounting Fair Value Adjustments | 1,796 | 781 | ||||||||||||||||||||||||
Long-term debt | 38,347 | 29,003 | ||||||||||||||||||||||||
Current portion of long-term debt | (2,254) | (3,695) | ||||||||||||||||||||||||
Total long-term debt | $ | 36,093 | $ | 25,308 |
FINANCIAL STATEMENTS | Notes to Financial Statements | 17 |
FINANCIAL STATEMENTS | Notes to Financial Statements | 18 |
NOTE 10 : | FAIR VALUE |
Jun 27, 2020 | Dec 28, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | $ | — | $ | 715 | $ | — | $ | 715 | $ | — | $ | 713 | $ | — | $ | 713 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments¹ | 3,870 | 1,591 | — | 5,461 | 1,064 | 408 | — | 1,472 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government debt² | — | 666 | — | 666 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reverse repurchase agreements | — | 1,400 | — | 1,400 | — | 1,500 | — | 1,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-term investments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | — | 1,426 | — | 1,426 | — | 347 | — | 347 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments¹ | — | 2,096 | — | 2,096 | — | 724 | — | 724 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government debt² | — | 1,269 | — | 1,269 | — | 11 | — | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Trading assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | — | 3,605 | — | 3,605 | — | 2,848 | — | 2,848 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments¹ | 206 | 2,304 | — | 2,510 | 87 | 1,578 | — | 1,665 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government debt² | — | 6,173 | — | 6,173 | — | 3,334 | — | 3,334 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other current assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets | 30 | 250 | — | 280 | 50 | 230 | — | 280 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans receivable³ | — | 348 | — | 348 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable equity securities | 464 | — | — | 464 | 450 | — | — | 450 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other long-term investments: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate debt | — | 1,864 | — | 1,864 | — | 1,898 | — | 1,898 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial institution instruments¹ | — | 452 | — | 452 | — | 825 | — | 825 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Government debt² | — | 568 | — | 568 | — | 553 | — | 553 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other long-term assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative assets | — | 1,679 | 35 | 1,714 | — | 690 | 16 | 706 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans receivable³ | — | 212 | — | 212 | — | 554 | — | 554 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets measured and recorded at fair value | $ | 4,570 | $ | 26,618 | $ | 35 | $ | 31,223 | $ | 1,651 | $ | 16,213 | $ | 16 | $ | 17,880 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other accrued liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities | $ | 48 | $ | 432 | $ | — | $ | 480 | $ | 3 | $ | 287 | $ | — | $ | 290 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other long-term liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities | — | 22 | — | 22 | — | 13 | — | 13 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities measured and recorded at fair value | $ | 48 | $ | 454 | $ | — | $ | 502 | $ | 3 | $ | 300 | $ | — | $ | 303 |
June 29, 2019 | December 29, 2018 | |||||||||||||||||||||||||||||||
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 | $ | — | $ | 417 | $ | — | $ | 417 | $ | — | $ | 262 | $ | — | $ | 262 | ||||||||||||||||
Financial institution instruments¹ | 410 | 343 | — | 753 | 550 | 183 | — | 733 | ||||||||||||||||||||||||
Reverse repurchase agreements | — | 1,300 | — | 1,300 | — | 1,850 | — | 1,850 | ||||||||||||||||||||||||
Short-term investments: | ||||||||||||||||||||||||||||||||
Corporate debt | — | 810 | — | 810 | — | 937 | — | 937 | ||||||||||||||||||||||||
Financial institution instruments¹ | — | 1,324 | — | 1,324 | — | 1,423 | — | 1,423 | ||||||||||||||||||||||||
Government debt² | — | 280 | — | 280 | — | 428 | — | 428 | ||||||||||||||||||||||||
Trading assets: | ||||||||||||||||||||||||||||||||
Corporate debt | — | 2,755 | — | 2,755 | — | 2,635 | — | 2,635 | ||||||||||||||||||||||||
Financial institution instruments¹ | 54 | 1,470 | — | 1,524 | 67 | 1,273 | — | 1,340 | ||||||||||||||||||||||||
Government debt² | — | 2,384 | — | 2,384 | — | 1,868 | — | 1,868 | ||||||||||||||||||||||||
Other current assets: | ||||||||||||||||||||||||||||||||
Derivative assets | 29 | 225 | — | 254 | — | 180 | — | 180 | ||||||||||||||||||||||||
Loans receivable³ | — | 57 | — | 57 | — | 354 | — | 354 | ||||||||||||||||||||||||
Marketable equity securities | 197 | — | — | 197 | 1,440 | — | — | 1,440 | ||||||||||||||||||||||||
Other long-term investments: | ||||||||||||||||||||||||||||||||
Corporate debt | — | 1,974 | — | 1,974 | — | 1,843 | — | 1,843 | ||||||||||||||||||||||||
Financial institution instruments¹ | — | 974 | — | 974 | — | 912 | — | 912 | ||||||||||||||||||||||||
Government debt² | — | 629 | — | 629 | — | 633 | — | 633 | ||||||||||||||||||||||||
Other long-term assets: | ||||||||||||||||||||||||||||||||
Derivative assets | — | 689 | — | 689 | — | 100 | — | 100 | ||||||||||||||||||||||||
Loans receivable³ | — | 507 | — | 507 | — | 229 | — | 229 | ||||||||||||||||||||||||
Total assets measured and recorded at fair value | 690 | 16,138 | — | 16,828 | 2,057 | 15,110 | — | 17,167 | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Other accrued liabilities: | ||||||||||||||||||||||||||||||||
Derivative liabilities | — | 303 | — | 303 | — | 412 | — | 412 | ||||||||||||||||||||||||
Other long-term liabilities: | ||||||||||||||||||||||||||||||||
Derivative liabilities | — | 15 | 18 | 33 | — | 415 | 68 | 483 | ||||||||||||||||||||||||
Total liabilities measured and recorded at fair value | $ | — | $ | 318 | $ | 18 | $ | 336 | $ | — | $ | 827 | $ | 68 | $ | 895 |
FINANCIAL STATEMENTS | Notes to Financial Statements |
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 28, 2019 | $ | 54 | $ | (1,382) | $ | 48 | $ | (1,280) | ||||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | 19 | (2) | 69 | 86 | ||||||||||||||||||||||||||||||||||
Amounts reclassified out of accumulated other comprehensive income (loss) | 60 | 28 | — | 88 | ||||||||||||||||||||||||||||||||||
Tax effects | (28) | (3) | (15) | (46) | ||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | 51 | 23 | 54 | 128 | ||||||||||||||||||||||||||||||||||
Balance as of June 27, 2020 | $ | 105 | $ | (1,359) | $ | 102 | $ | (1,152) |
FINANCIAL STATEMENTS | Notes to Financial Statements | 20 |
NOTE | DERIVATIVE FINANCIAL INSTRUMENTS |
(In Millions) | Jun 29, 2019 | Dec 29, 2018 | (In Millions) | Jun 27, 2020 | Dec 28, 2019 | |||||||||||||||||||||||
Foreign currency contracts | $ | 23,293 | $ | 19,223 | Foreign currency contracts | $ | 29,129 | $ | 23,981 | |||||||||||||||||||
Interest rate contracts | 22,292 | 22,447 | Interest rate contracts | 14,349 | 14,302 | |||||||||||||||||||||||
Other | 1,633 | 1,356 | Other | 1,787 | 1,753 | |||||||||||||||||||||||
Total | $ | 47,218 | $ | 43,026 | Total | $ | 45,265 | $ | 40,036 |
Jun 27, 2020 | Dec 28, 2019 | |||||||||||||||||||||||||||||||||||||
(In Millions) | Assets1 | Liabilities2 | Assets1 | Liabilities2 | ||||||||||||||||||||||||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||||||||||||||
Foreign currency contracts3 | $ | 76 | $ | 81 | $ | 56 | $ | 159 | ||||||||||||||||||||||||||||||
Interest rate contracts | 1,713 | — | 690 | 9 | ||||||||||||||||||||||||||||||||||
Total derivatives designated as hedging instruments | 1,789 | 81 | 746 | 168 | ||||||||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||||||||||||||||||||||||
Foreign currency contracts3 | 171 | 224 | 179 | 78 | ||||||||||||||||||||||||||||||||||
Interest rate contracts | 4 | 149 | 11 | 54 | ||||||||||||||||||||||||||||||||||
Equity contracts | 30 | 48 | 50 | 3 | ||||||||||||||||||||||||||||||||||
Total derivatives not designated as hedging instruments | 205 | 421 | 240 | 135 | ||||||||||||||||||||||||||||||||||
Total derivatives | $ | 1,994 | $ | 502 | $ | 986 | $ | 303 |
June 29, 2019 | December 29, 2018 | |||||||||||||||
(In Millions) | Assets1 | Liabilities2 | Assets1 | Liabilities2 | ||||||||||||
Derivatives designated as hedging instruments: | ||||||||||||||||
Foreign currency contracts3 | $ | 106 | $ | 90 | $ | 44 | $ | 244 | ||||||||
Interest rate contracts | 669 | 20 | 84 | 474 | ||||||||||||
Total derivatives designated as hedging instruments | 775 | 110 | 128 | 718 | ||||||||||||
Derivatives not designated as hedging instruments: | ||||||||||||||||
Foreign currency contracts3 | 134 | 170 | 132 | 155 | ||||||||||||
Interest rate contracts | 5 | 52 | 20 | 22 | ||||||||||||
Equity Contracts | 29 | 4 | — | — | ||||||||||||
Total derivatives not designated as hedging instruments | 168 | 226 | 152 | 177 | ||||||||||||
Total derivatives | $ | 943 | $ | 336 | $ | 280 | $ | 895 |
FINANCIAL STATEMENTS | Notes to Financial Statements |
Jun 27, 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 | $ | 1,985 | $ | — | $ | 1,985 | $ | (318) | $ | (1,641) | $ | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reverse repurchase agreements | 1,500 | — | 1,500 | — | (1,489) | 11 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 3,485 | $ | — | $ | 3,485 | $ | (318) | $ | (3,130) | $ | 37 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities subject to master netting arrangements | $ | 397 | $ | — | $ | 397 | $ | (318) | $ | (79) | $ | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | $ | 397 | $ | — | $ | 397 | $ | (318) | $ | (79) | $ | — |
June 29, 2019 | ||||||||||||||||||||||||
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 | $ | 937 | $ | — | $ | 937 | $ | (258 | ) | $ | (679 | ) | $ | — | ||||||||||
Reverse repurchase agreements | 1,650 | — | 1,650 | — | (1,650 | ) | — | |||||||||||||||||
Total assets | 2,587 | — | 2,587 | (258 | ) | (2,329 | ) | — | ||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Derivative liabilities subject to master netting arrangements | 325 | — | 325 | (258 | ) | (62 | ) | 5 | ||||||||||||||||
Total liabilities | $ | 325 | $ | — | $ | 325 | $ | (258 | ) | $ | (62 | ) | $ | 5 |
December 29, 2018 | ||||||||||||||||||||||||
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 | $ | 292 | $ | — | $ | 292 | $ | (220 | ) | $ | (72 | ) | $ | — | ||||||||||
Reverse repurchase agreements | 2,099 | — | 2,099 | — | (1,999 | ) | 100 | |||||||||||||||||
Total assets | 2,391 | — | 2,391 | (220 | ) | (2,071 | ) | 100 | ||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Derivative liabilities subject to master netting arrangements | 890 | — | 890 | (220 | ) | (576 | ) | 94 | ||||||||||||||||
Total liabilities | $ | 890 | $ | — | $ | 890 | $ | (220 | ) | $ | (576 | ) | $ | 94 |
Dec 28, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 | $ | 974 | $ | — | $ | 974 | $ | (144) | $ | (808) | $ | 22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reverse repurchase agreements | 1,850 | — | 1,850 | — | (1,850) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 2,824 | $ | — | $ | 2,824 | $ | (144) | $ | (2,658) | $ | 22 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative liabilities subject to master netting arrangements | $ | 262 | $ | — | $ | 262 | $ | (144) | $ | (72) | $ | 46 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total liabilities | $ | 262 | $ | — | $ | 262 | $ | (144) | $ | (72) | $ | 46 |
FINANCIAL STATEMENTS | Notes to Financial Statements |
Three Months Ended | Six Months Ended | |||||||||||||||
(In Millions) | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | ||||||||||||
Interest rate contracts | $ | 554 | $ | (113 | ) | $ | 1,039 | $ | (371 | ) | ||||||
Hedged items | (554 | ) | 113 | (1,039 | ) | 371 | ||||||||||
Total | $ | — | $ | — | $ | — | $ | — |
Gains (Losses) Recognized in Consolidated Condensed Statements of Income on Derivatives | ||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||
(In Millions) | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||||||||||||
Interest rate contracts | $ | 78 | $ | 554 | $ | 1,032 | $ | 1,039 | ||||||||||||||||||||||||||||||||||||
Hedged items | (78) | (554) | (1,032) | (1,039) | ||||||||||||||||||||||||||||||||||||||||
Total | $ | — | $ | — | $ | — | $ | — |
Line Item in the Consolidated Condensed Balance Sheet in Which the Hedged Item is Included | Carrying Amount of the Hedged Item Asset/(Liabilities) | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities) | ||||||||||||||
Years Ended (In Millions) | Jun 29, 2019 | Dec 29, 2018 | Jun 29, 2019 | Dec 29, 2018 | ||||||||||||
Long-term debt | $ | (20,661 | ) | $ | (19,622 | ) | $ | (649 | ) | $ | 390 |
Line Item in the Consolidated Condensed Balance Sheet in Which the Hedged Item is Included | Carrying Amount of the Hedged Item Asset/(Liabilities) | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount Assets/(Liabilities) | |||||||||||||||||||||||||||||||||||||||
(In Millions) | Jun 27, 2020 | Dec 28, 2019 | Jun 27, 2020 | Dec 28, 2019 | |||||||||||||||||||||||||||||||||||||
Long-term debt | $ | (13,710) | $ | (12,678) | $ | (1,713) | $ | (681) |
Three Months Ended | Six Months Ended | |||||||||||||||||
(In Millions) | Location of Gains (Losses) Recognized in Income on Derivatives | Jun 29, 2019 | Jun 30, 2018 | Jun 29, 2019 | Jun 30, 2018 | |||||||||||||
Foreign currency contracts | Interest and other, net | $ | (20 | ) | $ | 438 | $ | 37 | $ | 268 | ||||||||
Interest rate contracts | Interest and other, net | (25 | ) | 6 | (39 | ) | 20 | |||||||||||
Other | Various | 35 | 27 | 181 | (4 | ) | ||||||||||||
Total | $ | (10 | ) | $ | 471 | $ | 179 | $ | 284 |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||
(In Millions) | Location of Gains (Losses) Recognized in Income on Derivatives | Jun 27, 2020 | Jun 29, 2019 | Jun 27, 2020 | Jun 29, 2019 | |||||||||||||||||||||||||||||||||||||||
Foreign currency contracts | Interest and other, net | $ | (216) | $ | (20) | $ | (62) | $ | 37 | |||||||||||||||||||||||||||||||||||
Interest rate contracts | Interest and other, net | (14) | (25) | (91) | (39) | |||||||||||||||||||||||||||||||||||||||
Other | Various | 225 | 35 | (43) | 181 | |||||||||||||||||||||||||||||||||||||||
Total | $ | (5) | $ | (10) | $ | (196) | $ | 179 |
NOTE | CONTINGENCIES |
FINANCIAL STATEMENTS | Notes to Financial Statements |
FINANCIAL STATEMENTS | Notes to Financial Statements | 24 |
FINANCIAL STATEMENTS | Notes to Financial Statements | 25 |
FINANCIAL STATEMENTS | Notes to Financial Statements | 26 |
KEY TERMS |
TERM | DEFINITION | |||||||
2009 Debentures | 3.25% junior subordinated convertible debentures due 2039 | |||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | |||||||||||||||||||||||||
(Dollars in Millions, Except Per Share Amounts) | Amount | % of Net Revenue | Amount | % of Net Revenue | Amount | % of Net Revenue | Amount | % of Net Revenue | ||||||||||||||||||||
Net revenue | $ | 16,505 | 100.0 | % | $ | 16,962 | 100.0 | % | $ | 32,566 | 100.0 | % | $ | 33,028 | 100.0 | % | ||||||||||||
Cost of sales | 6,627 | 40.2 | % | 6,543 | 38.6 | % | 13,599 | 41.8 | % | 12,878 | 39.0 | % | ||||||||||||||||
Gross margin | 9,878 | 59.8 | % | 10,419 | 61.4 | % | 18,967 | 58.2 | % | 20,150 | 61.0 | % | ||||||||||||||||
Research and development | 3,438 | 20.8 | % | 3,371 | 19.9 | % | 6,770 | 20.8 | % | 6,682 | 20.2 | % | ||||||||||||||||
Marketing, general and administrative | 1,589 | 9.6 | % | 1,725 | 10.2 | % | 3,122 | 9.6 | % | 3,625 | 11.0 | % | ||||||||||||||||
Restructuring and other charges | 184 | 1.1 | % | — | — | % | 184 | 0.6 | % | — | — | % | ||||||||||||||||
Amortization of acquisition-related intangibles | 50 | 0.3 | % | 50 | 0.3 | % | 100 | 0.3 | % | 100 | 0.3 | % | ||||||||||||||||
Operating income | 4,617 | 28.0 | % | 5,273 | 31.1 | % | 8,791 | 27.0 | % | 9,743 | 29.5 | % | ||||||||||||||||
Gains (losses) on equity investments, net | 170 | 1.0 | % | (203 | ) | (1.2 | )% | 604 | 1.9 | % | 440 | 1.3 | % | |||||||||||||||
Interest and other, net | (63 | ) | (0.4 | )% | 459 | 2.7 | % | (124 | ) | (0.4 | )% | 357 | 1.1 | % | ||||||||||||||
Income before taxes | 4,724 | 28.6 | % | 5,529 | 32.6 | % | 9,271 | 28.5 | % | 10,540 | 31.9 | % | ||||||||||||||||
Provision for taxes | 545 | 3.3 | % | 523 | 3.1 | % | 1,118 | 3.4 | % | 1,080 | 3.3 | % | ||||||||||||||||
Net income | $ | 4,179 | 25.3 | % | $ | 5,006 | 29.5 | % | $ | 8,153 | 25.0 | % | $ | 9,460 | 28.6 | % | ||||||||||||
Earnings per share – diluted | $ | 0.92 | $ | 1.05 | $ | 1.79 | $ | 1.98 |
2019 Form 10-K | Our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 | |||||||
5G | The next-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, Non-Volatile Memory Solutions Group (NSG), and Programmable Solutions Group (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 | |||||||
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 | |||||||
Data-centric businesses | Includes our Data Center Group (DCG), Internet of Things Group (IOTG), Mobileye, Non-Volatile Memory Solutions Group (NSG), Programmable Solutions Group (PSG), and all other businesses | |||||||
EC | European Commission | |||||||
Edge | Allocated resources that move, store, and process data closer to the source or point of service delivery | |||||||
Form 10-Q | Quarterly Report on Form 10-Q | |||||||
FPGA | Field-programmable gate array | |||||||
IMFT | IM Flash Technologies, LLC | |||||||
Internet of Things | Refers to the Internet of Things market in which we sell our IOTG and Mobileye products | |||||||
IOT | Internet of Things portfolio | |||||||
IOTG | Internet of Things Group operating segment | |||||||
IP | Intellectual property | |||||||
MaaS | Mobility-as-a-Service | |||||||
McAfee | Business, post divestiture of Intel Security Group in Q2 2017, which we retained an interest in as part of our investment strategy | |||||||
MD&A | Management's Discussion & Analysis | |||||||
MG&A | Marketing, general and administrative | |||||||
Moovit | Moovit App Global Ltd, a MaaS solutions company acquired in Q2 2020 | |||||||
NAND | NAND flash memory | |||||||
nm | Nanometer | |||||||
OEM | Original equipment manufacturer | |||||||
PC-centric business | Our Client Computing Group (CCG) business, including both platform and adjacent products | |||||||
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 | |||||||
QLC | Quad-level cell | |||||||
R&D | Research and development | |||||||
RSU | Restricted stock unit | |||||||
SEC | U.S. Securities and Exchange Commission | |||||||
SoC | System-on-Chip | |||||||
SSD | Solid-state drive | |||||||
TLC | Triple-level cell | |||||||
U.S. GAAP | U.S. Generally Accepted Accounting Principles | |||||||
FINANCIAL STATEMENTS | ||||||||
27 |
(In Millions) | ||||
$ | 9,878 | Q2 2019 Gross Margin | ||
(370 | ) | Lower gross margin from platform revenue | ||
(310 | ) | Lower gross margin from adjacent businesses primarily due to lower margins on NAND, modem, and PSG | ||
145 | Lower period charges primarily due to lower factory start-up costs associated with our 10nm products | |||
(6 | ) | Other | ||
$ | 10,419 | Q2 2018 Gross Margin | ||
$ | 18,967 | YTD 2019 Gross Margin | ||
(385 | ) | Higher period charges primarily due to reserved non-qualified 10nm platform product in Q1 2019, offset by lower factory start-up costs associated with our 10nm products | ||
(355 | ) | Lower gross margin from adjacent businesses due to lower NAND margins | ||
(230 | ) | Lower gross margin from platform revenue | ||
(195 | ) | Higher platform unit cost primarily from increased mix of performance products | ||
(18 | ) | Other | ||
$ | 20,150 | YTD 2018 Gross Margin |
■ Platform | ■ Adjacent |
REVENUE SUMMARY |
Q2 2019 vs. Q2 2018 | YTD 2019 vs. YTD 2018 | |||||||||||||
(Dollars in Millions) | % | $ Impact | % | $ Impact | ||||||||||
Desktop platform volume | down | (11)% | $ | (308 | ) | down | (9)% | $ | (525 | ) | ||||
Desktop platform ASP | up | 5% | 121 | up | 6% | 317 | ||||||||
Notebook platform volume | down | (2)% | (109 | ) | down | (4)% | (432 | ) | ||||||
Notebook platform ASP | up | 3% | 160 | up | 8% | 720 | ||||||||
Adjacent products and other | 249 | 399 | ||||||||||||
Total change in revenue | $ | 113 | $ | 479 |
Q2 2020 vs. Q2 2019 | YTD 2020 vs. YTD 2019 | ||||||||||||||||||||||||||||||||||||||||||||||
(In Millions) | % | $ Impact | % | $ Impact | |||||||||||||||||||||||||||||||||||||||||||
Platform volume | up | 29% | $ | 1,326 | up | 28% | $ | 2,555 | |||||||||||||||||||||||||||||||||||||||
Platform ASP | up | 5% | 302 | up | 9% | 1,018 | |||||||||||||||||||||||||||||||||||||||||
Adjacent products | up | 118% | 506 | up | 77% | 652 | |||||||||||||||||||||||||||||||||||||||||
Total change in revenue | $ | 2,134 | $ | 4,225 | |||||||||||||||||||||||||||||||||||||||||||
MD&A | 28 |
OPERATING INCOME SUMMARY |
(In Millions) | ||||||||
$ | 3,099 | Q2 2020 DCG Operating Income | ||||||
1,450 | Higher gross margin from platform revenue | |||||||
100 | Lower period charges, primarily associated with the initial ramp of 10nm | |||||||
(110) | Lower DCG adjacency gross margin | |||||||
(105) | Higher platform unit cost | |||||||
(In Millions) | ||||
$ | 3,737 | Q2 2019 CCG Operating Income | ||
400 | Lower period charges primarily due to lower factory start-up costs associated with our 10nm process technology | |||
120 | Lower operating expenses partially driven by lower investment in modem | |||
(17 | ) | Other | ||
$ | 3,234 | Q2 2018 CCG Operating Income | ||
$ | 6,809 | YTD 2019 CCG Operating Income | ||
300 | Higher gross margin from platform revenue | |||
285 | Lower operating expenses partially driven by lower investment in modem | |||
130 | Lower period charges from factory start-up costs, offset by reserved non-qualified platform product associated with our 10nm process technology taken in Q1 2019 | |||
110 | Higher gross margin from adjacent businesses, primarily due to lack of initial production costs of modem products | |||
(41 | ) | Other | ||
$ | 6,025 | YTD 2018 CCG Operating Income |
Q2 2019 vs. Q2 2018 | YTD 2019 vs. YTD 2018 | ||||||||||||
(Dollars in Millions) | % | $ Impact | % | $ Impact | |||||||||
Platform volume | down | (12)% | $ | (627 | ) | down | (10)% | $ | (989 | ) | |||
Platform ASP | up | 2% | 80 | up | 1% | 100 | |||||||
Adjacent products | down | (4)% | (19 | ) | down | (1)% | (9 | ) | |||||
Total change in revenue | $ | (566 | ) | $ | (898 | ) |
(36) | Other | |||||||
1,800 | Q2 2019 DCG Operating Income |
(In Millions) | ||||
$ | 1,800 | Q2 2019 DCG Operating Income | ||
(465 | ) | Lower gross margin from platform revenue | ||
(240 | ) | Higher period charges, primarily associated with the initial ramp of 10nm | ||
(205 | ) | Higher DCG operating expenses | ||
(27 | ) | Other | ||
$ | 2,737 | Q2 2018 DCG Operating Income | ||
$ | 3,641 | YTD 2019 DCG Operating Income | ||
(760 | ) | Lower gross margin from platform revenue | ||
(470 | ) | Higher period charges, primarily associated with the initial ramp of 10nm | ||
(375 | ) | Higher DCG operating expenses | ||
(93 | ) | Other | ||
$ | 5,339 | YTD 2018 DCG Operating Income |
$ | 6,591 | YTD 2020 DCG Operating Income | ||||||
3,235 | Higher gross margin from platform revenue | |||||||
135 | Lower period charges, primarily associated with the initial ramp of 10nm | |||||||
(165) | Lower DCG adjacency gross margin | |||||||
(120) | Higher platform unit cost | |||||||
(75) | Higher operating expenses | |||||||
(60) | Other | |||||||
$ | 3,641 | YTD 2019 DCG Operating Income |
MD&A |
INTERNET OF THINGS REVENUE $B | INTERNET OF THINGS OPERATING INCOME $B |
■ IOTG | ■ Mobileye | ■ IOTG | ■ Mobileye |
REVENUE AND OPERATING INCOME SUMMARY |
Q2 2020 vs. Q2 2019 |
YTD 2020 vs. YTD 2019 |
MD&A |
NSG REVENUE $B | NSG OPERATING INCOME $B |
REVENUE AND OPERATING INCOME SUMMARY |
Q2 |
YTD 2020 vs. YTD 2019 |
MD&A |
PSG REVENUE $B | PSG OPERATING INCOME $B |
REVENUE AND OPERATING INCOME SUMMARY |
Q2 |
YTD 2020 vs. YTD 2019 |
MD&A | 32 |
CCG REVENUE $B | CCG OPERATING INCOME $B |
■Platform | ■Adjacent |
REVENUE SUMMARY |
Q2 2020 vs. Q2 2019 | YTD 2020 vs. YTD 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
(In Millions) | % | $ Impact | % | $ Impact | ||||||||||||||||||||||||||||||||||||||||||||||
Desktop platform volume | down | (14)% | $ | (460) | down | (9)% | $ | (607) | ||||||||||||||||||||||||||||||||||||||||||
Desktop platform ASP | up | 3% | 61 | up | 3% | 162 | ||||||||||||||||||||||||||||||||||||||||||||
Notebook platform volume | up | 9% | 434 | up | 15% | 1,501 | ||||||||||||||||||||||||||||||||||||||||||||
Notebook platform ASP | up | 5% | 274 | up | 1% | 138 | ||||||||||||||||||||||||||||||||||||||||||||
Adjacent products and other | 346 | 650 | ||||||||||||||||||||||||||||||||||||||||||||||||
Total change in revenue | $ | 655 | $ | 1,844 |
MD&A | 33 |
OPERATING INCOME SUMMARY |
(In Millions) | ||||||||
$ | 2,842 | Q2 2020 CCG Operating Income | ||||||
(1,115) | Higher platform unit cost due to ramp of 10nm products | |||||||
(550) | Higher period charges primarily due to reserved non-qualified platform product related to our 10nm process technology | |||||||
325 | Higher gross margin from platform revenue | |||||||
285 | Lower operating expenses driven by lower investment in modem | |||||||
205 | Higher CCG adjacency product margin | |||||||
(45) | Other | |||||||
$ | 3,737 | Q2 2019 CCG Operating Income | ||||||
$ | 7,067 | YTD 2020 CCG Operating Income | ||||||
1,040 | Higher gross margin from platform revenue | |||||||
590 | Lower operating expenses driven by lower investment in modem | |||||||
265 | Higher CCG adjacency product margin | |||||||
(1,710) | Higher platform unit cost due to ramp of 10nm products | |||||||
73 | Other | |||||||
$ | 6,809 | YTD 2019 CCG Operating Income |
MD&A |
CONSOLIDATED RESULTS OF OPERATIONS |
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | Amount | % of Net Revenue | Amount | % of Net Revenue | Amount | % of Net Revenue | Amount | % of Net Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 19,728 | 100.0 | % | $ | 16,505 | 100.0 | % | $ | 39,556 | 100.0 | % | $ | 32,566 | 100.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of sales | 9,221 | 46.7 | % | 6,627 | 40.2 | % | 17,033 | 43.1 | % | 13,599 | 41.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross margin | 10,507 | 53.3 | % | 9,878 | 59.8 | % | 22,523 | 56.9 | % | 18,967 | 58.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Research and development | 3,354 | 17.0 | % | 3,438 | 20.8 | % | 6,629 | 16.8 | % | 6,770 | 20.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketing, general and administrative | 1,447 | 7.3 | % | 1,639 | 9.9 | % | 2,988 | 7.6 | % | 3,222 | 9.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and other charges | 9 | — | % | 184 | 1.1 | % | 171 | 0.4 | % | 184 | 0.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income | 5,697 | 28.9 | % | 4,617 | 28.0 | % | 12,735 | 32.2 | % | 8,791 | 27.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Gains (losses) on equity investments, net | 267 | 1.4 | % | 170 | 1.0 | % | 156 | 0.4 | % | 604 | 1.9 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest and other, net | (29) | (0.1) | % | (63) | (0.4) | % | (342) | (0.9) | % | (124) | (0.4) | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income before taxes | 5,935 | 30.1 | % | 4,724 | 28.6 | % | 12,549 | 31.7 | % | 9,271 | 28.5 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Provision for taxes | 830 | 4.2 | % | 545 | 3.3 | % | 1,783 | 4.5 | % | 1,118 | 3.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | $ | 5,105 | 25.9 | % | $ | 4,179 | 25.3 | % | $ | 10,766 | 27.2 | % | $ | 8,153 | 25.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per share—diluted | $ | 1.19 | $ | 0.92 | $ | 2.50 | $ | 1.79 |
MD&A | 35 |
SEGMENT REVENUE WALK $B | |||||||||||||||||
MD&A | 36 |
GROSS MARGIN $B | ||
(In Millions) | ||||||||
$ | 10,507 | Q2 2020 Gross Margin | ||||||
1,550 | Higher gross margin from platform revenue | |||||||
815 | Higher gross margin from adjacent businesses primarily due to higher margins on NAND and modem | |||||||
(1,215) | Higher platform unit cost primarily from increased mix of 10nm and performance products | |||||||
(440) | Higher period charges primarily due to reserved non-qualified platform product related to our 10nm process technology, partially offset by lower factory start-up costs associated with our 10nm products | |||||||
(81) | Other | |||||||
$ | 9,878 | Q2 2019 Gross Margin | ||||||
$ | 22,523 | YTD 2020 Gross Margin | ||||||
4,025 | Higher gross margin from platform revenue | |||||||
1,150 | Higher gross margin from adjacent businesses primarily due to higher margins on NAND and modem partially offset by lower margins on DCG adjacencies | |||||||
320 | Lower period charges primarily due to lower factory start-up costs associated with our 10nm products | |||||||
(1,800) | Higher platform unit cost primarily from increased mix of 10nm and performance products | |||||||
(139) | Other | |||||||
$ | 18,967 | YTD 2019 Gross Margin |
MD&A | 37 |
RESEARCH AND DEVELOPMENT $B | MARKETING, GENERAL AND ADMINISTRATIVE $B | ||||||||||
RESEARCH AND DEVELOPMENT |
R&D decreased $84 million, or 2.4% driven by the following: | ||||||||
- | Ramp down of 5G smartphone modem business | |||||||
+ | Investments in our PC and data-centric businesses | |||||||
+ | Investments in our process technology | |||||||
+ | Profit dependent compensation | |||||||
R&D decreased by $141 million, or 2.1%, driven by the following: | |||||||||||||||||
- | Ramp down of 5G smartphone modem business | ||||||||||||||||
+ | Investments in our PC and data-centric businesses | ||||||||||||||||
+ | Investments in our process technology | ||||||||||||||||
+ | Profit dependent compensation | ||||||||||||||||
MARKETING, GENERAL AND ADMINISTRATIVE |
MG&A decreased $192M, or 11.7%, driven by the following: | ||||||||
- | Corporate spending efficiencies | |||||||
+ | Profit dependent compensation | |||||||
MG&A decreased by $234 million, or 7.3%, driven by the following: | |||||||||||||||||
- | Corporate spending efficiencies | ||||||||||||||||
+ | Profit dependent compensation | ||||||||||||||||
MD&A | 38 |
(In Millions) | Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | (In Millions) | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | |||||||||||||||||||||||||||||||||
Ongoing mark-to-market adjustments on marketable equity securities | Ongoing mark-to-market adjustments on marketable equity securities | $ | 165 | $ | (179) | $ | 62 | $ | 74 | |||||||||||||||||||||||||||||||||
Observable price adjustments on non-marketable equity securities | Observable price adjustments on non-marketable equity securities | 58 | 8 | 137 | 16 | |||||||||||||||||||||||||||||||||||||
Impairment charges | Impairment charges | (51) | (39) | (193) | (62) | |||||||||||||||||||||||||||||||||||||
Sale of equity investments and other | Sale of equity investments and other | 95 | 380 | 150 | 576 | |||||||||||||||||||||||||||||||||||||
Gains (losses) on equity investments, net | $ | 170 | $ | (203 | ) | $ | 604 | $ | 440 | Gains (losses) on equity investments, net | $ | 267 | $ | 170 | $ | 156 | $ | 604 | ||||||||||||||||||||||||
Interest and other, net | $ | (63 | ) | $ | 459 | $ | (124 | ) | $ | 357 | Interest and other, net | $ | (29) | $ | (63) | $ | (342) | $ | (124) |
(In Millions) | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | ||||||||||||||||||||||
Income before taxes | $ | 5,935 | $ | 4,724 | $ | 12,549 | $ | 9,271 | ||||||||||||||||||
Provision for taxes | $ | 830 | $ | 545 | $ | 1,783 | $ | 1,118 | ||||||||||||||||||
Effective tax rate | 14.0 | % | 11.5 | % | 14.2 | % | 12.1 | % |
(Dollars in Millions) | Q2 2019 | Q2 2018 | YTD 2019 | YTD 2018 | ||||||||||||
Income before taxes | $ | 4,724 | $ | 5,529 | $ | 9,271 | $ | 10,540 | ||||||||
Provision for taxes | $ | 545 | $ | 523 | $ | 1,118 | $ | 1,080 | ||||||||
Effective tax rate | 11.5 | % | 9.5 | % | 12.1 | % | 10.2 | % |
MD&A |
(Dollars in Millions) | Jun 29, 2019 | Dec 29, 2018 | ||||||||||||||||||||
(In Millions) | (In Millions) | Jun 27, 2020 | Dec 28, 2019 | |||||||||||||||||||
Cash and cash equivalents, short-term investments, and trading assets | $ | 11,944 | $ | 11,650 | Cash and cash equivalents, short-term investments, and trading assets | $ | 25,815 | $ | 13,123 | |||||||||||||
Other long-term investments | $ | 3,577 | $ | 3,388 | Other long-term investments | $ | 2,884 | $ | 3,276 | |||||||||||||
Loans receivable and other | $ | 1,691 | $ | 1,550 | Loans receivable and other | $ | 1,295 | $ | 1,239 | |||||||||||||
Reverse repurchase agreements with original maturities greater than three months | $ | 350 | $ | 250 | Reverse repurchase agreements with original maturities greater than three months | $ | 100 | $ | 350 | |||||||||||||
Total debt | $ | 28,815 | $ | 26,359 | Total debt | $ | 38,347 | $ | 29,001 | |||||||||||||
Temporary equity | $ | 247 | $ | 419 | Temporary equity | $ | — | $ | 155 | |||||||||||||
Debt as percentage of permanent stockholders’ equity | 38.4 | % | 35.4 | % |
CASH FROM OPERATIONS $B | CAPITAL EXPENDITURES $B | CASH TO STOCKHOLDERS $B |
■ Dividends ■ Buybacks |
Six Months Ended | ||||||||||||||||||||
(In Millions) | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||
Net cash provided by operating activities | $ | 17,315 | $ | 12,546 | ||||||||||||||||
Net cash used for investing activities | (14,346) | (6,010) | ||||||||||||||||||
Net cash provided by (used for) financing activities | 1,573 | (6,688) | ||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | 4,542 | $ | (152) |
Six Months Ended | ||||||||
(In Millions) | Jun 29, 2019 | Jun 30, 2018 | ||||||
Net cash provided by operating activities | $ | 12,546 | $ | 13,697 | ||||
Net cash used for investing activities | (6,010 | ) | (5,984 | ) | ||||
Net cash provided by (used for) financing activities | (6,688 | ) | (8,532 | ) | ||||
Net increase (decrease) in cash and cash equivalents | $ | (152 | ) | $ | (819 | ) |
MD&A | 40 |
MD&A |
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 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 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 current operating performance and are significantly impacted by the timing of restructuring activity. These adjustments facilitate a useful evaluation of our current 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. |
MD&A | 42 |
Three Months Ended | ||||||||||||||||||||||||||||||||
(In Millions, Except Per Share Amounts) | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||
Operating income | $ | 5,697 | $ | 4,617 | ||||||||||||||||||||||||||||
Acquisition-related adjustments | 352 | 337 | ||||||||||||||||||||||||||||||
Restructuring and other charges | 9 | 184 | ||||||||||||||||||||||||||||||
Non-GAAP operating income | $ | 6,058 | $ | 5,138 | ||||||||||||||||||||||||||||
Operating margin | 28.9 | % | 28.0 | % | ||||||||||||||||||||||||||||
Acquisition-related adjustments | 1.8 | % | 2.0 | % | ||||||||||||||||||||||||||||
Restructuring and other charges | — | % | 1.1 | % | ||||||||||||||||||||||||||||
Non-GAAP operating margin | 30.7 | % | 31.1 | % | ||||||||||||||||||||||||||||
Earnings per share—diluted | $ | 1.19 | $ | 0.92 | ||||||||||||||||||||||||||||
Acquisition-related adjustments | 0.08 | 0.08 | ||||||||||||||||||||||||||||||
Restructuring and other charges | — | 0.04 | ||||||||||||||||||||||||||||||
Ongoing mark-to-market on marketable equity securities | (0.04) | 0.04 | ||||||||||||||||||||||||||||||
Income tax effect | — | (0.02) | ||||||||||||||||||||||||||||||
Non-GAAP earnings per share—diluted | $ | 1.23 | $ | 1.06 | ||||||||||||||||||||||||||||
Six Months Ended | ||||||||||||||||||||||||||||||||
(In Millions) | Jun 27, 2020 | Jun 29, 2019 | ||||||||||||||||||||||||||||||
Net cash provided by operating activities | $ | 17,315 | $ | 12,546 | ||||||||||||||||||||||||||||
Additions to property, plant and equipment | (6,676) | (6,875) | ||||||||||||||||||||||||||||||
Free cash flow | $ | 10,639 | $ | 5,671 | ||||||||||||||||||||||||||||
Net cash used for investing activities | $ | (14,346) | $ | (6,010) | ||||||||||||||||||||||||||||
Net cash provided by (used for) financing activities | $ | 1,573 | $ | (6,688) |
MD&A | 43 |
OTHER KEY INFORMATION |
Three Months Ended | ||||||||
(In Millions, Except Per Share Amounts) | Jun 29, 2019 | Jun 30, 2018 | ||||||
Operating income | $ | 4,617 | $ | 5,273 | ||||
Amortization of acquisition-related intangible assets | 337 | 325 | ||||||
Restructuring and other charges | 184 | — | ||||||
Non-GAAP operating income | $ | 5,138 | $ | 5,598 |
Earnings per share - diluted | $ | 0.92 | $ | 1.05 | ||||
Amortization of acquisition-related intangible assets | 0.08 | 0.07 | ||||||
Restructuring and other charges | 0.04 | — | ||||||
(Gains) losses from divestiture | — | (0.10 | ) | |||||
Ongoing mark-to-market on marketable equity securities | 0.04 | 0.05 | ||||||
Tax Reform | — | (0.04 | ) | |||||
Income tax effect | (0.02 | ) | 0.01 | |||||
Non-GAAP earnings per share - diluted | $ | 1.06 | $ | 1.04 |
Period | Total Number of Shares Purchased (In Millions) | Average Price Paid Per Share | Dollar Value of Shares That May Yet Be Purchased Under the Program (In Millions) | ||||||||
March 31, 2019 - April 27, 2019 | 4.7 | $ | 55.82 | $ | 14,621 | ||||||
April 28, 2019 - May 25, 2019 | 28.3 | $ | 46.27 | $ | 13,311 | ||||||
May 26, 2019 - June 29, 2019 | 34.2 | $ | 45.95 | $ | 11,739 | ||||||
Total | 67.2 |
OTHER KEY INFORMATION |
Incorporated by Reference | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith | ||||||||||||||||||||||||||||||||||||||||||||||||||
3.1 | 8-K | 000-06217 | 3.1 | 5/22/2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
3.2 | 8-K | 000-06217 | 3.2 | 1/17/2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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 |
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit | Filing Date | Filed or Furnished Herewith | ||||||
3.1 | 8-K | 000-06217 | 3.1 | 5/22/2006 | ||||||||
3.2 | 8-K | 000-06217 | 3.2 | 1/17/2019 | ||||||||
10.1† | X | |||||||||||
10.2† | 8-K | 000-06217 | 10.1 | 4/3/2019 | ||||||||
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 - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | X |
OTHER KEY INFORMATION |
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 | Page 41 | ||||||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | Page | |||||||||
Item 4. | Controls and Procedures | Page | |||||||||
Part II - Other Information | |||||||||||
Item 1. | Legal Proceedings | ||||||||||
Item 1A. | Risk Factors | ||||||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | Page | |||||||||
Item 3. | Defaults Upon Senior Securities | Not applicable | |||||||||
Item 4. | Mine Safety Disclosures | Not applicable | |||||||||
Item 5. | Other Information | Not applicable | |||||||||
Item 6. | Exhibits | Page | |||||||||
Signatures | Page 47 |
OTHER KEY INFORMATION |
INTEL CORPORATION (Registrant) | |||||||||||||||||||||||
Date: | July 23, 2020 | (Registrant) | |||||||||||||||||||||
By: | |||||||||||||||||||||||
/s/ GEORGE S. DAVIS | |||||||||||||||||||||||
George S. Davis | |||||||||||||||||||||||
Executive Vice President, Chief Financial Officer and Principal Financial Officer | |||||||||||||||||||||||
Date: | July | By: | /s/ KEVIN T. MCBRIDE | ||||||||||||||||||||
Kevin T. McBride | |||||||||||||||||||||||
Vice President of Finance, Corporate Controller and Principal Accounting Officer |