Intel Reports Fourth-Quarter And Annual Results
Fourth-Quarter Earnings Per Share $0.16
SANTA CLARA, Calif., Jan. 14, 2003 - Intel Corporation today announced fourth-quarter revenue of $7.2 billion, up 10 percent sequentially and up 3 percent year-over-year.
Fourth-quarter net income was $1.0 billion, up 53 percent sequentially and up 108 percent year-over-year. Earnings per share were $0.16, up 60 percent sequentially and up 129 percent from $0.07 in the fourth quarter of 2001.
Fourth-quarter net income excluding acquisition-related costs1 of approximately $106 million was $1.1 billion, up 37 percent sequentially and up 6 percent year-over-year. Earnings excluding acquisition-related costs were $0.16 per share, up 45 percent sequentially and up 7 percent from $0.15 in the fourth quarter of 2001.
"2002 ended with a strong quarter," said Craig R. Barrett, Intel chief executive officer. "By successfully executing our strategies, it appears we have increased our market segment share in microprocessors, chipsets, graphics, motherboards, flash, PDA microprocessors and LAN-on-motherboard gigabit Ethernet connections.
"In 2003, we will continue to deploy advanced technology, further our silicon leadership, deliver industry-leading products, and improve our competitiveness and cost structure so we can continue to outperform now and when the economic picture improves."
The fourth-quarter 2002 results included a tax benefit of approximately $75 million related to small divestitures that closed during the quarter. The fourth-quarter 2001 results reflected charges for the amortization of goodwill, which is no longer amortized under generally accepted accounting principles (GAAP) with the adoption of FASB rule 142 at the beginning of 2002.
Intel will discontinue reporting earnings excluding acquisition-related costs beginning with its first-quarter 2003 earnings announcement. The goodwill provisions of FASB rule 142 have resulted in a substantial reduction in the difference between the company's earnings on a GAAP basis and its earnings excluding acquisition-related costs. Intel reported earnings excluding acquisition-related costs during 2002 to provide supplemental information on performance and a consistent basis for financial comparisons.
Full-Year Results
Revenue for 2002 was $26.8 billion, up 1 percent from $26.5 billion in 2001. Net income was $3.1 billion, up 141 percent from $1.3 billion in 2001. Earnings per share were $0.46, up 142 percent from $0.19 in 2001. The 2001 results reflect charges for the amortization of goodwill.
Net income for 2002 excluding acquisition-related costs was $3.5 billion, down 4 percent from $3.6 billion in 2001. Earnings excluding acquisition-related costs were $0.51 per share, down 2 percent from $0.52 in 2001.
BUSINESS OUTLOOK
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after Jan. 13, 2003.
Continuing uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters.
** Revenue in the first quarter is expected to be between $6.5 billion and $7.0 billion.
** Gross margin percentage in the first quarter is expected to be 50 percent, plus or minus a couple of points, as compared to 51.6 percent in the fourth quarter of 2002. Intel's gross margin percentage varies primarily with revenue levels, product mix and pricing, changes in unit costs, capacity utilization, and timing of factory ramps and associated costs.
** Gross margin percentage for 2003 is expected to be approximately 51 percent, plus or minus a few points, as compared to 50 percent in 2002.
** Expenses (R&D, excluding in-process R&D, plus MG&A) in the first quarter are expected to be between $2.0 billion and $2.1 billion, as compared to $2.1 billion in the fourth quarter of 2002. Expenses, particularly certain marketing- and compensation-related expenses, vary depending on the level of revenue and profits.
** R&D spending for 2003, excluding in-process R&D, is expected to be approximately $4.0 billion, flat with 2002.
** Capital spending for 2003 is expected to be between $3.5 billion and $3.9 billion, as compared to $4.7 billion in 2002. Intel's semiconductor equipment spending is being primarily targeted at 300-mm wafer production, which is providing the company with greater capital efficiency and lower manufacturing costs.
** Gains or losses from equity investments and interest and other in the first quarter are expected to be a net loss of $125 million due to the expectation of a net loss on equity investments of approximately $170 million, primarily as a result of impairment charges on private equity investments. Expectations of impairment charges are based on experience, and it is not possible to know which specific investments are likely to be impaired or the extent or timing of individual impairments. Gains or losses from equity securities and interest and other assume no unanticipated events and vary depending on equity market levels and volatility, gains or losses realized on the sale or exchange of securities, impairment charges related to non-marketable and other investments, interest rates, cash balances, and changes in the fair value of derivative instruments.
** The tax rate for 2003 is expected to be approximately 30.5 percent. This tax rate is higher than the 2002 rate of 27.4 percent primarily due to a higher percentage of profits being expected in higher-tax jurisdictions.
** Depreciation is expected to be approximately $1.2 billion in the first quarter and approximately $4.9 billion for the year.
** Amortization of acquisition-related intangibles and costs is expected to be approximately $85 million in the first quarter and approximately $300 million for the full year. |
