Intel Reports Full Year Revenue of $53.3 Billion, Net Income of $11.0 Billion

Intel Reports Full Year Revenue of $53.3 Billion, Net Income of $11.0 Billion

Generates $18.9 Billion in Cash from Operations

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intel Corporation today reported full-year revenue of $53.3 billion, operating income of $14.6 billion, net income of $11.0 billion and EPS of $2.13. The company generated approximately $18.9 billion in cash from operations, paid dividends of $4.4 billion, and used $4.8 billion to repurchase 191 million shares of stock.

For the fourth quarter, Intel posted revenue of $13.5 billion, operating income of $3.2 billion, net income of $2.5 billion and EPS of 48 cents. The company generated approximately $6 billion in cash from operations, paid dividends of $1.1 billion and used $1.0 billion to repurchase 47 million shares of stock.

"The fourth quarter played out largely as expected as we continued to execute through a challenging environment," said Paul Otellini, Intel president and CEO. "We made tremendous progress across the business in 2012 as we entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation and growth in the data center. As we enter 2013, our strong product pipeline has us well positioned to bring a new wave of Intel innovations across the spectrum of computing."

Full-Year 2012 Key Financial Information and Business Unit Trends

• PC Client Group had revenue of $34.3 billion, down 3 percent from 2011.

• Data Center Group had revenue of $10.7 billion, up 6 percent from 2011.

• Other Intel architecture group had revenue of $4.4 billion, down 13 percent from 2011.

Q4 Key Financial Information and Business Unit Trends

• PC Client Group revenue of $8.5 billion, down 1.5 percent sequentially and down 6 percent year-over-year.

• Data Center Group revenue of $2.8 billion, up 7 percent sequentially and up 4 percent year-over-year.

• Other Intel® architecture group revenue of $1.0 billion, down 14 percent sequentially and down 7 percent year-over-year.

• Gross margin of 58 percent, 1.0 percentage point above the midpoint of the company's expectation of 57 percent.

• R&D plus MG&A spending $4.6 billion, in line with the company's expectation of approximately $4.5 billion.

• Tax rate of 23 percent, below the company's expectation of approximately 27 percent.

Business Outlook

Intel's Business Outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures or other investments that may be completed after Jan. 17.

Full-Year 2013

• Revenue: low single-digit percentage increase.

• Gross margin percentage: 60 percent, plus or minus a few percentage points.

• R&D plus MG&A spending: $18.9 billion, plus or minus $200 million.

• Amortization of acquisition-related intangibles: approximately $300 million.

• Depreciation: $6.8 billion, plus or minus $100 million.

• Impact of equity investments and interest and other: net gain of approximately $100 million.

• Tax Rate: approximately 25 percent.

• Full-year capital spending: $13.0 billion, plus or minus $500 million.

Q1 2013

• Revenue: $12.7 billion, plus or minus $500 million.

• Gross margin percentage: 58 percent, plus or minus a couple percentage points.

• R&D plus MG&A spending: approximately $4.6 billion.

• Amortization of acquisition-related intangibles: approximately $75 million.

• Impact of equity investments and interest and other: net loss of approximately $50 million.

• Depreciation: approximately $1.7 billion.

For additional information regarding Intel's results and Business Outlook, please see the CFO commentary at: www.intc.com/results.cfm.

Status of Business Outlook

Intel's Business Outlook is posted on intc.com and may be reiterated in public or private meetings with investors and others. The Business Outlook will be effective through the close of business Mar. 15 unless earlier updated; except that the Business Outlook for amortization of acquisition-related intangibles, impact of equity investments and interest and other, and tax rate, will be effective only through the close of business on Jan. 24. Intel's Quiet Period will start from the close of business on Mar. 15 until publication of the company's first-quarter earnings release, scheduled for April 16, 2013. During the Quiet Period, all of the Business Outlook and other forward-looking statements disclosed in the company's news releases and filings with the SEC should be considered as historical, speaking as of prior to the Quiet Period only and not subject to an update by the company.

Risk Factors

The above statements and any others in this document that refer to plans and expectations for the first quarter, the year and the future are forward-looking statements that involve a number of risks and uncertainties. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "may," "will," "should" and their variations identify forward-looking statements. Statements that refer to or are based on projections, uncertain events or assumptions also identify forward-looking statements. Many factors could affect Intel's actual results, and variances from Intel's current expectations regarding such factors could cause actual results to differ materially from those expressed in these forward-looking statements. Intel presently considers the following to be the important factors that could cause actual results to differ materially from the company's expectations.

• Demand could be different from Intel's expectations due to factors including changes in business and economic conditions; customer acceptance of Intel's and competitors' products; supply constraints and other disruptions affecting customers; changes in customer order patterns including order cancellations; and changes in the level of inventory at customers. Uncertainty in global economic and financial conditions poses a risk that consumers and businesses may defer purchases in response to negative financial events, which could negatively affect product demand and other related matters.

• Intel operates in intensely competitive industries that are characterized by a high percentage of costs that are fixed or difficult to reduce in the short term and product demand that is highly variable and difficult to forecast. Revenue and the gross margin percentage are affected by the timing of Intel product introductions and the demand for and market acceptance of Intel's products; actions taken by Intel's competitors, including product offerings and introductions, marketing programs and pricing pressures and Intel's response to such actions; and Intel's ability to respond quickly to technological developments and to incorporate new features into its products.

• The gross margin percentage could vary significantly from expectations based on capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; changes in revenue levels; segment product mix; the timing and execution of the manufacturing ramp and associated costs; start-up costs; excess or obsolete inventory; changes in unit costs; defects or disruptions in the supply of materials or resources; product manufacturing quality/yields; and impairments of long-lived assets, including manufacturing, assembly/test and intangible assets.

• The tax rate expectation is based on current tax law and current expected income. The tax rate may be affected by the jurisdictions in which profits are determined to be earned and taxed; changes in the estimates of credits, benefits and deductions; the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties; and the ability to realize deferred tax assets.

• Gains or losses from equity securities and interest and other could vary from expectations depending on gains or losses on the sale, exchange, change in the fair value or impairments of debt and equity investments; interest rates; cash balances; and changes in fair value of derivative instruments. The majority of our marketable equity security portfolio balance is concentrated in ASML Holding, N.V., and declines in value could result in impairment charges, impacting gains or losses on equity securities.

• Intel's results could be affected by adverse economic, social, political and physical/infrastructure conditions in countries where Intel, its customers or its suppliers operate, including military conflict and other security risks, natural disasters, infrastructure disruptions, health concerns and fluctuations in currency exchange rates.

• Expenses, particularly certain marketing and compensation expenses, as well as restructuring and asset impairment charges, vary depending on the level of demand for Intel's products and the level of revenue and profits.

• Intel's results could be affected by the timing of closing of acquisitions and divestitures.

• Intel's current chief executive officer plans to retire in May 2013 and the Board of Directors is working to choose a successor. The succession and transition process may have a direct and/or indirect effect on the business and operations of the company. In connection with the appointment of the new CEO, the company will seek to retain our executive management team (some of whom are being considered for the CEO position), and keep employees focused on achieving the company's strategic goals and objectives.

• Intel's results could be affected by adverse effects associated with product defects and errata (deviations from published specifications), and by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust, disclosure and other issues, such as the litigation and regulatory matters described in Intel's SEC reports. An unfavorable ruling could include monetary damages or an injunction prohibiting Intel from manufacturing or selling one or more products, precluding particular business practices, impacting Intel's ability to design its products, or requiring other remedies such as compulsory licensing of intellectual property.

A detailed discussion of these and other factors that could affect Intel's results is included in Intel's SEC filings, including the company's most recent Form 10-Q and report on Form 10-K.

Earnings Webcast

Intel will hold a public webcast at 2 p.m. PDT today on its Investor Relations website at www.intc.com. A webcast replay and MP3 download will also be available on the site.

Intel plans to report its earnings for the first quarter of 2013 on April 16, 2013. Immediately following the earnings report, the company plans to publish a commentary by Stacy J. Smith, executive vice president, chief financial officer, and director of corporate strategy, at www.intc.com/results.cfm. A public webcast of Intel's earnings conference call will follow at 2 p.m. PDT at www.intc.com.

About Intel

Intel (NAS: INTC) is a world leader in computing innovation. The company designs and builds the essential technologies that serve as the foundation for the world's computing devices. Additional information about Intel is available at newsroom.intel.com and blogs.intel.com.

Intel, the Intel logo and Ultrabook are trademarks of Intel Corporation in the United States and other countries.

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