Intel 1994 Annual Report Download - page 34

functionality of Intel processors, future imitations are not expected to be as close an imitation as were the Am386* and Am486* products from
AMD. Competitors' products may add features and increase performance.
Management, including internal counsel, does not believe that the outcome of lawsuits currently facing Intel will have a material adverse effect
on the Company's financial position or overall trends in results of operations (see "Contingencies" in "Notes to Consolidated Financial
Statements"). However, were an unfavorable ruling to occur in any quarterly period, there exists the possibility of a material impact on the net
income of that period. Management believes, given the Company's current liquidity and cash and investments balances, that even an adverse
judgement would not have a material impact on cash and investments or liquidity.
As part of its strategic goal to double performance at major system price points, the Company cut microprocessor prices aggressively and
systematically in 1994, and this trend may continue in 1995. Future distortion of price maturity curves could occur as imitation products enter
the market in significant volume or alternative architectures gain market acceptance. The outlook for Pentium processor shipments in 1995
remains dependent on several business factors, including continued success in the manufacturing ramp and market demand, including
microprocessor product mix.
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Gross margin percentage trended downward during 1993 and 1994, although gross margin dollar contribution has generally continued to
increase on a quarterly basis. Except for the one-time charge for the Pentium processor divide problem, the factors impacting cost of sales
growth (discussed above) are expected to continue. Research and development and marketing spending is expected to continue to grow, as the
Company regards these expenditures as critical to future business success. The Company expects its tax rate to increase to 37% for 1995.
Intel's stock price is subject to significant volatility. If revenues or earnings fail to meet expectations of the investment community, there could
be an immediate and significant impact on the trading price for the Company's stock. Because of stock market forces beyond Intel's control and
the nature of Intel's business, such shortfalls can be sudden.
The Company believes it has the product portfolio and financial and technological resources necessary for continued success, but revenue and
profitability trends cannot be precisely determined at this time.
FINANCIAL INFORMATION BY QUARTER
(unaudited)
(A) Net income for the fourth quarter of 1994 was impacted by a $475 million pretax charge to revenue and cost of sales to cover replacement
and other costs associated with a divide problem in the floating point unit of the Company's Pentium processor.
(B) Intel plans to continue its dividend program. However, dividends are dependent on future earnings, capital requirements and financial
condition.
(C) Intel's Common Stock (symbol INTC) and 1998 Step-Up Warrants (symbol INTCW) are traded on Nasdaq and quoted in the Wall Street
Journal and other newspapers. Intel's Common Stock also trades on the Zurich, Basel and Geneva, Switzerland exchanges. At December 31,
1994, there were approximately 39,900 holders of Common Stock. All stock and warrant prices are closing prices per the Nasdaq National
Market System. (D) Interest and other income for the fourth quarter of 1993 included gains of $27 million from the sale of certain foreign
benefits related to the Company's Ireland expansion.
(in millions--except per share and price data)
1994 for quarter ended December 31 October 1 July 2 April 2
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Net revenues $ 3,228 $ 2,863 $ 2,770 $ 2,660
Cost of sales $ 2,023 $ 1,273 $ 1,156 $ 1,124
Net income $ 372(A) $ 659 $ 640 $ 617
Earnings per share $ .86 $ 1.52 $ 1.46 $ 1.40
Dividends per share(B) Declared $ .06 $ .06 $ .06 $ .05
Paid $ .06 $ .06 $ .05 $ .05
Market price range Common Stock(C) High $ 66.13 $ 67.25 $ 70.63 $ 72.25
Low $ 57.81 $ 56.50 $ 57.50 $ 61.25
Market price range Step-Up Warrants(C) High $ 15.00 $ 16.00 $ 18.44 $ 19.50
Low $ 12.31 $ 13.00 $ 13.00 $ 15.13
(in millions--except per share and price data)
1993 for quarter ended December 25 September 25 June 26 March 27
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Net revenues $ 2,389 $ 2,240 $ 2,130 $ 2,023
Cost of sales $ 935 $ 833 $ 766 $ 718
Net income $ 594(D) $ 584 $ 569 $ 548
Earnings per share $ 1.35 $ 1.33 $ 1.30 $ 1.24
Dividends per share(B) Declared $ .05 $ .05 $ .05 $ .05
Paid $ .05 $ .05 $ .05 $ .05
Market price range Common Stock(C) High $ 73.25 $ 68.75 $ 58.75 $ 59.94
Low $ 56.25 $ 50.00 $ 43.69 $ 43.25
Market price range Step-Up Warrants(C) High $ 19.94 $ 17.63 $ 14.31 $ 14.69
Low $ 13.75 $ 11.25 $ 9.44 $ 13.13