Intel 2009 Annual Report Download - page 30

Table of Contents
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is provided in
addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of
operations, financial condition, and cash flows. MD&A is organized as follows:
The various sections of this MD&A contain a number of forward-looking statements. Words such as “expects,” “goals,”
“plans,” “believes,” “continues,” “may,” “will,” and variations of such words and similar expressions are intended to identify
such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our
anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-
looking statements. Such statements are based on our current expectations and could be affected by the uncertainties and risk
factors described throughout this filing and particularly in the “Business Outlook” section (see also “Risk Factors” in Part I,
Item 1A of this Form 10-K). Our actual results may differ materially, and these forward-looking statements do not reflect the
potential impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of
February 22, 2010.
Overview
Our goal is to be the preeminent provider of semiconductor chips and platforms for the worldwide digital economy. Our
primary component-level products include microprocessors, chipsets, and flash memory. To better align our major product
groups around the core competencies of Intel architecture and our manufacturing operations, we completed the reorganization
of our business in the fourth quarter of 2009. Net revenue, gross margin, operating income, and net income for the fourth and
third quarters of 2009, and fiscal year 2009 and 2008 were as follows:
We started the year in one of the deepest recessions in our history and emerged from it with better products and technology in
a strengthening market. Compared to the first quarter of 2008, revenue was down 26% in the first quarter of 2009, with the
second and third quarters down 15% and 8%, respectively, compared to the second and third quarters of 2008. However, our
fourth quarter results reflected a strengthening demand across all regions and all product categories, driven primarily by the
notebook market segment. Fourth quarter revenue of $10.6 billion was up 13% compared to the third quarter, nearly twice the
seasonal average, and up 28% compared to the fourth quarter of 2008.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
• Overview. Discussion of our business and overall analysis of financial and other highlights affecting the company in
order to provide context for the remainder of MD&A.
•
Strategy.
Overall strategy and the strategy for our major market segments.
• Critical Accounting Estimates. Accounting estimates that we believe are most important to understanding the
assumptions and judgments incorporated in our reported financial results and forecasts.
•
Results of Operations.
Analysis of our financial results comparing 2009 to 2008 and comparing 2008 to 2007. At the
end of 2009, we reorganized our business to better align our major product groups around the core competencies of
Intel architecture and our manufacturing operations. The analysis of our major operating segments’ financial results
reflects this reorganization and
prior
-
period
analysis, and amounts have been adjusted retrospectively.
•
Business Outlook.
Our expectations for selected financial items for 2010.
•
Liquidity and Capital Resources.
An analysis of changes in our balance sheets and cash flows, and discussion of our
financial condition and potential sources of liquidity.
•
Fair Value of Financial Instruments.
Discussion of the methodologies used in the valuation of our financial
instruments.
• Contractual Obligations and Off-Balance-Sheet Arrangements. Overview of contractual obligations and contingent
liabilities and commitments outstanding as of December 26, 2009, including expected payment schedule, and
explanation of off
-
balance
-
sheet arrangements.
Three Months Ended
Twelve Months
Ended
Dec. 26,
Sept. 26,
Dec. 26, Dec. 27,
(In Millions)
2009 2009 2009 2008
Net revenue
$
10,569
$
9,389
$
35,127
$
37,586
Gross margin
$
6,840
$
5,404
$
19,561
$
20,844
Operating income
$
2,497
$
2,579
$
5,711
$
8,954
Net income
$
2,282
$
1,856
$
4,369
$
5,292