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2014 was a year of signicant and tangible
progress for Intel.
The nancial achievements described in the CEO’s letter
reect the energies of a company that is changing. There
is a renewed focus on discipline and results, and we are
executing on our strategy to deliver value to stockholders.
We have strengthened our resolve to be successful in the
market and to take informed, appropriate business risks.
We are determined to heed the lessons of history, adapt
to changes in our environment, and lead with innovation.
Your Board of Directors has been listening to investor concerns and has taken
a fresh look at its own responsibilities to stockholders. Our priorities in 2014
included strategic clarity, cash policy, and Board composition.
The Board has actively engaged in discussions about the strategy behind Intel’s
investments, to help make sure possible risks and returns for stockholders are
clearly understood. We have seen progress in unprotable businesses and are
encouraged by new investments to capture strategic opportunities.
In reviewing cash policy, the Board looks rst at the needs of the business.
Most of Intel’s investments focus on advanced technologies critical to business
success. In 2014, Intel made capital investments of $10.1 billion, the largest
portion of which was used to build and equip leading-edge manufacturing
capacity. The company also spent $11.5 billion on research and development.
About 70% of this was for technical capabilities and intellectual property, the
costs and benets of which are shared across Intel’s business segments. This
broad and deep foundation allows us to integrate functions into the platform
products that customers increasingly require.
After reviewing plans for the business, the Board considers the dividend and
then stock repurchases. In 2014, the Board announced the rst increase in the
dividend since 2012, from $0.90 to $0.96 per share. It also authorized an
acceleration of stock repurchases to return more cash to investors. Intel
repurchased $10.8 billion worth of Intel stock in 2014, ve times the level of
2013. Through dividends and repurchases, Intel returned cash to stockholders
in 2014 of $15.2 billion, more than two times the amount in 2013.
These actions extend Intel’s commitment to deliver long-term value to owners.
In the last ve years, Intel returned $54.2 billion to stockholders through
dividends and stock repurchases. Since 2009, the dividend has risen from
$0.56 to $0.96 per share, and average shares outstanding have decreased
from 5.6 to 5.1 billion shares.
With an eye to Intel’s future, the Board reviewed its composition to make sure
it has the appropriate skills and experience for stewardship. We added a new
Board member who brings more than 20 years of experience in enterprise
software innovation and cloud computing, areas that are key to Intel’s business.
While pointing with pride to accomplishments, we understand there is more to
do. Many of us are disciples of former Intel CEO and Chairman Andy Grove. In his
world, there are no victory laps. Every day brings a new challenge, and we must
never become complacent.
At the same time, the optimism about the future shared by all of Intel’s founders
remains strong in Intel’s culture. Fifty years after Gordon Moore made his famous
predictions for the future of integrated electronics, we believe the potential for
innovation continues to be enormous.
Change is essential for innovation. We must continue to embrace change and
innovate. Our goal is to continue the foundational technology investments and
drive Intel’s protability.
Letter From Your Chairman Financial Results
Cash from Operations
Dollars in billions
16.7
21.0
18.9
20.820.4
2010 2011 2012 2013 2014
25
20
15
10
5
38.8
35.4
38.3 37.6 35.1
43.6
54.0 53.3 52.7
55.9
05 06 07 08 09 10 11 12 13 14
Net Revenue
Dollars in billions
60
50
40
30
20
10
2.01
2.39
2.13
1.89
2.31
2010 2011 2012 2013 2014
Diluted Earnings Per Share
Dollars
2.50
2.00
1.50
1.00
.50
0.63
0.78
0.87 0.90 0.90
2010 2011 2012 2013 2014
Dividends Per Share Paid
Dollars
1.00
0.80
0.60
0.40
0.20
Andy D. Bryant, Chairman of the Board