Intel Corporation
Explanation of Non-GAAP Measures
In addition to disclosing financial results in accordance with US GAAP, this document contains references to the non-GAAP financial measures below. We believe these non-GAAP financial measures provide investors with useful supplemental information about our operating performance, enable comparison of financial trends and results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business and measuring our performance. These non-GAAP financial measures are used in our performance-based RSUs and our cash bonus plans.
Our non-GAAP financial measures reflect adjustments based on one or more of the following items, as well as the related income tax effects. Income tax effects are calculated using a fixed long-term projected tax rate of 13% across all adjustments. We project this long-term non-GAAP tax rate on an annual basis using a five-year non-GAAP financial projection that excludes the income tax effects of each adjustment. The projected non-GAAP tax rate also considers factors such as our tax structure, our tax positions in various jurisdictions, and key legislation in significant jurisdictions where we operate. This long-term non-GAAP tax rate may be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or changes to our strategy or business operations. Management uses this non-GAAP tax rate in managing internal short- and long-term operating plans and in evaluating our performance; we believe this approach facilitates comparison of our operating results and provides useful evaluation of our current operating performance.
Our non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the financial results calculated in accordance with US GAAP and reconciliations from these results should be carefully evaluated.
Non-GAAP adjustment or measure |
Definition |
Usefulness to management and investors |
Acquisition-related adjustments |
Amortization of acquisition-related intangible assets consists of amortization of intangible assets such as developed technology, brands, and customer relationships acquired in connection with business combinations. Charges related to the amortization of these intangibles are recorded within both cost of sales and MG&A in our US GAAP financial statements. Amortization charges are recorded over the estimated useful life of the related acquired intangible asset, and thus are generally recorded over multiple years. |
We exclude amortization charges for our acquisition-related intangible assets for purposes of calculating certain non-GAAP measures because these charges are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. These adjustments facilitate a useful evaluation of our current operating performance and comparison to our past operating performance and provide investors with additional means to evaluate cost and expense trends. |
Share-based compensation |
Share-based compensation consists of charges related to our employee equity incentive plans. |
We exclude charges related to share-based compensation for purposes of calculating certain non-GAAP measures because we believe these adjustments provide comparability to peer company results and because these charges are not viewed by management as part of our core operating performance. We believe these adjustments provide investors with a useful view, through the eyes of management, of our core business model, how management currently evaluates core operational performance, and additional means to evaluate expense trends, including in comparison to other peer companies. |
Restructuring and other charges |
Restructuring charges are costs associated with a restructuring plan and are primarily related to employee severance and benefit arrangements. Other charges include periodic goodwill and asset impairments, certain pension charges, and costs associated with restructuring activity. |
We exclude restructuring and other charges, including any adjustments to charges recorded in prior periods, for purposes of calculating certain non-GAAP measures because these costs do not reflect our core operating performance. These adjustments facilitate a useful evaluation of our core operating performance and comparisons to past operating results and provide investors with additional means to evaluate expense trends. |
(Gains) losses on equity investments, net |
(Gains) losses on equity investments, net consists of ongoing mark-to-market adjustments on marketable equity securities, observable price adjustments on non-marketable equity securities, related impairment charges, and the sale of equity investments and other. |
We exclude these non-operating gains and losses for purposes of calculating certain non-GAAP measures because it provides comparability between periods. The exclusion reflects how management evaluates the core operations of the business. |
(Gains) losses from divestiture |
(Gains) losses are recognized at the close of a divestiture, or over a specified deferral period when deferred consideration is received at the time of closing. Based on our ongoing obligation under the NAND wafer manufacturing and sale agreement entered into in connection with the first closing of the sale of our NAND memory business on December 29, 2021, a portion of the initial closing consideration was deferred and will be recognized between first and second closing. |
We exclude gains or losses resulting from divestitures for purposes of calculating certain non-GAAP measures because they do not reflect our current operating performance. These adjustments facilitate a useful evaluation of our current operating performance and comparisons to past operating results. |
Adjusted free cash flow |
We reference a non-GAAP financial measure of adjusted free cash flow, which is used by management when assessing our sources of liquidity, capital resources, and quality of earnings. Adjusted free cash flow is operating cash flow adjusted for (1) additions to property, plant, and equipment, net of proceeds from capital-related government incentives and partner contributions, and (2) payments on finance leases. |
This non-GAAP financial measure is helpful in understanding our capital requirements and sources of liquidity by providing an additional means to evaluate the cash flow trends of our business. |
Intel Corporation
Supplemental Reconciliations of GAAP Actuals to Non-GAAP Actuals
Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable US GAAP financial measure. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with US GAAP, and the reconciliations from US GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustments made to the comparable US GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.
|
|
Three Months Ended |
|
||||||
| (In Millions, Except Per Share Amounts) |
|
Mar 30, 2024 |
|
Apr 1, 2023 |
|
||||
| GAAP gross margin |
|
$ |
5,217 |
|
|
$ |
4,008 |
|
|
| Acquisition-related adjustments |
|
|
224 |
|
|
|
328 |
|
|
| Share-based compensation |
|
|
298 |
|
|
|
158 |
|
|
| Non-GAAP gross margin |
|
$ |
5,739 |
|
|
$ |
4,494 |
|
|
| GAAP gross margin percentage |
|
|
41.0 |
% |
|
|
34.2 |
% |
|
| Acquisition-related adjustments |
|
|
1.8 |
% |
|
|
2.8 |
% |
|
| Share-based compensation |
|
|
2.3 |
% |
|
|
1.4 |
% |
|
| Non-GAAP gross margin percentage |
|
|
45.1 |
% |
|
|
38.4 |
% |
|
| GAAP R&D and MG&A |
|
$ |
5,938 |
|
|
$ |
5,412 |
|
|
| Acquisition-related adjustments |
|
|
(41 |
) |
|
|
(43 |
) |
|
| Share-based compensation |
|
|
(881 |
) |
|
|
(581 |
) |
|
| Non-GAAP R&D and MG&A |
|
$ |
5,016 |
|
|
$ |
4,788 |
|
|
| GAAP operating income (loss) |
|
$ |
(1,069 |
) |
|
$ |
(1,468 |
) |
|
| Acquisition-related adjustments |
|
|
265 |
|
|
|
371 |
|
|
| Share-based compensation |
|
|
1,179 |
|
|
|
739 |
|
|
| Restructuring and other charges |
|
|
348 |
|
|
|
64 |
|
|
| Non-GAAP operating income (loss) |
|
$ |
723 |
|
|
$ |
(294 |
) |
|
| GAAP operating margin (loss) |
|
|
(8.4 |
)% |
|
|
(12.5 |
)% |
|
| Acquisition-related adjustments |
|
|
2.1 |
% |
|
|
3.2 |
% |
|
| Share-based compensation |
|
|
9.3 |
% |
|
|
6.3 |
% |
|
| Restructuring and other charges |
|
|
2.7 |
% |
|
|
0.5 |
% |
|
| Non-GAAP operating margin (loss) |
|
|
5.7 |
% |
|
|
(2.5 |
)% |
|
| GAAP tax rate |
|
|
39.2 |
% |
|
|
(139.0 |
)% |
|
| Income tax effects |
|
|
(26.2 |
)% |
|
|
152.0 |
% |
|
| Non-GAAP tax rate |
|
|
13.0 |
% |
|
|
13.0 |
% |
|
| (In Millions, Except Per Share Amounts) |
|
Mar 30, 2024 |
|
Apr 1, 2023 |
|
||||
| GAAP net income (loss) attributable to Intel |
|
$ |
(381 |
) |
|
$ |
(2,758 |
) |
|
| Acquisition-related adjustments |
|
|
265 |
|
|
|
371 |
|
|
| Share-based compensation |
|
|
1,179 |
|
|
|
739 |
|
|
| Restructuring and other charges |
|
|
348 |
|
|
|
64 |
|
|
| (Gains) losses on equity investments, net |
|
|
(205 |
) |
|
|
(169 |
) |
|
| (Gains) losses from divestiture |
|
|
(39 |
) |
|
|
(39 |
) |
|
| Adjustments attributable to non-controlling interest |
|
|
(18 |
) |
|
|
(12 |
) |
|
| Income tax effects |
|
|
(390 |
) |
|
|
1,635 |
|
|
| Non-GAAP net income attributable to Intel |
|
$ |
759 |
|
|
$ |
(169 |
) |
|
|
|
|
|
|
|
|
||||
| GAAP earnings (loss) per share attributable to Intel—diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.66 |
) |
|
| Acquisition-related adjustments |
|
|
0.06 |
|
|
|
0.09 |
|
|
| Share-based compensation |
|
|
0.28 |
|
|
|
0.18 |
|
|
| Restructuring and other charges |
|
|
0.08 |
|
|
|
0.01 |
|
|
| (Gains) losses on equity investments, net |
|
|
(0.05 |
) |
|
|
(0.04 |
) |
|
| (Gains) losses from divestiture |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
| Adjustments attributable to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
| Income tax effects |
|
|
(0.09 |
) |
|
|
0.39 |
|
|
| Non-GAAP earnings per share attributable to Intel—diluted |
|
$ |
0.18 |
|
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
||||
| GAAP net cash used for operating activities |
|
$ |
(1,223 |
) |
|
$ |
(1,785 |
) |
|
| Net additions to property, plant, and equipment |
|
|
(4,955 |
) |
|
|
(6,964 |
) |
|
| Payments on finance leases |
|
|
— |
|
|
|
(15 |
) |
|
| Adjusted free cash flow |
|
$ |
(6,178 |
) |
|
$ |
(8,764 |
) |
|
| GAAP net cash used for investing activities |
|
$ |
(2,563 |
) |
|
$ |
(8,521 |
) |
|
| GAAP net cash provided by financing activities |
|
$ |
3,630 |
|
|
$ |
7,394 |
|
|
Intel Corporation
