Intel 2006 Annual Report Download - page 50

Download and view the complete annual report

Please find page 50 of the 2006 Intel annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 145

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145

Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
In summary, our cash flows were as follows:
Operating Activities
Cash provided by operating activities is net income adjusted for certain non-cash items and changes in assets and liabilities.
For 2006 compared to 2005, the largest contributing factors to the decrease in cash provided by operating activities were due
to lower net income, lower net maturities of trading assets, and changes in the amount of estimated tax payments, partially
offset by a decrease in accounts receivable balances. Fiscal year 2006 included share-based compensation charges of
approximately $1.4 billion. For 2005 compared to 2004, the majority of the increase in cash provided by operating activities
was from higher net maturities of trading assets and higher net income, partially offset by an increase in accounts receivable
balances.
Inventories as of December 30, 2006 increased compared to December 31, 2005, as we continued to ramp new, higher cost
products, primarily related to microprocessors on our 65-nanometer process technology and associated chipsets on our 90-
nanometer process technology. Accounts receivable as of December 30, 2006 decreased compared to December 31, 2005,
primarily driven by lower revenue and higher cash collections. For 2006 and 2005, our two largest customers accounted for
35% of net revenue, with one of these customers accounting for 19% of revenue and another customer accounting for 16%.
Additionally, these two largest customers accounted for 52% of net accounts receivable at December 30, 2006 (42% at
December 31, 2005).
Investing Activities
Investing cash flows consist primarily of capital expenditures and payments for investments acquired, partially offset by
proceeds from investment maturities and sales. The decrease in cash used in investing activities in 2006 compared to 2005 was
primarily due to higher net maturities and sales of available-for-sale
investments. We also received $752 million for the sale of
three completed divestitures (see “Note 14: Acquisitions and Divestitures” in Part II, Item 8 of this Form 10-K). Additionally,
during 2006 we sold a portion of our investment in Micron for $275 million. Partially offsetting these impacts, we paid $600
million in cash for our equity investment in Clearwire and $615 million in cash for our equity investment in IMFT. In addition
to the $615 million paid in cash, our initial investment in IMFT of $1.2 billion included the issuance of $581 million in notes
(reflected as a financing activity). In addition, we made a capital contribution of $128 million to IMFT. Other investing
activities for 2006 included the purchase of intellectual property assets from Micron, concurrent with the formation of IMFT,
for $230 million. For 2005 compared to 2004, the higher cash used in investing activities resulted from capital spending,
primarily driven by investments in 65-nanometer production equipment.
Financing Activities
Financing cash flows consist primarily of repurchases and retirement of common stock and payment of dividends to
stockholders. The lower cash used in financing activities in 2006 compared to 2005 was primarily due to a decrease in
repurchases and retirement of common stock, partially offset by additions to long-term debt in 2005 of $1.7 billion. For 2006,
we repurchased 226 million shares of common stock for $4.6 billion compared to 418 million shares for $10.6 billion in 2005.
At December 30, 2006, $17.3 billion remained available for repurchase under existing repurchase authorizations. Our dividend
payments were $2.3 billion in 2006, which is higher than the $2.0 billion paid in 2005, due to an increase from $0.08 to $0.10
in cash dividends per common share effective for the first quarter of 2006. On January 18, 2007, our Board of Directors
declared a cash dividend of $0.1125 per common share effective the first quarter of 2007. Additional financing activities for
2006 included proceeds from the sale of shares pursuant to employee equity incentive plans of $1.0 billion ($1.2 billion during
2005). For 2005 compared to 2004, the higher cash used in financing activities was primarily due to an increase in repurchases
and retirements of common stock, partially offset by cash received from the issuance of long-term debt.
40
(In Millions)
2006
2005
2004
Net cash provided by operating activities
$
10,620
$
14,823
$
13,119
Net cash used for investing activities
(4,907
)
(6,362
)
(5,032
)
Net cash used for financing activities
(6,439
)
(9,544
)
(7,651
)
Net increase (decrease) in cash and cash equivalents
$
(726
)
$
(1,083
)
$
436