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Intel Corp. (INTC)

Analysis of Revenues

Advanced level

Accounting Policy on Revenue Recognition

Intel recognizes net product revenue when Intel satisfies performance obligations as evidenced by the transfer of control of the products or services to customers. Substantially all of Intel’s revenue is derived from product sales. In accordance with contract terms, revenue for product sales is recognized at the time of product shipment from Intel’s facilities or delivery to the customer location, as determined by the agreed upon shipping terms. Prior to 2018, on sales made to distributors that allowed for price protections or right of return until the distributor sold through the merchandise, Intel deferred product revenue and related costs of sales. Intel includes shipping charges billed to customers in net revenue, and includes the related shipping costs in cost of sales.

Intel measures revenue based on the amount of consideration Intel expects to be entitled to in exchange for products or services. Variable consideration is estimated and reflected as an adjustment to the transaction price. Intel determines variable consideration, which consists primarily of various sales price concessions, by estimating the most likely amount of consideration Intel expects to receive from the customer based on historical analysis of customer purchase volumes. Sales rebates earned by customers are offset against their receivable balances. Rebates earned by customers when they do not have outstanding receivable balances are recorded within other accrued liabilities. The impacts of distributor sales price reductions resulting from price protection agreements are also estimated based on historical analysis of such activity and are reflected as a reduction in net revenue.

Intel makes payments to the customers through cooperative advertising programs for marketing activities for certain of the products. Intel generally records the payment as a reduction in revenue in the period that the revenue is earned, unless the payment is for a distinct service, which Intel records as expense when the marketing activities occur. During the second half of 2017, Intel transitioned customers from previous offerings under the Intel Inside® program to cooperative advertising offerings more tailored to customers and their marketing audiences. These cooperative advertising costs are recorded as a reduction of revenue beginning in the second half of 2017, as Intel no longer meets the criteria for recording these as expense.

Source: 10-K (filing date: 2019-02-01).

Revenues as Reported

Intel Corp., Income Statement, Revenues

US$ in millions

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12 months ended Dec 29, 2018 Dec 30, 2017 Dec 31, 2016 Dec 26, 2015 Dec 27, 2014
Client Computing Group (CCG) 37,004  34,003  32,908  32,219  34,872 
Data Center Group (DCG) 22,991  19,064  17,236  15,981  14,396 
Internet of Things Group (IOTG) 3,455  3,169  2,638  2,298  2,142 
Non-Volatile Memory Solutions Group (NSG) 4,307  3,520  2,576  2,597  2,146 
Programmable Solutions Group (PSG) 2,123  1,902  1,669  —  — 
All other 968  1,103  2,360  2,260  2,314 
Net revenue 70,848  62,761  59,387  55,355  55,870 

Based on: 10-K (filing date: 2019-02-01), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-17), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

Item Description The company
Net revenue Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss). Intel Corp.’s net revenue increased from 2016 to 2017 and from 2017 to 2018.