Question
Following are the income statement and balance sheet for Intel Corporation. INTEL CORPORATION Consolidated Statements of Income Years Ended December (In Millions, Except Per Share
Following are the income statement and balance sheet for Intel Corporation.
INTEL CORPORATION Consolidated Statements of Income | |||
---|---|---|---|
Years Ended December (In Millions, Except Per Share Amounts) | 2012 | 2011 | 2010 |
Net revenue | $ 53,341 | $ 53,999 | $ 46,623 |
Cost of sales | 20,190 | 20,242 | 15,132 |
Gross margin | 33,151 | 33,757 | 28,491 |
Research and development | 10,148 | 8,350 | 6,576 |
Marketing, general and administrative | 8,057 | 7,670 | 6,309 |
Amortization of acquisition-related intangibles | 308 | 260 | 18 |
Operating expenses | 18,513 | 16,280 | 12,903 |
Operating income | 14,638 | 17,477 | 15,588 |
Gains (losses) on other equity investments, net | 141 | 112 | 348 |
Interest and other, net | 94 | 192 | 109 |
Income before taxes | 14,873 | 17,781 | 16,045 |
Provisions for taxes | 3,868 | 4,839 | 4,581 |
Net income | $ 11,005 | $ 12,942 | $ 11,464 |
INTEL CORPORATION Consolidated Balance Sheets | ||
---|---|---|
As of Year-Ended (In millions, except par value) | Dec. 29, 2012 | Dec. 31, 2011 |
Assets | ||
Current assets | ||
Cash and cash equivalents | $ 8,478 | $ 5,065 |
Short-term investments | 3,999 | 5,181 |
Trading assets | 5,685 | 4,591 |
Accounts receivables, net | 3,833 | 3,650 |
Inventories | 4,734 | 4,096 |
Deferred tax assets | 2,117 | 1,700 |
Other current assets | 2,512 | 1,589 |
Total current assets | 31,358 | 25,872 |
Property, plant and equipment, net | 27,983 | 23,627 |
Marketable equity securities | 4,424 | 562 |
Other long-term investments** | 493 | 889 |
Goodwill | 9,710 | 9,254 |
Identified intangible assets | 6,235 | 6,267 |
Other long-term assets | 4,148 | 4,648 |
Total assets | $84,351 | $71,119 |
Liabilities | ||
Current liabilities | ||
Short-term debt | $312 | $247 |
Accounts payable | 3,023 | 2,956 |
Accrued compensation and benefits | 2,972 | 2,948 |
Accrued advertising | 1,015 | 1,134 |
Deferred income | 1,932 | 1,929 |
Other accrued liabilities | 3,644 | 2,814 |
Total current liabilities | 12,898 | 12,028 |
Long-term debt | 13,136 | 7,084 |
Long-term deferred tax liabilities | 3,412 | 2,617 |
Other long-term liabilities | 3,702 | 3,479 |
Stockholders' equity | ||
Preferred stock, $0.001 par value, 50 shares authorized; none issued | -- | -- |
Common stock, $0.001 par value, 10,000 shares authorized; 4,944 issued and outstanding (5,000 issued and outstanding in 2011) and capital in excess of par value | 19,464 | 17,036 |
Accumulated other comprehensive income (loss) | (399) | (781) |
Retained earnings | 32,138 | 29,656 |
Total stockholders' equity | 51,203 | 45,911 |
Total liabilities and stockholders' equity | $ 84,351 | $ 71,119 |
** These investments are operating assets as they relate to associated companies. (a) Compute Intel's net operating assets (NOA) for year-end 2012. 2012 NOA = $Answer
(b) Compute net operating profit after tax (NOPAT) for 2012, assuming a federal and state statutory tax rate of 37%. Round your answer to the nearest whole number. 2012 NOPAT = $Answer
(c) Use the parsimonious forecast method, as shown in Analysis Insight box on page 13-4, to forecast Ciscos sales, NOPAT, and NOA for 2013 through 2016 and the terminal period using the following assumptions.
Sales growth | 10% |
Net operating profit margin (NOPM) | 20.4% |
Net operating asset turnover (NOAT) at year-end | 1.27 |
Forecast the terminal period value using a terminal period growth of: 1% and the NOPM and NOAT assumptions above.
INTC | Reported | Forecast Horizon | Terminal | |||
---|---|---|---|---|---|---|
($ millions) | 2012 | 2013 Est. | 2014 Est. | 2015 Est. | 2016 Est. | Period |
Sales (rounded two decimal places) | Answer
| Answer
| Answer
| Answer
| Answer
| Answer
|
Sales (rounded nearest whole number) | Answer
| Answer
| Answer
| Answer
| Answer
| Answer
|
NOPAT (rounded nearest whole number)* | Answer
| Answer
| Answer
| Answer
| Answer
| Answer
|
NOA (rounded nearest whole number)* | Answer
| Answer
| Answer
| Answer
| Answer
| Answer
|
* Use sales rounded to nearest whole number for this calculation.
(d) Estimate the value of a share of Intel common stock using the discounted cash flow (DCF) model as of December 29, 2012; assume a discount rate (WACC) of 11%, common shares outstanding of 4,944 million, and net nonoperating obligations (NNO) of $(9,138) million (NNO is negative which means that Intel has net nonoperating investments).
Instructions:
Use your rounded answers for subsequent calculations.
Round all answers to the nearest whole number, except for discount factors and stock price per share.
- Round discount factors to 5 decimal places.
- Round stock price per share to two decimal places.
- Use a negative sign with your NNO answer.
INTC | Reported | Forecast Horizon | Terminal | |||
---|---|---|---|---|---|---|
($ millions) | 2012 | 2013 Est. | 2014 Est. | 2015 Est. | 2016 Est. | Period |
DCF Model | ||||||
Increase in NOA | Answer
| Answer
| Answer
| Answer
| Answer
| |
FCFF (NOPAT - Increase in NOA) | Answer
| Answer
| Answer
| Answer
| Answer
| |
Discount factor | Answer
| Answer
| Answer
| Answer
| ||
Present value of horizon FCFF | Answer
| Answer
| Answer
| Answer
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Cum present value of horizon FCFF | Answer
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Present value of terminal FCFF | Answer
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Total firm value | Answer
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NNO | Answer
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Firm equity value | Answer
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Shares outstanding (millions) | Answer
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Stock price per share | Answer
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