Intel 1996 Annual Report Download

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INTEL CORP
FORM 10-K
(Annual Report)
Filed 03/28/97 for the Period Ending 12/28/96
Address 2200 MISSION COLLEGE BLVD
RNB-4-151
SANTA CLARA, CA 95054
Telephone 4087658080
CIK 0000050863
Symbol INTC
SIC Code 3674 - Semiconductors and Related Devices
Industry Semiconductors
Sector Technology
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2008, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ... 10-K (Annual Report) Filed 03/28/97 for the Period Ending 12/28/96 Address 2200 MISSION COLLEGE BLVD RNB-4-151 SANTA CLARA, CA 95054 4087658080 0000050863 INTC 3674 - Semiconductors and Related Devices Semiconductors Technology 12/31 Telephone CIK Symbol SIC Code Industry Sector Fiscal Year http...

  • Page 2
    ... File Number 0-6217 INTEL CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 94-1672743 (I.R.S. Employer Identification No.) 2200 Mission College Boulevard, Santa Clara, California, 95052-8119 (Address...

  • Page 3
    (2) Portions of the Registrant's Proxy Statement related to the 1997 Annual Meeting of Stockholders, to be filed subsequent to the date hereof Part III.

  • Page 4
    ... transistors, diodes, capacitors and resistors. Products The Company's major products include microprocessors and related board-level products, chipsets, embedded processors and microcontrollers, flash memory products, network and communications products and conferencing products. Microprocessors...

  • Page 5
    ... single upgrade chip. Chipsets The Company's core-logic chipsets support incremental performance, ease-of-use and new capabilities for systems based on Intel's Pentium and Pentium Pro microprocessors. Based on the Peripheral Components Interconnect (PCI) bus, the Intel 430 PCIset family for desktop...

  • Page 6
    ... 1996, Intel introduced several new or upgraded LAN products: 100BASE-T4 models of the EtherExpress PRO/100 adapter and Express Stackable Hubs; the NetportExpress PRO/100 print server, allowing workgroups to connect and manage printers at 10Mbps or 100Mbps; and the Intel Express 100BASE-TX Switching...

  • Page 7
    ... Intel facilities in Chandler, Arizona; Aloha, Oregon; Santa Clara, California; and Rio Rancho, New Mexico. A significant portion of Intel's production of microprocessor board-level products and systems takes place at facilities in Hillsboro, Oregon; DuPont, Washington; and Las Piedras, Puerto Rico...

  • Page 8
    Employees At December 28, 1996, the Company employed approximately 48,500 people worldwide. Sales Most of Intel's products are sold or licensed through sales offices located near major concentrations of users throughout the United States, Europe, Japan, Asia-Pacific and other parts of the world. The...

  • Page 9
    ... and Intel's ability to transfer new products to production in a timely and cost-effective manner. Most design and development of components and other products is performed at Intel's facilities in Santa Clara and Folsom, California; Aloha and Hillsboro, Oregon; Chandler, Arizona; and Haifa, Israel.

  • Page 10
    ... trademarks and trade names for its products to distinguish genuine Intel products from those of its competitors and is currently engaged in a cooperative program with OEMs to identify personal computers that incorporate genuine Intel microprocessors with the Intel Inside logo. Intel maintains...

  • Page 11
    ... Vice President and General Manager, Intel Architecture Laboratories from 1993 to 1995 and Vice President and General Manager, Software Technology Group from 1991 to 1992. Albert Y. C. Yu (age 55) has been Senior Vice President and General Manager, Microprocessor Products Group since 1993. Prior...

  • Page 12
    ...MD 6, Microprocessor Development from 1991 to 1992. John H. F. Miner (age 41) has been Vice President and General Manager, Enterprise Server Group since 1996. Prior to that, Mr. Miner was Vice President, Desktop Products Group and General Manager, OEM Products and Services Division from 1995 to 1996...

  • Page 13
    ... offices. 6 Ireland 6 Malaysia (A) 531,000 4 Israel 380,000 5 Puerto Rico 426,000 3 England 184,000 3 Japan 167,000 1 Philippines 431,000 1 Germany 86,000 At December 28, 1996, Intel also leased 22 major facilities in the U.S. totaling approximately 722,000 square...

  • Page 14
    .... B. Environmental Proceedings Intel has been named to the California and U.S. Superfund lists for three of its sites and has completed, along with two other companies, a Remedial Investigation/Feasibility study with the U.S. Environmental Protection Agency (EPA) to evaluate the groundwater in areas...

  • Page 15
    ... 33 of the Registrant's 1996 Annual Report to Stockholders, which information is hereby incorporated by reference. In addition, the ratios of earnings to fixed charges for each of the five years in the period ended December 28, 1996 are as follows: Fiscal Year 1992 1993 1994 1995 1996 20.7x 54.4x 39...

  • Page 16
    ... 36 of the Registrant's 1996 Annual Report to Stockholders, which information is hereby incorporated by reference. Between December 28, 1996 and March 26, 1997, Intel repurchased 7.7 million shares of Common Stock under the Company's authorized stock repurchase program at a cost of $1.2 billion. The...

  • Page 17
    ... hereby incorporated by reference, and to the information under the heading "Executive Officers" in Part I hereof. ITEM 11. EXECUTIVE COMPENSATION Reference is made to the information appearing under the headings "Directors' Compensation," "Compensation Committee Interlocks and Insider Participation...

  • Page 18
    ... The financial statements listed in the accompanying index to financial statements and financial statement schedules are filed or incorporated by reference as part of this annual report. 2. Financial Statement Schedule The financial statement schedule listed in the accompanying index to financial...

  • Page 19
    ... SCHEDULES (Item 14 (a)) Reference Page 1996 Annual Report to Stockholders Form 10K --- Consolidated Balance SheetsDecember 28, 1996 and December 30, 1995 Consolidated Statements of Income for the years ended December 28, 1996, December 30, 1995 and December 31, 1994 Consolidated Statements...

  • Page 20
    INTEL CORPORATION SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS December 31, 1994, December 30, 1995 and December 28,1996 (In Millions) Additions Charged to Costs and Expenses -------- Balance at Beginning of Year ------1994 Allowance for Doubtful Receivables Deductions(A Balance at End of ...

  • Page 21
    ...Form S-8 as filed on July 17, 1996). Computation of Per Share Earnings. Statement Setting Forth the Computation of Ratios of Earnings to Fixed Charges. Portions of the Annual Report to Stockholders for fiscal year ended December 28, 1996 expressly incorporated by reference herein. Intel Subsidiaries...

  • Page 22
    ... caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized. INTEL CORPORATION Registrant ...Officer, Principal Accounting and Financial Officer March 26, 1997 /s/ Winston H. Chen Winston H. Chen Director March 26, 1997 /s/ Jane E. Shaw Jane E. Shaw Director...

  • Page 23
    ... appointed by the Board of Directors from among its members to administer this Plan pursuant to Section 9. (c) "Disablement" shall have the meaning specified by the Committee in the terms of an option grant or, in the absence of any such term, shall mean a physical condition arising from an illness...

  • Page 24
    ... efforts for the successful conduct of Intel's operations. However, no Participant shall be granted options in any year to purchase a number of shares of the Corporation's Common Stock in excess of one percent (1%) of the number of shares of the Corporation's common stock outstanding on January...

  • Page 25
    ... be subject to the following terms and conditions: (a) Price: The purchase price under each option granted to employees shall be established by the Committee. In no event will the option price be less than 100% of the fair market value of the stock on the date of grant, except as otherwise provided...

  • Page 26
    ... serving as director on a date not coincident with a grant date for such options, that director will be granted an initial non-employee director option as of the date of the first meeting of the Board of Directors at which he or she serves as director for a number of shares calculated on a pro-rata...

  • Page 27
    ...return for the grant of new options for the same or a different number of shares and at the same or a different exercise price. (g) Conditions and Restrictions Upon Securities Subject to Options: Subject to the express provisions of the Plan, the Committee may provide that the shares of Common Stock...

  • Page 28
    ...the Plan, the number and kind of shares of stock or other securities into which each outstanding share of common stock of the Corporation shall so be changed, or for which each such share shall be exchanged, or to which each such share shall be entitled, as the case may be. Outstanding options shall...

  • Page 29
    ... the Board of Directors. The Board shall fill vacancies and may from time to time remove or add members. All members of the Committee will be "non-employee directors" as defined in Rule 16b-3 under the Exchange Act and "outside directors" as defined under Section 162(m) of the Code, but in each case...

  • Page 30
    ...to any such provisions in good faith and for the benefit of the Corporation. All decisions, determinations and interpretations by the Committee regarding the Plan, any rules and regulations under the Plan and the terms and conditions of any option granted hereunder, shall be final and binding on all...

  • Page 31
    ... 1988 Executive Long Term Stock Option Plan, as amended and restated herein. (e) "Retirement" shall have the meaning specified by the Committee in the terms of an option grant or, in the absence of any such term, shall mean retirement from active employment with Intel (i) at or after age 55 and...

  • Page 32
    ... to outstanding options held by him or her, amounting to more than five percent (5%) of the total combined voting power or value of all classes of stock of the Corporation or any Subsidiary. Options may not be granted to non-employee directors or members of the Committee. 4. EFFECTIVE DATE AND...

  • Page 33
    ... Plan need not be identical but each option much contain and be subject to the following terms and conditions: (a) Price: The purchase price under each option shall be established by the Committee. In no event will the option price be less than the fair market value of the stock on the date of grant...

  • Page 34
    ... of the deceased Participant will be the total number of shares which were exercisable under such option on the date of the Participant's death. If a Participant should die within thirty (30) days of his or her termination of employment with Intel, an option will be exercisable by his or her...

  • Page 35
    ... in their place options at a different price and different type under different terms or in different amounts. (g) Conditions and Restrictions Upon Securities Subject to Options: Subject to the express provisions of the Plan, the Committee may provide that the shares of Common Stock issued upon...

  • Page 36
    ...for the purpose of enabling the Participant to exercise options granted under the Plan and to pay the tax liability resulting from an option exercise under the Plan. The Board or its Committee shall have full authority to determine the terms and conditions of such loans. Such loans may be secured by...

  • Page 37
    ... Directors. The Board of Directors shall fill vacancies and may from time to time remove or add members. All members of the Committee will be "non-employee directors" as defined in Rule 16b-3 under the Exchange Act and "outside directors" as defined under Section 162(m) of the Code, but in each case...

  • Page 38
    ...to any such provisions in good faith and for the benefit of the Corporation. All decisions, determinations and interpretations by the Committee regarding the Plan, any rules and regulations under the Plan and the terms and conditions of any option granted hereunder, shall be final and binding on all...

  • Page 39
    ... 11.1 INTEL CORPORATION COMPUTATION OF PER SHARE EARNINGS (In millions, except per share amounts) Year Ended Dec. 31, Dec. 30, Dec. 28, 1994 1995 1996 PRIMARY SHARES CALCULATION Reconciliation of weighted average number of shares outstanding to amount used in primary earnings per share computation...

  • Page 40
    ... share. Dual presentation of primary and fully diluted earnings per share has not been made on the face of the income statement because the differences are insignificant. This exhibit is presented because common stock equivalents represent more than 3% of weighted average common shares outstanding...

  • Page 41
    ... EARNINGS TO FIXED CHARGES FOR INTEL CORPORATION (In millions, except ratios) Years Ended Dec. 26, 1992 -------$1,569 Dec. 25, 1993 -------$3,530 Dec. 31, 1994 -------$3,603 Dec. 30, 1995 -------$5,638 Dec. 28, 1996 ------$7,934 Income before taxes Add - Fixed charges net of capitalized interest...

  • Page 42
    ... years ended December 28, 1996 (In millions -except per share amounts) 1996 1995 1994 Net revenues $20,847 $16,202 $11,521 Cost of sales ...common and common equivalent share $ 5.81 $ 4.03 $ 2.62 Weighted average common and common equivalent shares outstanding 888 884 874 See accompanying notes.

  • Page 43
    ... $ Long-term debt Deferred tax liabilities Put warrants Commitments and contingencies Stockholders' equity: Preferred Stock, $.001 par value, 50 shares authorized; none issued -Common Stock, $.001 par value, 1,400 shares authorized; 821 issued and outstanding in 1996 and 1995, and capital in...

  • Page 44
    ...) Decrease (increase) in inventories 711 (835) (331) (Increase) in other assets (7) (251) (57) Increase in accounts payable 105 289 148 Tax benefit from employee stock plans 196 116 61 Purchase of trading assets (75) (Gain) on trading assets (12) Increase in income taxes payable 185 372 38 Increase...

  • Page 45

  • Page 46
    ... Stock and capital in excess of par value Number Retained (In millions) of shares Amount earnings Total Balance at December 25, 1993 837 $2,194 $ 5,306 $ 7,500 Proceeds from sales of shares through employee stock plans, tax benefit of $61 and other 12 215 -215 Proceeds from sales of put warrants...

  • Page 47
    ...-out basis). Inventories at fiscal year-ends were as follows: (In millions) 1996 1995 Materials and purchased parts $ 280 $ 674 Work in process 672 707 Finished goods 341 623 Total $1,293 $2,004 Property, plant and equipment. Property, plant and equipment are stated at cost. Depreciation is...

  • Page 48
    ..., "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," effective as of the beginning of fiscal 1995. This adoption had no material effect on the Company's financial statements. Deferred income on shipments to distributors. Certain of the Company's sales...

  • Page 49
    ... per share in 1994. Stock repurchase program. The Company has an authorization from the Board of Directors to repurchase up to 110 million shares of Intel's Common Stock in open market or negotiated transactions. During 1996 the company repurchased 16.8 million shares at a cost of $1.3 billion...

  • Page 50
    ... ranging from $56 to $69 per share, with an average exercise price of $61 per share. There is no significant dilutive effect on earnings per share for the periods presented. Borrowings Short-term debt. Short-term debt and weighted average interest rates at fiscal year-ends were as follows: 1996 1995...

  • Page 51
    ... $306 million during 1996 and $700 million during 1995. This debt is rated A1+ by Standard and Poor's and P1 by Moody's. Proceeds are used to fund short-term working capital needs. Long-term debt. Long-term debt at fiscal year-ends was as follows: (In millions) 1996 1995 Payable in U.S. dollars...

  • Page 52
    ... 1,161 -------Swaps hedging investments in debt securities -Swaps hedging investments in equity securities -Options hedging investments in equity securities (9) Currency forward contracts hedging investments in debt securities --------Total available-for-sale securities 8,840 Less amounts classified...

  • Page 53
    ... in 1-2 years 320 327 Due in 2-5 years 86 88 Due after 5 years 277 276 Total investments in debt securities $7,688 $7,698 Derivative financial instruments Outstanding notional amounts for derivative financial instruments at fiscal year-ends were as follows: (In millions) 1996 1995 Swaps hedging...

  • Page 54
    ... the yield of the related investments or debt they hedge. Pay rates on swaps hedging investments in debt securities match the yields on the underlying investments they hedge. Payments on swaps hedging investments in equity securities match the equity returns on the underlying investments they hedge...

  • Page 55
    ... outstanding at fiscal year-ends were as follows: 1996 1995 Estimated Estimated Carrying fair Carrying fair (In millions) amount value amount value Cash and cash equivalents $4,165 $4,165 $1,463 $1,463 Short-term investments $3,736 $3,736 $ 995 $ 995 Trading assets $ 87 $ 87 $ -$ -Long-term...

  • Page 56
    .... Management believes that credit risks are moderated by the diversity of its end customers and geographic sales areas. Intel performs ongoing credit evaluations of its customers' financial condition and requires collateral as deemed necessary. Interest income and other (In millions) 1996 1995 1994...

  • Page 57
    ...directors. Under all plans, the option purchase price is equal to fair market value at the date of grant. Options currently expire no later than ten years from the grant date and generally vest after five years. Proceeds received by the Company from exercises are credited to Common Stock and capital...

  • Page 58
    ... price of the Company's stock over the period of the grants. The following tables summarize information about options outstanding at December 28, 1996: Outstanding options Weighted average Weighted Number of contractaverage shares ual life exercise Range of exercise prices (in millions) (in years...

  • Page 59
    ... exercised at specific dates ranging from January 1997 to December 2006. Prices for options exercised during the three-year period ended December 28, 1996 ranged from $3.04 to $69.43. Stock Participation Plan. Under this plan, eligible employees may purchase shares of Intel's Common Stock at 85% of...

  • Page 60
    ... on the employee's years of service. Vesting begins after three years of service in 20% annual increments until the employee is 100% vested after seven years. The Company provides tax-qualified defined-benefit pension plans for the benefit of eligible employees in the U.S. and Puerto Rico. Each plan...

  • Page 61
    ...cost 3 3 Accrued pension costs $ (6) $ (7 At fiscal year-ends, the weighted average discount rates and long- term rates for compensation increases used for estimating the benefit obligations and the expected return on plan assets were as follows: 1996 1995 1994 Discount rate 7.0% 7.0% 8.5% Rate...

  • Page 62
    ...Prepaid (accrued) pension costs $ 11 $ (13 At fiscal year-ends, the weighted average discount rates and long-term rates for compensation increases used for estimating the benefit obligations and the expected return on plan assets were as follows: 1996 1995 1994 Discount rate 5.5%-14% 5.5%-14...

  • Page 63
    ...board-level products, chipsets, embedded processors and microcontrollers, flash memory chips, and network and communications products. Microprocessors and related board-level products account for a substantial majority of the Company's net revenues. No customer exceeded 10% of revenues in 1996, 1995...

  • Page 64
    ..., trading assets, deferred tax assets, long-term investments and certain other assets. Transfers Sales to between Indenti(In millions) unaffiliated geographic Net Operating fiable 1996 customers areas revenues income assets United States $ 8,668 $ 9,846 $18,514 $ 5,255 $12,982 Europe 5,876...

  • Page 65
    ...of Intel Corporation as of December 28, 1996 and December 30, 1995, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 28, 1996. These financial statements are the responsibility of the Company's management...

  • Page 66
    Financial summary Ten Years Ended December 28, 1996 Net investment Additions in property, Long-term Stock- to property, plant & Total debt & put holders' plant & (In millions) equipment assets warrants equity equipment 1996 $ 8,487 $23,735 $ 1,003 $16,872 $ 3,024 1995 $ 7,471 $17,504 $ 1,125 $12,...

  • Page 67
    ... growth in Pentium microprocessor and related board-level products, new factories commencing production, manufacturing process conversions and shifts in product mix. While revenues increased substantially from 1995 to 1996, growth in cost of sales was significantly less. Cost of sales in the first...

  • Page 68
    ...pursuant to employee stock plans ($192 million in 1995 and $150 million in 1994). As part of its authorized stock repurchase program, the Company had outstanding put warrants at the end of 1996, with the potential obligation to buy back 4.5 million shares of its Common Stock at an aggregate price of...

  • Page 69
    ...cost of sales and research and development spending. The industry in which Intel operates is characterized by very short product life cycles. Intel considers it imperative to maintain a strong research and development program to continue to succeed. The Company will also continue spending to promote...

  • Page 70
    ... Market price range Step-Up Warrants (B) High $ 39.00 $ 43.63 $ 31.88 $ 11.91 Low $ 26.75 $ 30.44 $ 11.31 $ 6.97 (A) Intel plans to continue its dividend program. However, dividends are dependent on future earnings, capital requirements and financial condition. (B) Intel's Common Stock (symbol INTC...

  • Page 71
    ... descriptions of graphs on pages 34 and 35 of the Company's 1996 Annual Report ...1996 Annual Report to Stockholders. REVENUES AND INCOME (Dollars in billions) 1994 -----11.5 2.3 1995 -----16.2 3.6 1996 -----20.8 5.2 Net revenues Net income COSTS AND EXPENSES (Percent of revenues) Cost of sales...

  • Page 72
    1 EXHIBIT 21 INTEL CORPORATION SUBSIDIARIES (All 100% Owned) Intel International (Incorporated in California) Intel Overseas Corp. (Incorporated in California) Synchroquartz (U.S.) Corp. (Incorporated in California) Intel Malaysia SDN. BHD. (Incorporated in Malaysia)

  • Page 73
    ... dated January 13, 1997, included in the 1996 Annual Report to Stockholders of Intel Corporation. Our audits also include the financial statement schedule of Intel Corporation listed in Item 14(a). This schedule is the responsibility of the Company's management. Our responsibility is to express...

  • Page 74
    .... PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS...