Intel 1996 Annual Report Download - page 63

Commitments
The Company leases a portion of its capital equipment and certain of its facilities under operating leases that expire at various dates through
2011. Rental expense was $57 million in 1996, $38 million in 1995 and $38 million in 1994. Minimum rental commitments under all non-
cancelable leases with an initial term in excess of one year are payable as follows: 1997-$23 million; 1998-$18 million; 1999-$14 million;
2000-$11 million; 2001-$9 million; 2002 and beyond-
$25 million. Commitments for construction or purchase of property, plant and equipment
approximated $1.6 billion at December 28, 1996. In connection with certain manufacturing arrangements, Intel had minimum purchase
commitments of approximately $333 million at December 28, 1996 for flash memories and other memory components and for production
capacity of board-level products.
Contingencies
In March 1995, EMI Group, N.A. (formerly known as Thorn EMI North America Inc.) brought suit in Federal Court in Delaware against Intel,
alleging that certain Intel manufacturing processes infringe a U.S. patent. In May 1996, the Court granted Intel's motion for summary judgment
on some of the processes in issue. In November 1996, the Court granted Intel's motion for summary judgment on the remaining processes in
issue and entered judgment in favor of Intel and against EMI on the claims in EMI's complaint. EMI has filed a Notice of Appeal with respect
to the Court's decision. Although the ultimate outcome of this lawsuit cannot be determined at this time, management, including internal
counsel, does not believe that the outcome of this litigation will have a material adverse effect on the Company's financial position or overall
trends in results of operations.
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 adjacent
to one of its former sites. The EPA has issued a Record of Decision with respect to a groundwater cleanup plan at that site, including expected
costs to complete. Under the California and U.S. Superfund statutes, liability for cleanup of this site and the adjacent area is joint and several.
The Company, however, has reached agreement with those same two companies which significantly limits the Company's liabilities under the
proposed cleanup plan. Also, the Company has completed extensive studies at its other sites and is engaged in cleanup at several of these sites.
In the opinion of management, including internal counsel, the potential losses to the Company in excess of amounts already accrued arising out
of these matters will not have a material adverse effect on the Company's financial position or overall trends in results of operations, even if
joint and several liability were to be assessed.
The Company is party to various other legal proceedings. In the opinion of management, including internal counsel, these proceedings will not
have a material adverse effect on the financial position or overall trends in results of operations of the Company.
The estimate of the potential impact on the Company's financial position or overall results of operations for the above legal proceedings could
change in the future.
Industry segment reporting
Intel operates predominantly in one industry segment. The Company designs, develops, manufactures and markets microcomputer components
and related products at various levels of integration. The Company sells its products directly to original equipment manufacturers (OEMs) and
also to a network of industrial and retail distributors throughout the world. The Company's principal markets are in the United States, Europe,
Asia-Pacific and Japan, with the U.S. and Europe being the largest based on revenues. The Company's major products include microprocessors
and related 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 or 1994. Summary balance sheet information for operations outside the United States at fiscal year-
ends is as follows:
(In millions) 1996 1995
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Assets $4,784 $4,404
Total liabilities $1,694 $1,661
Net property, plant and equipment $1,615 $1,414