Intel 1997 Annual Report Download - page 62

Notes to consolidated
financial statements
Digital brought suit in Federal District Court in Massachusetts in May 1997, alleging that Intel is infringing 10 patents in making and selling
microprocessor products. Digital sought an injunction and monetary damages. If granted, the injunction would prohibit Intel from using
Digital's patented technology in its microprocessor products. The Company believes that its products do not infringe the Digital patents. The
Company filed a counterclaim against Digital for infringement of nine microprocessor-related patents, and, in District Court in Oregon, the
Company claimed that Digital infringes six video and computer system patents. In October 1997, Intel and Digital announced that they have
agreed to establish a broad-based business relationship as described above (see "Commitments"). Among other matters, the two companies
agreed to request a stay of all lawsuits until government review of the agreement is completed, following which the lawsuits would be
dismissed with prejudice.
In November 1997, Intergraph Corporation ("Intergraph") filed suit in Federal District Court in Alabama generally alleging that Intel attempted
to coerce Intergraph into relinquishing certain patent rights relating to microprocessor and chipset interaction in multiprocessor workstations.
The suit also alleges that Intel infringes three Intergraph patents and includes alleged violations of antitrust laws. The suit seeks injunctive relief
along with unspecified damages. In November 1997, Intel filed suit against Intergraph in Federal District Court in California seeking a
declaratory judgment that the Intergraph patents are invalid. Intel also filed an action in the same court alleging breach of contract and
misappropriation of trade secrets based on Intergraph's refusal to return Intel confidential information as contractually required.
Although the ultimate outcome of the legal proceedings noted above cannot be determined at this time, management, including internal
counsel, does not believe that the outcome of these proceedings, individually and in the aggregate, 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 Company's financial position or overall trends in results of operations.
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.
In 1997, one customer accounted for 12% of the Company's revenues. No customer exceeded 10% of revenues in 1996 and 1995. Summary
balance sheet information for operations outside the United States at fiscal year-ends is as follows:
(In millions) 1997 1996
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Assets $ 5,332 $ 4,784
Total liabilities $ 2,127 $ 1,694
Net property, plant and equipment $ 2,644 $ 1,615