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INTEL CORP
FORM 10-K
(Annual Report)
Filed 02/27/06 for the Period Ending 12/31/05
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
    INTEL CORP FORM 10-K (Annual Report) Filed 02/27/06 for the Period Ending 12/31/05 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 ...

  • Page 2
    Table of Contents

  • Page 3
    ... and non-voting common equity held by non-affiliates of the registrant as of July 1, 2005, based upon the closing price of the common stock as reported by The NASDAQ* National Market on such date, was approximately $154.9 billion 5,883 million shares of common stock outstanding as of January 27...

  • Page 4
    ... Other Information PART III Directors and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions Principal Accounting Fees and Services PART IV Exhibits...

  • Page 5
    .... Products Our products include microprocessors; chipsets; motherboards; flash memory; wired and wireless connectivity products; communications infrastructure components, including network processors; application and cellular baseband processors; and products for networked storage. Our customers...

  • Page 6
    ...equals one billion cycles processed per second. As computers continue to support more usage models, other factors are increasingly important to overall platform performance. For example, microprocessors have historically contained only one processor core. Recently, we have started offering dual-core...

  • Page 7
    ... communications platforms are standards-based solutions that offer network infrastructure builders flexible, low-cost, faster time-to -market options for designing their networks. Our network processor products are based on the Intel ® Internet Exchange Architecture (Intel ® IXA). At the core...

  • Page 8
    ... 64-bit memory addressability through Intel EM64T, has 2 MB of L2 cache and supports an 800-MHz system bus. We also introduced the Intel ® Professional Business Platform based on these processors, the Intel ® 945G Express Chipset and an optional Intel ® PRO/1000 PM Network Connection. The Intel...

  • Page 9
    ... DDR2 533-MHz system memory. In February 2006, we introduced three new Intel Core Duo processors supported by the Mobile Intel ® 945GM Express Chipset for embedded market segments. These Intel Core Duo processors run at speeds of up to 2.0 GHz, support a 667-MHz bus and include 2 MB of L2 cache. 5

  • Page 10
    ... for use in the notebook market segment. Our strategy is to deliver products with optimized performance, battery life, form factor and wireless connectivity- features that are important to users of mobile computers. We offer mobile computing microprocessors at a variety of price/performance points...

  • Page 11
    ... new dualcore Intel Core Duo processor designed to boost multitasking performance, power-saving features to improve battery life, high-definition entertainment features and a more flexible network connection. Intel Centrino Duo mobile technology also includes the Mobile Intel ® 945 Express Chipset...

  • Page 12
    ...975 Express Chipset, a network connectivity device and enabling software, all optimized to work together in the digital home environment. Digital Health Group The strategy for the Digital Health Group is to target global business opportunities in healthcare research, diagnostics and productivity, as...

  • Page 13
    ..., China, the Philippines and Costa Rica. We plan to continue to invest in new assembly and test technologies and facilities to keep pace with our microprocessor, chipset, flash memory and communications technology improvements. To augment capacity, we use subcontractors to perform assembly of...

  • Page 14
    ... as facilities in the U.S., Malaysia and the Philippines dedicated to improvements in assembly and test processes. Employees As of December 31, 2005, we employed approximately 99,900 people worldwide, with more than 50% of these employees located in the U.S. Sales and Marketing Most of our products...

  • Page 15
    .... From time to time, we may enter into additional agreements with customers covering, for example, changes from our standard terms and conditions, new product development and marketing, private-label branding and other matters. Most of our sales are made using electronic and web-based processes that...

  • Page 16
    ... introducing new products and platform solutions, discontinuing older products, reducing prices, and offering rebates and other incentives, to increase acceptance of our latest products and to be competitive within each relevant market segment. Our products compete with products developed for...

  • Page 17
    ... Micro Devices, Inc. (AMD), our primary microprocessor competitor, market software-compatible products that compete with Intel architecture-based processors. We also face competition from companies offering rival microprocessor designs, such as International Business Machines Corporation (IBM...

  • Page 18
    ...in the digital economy, create new business opportunities for Intel and expand global markets for our products. The investments may support, among other things, Intel product initiatives, emerging trends in the technology industry or worldwide Internet deployment. We invest in companies that develop...

  • Page 19
    ... ® technology for mobile and desktop platforms, and Demand Based Switching (DBS) technology for server platforms. The manufacture and assembly and testing of Intel products requires the use of hazardous materials that are subject to a broad array of EHS laws and regulations. Intel actively monitors...

  • Page 20
    ...49) has been Executive Vice President and General Manager, Mobility Group, since January 2005. Prior to that, Mr. Maloney was Executive Vice President and General Manager, Intel Communications Group, from 2001 to January 2005; Executive Vice President and Director, Sales and Marketing Group, in 2001...

  • Page 21
    ... Dorr LLP law firm; E. John P. Browne, Group Chief Executive of BP plc; D. James Guzy, Chairman of Arbor Company; Reed E. Hundt, Principal, Charles Ross Partners, LLC; Paul S. Otellini, Intel's Chief Executive Officer and President; James D. Plummer, John M. Fluke Professor of Electrical Engineering...

  • Page 22
    ...not be able to successfully develop and market these new products; the products we invest in and develop may not be well received by customers; and products developed and new technologies offered by others may affect the demand for our products. These types of events could have a variety of negative...

  • Page 23
    ... affect our ability to meet demand for our products and may increase our costs. We have thousands of suppliers providing various materials that we use in production of our products and other aspects of our business, and we seek, where possible, to have several sources of supply for all of these...

  • Page 24
    ... to: • pay third-party infringement claims; • discontinue manufacturing, using or selling the infringing products; • discontinue using the infringing technology or processes; • develop non-infringing technology, which could be time-consuming and costly or may not be possible; or • license...

  • Page 25
    ... over time. Changes in forecasted share-based compensation expense could impact our gross margin percentage; research and development expenses; marketing, general and administrative expenses; and our tax rate. Our failure to comply with applicable environmental laws and regulations worldwide could...

  • Page 26
    ... in non-marketable equity securities of private companies, which range from early-stage companies that are often still defining their strategic direction to more mature companies whose products or technologies may directly support an Intel product or initiative. The success of these companies (or...

  • Page 27
    ... Israel. The majority of our assembly and test facilities are located overseas, specifically in Malaysia, China, the Philippines and Costa Rica. In addition, we have sales and marketing offices located worldwide. These facilities are generally located near major concentrations of users. We believe...

  • Page 28
    ... by AMD that Intel used unfair business practices to persuade clients to buy Intel microprocessors. In June 2005, Intel received an inquiry from the Korea Fair Trade Commission requesting documents from Intel's Korean subsidiary related to marketing and rebate programs that Intel entered into with...

  • Page 29
    Table of Contents ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Information regarding the market price range of Intel common stock and dividend information...

  • Page 30
    Table of Contents ITEM 6. SELECTED FINANCIAL DATA Ten Years Ended December 31, 2005 (In Millions) Net Revenue Gross Margin Research & Development Operating Income Net Income 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 Basic Earnings Per Share 1 38,826 34,209 30,141 26,764 26,539 33,726 ...

  • Page 31
    ... generation of products and platforms that will enable new form factors and new usage models for businesses and consumers. We believe that the end users of computing and communications systems and devices want products based on platform solutions. We define a platform as a collection of technologies...

  • Page 32
    ... based on Intel XScale technology, used to manage and direct data moving across the Internet and corporate networks. We also offer embedded microprocessors that can be used for modular communications platform applications as well as for industrial equipment and point-of -sale systems. Mobility Group...

  • Page 33
    ...a network connectivity device and enabling software, all optimized to work together in the digital home environment. We also offer microprocessors and chipsets for embedded consumer electronics designs, such as digital televisions, video recorders and set-top boxes. Digital Health Group The strategy...

  • Page 34
    ... Non-Marketable Equity Securities We typically invest in non-marketable equity securities of private companies, which range from early-stage companies that are often still defining their strategic direction to more mature companies whose products or technologies may directly support an Intel product...

  • Page 35
    ... is measured by the difference between the asset grouping's carrying amount and its fair value, based on the best information available, including market prices or discounted cash flow analysis. Impairments of long-lived assets are determined for groups of assets related to the lowest level of...

  • Page 36
    ...of Revenue Net revenue Cost of sales Gross margin Research and development Marketing, general and administrative Impairment of goodwill Amortization and impairment of acquisition-related intangibles and costs Purchased in-process research and development Operating income Losses on equity securities...

  • Page 37
    ... Digital Enterprise Group and the Mobility Group operating segments. In 2004, our Asia-Pacific region's revenue made up the largest portion of our total revenue and increased 26%, reflecting both growth in local consumption and movement of more of the production for our customers' PC supply chains...

  • Page 38
    ... was primarily due to higher unit sales of microprocessors and motherboards. The increase was partially offset by lower average selling prices for microprocessors designed for desktop platforms, and lower chipset revenue. We ramped our 90-nanometer process technology in 2004 and exited the year...

  • Page 39
    ... mobile processor. Revenue from sales of chipsets and wireless connectivity products also increased significantly in 2005 compared to 2004, primarily due to the success of Intel Centrino mobile technology. Revenue from application processors, which are based on Intel XScale technology, increased...

  • Page 40
    ...of higher revenue from sales of microprocessors in the DEG and MG operating segments, and because our customers used a higher percentage of their available Intel Inside program funds) and increased profit-dependent compensation expenses. In addition, the increase was due to higher marketing expenses...

  • Page 41
    ... and slower-than-expected customer acceptance of the reporting unit's products in the cellular baseband processor business, as well as a delay in the transition to next-generation phone networks, had pushed out the forecasts for sales into high-end data cell phones. These factors resulted in lower...

  • Page 42
    ..., Arizona. Financing sources of cash during 2005 also included $1.2 billion in proceeds from the sale of shares pursuant to employee equity incentive plans ($894 million in 2004 and $967 million in 2003). During January 2006, Micron and Intel formed IMFT. As part of the initial capital contribution...

  • Page 43
    ... meet business requirements for the next 12 months, including capital expenditures for the expansion or upgrading of worldwide manufacturing and assembly and test capacity, working capital requirements, the dividend program, potential stock repurchases and potential future acquisitions or strategic...

  • Page 44
    ...$39 million. Obligations to employees and non-employee directors related to our equity incentive plans are not included in the table above, as these arrangements do not result in a future cash outflow. The expected timing of payments of the obligations above is estimated based on current information...

  • Page 45
    ...to executive officers are determined by the Compensation Committee. All members of the Compensation Committee are independent directors, as defined in the applicable rules for issuers traded on The NASDAQ Stock Market*. For additional information regarding equity incentive plans and the activity for...

  • Page 46
    ...AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Options granted to listed officers as a group during fiscal 2005 were as follows: Number of Securities Underlying Option Grants Percent of Total Options Granted to Employees Grant Date Present Value 1 Exercise Price Per Share...

  • Page 47
    ... excludes share-based compensation from our consolidated budget and planning process to facilitate period-to -period comparisons and to assess changes in gross margin dollar, net income and earnings per share targets in relation to changes in forecasted revenue. Profit-dependent cash-incentive pay...

  • Page 48
    ..., including this MD&A, involve a number of risks and uncertainties- in particular, the statements regarding our goals and strategies, new product introductions, plans to cultivate new businesses, future economic conditions, revenue, pricing, gross margin and costs, capital spending, depreciation and...

  • Page 49
    ... to realize deferred tax assets. We believe that we have the product offerings, facilities, personnel, and competitive and financial resources for continued business success, but future revenue, costs, gross margin and profits are all influenced by a number of factors, including those discussed...

  • Page 50
    ... generation of silicon production technologies. Our focus areas tend to develop and change over time due to rapid advancements in the technology field. Our total marketable portfolio includes marketable strategic equity securities as well as marketable equity securities classified as trading assets...

  • Page 51
    ... is part of our strategy to support the development and supply of DRAM products. Based on the analysis of the high-technology stock indices and the historical volatility of Micron's stock, we estimated that it was reasonably possible that the prices of the stocks in our marketable strategic equity...

  • Page 52
    ... Statements of Income Consolidated Balance Sheets Consolidated Statements of Cash Flows Consolidated Statements of Stockholders' Equity Notes to Consolidated Financial Statements Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm Supplemental Data: Financial Information...

  • Page 53
    ... Cost of sales Gross margin Research and development Marketing, general and administrative Impairment of goodwill Amortization and impairment of acquisition-related intangibles and costs Purchased in-process research and development Operating expenses Operating income Losses on equity securities...

  • Page 54
    ... equipment, net Marketable strategic equity securities Other long-term investments Goodwill Deferred taxes and other assets Total assets Liabilities and stockholders' equity Current liabilities: Short-term debt Accounts payable Accrued compensation and benefits Accrued advertising Deferred income on...

  • Page 55
    ...acquisition-related costs Purchased in-process research and development Losses on equity securities, net Net loss on retirements and impairments of property, plant and equipment Deferred taxes Tax benefit from employee equity incentive plans Changes in assets and liabilities: Trading assets Accounts...

  • Page 56
    ... income Proceeds from sales of shares through employee equity incentive plans, tax benefit of $216 and other Amortization of acquisition-related unearned stock compensation, net of adjustments Repurchase and retirement of common stock Cash dividends declared ($0.08 per share) Balance at December 27...

  • Page 57
    ... the company's marketable equity securities may from time to time be classified as trading assets, if the company no longer deems the investments to be strategic in nature at the time of trading asset designation, and has the ability and intent to mitigate equity market risk through sale or the use...

  • Page 58
    ...The evaluation Intel uses to determine whether to impair a marketable equity security is based on the specific facts and circumstances present at that time, and includes the consideration of general market conditions, the duration and extent to which the fair value is less than cost, and the company...

  • Page 59
    ..., trading assets, long-term investments, marketable strategic equity securities, certain non-marketable investments, short-term debt, long-term debt, swaps, currency forward contracts, currency options, equity options and warrants are based on quoted market prices or pricing models using current...

  • Page 60
    ... currency forward contracts used in cash flow hedging strategies related to long-term capital purchases, forward points are excluded and effectiveness is measured using spot rates to value both the hedge contract and the hedged item. For currency options and equity options accounted for as cash flow...

  • Page 61
    ... with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Product Warranty The company generally sells products with a limited warranty of...

  • Page 62
    ... Stock Issued to Employees," and related interpretations. The exercise price of options is equal to the market price of Intel common stock (defined as the average of the high and low trading prices reported by The NASDAQ Stock Market*) on the date of grant. Accordingly, no share-based compensation...

  • Page 63
    ...Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The company's equity incentive plans provide for retirement-related acceleration of vesting for a portion of certain employee stock options based on the employee's age and years of service under two retirement programs...

  • Page 64
    ... by the timing of the related debt issuance. See "Note 5: Borrowings." Note 4: Common Stock Repurchase Program The company has an ongoing authorization, as amended in November 2005, from the Board of Directors to repurchase up to $25 billion in shares of Intel's common stock in open market or...

  • Page 65
    ...of time, require the company to repurchase the holder's debentures for the principal amount plus any accrued and unpaid interest. The company may pay the repurchase price in cash or in shares of the company's common stock. In addition, on or prior to June 12, 2006, the company may redeem all or part...

  • Page 66
    ... consolidated balance sheets. The decrease in 2005 was primarily related to an amendment of the company's U.S. defined-benefit plan, which resulted in a transfer of deferred compensation liabilities to the plan (see "Note 12: Retirement Benefit Plans"). Net gains for the period on equity securities...

  • Page 67
    ...the market price of Micron's stock had been below the company's cost basis for an extended period of time, as well as the competitive pricing environment for Dynamic Random Access Memory (DRAM) products. The investment in Micron is part of the company's strategy to support the development and supply...

  • Page 68
    ... systems, cellular handsets and handheld computing devices, and networking and communications equipment. The company also has accounts receivable derived from sales to industrial and retail distributors. The company's two largest customers accounted for 35% of net revenue for 2005 and 2004, and 34...

  • Page 69
    ...Contents INTEL CORPORATION...the company recognized $60 million of gains in other, net associated with terminating financing arrangements for manufacturing facilities and... available-for-sale investments Accumulated net unrealized holding gain on derivatives Accumulated minimum pension liability Total ...

  • Page 70
    ... (the Jobs Act) created a temporary incentive for U.S. corporations to repatriate accumulated income earned abroad by providing an 85% dividends-received deduction for certain dividends from controlled non-U.S. corporations. During 2005, the company's Chief Executive Officer and Board of Directors...

  • Page 71
    ... 1,149 35 (703) 481 $ $ $ $ $ Included in the "Deferred taxes and other assets" line item on the consolidated balance sheet. The net deferred tax asset valuation allowance increased $11 million to $86 million at December 31, 2005 based on management's assessments that it is more likely than not...

  • Page 72
    ... Equity Incentive Plan (the 2004 Plan), options to purchase shares may be granted to all employees and non-employee directors. Beginning in 2006, the company will also issue restricted stock units to employees and non-employee directors under the 2004 Plan. The company may use other types of equity...

  • Page 73
    ... Chief Executive Officer of the company under delegation of authority from the Board of Directors, pursuant to the terms of the Profit Sharing Plan. As of December 31, 2005, approximately 90% of the assets of the U.S. Profit Sharing Plan had been allocated to domestic and international equity index...

  • Page 74
    ... into account the participant's social security wage base), reduced by the participant's balance in the Profit Sharing Plan. If the pension benefit exceeds the participant's balance in the Profit Sharing Plan, the participant will receive a combination of pension and profit sharing amounts equal to...

  • Page 75
    ...on the balance sheet for the plans described above were as follows: U.S. Pension Benefits 2005 2004 Non-U.S. Pension Benefits 2005 2004 Postretirement Medical Benefits 2005 2004 (In Millions) Amounts recognized in the balance sheet: Prepaid benefit cost Accrued benefit liability Deferred tax asset...

  • Page 76
    ... actuarial assumptions used to determine costs for the plans were as follows: U.S. Pension Benefits 2005 2004 Non-U.S. Pension Benefits 2005 2004 Postretirement Medical Benefits 2005 2004 Discount rate Expected return on plan assets Rate of compensation increase Future profit sharing contributions...

  • Page 77
    ... companies or pension funds under standard contracts follow local regulations, and Intel is not actively involved in the investment strategy. In general, the investment strategy followed is designed to accumulate a diversified portfolio among markets, asset classes or individual securities in order...

  • Page 78
    ...major product groups in line with the company's strategy to design and deliver technology platforms (see "Note 19: Operating Segment and Geographic Information"). Due to this reorganization of the company's business groups during the first quarter of 2005, goodwill was allocated to the new reporting...

  • Page 79
    ... and slower-than-expected customer acceptance of the reporting unit's products in the cellular baseband processor business, as well as a delay in the transition to next-generation phone networks, had pushed out the forecasts for sales into high-end data cell phones. These factors resulted in lower...

  • Page 80
    ..., Micron contributed assets valued at $995 million and $250 million in cash. Intel is currently committed to purchasing 49% of IMFT's production output and production-related services. IMFT will be governed by a Board of Managers, with the parties initially appointing an equal number of managers to...

  • Page 81
    ... on new product designs. Intel has reflected its net investment in this technology of $230 million as an identified intangible asset. The identified intangible asset will be amortized into cost of sales over its expected five-year life. Costs incurred by Intel and Micron for product and process...

  • Page 82
    ... by AMD that Intel used unfair business practices to persuade clients to buy Intel microprocessors. In June 2005, Intel received an inquiry from the Korea Fair Trade Commission requesting documents from Intel's Korean subsidiary related to marketing and rebate programs that Intel entered into with...

  • Page 83
    ... product groups in line with the company's strategy to design and deliver technology platforms. The operating segments after the first-quarter reorganization included the Digital Enterprise Group, the Mobility Group, the Digital Home Group, the Digital Health Group and the Channel Platforms Group...

  • Page 84
    ...both of these customers was from the sale of microprocessors, chipsets, and other components by the Digital Enterprise Group and Mobility Group operating segments. Geographic revenue information for the three years ended December 31, 2005 is based on the location of the customer. Property, plant and...

  • Page 85

  • Page 86
    ... REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders, Intel Corporation We have audited the accompanying consolidated balance sheets of Intel Corporation as of December 31, 2005 and December 25, 2004, and the related consolidated statements of income, stockholders' equity, and...

  • Page 87
    ... Contents REPORT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of Directors and Stockholders, Intel Corporation We have audited management's assessment, included in the accompanying Management Report on Internal Control Over Financial Reporting, that Intel Corporation...

  • Page 88
    ... accrued tax items, primarily related to an increase in estimated research and development tax credits from prior years, increasing both basic and diluted earnings per share by $0.02. 2 Intel's common stock (symbol INTC) trades on The NASDAQ Stock Market* and is quoted in the Wall Street Journal...

  • Page 89
    ... certifications. Part II, Item 8 of this Form 10-K sets forth the report of Ernst & Young LLP, our independent registered public accounting firm, regarding its audit of Intel's internal control over financial reporting and of management's assessment of internal control over financial reporting set...

  • Page 90
    ... effectiveness of key financial reporting controls, process documentation, accounting policies and our overall control environment. This assessment is supported by testing and monitoring performed by both our Internal Audit organization and our Finance and Enterprise Services organization. Based on...

  • Page 91
    ...executive officers and directors, on this web site within four business days following the date of such amendment or waiver. ITEM 11. EXECUTIVE COMPENSATION The information appearing under the headings "Directors' Compensation," "Stock Price Performance Graph," "Report of the Compensation Committee...

  • Page 92
    ... by reference as part of this Form 10-K. Intel, the Intel logo, Intel. Leap ahead., Intel Inside, Celeron, Centrino, Intel Core, Intel SpeedStep, Intel StrataFlash, Intel Viiv, Intel Xeon, Intel XScale, Itanium, and Pentium are trademarks or registered trademarks of Intel Corporation or its...

  • Page 93
    ..., 2003 (In Millions) Balance at Beginning of Year Additions Charged to Costs and Expenses Deductions Balance at End of Year Allowance for doubtful receivables 1 2005 2004 2003 Valuation allowance for deferred tax asset 2005 2004 2003 1 Deductions represent uncollectible accounts written off, net...

  • Page 94
    ... Morgan Securities Inc. dated December 16, 2005 Indenture issued by Intel Corporation to Citibank N.A., dated as of December 16, 2005 Intel Corporation 2004 Equity Incentive Plan, as amended and restated, effective May 18, 2005 Standard Terms and Conditions Relating to Non-Qualified Stock Options...

  • Page 95
    10.16** Form of Intel Corporation Nonqualified Stock Option Agreement under the 2004 Equity Incentive Plan 89 X

  • Page 96
    ... May 18, 2005 Description of Bonus Terms under the Executive Officer Incentive Plan Intel Corporation Deferral Plan for Outside Directors, effective July 1, 1998 Intel Corporation Special Deferred Compensation Plan Intel Corporation Sheltered Employee Retirement Plan Plus, as amended and restated...

  • Page 97
    ... Executive Vice President, Chief Financial Officer and Principal Accounting Officer February 24, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates...

  • Page 98

  • Page 99
    ..., the Company agrees with the Initial Purchaser, for the benefit of the holders (including the Initial Purchaser) of the Debentures and the Shares (as defined below), as follows: 1. Certain Definitions. Capitalized terms used but not defined herein shall have the meanings given to such terms in the...

  • Page 100
    ... be amended from time to time pursuant to the terms hereof. (e) " Business Day " shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed. (f) " Closing Date " means the date on which any Debentures...

  • Page 101
    ... Questionnaire to the Company on or prior to such date. (x) " Offering Memorandum " means the Offering Memorandum dated December 13, 2005 relating to the offer and sale of the Securities. (y) " Person " means a corporation, association, partnership, organization, business, individual, government or...

  • Page 102
    ...to the same (including any successor statute, rule or regulation thereto) as it may be amended from time to time. 2. Registration Under the Securities Act. (a) The Company agrees to file under the Securities Act within 180 days after the Closing Date, a shelf registration statement providing for the...

  • Page 103
    ...exclusively of an Exchange Act report or other Exchange Act filing otherwise publicly available on the Company's website. (c) Each Holder of Registrable Securities agrees that if such Holder wishes to sell Registrable Securities pursuant to the Shelf Registration Statement and related Prospectus, it...

  • Page 104
    ... day after the Closing Date, Additional Interest shall accrue on the principal amount of the outstanding Debentures that are Registrable Securities at a rate of 0.25% per annum for the first 90 days following such 181 st day and at a rate of 0.5% per annum thereafter; (ii) if the Company has failed...

  • Page 105
    ... arrears and will be payable in cash on June 15 and December 15 of each year to holders of record of outstanding Debentures that are Registrable Securities at the close of business on June 1 or December 1, as the case may be, immediately preceding the relevant interest payment date, provided that in...

  • Page 106
    ... on any form which may be utilized by the Company and which shall permit the disposition of the Registrable Securities in accordance with the intended method or methods thereof, as specified in writing by the Holders of the Registrable Securities, and use its reasonable best efforts to cause...

  • Page 107
    ...and the rules and regulations of the Commission thereunder; (v) prior to any public offering of the Registrable Securities pursuant to the Shelf Registration Statement, use its commercially reasonable efforts to register or qualify, or cooperate with the Notice Holders of Securities included therein...

  • Page 108
    ... for, the Majority Holders of the Securities being sold, all relevant financial and other records, pertinent corporate documents and properties of the Company and its Subsidiaries and (ii) use its commercially reasonable efforts to have its officers, employees, accountants and counsel make available...

  • Page 109
    ...; and the Company hereby consents (except during such periods that a Deferral Notice is outstanding and has not been revoked) to the use of such Prospectus or each amendment or supplement thereto by each Notice Holder in connection with any offering and sale of the Registrable Securities covered by...

  • Page 110
    ... or business reason that, in the sole discretion of the Company, makes it appropriate to suspend the availability of the Shelf Registration Statement and the related Prospectus, including, without limitation, the acquisition or divestiture of assets, pending corporate developments, public filings...

  • Page 111
    ... to make the statements therein not misleading. (e) The Company shall use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission and make generally available to its securityholders earning statements (which need not be audited) satisfying the...

  • Page 112
    ...and expenses in connection with the qualification of the Securities for offering and sale under the State securities and Blue Sky laws referred to in Section 3(a)(v) hereof, (c) all expenses relating to the preparation, printing, distribution and reproduction of the Shelf Registration Statement, the...

  • Page 113
    ... . (a) The Company shall indemnify and hold harmless each Holder (including, without limitation, the Initial Purchaser), its Affiliates, their respective officers, directors, employees, and each person, if any, who controls such Holder within the meaning of the Securities Act or the Exchange Act...

  • Page 114
    ... loss, claim, damage, liability or action as such expenses are incurred; provided, however, that no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Securities pursuant to such Shelf Registration Statement...

  • Page 115
    ...to reflect the relative benefits received by the Company from the offering and sale of the Debentures, on the one hand, and a Holder with respect to the sale by such Holder of Securities, on the other, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such...

  • Page 116
    ...Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the written request of any Holder of Registrable Securities, make publicly available other information so long as necessary to permit sales of such Holder's securities pursuant to Rules 144 and...

  • Page 117
    ... . All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telecopier or air courier guaranteeing next-day delivery: (1) If to the Company, initially at the address set forth for it in the Purchase Agreement with a copy to...

  • Page 118
    ...of reference only and shall not limit or otherwise affect the meaning hereof. (f) Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (g) Remedies . In the event of a breach by the Company or by any Holder of any of their respective...

  • Page 119
    ..., etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its Affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be Affiliates solely by reason...

  • Page 120
    ... with your understanding of our agreement, kindly sign and return to us a counterpart hereof, whereupon this instrument will become a binding agreement between the Company and the Initial Purchaser in accordance with its terms. Very truly yours, INTEL CORPORATION By: /s/ Ravi Jacob Name: Title:

  • Page 121
    Accepted: December 16, 2005 J.P. MORGAN SECURITIES INC. By: /s/ David A. Seaman Name: David A. Seaman Title: Managing Director

  • Page 122

  • Page 123
    Exhibit 4.2 EXECUTION COPY INTEL CORPORATION as Issuer AND Citibank, N.A. as Trustee Indenture Dated as of December 16, 2005 2.95% Junior Subordinated Convertible Debentures due 2035

  • Page 124
    ... . Section 3.10 . Title and Terms; Payments Denominations Execution, Authentication, Delivery and Dating Temporary Securities Registration; Registration of Transfer and Exchange; Restrictions on Transfer Mutilated, Destroyed, Lost and Stolen Securities Persons Deemed Owners Book-Entry Provisions for...

  • Page 125
    ... Payments to be Held in Trust Statement by Officers as to Default Existence Rule 144A Information Requirement Resale of Certain Securities Book-Entry System Additional Interest under the Registration Rights Agreement Stay, Extension and Usury Laws Information for IRS Filings Further Instruments and...

  • Page 126
    ... Adjustment of Conversion Rate Shares to Be Fully Paid Conversion After a Public Acquiror Change of Control Effect of Reclassification, Consolidation, Merger or Sale Certain Covenants Responsibility of Trustee Notice to Holders Prior to Certain Actions Stockholder Rights Plans Alternate Conversion...

  • Page 127
    ...Trustee May File Proofs of Claim Application of Money Collected Limitation on Suits Unconditional Right of Holders to Receive Payment Restoration of Rights ...Consolidation or Succession to Business Preferential Collection of Claims against the Company ARTICLE 13 HOLDERS' LISTS AND REPORTS BY TRUSTEE ...

  • Page 128
    .... Section 15.06 . Supplemental Indentures Without Consent of Holders Supplemental Indentures With Consent of Holders Execution of Supplemental Indentures Effect of Supplemental Indentures Conformity with Trust Indenture Act Reference in Securities to Supplemental Indentures v 110 111 112 112 112 112...

  • Page 129
    INDENTURE, dated as of December 16, 2005, between Intel Corporation, a corporation duly organized and existing under the laws of the State of Delaware, as Issuer (the " Company "), having its principal office at 2200 Mission College Boulevard, Santa Clara, California 95054 and Citibank, N.A., a ...

  • Page 130
    .... " 105% Exception " means, and shall be deemed applicable with respect to the definition of "Fundamental Change" in, any event in which the Last Reported Sale Price of the Company's Common Stock for any 5 Trading Days within the 10 consecutive Trading Days ending immediately before the date of any...

  • Page 131
    ...the Trustee. " Business Day " means any day other than a Saturday, a Sunday or a day on which banking institutions in The City of New York are authorized or obligated by law, or executive order or governmental decree to be closed. " Capital Stock " means any and all shares, interests, participations...

  • Page 132
    ... mean such successor Person. " Company Request " or " Company Order " means a written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its President or any Vice President, and by its Chief Financial Officer...

  • Page 133
    ... Average Prices of the Company's Common Stock for the five consecutive Trading Days ending on the Trading Day immediately preceding such date. " Corporate Trust Office " means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be...

  • Page 134
    ...01. " Ex-Dividend Date " means, with respect to any dividend, distribution or issuance on the Common Stock or any other equity security, the first date on which the shares of Common Stock or such other equity security trade on the applicable exchange or in the applicable market, regular way, without...

  • Page 135
    ... balance sheet under GAAP or (2) as lessee under other leases for facilities, capital equipment or related assets, whether or not capitalized, entered into or leased for financing purposes, (iii) all obligations under Interest Rate Agreements, Exchange Rate Contracts, treasury management agreements...

  • Page 136
    ... from time to time. " Issue Date " means the date the Securities are originally issued as set forth on the face of the Security under this Indenture. " Last Reported Sale Price " of the Company's Common Stock on any date means the closing sale price per share (or if no closing sale price is reported...

  • Page 137
    ...securities exchange on which the Company's Common Stock is then listed. If the Company's Common Stock is not either quoted on The Nasdaq National Market or listed on any U.S. national or regional securities exchange on the relevant date, the Last Reported Sale Price will be the last quoted bid price...

  • Page 138
    ..., financial or accounting officer of the Company. " Opinion of Counsel " means a written opinion of counsel, who may be external or in-house counsel for the Company, and who shall be reasonably acceptable to the Trustee. " Outstanding ," when used with respect to Securities, means, as of the date of...

  • Page 139
    ...; in such case, all references to Public Acquiror Common Stock shall refer to such class of common stock. " Publicly Traded Securities " means shares of Capital Stock that are traded on a U.S. national securities exchange or quoted on The Nasdaq National Market or, with respect to a Change of...

  • Page 140
    ... of an Extraordinary Dividend or a prepayment of Deferred Interest, each June 1 and December 1 (whether or not a Business Day), (ii) with respect to the payment of Interest payable upon designation of an Extraordinary Dividend, the record date specified by the Company's Board of Directors for the...

  • Page 141
    ... owed by the Company for trade payables or otherwise for goods or materials purchased or services obtained in the ordinary course of business. " Spin-Off " has the meaning specified in Section 9.03(c). " Stated Maturity ," when used with respect to any Security, means the date specified in such...

  • Page 142
    ... quotations of securities prices. " Trading Day " means (i) if the applicable security is quoted on The Nasdaq National Market or Nasdaq SmallCap Market, a day on which trades may be made on thereon, (ii) if the applicable security is listed or admitted for trading on the New York Stock Exchange or...

  • Page 143
    ... Securities, the Trading Price per $1,000 Principal Amount of the Securities will be determined by the Company's Board of Directors (acting through the board or a committee thereof) based on a good faith estimate of the fair value of the Securities. " Transfer Restricted Security " means a Security...

  • Page 144
    ... average price per share of the Company's Common Stock on that Trading Day as determined by a nationally recognized independent investment banking firm retained for this purpose by the Company. Section 1.02 . Compliance Certificates and Opinions. Upon any application or request by the Company to...

  • Page 145
    ... and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument...

  • Page 146
    ... at its applicable Corporate Trust Office; or (ii) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company addressed to it at the address of its...

  • Page 147
    ... successors hereunder and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. Section 1.12. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York. Section 1.13...

  • Page 148
    ..., numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or Depositary therefor, the Code and regulations thereunder, or as may, consistently herewith, be determined by the officers executing...

  • Page 149
    ... IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY ("DTC"), A NEW YORK CORPORATION...

  • Page 150
    ... ADJUSTMENTS THERETO. A HOLDER OF SECURITIES MAY OBTAIN THE ISSUE DATE, YIELD TO MATURITY, COMPARABLE YIELD AND THE PROJECTED PAYMENT SCHEDULE BY SUBMITTING A WRITTEN REQUEST FOR SUCH INFORMATION TO: INTEL CORPORATION, 2200 MISSION COLLEGE BLVD., M/S SC4-203, SANTA CLARA, CA 95052-8119, ATTENTION...

  • Page 151
    ... effect as though fully set forth at this place. Capitalized terms used but not defined herein shall have such meanings as are ascribed to such terms in the Indenture. This Security shall be deemed to be a contract made under the laws of the State of New York, and for all purposes shall be construed...

  • Page 152
    IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. INTEL CORPORATION By: Authorized Signatory 24

  • Page 153
    ... a rate of 0.25% of such trading price per annum and (iii) at any time that Securities are outstanding in the event that the Company pays an extraordinary cash dividend or distribution to holders of the Company's Common Stock that the Company's Board of Directors designates as payable to Holders of...

  • Page 154
    ... by (ii) 95% of the average Closing Price of the shares of Common Stock or Acquiror Securities, as applicable, for the five Trading Day period immediately preceding and including the third Trading Day immediately preceding the Fundamental Change Repurchase Date, subject to adjustment as described in...

  • Page 155
    ... rate of 31.7162 shares per $1,000 Principal Amount of Securities (the " Conversion Rate "), at any time prior to the close of business on December 14, 2035; provided , that the Company may elect to deliver cash equal to (i) the average of the Last Reported Sale Price for the Company's Common Stock...

  • Page 156
    ..., request and offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of any payment of the Principal Amount, Redemption Price or Fundamental Change Repurchase Price hereof on or after the respective due dates expressed herein. No...

  • Page 157
    ... neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. This Security shall be governed by and construed in accordance with the laws of the State of New York. All terms used in this Security that are defined in the Indenture shall have the meanings assigned...

  • Page 158
    ... to: (Print or type name, address and zip code and social security or tax ID number of assignee) and irrevocably appoint of the Company. The agent may substitute another to act for him. Date: Signature Guarantee: Note: Signatures must be guaranteed by an "eligible guarantor institution" meeting the...

  • Page 159
    ... of the Issue Date set forth on the face of this Security, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Security is being transferred: [ Check One ] (1) 3 to the Company or a subsidiary thereof...

  • Page 160
    ... must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Security Registrar, which requirements include membership or participation in the Security Transfer Agent Medallion Program (" STAMP ") or such other "signature guarantee program" as may be determined by the...

  • Page 161
    ...to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Date: NOTICE: To be executed by an executive officer. 33 Signed...

  • Page 162
    ... stock certificate made out in another person's name, fill in the form below: (Insert other person's social security or tax ID no.) (Print or type other person's name, address and zip code) Date: Signature Guarantee: Note: Signatures must be guaranteed by an "eligible guarantor institution" meeting...

  • Page 163
    ... until it has received an Officers' Certificate from the Company directing it to do so. ARTICLE 3 THE SECURITIES Section 3.01 . Title and Terms; Payments. The aggregate Principal Amount of Securities that may be authenticated and delivered under this Indenture is initially limited to $1,600,000,000...

  • Page 164
    ..., Delivery and Dating. The Securities shall be executed on behalf of the Company by its Chairman of the Board of Directors, its President or one of its Vice Presidents. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall...

  • Page 165
    ... the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at any office or agency of the Company designated pursuant to Section 6.02, without charge to the Holder. Upon surrender for cancellation...

  • Page 166
    ... and tenor, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All...

  • Page 167
    ... Notice has been delivered and not withdrawn, except that where such Fundamental Change Repurchase Notice provides that such Security is to be purchased only in part, the Company and the Security Registrar shall be required to exchange or register a transfer of the portion thereof not to be...

  • Page 168
    ... acquired by a bona fide purchaser, the Company shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and Principal Amount and bearing a number not contemporaneously outstanding. In case any such mutilated...

  • Page 169
    ...rights of any Holder. (b) Transfers of the Global Securities shall be limited to transfers in whole, but not in part, to the Depositary, its successors or their respective nominees. Interests of beneficial owners in a Global Security may be transferred or exchanged, in whole or in part, for Physical...

  • Page 170
    ... cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in the Global Security, an equal aggregate Principal Amount of Physical Securities of authorized denominations...

  • Page 171
    ... advised the Company and the Security Registrar in writing, that it is purchasing the Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it...

  • Page 172
    ... such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Security Registrar. Section 3.10 . CUSIP Numbers. In issuing the Securities, the Company may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall...

  • Page 173
    ... the close of business on a Record Date and the opening of business on the corresponding Interest Payment Date shall be required to pay the Company an amount equal to the Interest payable by the Company with respect to such Securities on such Interest Payment Date at the time such Holder surrenders...

  • Page 174
    ...annum of the average Trading Price for the 10 Trading Days immediately preceding the first day of such six-month interest payment period; and (ii) at any time Securities are outstanding, upon the declaration by the Company's Board of Directors of an extraordinary cash dividend or distribution to all...

  • Page 175
    ... that the Company's Board of Directors designates as payable with respect to the Securities (an " Extraordinary Dividend "), in which case (A) Contingent Interest will be payable on the same date as, and in an amount equal to, the dividend or distribution that a Holder would have received had such...

  • Page 176
    ... Business News stating that Contingent Interest will be paid on the Securities and identifying the Record Date for the payment of such Contingent Interest and the amount of such extraordinary cash dividend or distribution payable with respect to each share of the Company's Common Stock. Section...

  • Page 177
    ... of shares of the Company's Capital Stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers, directors or consultants, which contract, plan or arrangement is approved by the Company's Board of Directors; (ii...

  • Page 178
    ... 5.02 . Payments to Holders. No payment shall be made with respect to the principal of or Interest on the Securities (including, but not limited to, the Redemption Price and the Fundamental Change Repurchase Price with respect to the Securities subject to redemption or purchase in accordance with...

  • Page 179
    ... this Article 5 otherwise prohibits the payment or distribution at the time of such payment or distribution. Upon any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or...

  • Page 180
    ... the Holders of the Securities or to the Trustee. For purposes of this Article 5, the words, "cash, property or securities" shall not be deemed to include shares of Capital Stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan...

  • Page 181
    ... pursuant to the provisions of this Article 5 (equally and ratably with the holders of all indebtedness of the Company which by its express terms is subordinated to other indebtedness of the Company to substantially the same extent as the Securities are subordinated and is entitled to like rights of...

  • Page 182
    ... Company, the amount thereof or payable thereon and all other facts pertinent thereto or to this Article 5. Section 5.04 . Authorization to Effect Subordination. Each Holder of a Security by the Holder's acceptance thereof authorizes and directs the Trustee on the Holder's behalf to take such action...

  • Page 183
    ... exist; provided that, if on a date not less than two Business Days prior to the date upon which by the terms hereof any such monies may become payable for any purpose (including, without limitation, the payment of the principal of or Interest on any Security) the Trustee shall not have received...

  • Page 184
    ..., of the Holder of any Security to convert such Security in accordance with Article 9. Section 5.09 . Article Applicable to Paying Agents. If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term "Trustee" as used in this...

  • Page 185
    ... in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of...

  • Page 186
    ... date of such publication, any unclaimed balance of such money then remaining shall be repaid to the Company. In the absence of a written request from the Company to return funds remaining unclaimed for two years after such payment has become due to the Company, the Trustee shall from time to time...

  • Page 187
    ... to the extent required from time to time to enable such Holder or beneficial holder to sell its Securities or Common Stock without registration under the Securities Act within the limitation of the exemption provided by Rule 144A, as such rule may be amended from time to time. Upon the request of...

  • Page 188
    ... shall provide to the Trustee on a timely basis such information as the Trustee requires to enable the Trustee to prepare and file any form required to be submitted by the Company to the Internal Revenue Service and the Holders of the Securities. Section 6.13. Further Instruments and Acts. Upon...

  • Page 189
    ... adjustments thereto. A Holder of Securities may obtain the issue date, yield to maturity, comparable yield and the projected payment schedule by submitting a written request for such information to: Intel Corporation, 2200 Mission College Blvd., M/S SC4-203, Santa Clara, CA 95052-8119, Attention...

  • Page 190
    ... by the rules of The Nasdaq National Market or any stock exchange on which the Securities are then listed, as applicable). The Trustee shall make the selection within 7 days from its receipt of the notice from the Company delivered pursuant to Section 7.03 from Outstanding Securities not previously...

  • Page 191
    ... Redemption Price; (iii) the Conversion Price; (iv) the name and address of the Paying Agent and Conversion Agent; (v) that Securities called for redemption may be converted at any time before the close of business on the Business Day immediately preceding the Redemption Date; (vi) that Holders who...

  • Page 192
    ... from such trust. Section 7.06 . Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new Security in an authorized denomination equal in principal amount to the unredeemed portion...

  • Page 193
    ... time after delivery of the Fundamental Change Repurchase Notice (together with all necessary endorsements) at the applicable Corporate Trust Office of the Trustee (or other Paying Agent appointed by the Company) in the Borough of Manhattan, such delivery being a condition to receipt by the Holder...

  • Page 194
    ... or through such other public medium as the Company may use at such time. Each Fundamental Change Company Notice shall specify: (i) the events causing the Fundamental Change; (ii) the date of the Fundamental Change; (iii) the last date on which a Holder may exercise the repurchase right; (iv) the...

  • Page 195
    ... Securities to be repurchased may be paid for, in whole or in part, at the election of the Company, in (i) shares of the Company's Common Stock that are Publicly Traded Securities, (ii) shares of Capital Stock of an acquiror of the Company that are Publicly Traded Securities (" Acquiror Securities...

  • Page 196
    ... to Holders except in the event of a failure to satisfy, prior to the close of business on the Business Day prior to the Fundamental Change Repurchase Date, any condition to the payment of the Fundamental Change Repurchase Price, in whole or in part, in shares of Common Stock or Acquiror Securities...

  • Page 197
    ...forth the Last Reported Sale Price of a share of Common Stock or Acquiror Securities, as applicable, on each Trading Day during the period commencing on the fifth Trading Day immediately preceding but ending on the third Business Day prior to the applicable Fundamental Change Repurchase Date. If the...

  • Page 198
    ... other public medium as the Company may use at that time. All shares of Common Stock and Acquiror Securities delivered upon repurchase of the Securities shall be duly authorized, validly issued, fully paid and nonassessable. If a Holder of a repurchased Security is paid in shares of Common Stock or...

  • Page 199
    ... Paying Agent in accordance with the Fundamental Change Company Notice at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date, specifying: (i) the Principal Amount of the Securities with respect to which such notice of withdrawal...

  • Page 200
    ... term, as used herein, includes any successor provision thereto) under the Exchange Act at the time of such offer or repurchase), the Company shall (i) comply with Rule 13e-4 and Rule 14e-1 under the Exchange Act, (ii) file the related Schedule TO (or any successor schedule, form or report) under...

  • Page 201
    thereof) of such Security at any time prior to the close of business on the scheduled Trading Day immediately preceding the Stated Maturity at a rate (the " Conversion Rate ") of 31.7162 shares of Common Stock (subject to adjustment as provided in this Indenture) per $1,000 Principal Amount (the " ...

  • Page 202
    ... issuance or (ii) in lieu of delivering shares of Common Stock in excess of such limitations, pay cash on a pro rata basis to the Holders of Securities being converted in an amount per share of Common Stock equal to the Last Reported Sale Price for the Company's Common Stock on the Trading Day 74

  • Page 203
    ... pay the Holder surrendering such a Security for conversion an amount of cash equal to the average, as determined by the Company or its agent, of the Last Reported Sale Price of the Company's Common Stock for the five consecutive Trading Days immediately following (i) the date of delivery of notice...

  • Page 204
    ... for the number of full shares of Common Stock to which such Holder shall be entitled as part of such Conversion Obligation. (f) In case any Security shall be surrendered for partial conversion, the Company shall execute and the Trustee shall authenticate and deliver to or upon the written order of...

  • Page 205
    ... to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; such conversion shall be at the Conversion Rate in effect on the date that such Securities shall have been...

  • Page 206
    ... the Last Reported Sale Price of the Common Stock on the related Conversion Date. Section 9.03 . Adjustment of Conversion Rate. The Conversion Rate shall be adjusted from time to time by the Company as follows: (a) In case the Company shall issue shares of Common Stock as a dividend or distribution...

  • Page 207
    ... securities; and the number of shares of Common Stock equal to the aggregate price payable to exercise or convert such rights, warrants or convertible securities divided by the average of the Last Reported Sale Prices of Common Stock over the ten consecutive Trading Day period ending on the Business...

  • Page 208
    ...earlier, the Ex-Dividend Date relating to such distribution); and = the fair market value (as determined by the Company's Board of Directors) of the shares of Capital Stock, evidences of indebtedness, assets or property distributed with respect to each outstanding share of Common Stock on the record...

  • Page 209
    ...dividend or other distribution on the Common Stock or shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit (a " Spin-Off "), the Conversion Rate in effect immediately before 5:00 p.m., New York City time, on the record date...

  • Page 210
    ...applicable that also includes shares of Common Stock, or rights or warrants to subscribe for or purchase shares of Common Stock to which Section 9.03(b) applies (or both), shall be deemed instead to be (1) a dividend or distribution of the evidences of indebtedness, assets or shares of Capital Stock...

  • Page 211
    ...; the Last Reported Sale Prices of the Common Stock on the Trading Day immediately preceding the record date for such distribution (or, if earlier, the Ex-Dividend Date relating to such distribution); and the amount in cash per share the Company distributes to holders of Common Stock in excess of...

  • Page 212
    ... offer expires (including any purchased shares); the number of shares of Common Stock outstanding immediately after the date such tender or exchange offer expires (not including any purchased shares); and the average of the Last Reported Sale Prices of Common Stock over the ten consecutive Trading...

  • Page 213
    ...to the extent permitted by applicable law and subject to the applicable rules of The Nasdaq National Market, the Company from time to time may increase the Conversion Rate by any amount for a period of at least 20 days if the Company's Board of Directors determines that such increase would be in the...

  • Page 214
    ... (4) the expiration date for any tender or exchange offer pursuant to Section 9.03(e) (each an " Adjustment Determination Date "), the Company may elect to defer until the occurrence of the applicable Adjustment Event (as hereinafter defined) (x) issuing to the Holder of any Security converted after...

  • Page 215
    ...by the Company's Board of Directors in the manner contemplated by Section 9.03(c)) paid or payable per share of Common Stock or (B) in the case of any other Public Acquiror Change of Control, the average of the Last Reported Sale Prices of the Common Stock for the five consecutive Trading Days prior...

  • Page 216
    ... which holders of Common Stock shall be entitled to receive cash, securities or other property or assets with respect to or in exchange for such Common Stock (any such event a " Merger Event "), then: (a) the Company or the successor or purchasing corporation, as the case may be, shall execute with...

  • Page 217
    ... and amount of shares of cash, securities or other property or assets that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such transaction would have owned or been entitled to receive (the " Reference Property "). In such a case, any increase in the...

  • Page 218
    ... at any time the Common Stock shall be listed on any other national securities exchange or automated quotation system the Company will, if permitted and required by the rules of such exchange or automated quotation system, list and keep listed, so long as the Common Stock shall be so listed on such...

  • Page 219
    ...all of the holders of its Common Stock of rights or warrants to subscribe for or purchase any share of any class or any other rights or warrants; or (c) of any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding Common Stock, or a change in...

  • Page 220
    ... in respect of Common Stock issuable upon conversion of the Securities, the Conversion Rate will be adjusted at the time of separation as if the Company has distributed to all holders of Common Stock, shares of Capital Stock of the Company, evidence of indebtedness or assets as provided in Section...

  • Page 221
    ... the Principal Amount, Redemption Price or Fundamental Change Repurchase Price on any Security when it becomes due and payable; (c) default in the Company's obligation to convert the Securities into shares of its Common Stock or a cash, as applicable, upon exercise of a Holder's conversion rights in...

  • Page 222
    ... may declare the Principal Amount plus accrued and unpaid Interest on all the Outstanding Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such Principal Amount plus accrued and unpaid Interest...

  • Page 223
    ... Repurchase Price in respect of any Security, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs...

  • Page 224
    ... Change Repurchase Price or Interest, as the case may be, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities. Section 10.06 . Limitation on Suits. No Holder of...

  • Page 225
    ... of the Principal Amount, Redemption Price, Fundamental Change Repurchase Price or Interest in respect of the Securities held by such Holder, on or after the respective due dates expressed in the Securities or any Redemption Date or Fundamental Change Purchase Date, as applicable, and to convert the...

  • Page 226
    ... of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that: (i) such direction shall not be in conflict with any rule of law or...

  • Page 227
    ...such Security, the Redemption Price or the Fundamental Change Repurchase Price. Section 10.14 . Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit...

  • Page 228
    ... case an Event of Default of which a Responsible Officer of the Trustee has actual knowledge with respect to the Securities has occurred (which has not been cured or waived), the Trustee shall exercise the rights and powers vested in it by this Indenture, and use the same degree of care and skill in...

  • Page 229
    ...genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors of the Company may be sufficiently evidenced by...

  • Page 230
    ... agent, custodian, director, officer, employee and other Person employed to act hereunder; (k) the Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this...

  • Page 231
    ... for all services rendered by it hereunder as the Company and the Trustee shall from time to time agree in writing (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (ii) except as otherwise expressly provided herein, to...

  • Page 232
    ... shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has, or whose parent banking company has, a combined capital and surplus of at least $50,000,000. If such Person publishes reports of condition at least annually...

  • Page 233
    ... or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Company by a Company Order may remove the Trustee, or (B) subject to Section 10.13, any Holder who has...

  • Page 234
    ... the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in Principal Amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment...

  • Page 235
    ... reasonably require, of the names and addresses of the Holders as of such Record Date; and (ii) at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior...

  • Page 236
    ... 15, 2006. Each such report shall be dated as of a date not more than 60 days prior to the date of transmission. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange, if any, upon which the Securities are listed, with the...

  • Page 237
    ... paid or caused to be paid all other sums payable hereunder by the Company; and (c) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture...

  • Page 238
    ..., transfer, assign, mortgage or pledge to the Trustee as security for the Securities any property or assets; (vi) to add to the covenants of the Company for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company; or (vii) to add or modify any other provision...

  • Page 239
    ...Fundamental Change Repurchase Price of any Security or amend or modify in any manner adverse to the Holders of Securities the Company's obligation to make such payments, whether through an amendment or waiver of provisions in the covenants, definitions or otherwise; (vi) make any Security payable in...

  • Page 240
    due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder's Securities; (viii) modify the provisions of Article 5 relating to the subordination of the Securities in a manner adverse to the Holders of Securities; or (ix) modify any of the provisions ...

  • Page 241
    opinion of the Trustee and the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities. 113

  • Page 242
    IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. INTEL CORPORATION By: /s/ Ravi Jacob [ Trustee Signature Follows ]

  • Page 243
    Citibank, N.A., as Trustee By: /s/ John J. Byrnes John J. Byrnes Vice President

  • Page 244
    ... Change Repurchase Notice as defined in Section 8.01(a) of the Indenture dated as of December 16, 2005 (the "Indenture") between the Company and Citibank, N.A., as Trustee. Terms used but not defined herein shall have the meanings ascribed to them in the Indenture. Certificate No(s). of Securities...

  • Page 245
    EXHIBIT B Additional Shares to Be Delivered in Connection with Conversion Upon a Make-Whole Fundamental Change Stock Price Effective date $26.72 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00 $65.00 $70.00 $75.00 $80.00 $85....

  • Page 246

  • Page 247
    ...price is made pursuant to an irrevocable direction to the broker to deliver all or part of the proceeds from the sale of the shares of the Common Stock issuable under the option to Intel, (c) by delivery of any other lawful consideration approved in advance by the Committee of the Board of Directors...

  • Page 248
    ...the delivery of shares hereunder would violate any federal, state or other applicable laws. Notwithstanding anything to the contrary in these Standard Terms or the applicable Notice of Grant, Intel may reduce your unvested options if you change classification from a full-time employee to a part-time...

  • Page 249
    ... disclosure of trade secrets or confidential information, breach of fiduciary duty or nonpayment of an obligation owed to the Corporation, an Authorized Officer, as defined in the 2004 Plan, may suspend your right to exercise the option, pending a decision by the Committee (or Board of Directors, as...

  • Page 250
    ...exercised and whether or not vested on the date of death, at any time prior to 365 days from the date of death. Except as expressly provided otherwise in by these Standard Terms, if you die prior to ninety (90) days after terminating your employment with the Corporation, the executor of your will or...

  • Page 251
    ... individual incapable of performing work in any occupation, as determined by the Corporation. 10. RETIREMENT For purposes of by these Standard Terms, "Retirement" shall mean either Standard Retirement (as defined below) or the Rule of 75 (as defined below). Following your Retirement, the vesting of...

  • Page 252
    ... by the Committee or the Board of Directors of Intel to the extent provided in the 2004 Plan. 15. THE 2004 PLAN AND OTHER AGREEMENTS; OTHER MATTERS (a) The provisions of these Standard Terms and the 2004 Plan are incorporated into the Notice of Grant by reference. Certain capitalized terms used in...

  • Page 253
    ... laws of your country of residence or employment, only authorized but unissued shares thereof shall be utilized for delivery upon exercise by the holder in accord with the terms hereof. Because by these Standard Terms relate to terms and conditions under which you may purchase Common Stock of Intel...

  • Page 254

  • Page 255
    ... the Intel Corporation 2004 Equity Incentive Plan (the "2004 Plan"), as such may be amended from time to time, set forth the terms of your option identified in the Notice of Grant. As used herein, the "Corporation" shall mean Intel Corporation and its Subsidiaries. 2. NONQUALIFIED STOCK OPTION This...

  • Page 256
    Stock issuable under the option to Intel, (c) by delivery of any other lawful consideration approved in advance by the Committee of the Board of Directors of Intel established pursuant to the 2004 Plan (the "Committee") or its delegate, or (d) in any combination of the foregoing. Fractional shares ...

  • Page 257
    ... disclosure of trade secrets or confidential information, breach of fiduciary duty or nonpayment of an obligation owed to the Corporation, an Authorized Officer, as defined in the 2004 Plan, may suspend your right to exercise the option, pending a decision by the Committee (or Board of Directors, as...

  • Page 258
    ... and to the extent the option had vested on or prior to the date of your employment termination, at any time prior to 365 days from the date of your employment termination. The option shall terminate on the applicable expiration date described in this Section 8, to the extent that it is unexercised...

  • Page 259
    ...have the same meaning as disablement is defined in the Intel Long Term Disability Plan, which is generally a physical condition arising from an illness or injury, which renders an individual incapable of performing work in any occupation, as determined by the Corporation. 10. RETIREMENT For purposes...

  • Page 260
    ... 2004 Plan. You hereby understand that the Corporation holds certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock...

  • Page 261
    ... any changes in the financial or tax accounting rules applicable to the options covered by this Agreement shall occur which, in the sole judgment of the Committee, may have an adverse effect on the reported earnings, assets or liabilities of the Corporation, the Committee may, in its sole discretion...

  • Page 262
    ... authorized but unissued shares thereof shall be utilized for delivery upon exercise by the holder in accord with the terms hereof. Because this Agreement relates to terms and conditions under which you may purchase Common Stock of Intel, a Delaware corporation, an essential term of this Agreement...

  • Page 263

  • Page 264
    ... plan administrator which is acceptable to Intel where payment of the option price is made pursuant to an irrevocable direction to the broker to deliver all or part of the proceeds from the sale of the shares of the Common Stock issuable under the option to Intel, (c) by delivery of any other lawful...

  • Page 265
    ... or the delivery of shares hereunder would violate any federal, state or other applicable laws. Notwithstanding anything to the contrary in these Terms or the applicable Notice of Grant, Intel may reduce your unvested options if you change classification from a full-time to a part-time employee. IF...

  • Page 266
    ... disclosure of trade secrets or confidential information, breach of fiduciary duty or nonpayment of an obligation owed to the Corporation, an Authorized Officer, as defined in the 2004 Plan, may suspend your right to exercise the option, pending a decision by the Committee (or Board of Directors, as...

  • Page 267
    ..., if your employment by the Corporation terminates for any reason, whether voluntarily or involuntarily, other than death, Disablement (defined below), or discharge for misconduct, you may exercise any portion of the option that had vested on or prior to the date of termination at any time prior to...

  • Page 268
    ... companies whose only shareholders are you or members of your Immediate Family, trusts established solely for the benefit of you or members of your Immediate Family, or private, charitable foundations in which you or members of your Immediate Family control the management of the foundation's assets...

  • Page 269
    ... or the Board of Directors of Intel to the extent provided in the 2004 Plan. 14. THE 2004 PLAN AND OTHER AGREEMENTS; OTHER MATTERS (a) The provisions of these Terms and the 2004 Plan are incorporated into the Notice of Grant by reference. Certain capitalized terms used in these Terms are defined in...

  • Page 270
    ... authorized but unissued shares thereof shall be utilized for delivery upon exercise by the holder in accord with the terms hereof. Because this Agreement relates to terms and conditions under which you may purchase Common Stock of Intel, a Delaware corporation, an essential term of this Agreement...

  • Page 271

  • Page 272
    ...") and the Intel Corporation 2004 Equity Incentive Plan (the "2004 Plan"), as such may be amended from time to time, set forth the terms of your option identified in the Notice of Grant for grants formerly known as ELTSOP grants. As used herein, the "Corporation" shall mean Intel Corporation and its...

  • Page 273
    ...price is made pursuant to an irrevocable direction to the broker to deliver all or part of the proceeds from the sale of the shares of the Common Stock issuable under the option to Intel, (c) by delivery of any other lawful consideration approved in advance by the Committee of the Board of Directors...

  • Page 274
    ... disclosure of trade secrets or confidential information, breach of fiduciary duty or nonpayment of an obligation owed to the Corporation, an Authorized Officer, as defined in the 2004 Plan, may suspend your right to exercise the option, pending a decision by the Committee (or Board of Directors, as...

  • Page 275
    ..., if your employment by the Corporation terminates for any reason, whether voluntarily or involuntarily, other than death, Disablement (defined below), or discharge for misconduct, you may exercise any portion of the option that had vested on or prior to the date of termination at any time prior to...

  • Page 276
    ... by the Corporation or the Subsidiary that employs you, "Disablement" shall have the same meaning as disablement is defined in the Intel Long Term Disability Plan, which is generally a physical condition arising from an illness or injury, which renders an individual incapable of performing work in...

  • Page 277
    ... 2004 Plan. You hereby understand that the Corporation holds certain personal information about you, including, but not limited to, your name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock...

  • Page 278
    ... into the Notice of Grant by reference. Certain capitalized terms used in this Agreement are defined in the 2004 Plan. This Agreement, the Notice of Grant and the 2004 Plan constitute the entire understanding between you and the Corporation regarding the option. Any prior agreements, commitments or...

  • Page 279
    ... authorized but unissued shares thereof shall be utilized for delivery upon exercise by the holder in accord with the terms hereof. Because this Agreement relates to terms and conditions under which you may purchase Common Stock of Intel, a Delaware corporation, an essential term of this Agreement...

  • Page 280

  • Page 281
    ...SETTING FORTH THE COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES FOR INTEL CORPORATION (In millions, except ratios) Dec. 29, 2001 Dec. 28, 2002 Years Ended Dec. 27, 2003 Dec. 25, 2004 Dec. 31, 2005 Income before taxes Add - Fixed charges net of capitalized interest Income before taxes and fixed...

  • Page 282

  • Page 283
    ... Intel de Costa Rica, S.A. Intel Americas, Inc. Intel Asia Finance Ltd. Intel Capital Corporation Intel Copenhagen ApS Intel Corporation (UK) Ltd. Intel Electronics Finance Limited Intel Electronics Ltd. Intel Europe, Inc. Intel International Intel International B.V. Intel Ireland Limited Intel...

  • Page 284

  • Page 285
    ... REGISTERED PUBLIC ACCOUNTING FIRM We ...Intel Corporation of our reports dated February 21, 2006, with respect to the consolidated financial statements and schedule of Intel Corporation, Intel Corporation management's assessment of the effectiveness of internal control over financial reporting...

  • Page 286

  • Page 287
    ... information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ PAUL S. OTELLINI Paul S. Otellini President and Chief Executive Officer Date: February 24, 2006

  • Page 288

  • Page 289
    ... or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. By: /s/ ANDY D. BRYANT Andy D. Bryant Executive Vice President, Chief Financial Officer and Principal Accounting Officer Date: February 24, 2006

  • Page 290

  • Page 291
    ... to the Securities and Exchange Commission or its staff upon request. Date: February 24, 2006 By: /s/ PAUL S. OTELLINI Paul S. Otellini President and Chief Executive Officer /s/ ANDY D. BRYANT Andy D. Bryant Executive Vice President, Chief Financial Officer and Principal Accounting Officer Date...