Intel 2006 Annual Report Download

Download and view the complete annual report

Please find the complete 2006 Intel annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 145

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145

INTEL CORP
FORM 10-K
(Annual Report)
Filed 02/26/07 for the Period Ending 12/30/06
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 02/26/07 for the Period Ending 12/30/06 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
    ... from to . Commission File Number 000-06217 INTEL CORPORATION (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2200 Mission College Boulevard, Santa Clara, California (Address of principal executive offices) 94-1672743...

  • Page 4
    DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of the registrant's Proxy Statement relating to its 2007 Annual Stockholders' Meeting, to be filed subsequently- Part III.

  • Page 5
    ... 5. Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Submission of Matters to a Vote of Security Holders 1 16 20 20 21 22 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Item 6. Selected Financial Data...

  • Page 6
    ... other semiconductor products that are the building blocks integral to computers, servers, handheld devices, and networking and communications products. Our component-level products consist of integrated circuits used to process information, including microprocessors, chipsets, and flash memory. We...

  • Page 7
    ... Capability Intel ® Wide Dynamic Execution Intel ® Smart Memory Access Intel ® Advanced Digital Media Boost ® Advanced Allows one core to utilize the entire cache Optimizes energy by managing the runtime power consumption of each core Enables each core to complete up to four full instructions...

  • Page 8
    ... in writing data. We offer NAND flash memory products that are designed primarily for memory cards, digital audio players, and cellular phones. Our NAND flash memory products are manufactured by IM Flash Technologies, LLC (IMFT), a company we formed with Micron Technology, Inc. in January 2006. For...

  • Page 9

  • Page 10
    ... security and manageability, energy-efficient performance, and lower cost of ownership. Platforms based on Intel vPro technology include the Intel Core 2 Duo processor, the Intel ® Q965 Express Chipset, and the Intel ® 82566DM Gigabit Network Connection. Intel vPro technology also features Intel...

  • Page 11
    ... greater memory capacity for data-intensive applications. Communications Infrastructure Products In February 2006, we introduced three new Intel Core Duo processors for embedded market segments. These processors are supported by the mobile Intel ® 945GM Express Chipset offered by the Mobility Group...

  • Page 12
    ... market segment and wireless connectivity products. In 2006, the Mobility Group's products also included cellular baseband processors and application processors. In the fourth quarter of 2006, we sold certain assets of our communications and application processor business line to Marvell Technology...

  • Page 13
    ..., Intel Core Duo, Intel Pentium D, or Pentium ® Processor Extreme Edition; as well as a chipset; a network connectivity device; and enabling software-all optimized to work together in the digital home environment. In July 2006, we introduced the first digital home processor based on the new Intel...

  • Page 14
    ... and Assembly and Test As of year-end 2006, 68% of our wafer manufacturing, including microprocessor, chipset, NOR flash memory, and communications silicon fabrication, was conducted within the U.S. at our facilities in Arizona, New Mexico, Oregon, Massachusetts, California, and Colorado...

  • Page 15
    ... Costa Rica. We plan to continue investing in new assembly and test technologies as well as increasing the capacity of our existing facilities and building new facilities to keep pace with our microprocessor, chipset, flash memory, and communications technology improvements. In line with these plans...

  • Page 16

  • Page 17
    ...had approximately 99,900 employees worldwide. Sales and Marketing Most of our products are sold or licensed through sales offices located near major concentrations of users, throughout the Asia-Pacific, Americas, Europe, and Japan regions. Our business relies on continued sales growth in both mature...

  • Page 18
    ... Intel Centrino mobile technology, Intel vPro technology, and Intel Viiv technology. The Intel Core 2 Quad, Intel Core 2 Extreme, Intel Core 2 Duo, Itanium, Intel Xeon, Pentium, and Celeron trademarks make up our processor brands. We promote brand awareness and generate demand through our own direct...

  • Page 19
    ... facilities and assembly and test facilities gives us a competitive advantage. This network enables us to have more direct control over our processes, quality control, product cost, volume, timing of production, and other factors. These facilities require significant up-front capital spending...

  • Page 20

  • Page 21
    ... competition in various market segments. Acquisitions and Strategic Investments During 2006, the company did not complete any acquisitions qualifying as business combinations. In 2006, Intel formed IMFT, a NAND flash memory manufacturing company, with Micron. Intel invested $1.3 billion in return...

  • Page 22
    ...strives to provide a safe and healthy workplace for our employees, contractors, and the communities in which we do business. We have environmental, health, and safety (EHS) policies and expectations that apply to our global operations. Each of Intel's worldwide production facilities is registered to...

  • Page 23
    ... President and General Manager, Sales and Marketing Group, and Chief Sales and Marketing Officer since July 2006. Prior to that, Mr. Maloney was Executive Vice President and General Manager, Mobility Group, from 2005 to 2006; Executive Vice President and General Manager, Intel Communications Group...

  • Page 24
    ... technologies including product offerings, marketing programs, and pricing pressures; • changes in customer product needs; • changes in the level of customers' component inventory; • changes in business and economic conditions, including a downturn in the semiconductor industry; • strategic...

  • Page 25
    ... operations and financial condition. We have sales offices, research and development, manufacturing, and assembly and test facilities in many countries, and as a result, we are subject to risks associated with doing business globally. Our global operations may be subject to risks that may limit our...

  • Page 26
    17

  • Page 27
    ... time to time, third parties may assert against us or our customers alleged patent, copyright, trademark, and other intellectual property rights to technologies that are important to our business. We may be subject to intellectual property infringement claims from certain individuals and companies...

  • Page 28
    ... use valuation methodologies (which were not developed for use in valuing employee stock options and restricted stock units) and a number of assumptions, estimates, and conclusions regarding matters such as expected forfeitures, expected volatility of our share price, the expected dividend rate with...

  • Page 29

  • Page 30
    ... objectives and support our key business initiatives. Such investments include investments in equity securities of public companies and investments in non-marketable equity securities of private companies, which range from early-stage companies that are often still defining their strategic direction...

  • Page 31
    ...in Malaysia, the Philippines, China, and Costa Rica. In addition, we have sales and marketing offices located worldwide. These facilities are generally located near major concentrations of users. We also plan to build a new assembly and test facility in Vietnam, which is expected to begin production...

  • Page 32
    ... claims 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...

  • Page 33
    Table of Contents 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 may be found in "Financial Information by Quarter (Unaudited)" ...

  • Page 34
    ... Dow Jones and Company, Inc. and Standard & Poor's Compustat Services, Inc. furnished this data. Cumulative total stockholder returns for our common stock, the Dow Jones Technology Index, and the S&P 500 Index are based on our fiscal year. Comparison of Five-Year Cumulative Return for Intel, the Dow...

  • Page 35
    ... .16 .08 .08 $ $ $ $ $ 1,375 - - - - (In Millions, Except Employees) Net Investment in Property, Plant Long-Term Stockholders' & Equipment Total Assets Debt Equity Additions to Property, Employees at Plant & Year-End Equipment (In Thousands) 2006 2005 2004 2003 2002 1 $ $ $ $ $ 17,602 17,111...

  • Page 36
    ... brand recognition. Our strategy focuses on taking customer needs into account in developing the next generation of products and platforms that will enable new form factors and new usage models for businesses and consumers. We believe that end users, OEMs, thirdparty vendors, and service providers...

  • Page 37
    ... Contents MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) We make equity investments in companies around the world to further our strategic objectives and support our key business initiatives, including investments through our Intel Capital program...

  • Page 38
    ... related chipsets designed for the notebook market segment and wireless connectivity products. Our strategy for notebook PCs is to deliver platforms designed to optimize performance, battery life, form factor, and wireless connectivity. For high-end mobility platforms, we offer the Intel Core 2 Duo...

  • Page 39
    ... Duo, Intel Core 2 Extreme, Intel Core 2 Extreme quad-core, Intel Core Duo, Intel Pentium D, or Pentium Processor Extreme Edition; as well as a chipset; a network connectivity device; and enabling software-all optimized to work together in the digital home environment. In addition, we offer products...

  • Page 40
    ... ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Investments in non-marketable equity securities are inherently risky, and a number of these companies are likely to fail. Their success is dependent on product development, market acceptance, operational efficiency, and other key...

  • Page 41
    ... for all share-based payment awards. Total share-based compensation during 2006 was $1.4 billion. Determining the appropriate fair-value model and calculating the fair value of employee stock options and rights to purchase shares under stock purchase plans at the date of grant requires judgment...

  • Page 42
    ... the year with fourth-quarter mobile microprocessor revenue surpassing desktop microprocessor revenue for the first time. Results for 2006 included share-based compensation charges of $1.4 billion, gains on divestitures of $612 million, and restructuring and asset impairment charges of $555 million...

  • Page 43
    ...of 2007. From a financial condition perspective, we ended the year with $8.9 billion in cash and short-term investments, and returned $4.6 billion to stockholders through stock repurchases and $2.3 billion as dividends in 2006. The following table sets forth certain consolidated statements of income...

  • Page 44
    ... in "Note 2: Accounting Policies" in Part II, Item 8 of this Form 10-K. The following table summarizes the effects of share-based compensation resulting from the application of SFAS No. 123(R): (In Millions) 2006 2005 2004 Cost of sales Research and development Marketing, general and administrative...

  • Page 45
    ...approximately flat, with slightly higher unit sales being offset by slightly lower average selling prices. Revenue from sales of server microprocessors in 2005 was negatively affected by the highly competitive server market. Chipset, motherboard, and other revenue was higher, primarily due to higher...

  • Page 46
    ... wireless connectivity products. Sales of these products increased primarily due to the Intel Centrino Duo mobile technology platform. Revenue from application and cellular baseband processors is included in "chipset and other revenue" above. In the fourth quarter of 2006, we divested certain assets...

  • Page 47
    ...quarter of 2006. Prior to adoption of SFAS No. 123(R), we accounted for our equity incentive plans under the intrinsic value recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees" (APB No. 25) and related interpretations...

  • Page 48
    ... support the communications and application processor business. The fair market value of the asset grouping was determined using various valuation techniques. The following table summarizes the restructuring and asset impairment activity for 2006: (In Millions) Employee Severance and Benefit Asset...

  • Page 49
    ... quarter of 2005 of Micron's financial results and the fact that the market price of Micron's stock had been below our cost basis for an extended period of time, as well as the competitive pricing environment for DRAM products. During 2004, the net losses on equity securities of $2 million included...

  • Page 50
    ... assets and higher net income, partially offset by an increase in accounts receivable balances. Inventories as of December 30, 2006 increased compared to December 31, 2005, as we continued to ramp new, higher cost products, primarily related to microprocessors on our 65-nanometer process technology...

  • Page 51
    ... or upgrading of worldwide manufacturing and assembly and test capacity, working capital requirements, the dividend program, potential stock repurchases, potential future acquisitions or strategic investments, and cash payments associated with our structure and efficiency program. Contractual...

  • Page 52
    ... for new fabrication facilities, and in November 2006, we announced our intention to form a new venture with Micron to add an additional NAND flash memory fabrication facility in Singapore. • We also have several agreements with Micron related to intellectual property rights, and research and...

  • Page 53
    ...the stock purchase plan and awards assumed in connection with acquisitions. Equity-based awards granted to employees, including officers, and non-employee directors from 2002 through 2006 are summarized as follows: (Shares in Millions) 2006 2005 2004 2003 2002 Total equity-based awards granted Less...

  • Page 54
    ...including new product offerings, marketing programs, and pricing pressures, and our reaction to such actions. Microprocessor revenue is also dependent on the availability of other parts of the platform, including chipsets, motherboards, operating system software, and application software. Revenue is...

  • Page 55
    Table of Contents MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Status of Business Outlook We expect that our corporate representatives will, from time to time, meet privately with investors, investment analysts, the media, and others, and may ...

  • Page 56
    ... next generation of silicon production technologies. Our focus areas tend to develop and change over time due to rapid advancements in technology. Our total marketable portfolio includes marketable strategic equity securities as well as marketable equity securities classified as trading assets. To...

  • Page 57

  • Page 58
    ..., or 55% of the total marketable strategic equity portfolio value including equity derivative instruments. During 2006, we sold a portion of our investment in Micron. Based on the analysis of the high-technology stock indices and the historical volatility of Micron's stock, we estimated that it was...

  • Page 59
    ... FINANCIAL STATEMENTS Page Consolidated 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...

  • Page 60
    ... of Contents INTEL CORPORATION CONSOLIDATED STATEMENTS OF INCOME Three Years Ended December 30, 2006 (In Millions, Except Per Share Amounts) 2006 1 2005 2004 Net revenue Cost of sales Gross margin Research and development Marketing, general and administrative Restructuring and asset impairment...

  • Page 61
    ... assets Property, plant and equipment, net Marketable strategic equity securities Other long-term investments Goodwill Other long-term assets Total assets Liabilities and stockholders' equity Current liabilities: Short-term debt Accounts payable Accrued compensation and benefits Accrued advertising...

  • Page 62
    ... Excess tax benefit from share-based payment arrangements Additions to long-term debt Repayments and retirement of debt Repayment of notes payable Proceeds from sales of shares through employee equity incentive plans Repurchase and retirement of common stock Payment of dividends to stockholders Net...

  • Page 63
    .... 158, net of tax Proceeds from sales of shares through employee equity incentive plans, net excess tax benefit, and other Share-based compensation Repurchase and retirement of common stock Cash dividends declared ($0.40 per share) Balance at December 30, 2006 See accompanying notes. 6,487 $ 6,754...

  • Page 64
    .... The consolidated financial statements include the accounts of Intel and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated. The company uses the equity method to account for equity investments in instances in which the company owns common stock or similar...

  • Page 65
    ...specific adverse conditions related to the financial health of and business outlook for the investee, including industry and sector performance, changes in technology, operational and financing cash flow factors, and changes in the investee's credit rating. • Non-marketable investments when events...

  • Page 66
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) • Marketable debt securities when a significant decline in the issuer's credit quality is likely to have a significant adverse effect on the fair value of the investment. Investments identified as having...

  • Page 67
    ... INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Through the use of derivative financial instruments, the company manages the following risks: Currency Risk The company transacts business in various currencies other than the U.S. dollar and has established balance sheet...

  • Page 68
    ... of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Equity Market Risk The company may elect to mitigate equity risk using the following equity market risk management programs: • Equity derivatives with hedge accounting designation which utilize equity options...

  • Page 69
    ... in 2006. Property, plant and equipment is identified as held for sale when it meets the held for sale criteria of Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for Impairment or Disposal of Long-Lived Assets." The company ceases recording depreciation on assets that...

  • Page 70
    ... a straight-line basis, and customer supply agreements, which are amortized based on product volume. Other intangible assets are amortized over periods ranging from 2 to 6 years. All identified intangible assets are classified within other long-term assets on the consolidated balance sheets. In the...

  • Page 71
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Advertising Cooperative advertising programs reimburse customers for marketing activities for certain of the company's products, subject to defined criteria. Cooperative advertising obligations are accrued ...

  • Page 72
    ... rights, and the shares underlying the restricted stock units are not considered issued and outstanding. Awards granted to employees in 2006 under the company's equity incentive plans generally vest over 4 years and expire 7 years from the date of grant. Awards granted to key officers, senior-level...

  • Page 73
    ...in "Note 2: Accounting Policies." The following table summarizes the effects of share-based compensation resulting from the application of SFAS No. 123(R): (In Millions, Except Per Share Amounts) 2006 2005 2004 Cost of sales Research and development Marketing, general and administrative Share-based...

  • Page 74
    ...terms and contractual life of current option grants compared to the company's historical grants. No adjustments to the 2004 input assumptions were made. Share-based compensation related to restricted stock unit awards is calculated based on the market price of Intel common stock on the date of grant...

  • Page 75
    ... costs related to stock options granted under the company's equity incentive plans. The unrecognized compensation cost is expected to be recognized over a weighted average period of 1.1 years. Additional information with respect to stock option plan activity is as follows: Number of Shares...

  • Page 76
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Restricted Stock Unit Awards Information with respect to restricted stock units as of December 30, 2006 is as follows: Number of Shares Weighted Average Aggregate Grant-Date Fair Fair Value Value 1 (In ...

  • Page 77
    ...of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For 2006, 693 million of the company's outstanding stock options (372 million in 2005 and 357 million in 2004) were excluded from the calculation of diluted earnings per common share because the exercise prices of...

  • Page 78
    ... 2004). Certain equity securities within the trading asset portfolio are maintained to generate returns that seek to offset changes in liabilities related to the equity market risk of certain deferred compensation arrangements. These deferred compensation liabilities were $416 million in 2006 ($316...

  • Page 79
    ...-sale investments Investments in loan participation notes (cost basis) Cash on hand Total Reported as (In Millions) $12,971 103 215 $13,289 2006 $15,387 373 226 $15,986 2005 Cash and cash equivalents Short-term investments Marketable strategic equity investments Other long-term investments Total...

  • Page 80
    ...30, 2006, which includes a previous investment. This investment is part of Intel's strategy to support the development and deployment of WiMAX networks. Intel's investment in Clearwire is classified within other long-term assets on the consolidated balance sheet. Intel accounts for its investment in...

  • Page 81
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 8: Concentrations of Credit Risk Financial instruments that potentially subject the company to concentrations of credit risk consist principally of investments in debt securities, derivative financial ...

  • Page 82
    ..., respectively. For 2006, $6 million of net deferred holding losses on derivatives were reclassified from accumulated other comprehensive income (loss) to cost of sales and operating expense related to the company's non-U.S.-currency capital purchase and operating cost hedging programs (gains of $38...

  • Page 83
    ... communications and application processor business. The fair value of the asset grouping was determined using various valuation techniques. The following table summarizes the restructuring and asset impairment activity for 2006: (In Millions) Employee Severance and Benefits Asset Impairment Total...

  • Page 84
    ... 0.5 27.8% During 2006, the tax benefit realized for the tax deduction from option exercises and other awards totaled $139 million. The tax benefit from employee equity incentive plans was $351 million for 2005 and $344 million for 2004. The American Jobs Creation Act of 2004 (the Jobs Act) created...

  • Page 85
    ... the company's deferred tax assets and liabilities at fiscal year-ends were as follows: (In Millions) 2006 2005 Deferred tax assets Accrued compensation and other benefits Accrued advertising Deferred income Share-based compensation Inventory valuation Impairment losses on equity investments State...

  • Page 86
    ... Executive Officer of the company under delegation of authority from the Board of Directors, pursuant to the terms of the U.S. Profit Sharing Plan. As of December 30, 2006, approximately 80% of the assets of the U.S. Profit Sharing Plan had been allocated to domestic and international equities index...

  • Page 87
    ... employees and retirees in the U.S. The plan provides for a minimum pension benefit that is determined by a participant's years of service and final average compensation (taking into account the participant's social security wage base), reduced by the participant's balance in the Profit Sharing Plan...

  • Page 88

  • Page 89
    ... the amounts recognized on the consolidated balance sheet as of December 30, 2006: (In Millions) U.S. Pension Benefits Non-U.S. Pension Benefits Postretirement Medical Benefits Other long-term assets Accrued compensation and benefits Other long-term liabilities Accumulated other comprehensive loss...

  • Page 90
    ... table summarizes the amounts recognized on the consolidated balance sheet as of December 31, 2005: (In Millions) U.S. Pension Benefits Non-U.S. Pension Benefits Postretirement Medical Benefits Other long-term assets Accrued compensation and benefits Accumulated other comprehensive loss Net amount...

  • Page 91
    ...to purchase medical coverage. Weighted-average actuarial assumptions used to determine costs for the plans were as follows: NonU.S. Pension Benefits 2006 2005 Postretirement Medical Benefits 2006 2005 U.S. Pension Benefits 2006 2005 Discount rate Expected return on plan assets Rate of compensation...

  • Page 92
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) U.S. Plan Assets In general, the investment strategy followed for U.S. plan assets is designed to assure that the pension assets are available to pay benefits as they come due and minimize market risk. When ...

  • Page 93
    ... was recorded within interest and other, net. In November 2006, the company completed the divestiture of certain assets of the communications and application processor business to Marvell Technology Group, Ltd. for a cash purchase price of $600 million, plus the assumption of certain liabilities...

  • Page 94
    ... Digital Home Group operating segment, which is also a reporting unit. During 2006, 2005, and 2004, the company concluded that goodwill was not impaired. Note 16: Identified Intangible Assets Identified intangible assets are classified within other long-term assets on the consolidated balance sheets...

  • Page 95
    ...2009 2010 2011 Intellectual property assets Acquisition-related developed technology Other intangible assets Note 17: Venture $152 $142 $115 $103 $ 52 $ 1 $ 1 80 $ 85 $111 $ - $ - During January 2006, Micron and Intel formed IMFT, a company that manufactures NAND flash memory products for Micron...

  • Page 96
    ... asset will be amortized into cost of sales over its expected five-year life. Costs incurred by Intel and Micron for product and process development related to IMFT are generally split evenly between Intel and Micron and are classified as research and development on the consolidated statements...

  • Page 97
    ... claims 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...

  • Page 98
    85

  • Page 99
    ...for network and server storage. • Mobility Group. Includes microprocessors and related chipsets designed for the notebook computing market segment; and wireless connectivity products. The operating results associated with the divested assets of the communications and application processor business...

  • Page 100
    ...Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Operating segment net revenue and operating income (loss) for the three years ended December 30, 2006 were as follows: (In Millions) 2006 2005 2004 Net revenue Digital Enterprise Group Microprocessor revenue Chipset...

  • Page 101
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Net property, plant and equipment by country was as follows: (In Millions) 2006 2005 2004 United States Ireland Other countries Total property, plant and equipment, net $11,558 $11,211 $11,265 2,860 3,192 ...

  • Page 102
    ... 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 30, 2006 and December 31, 2005, and the related consolidated statements of income, stockholders' equity, and...

  • Page 103
    ... with the standards of the Public Company Accounting Oversight Board (United States), the 2006 consolidated financial statements of Intel Corporation and our report dated February 20, 2007 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP San Jose, California February 20, 2007 90

  • Page 104
    ...(R) in fiscal year 2006. Results for fiscal year 2005 do not include the effects of share-based compensation. For further information, see "Note 2: Accounting Policies" and "Note 3: Employee Equity Incentive Plans" in the Notes to Consolidated Financial Statements. Intel's common stock (symbol INTC...

  • Page 105
    Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. ITEM 9A. CONTROLS AND PROCEDURES Attached as exhibits to this Form 10-K are certifications of Intel's Chief Executive Officer (CEO) and Chief Financial Officer (CFO), which...

  • Page 106
    ... and the preparation of financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. We reviewed the results of management's assessment with the Audit Committee of our Board of Directors. In addition, on a quarterly basis we evaluate any...

  • Page 107
    ... code of ethics applicable to all employees, including all officers, and including our independent directors, who are not employees of the company, with regard to their Intel-related activities. The Corporate Business Principles incorporate our guidelines designed to deter wrongdoing and to promote...

  • Page 108
    ...10-K. Intel, the Intel logo, Intel Inside, Celeron, Intel Centrino, Intel Core, Intel Core Duo, Intel Core 2 Duo, Intel Core 2 Quad, Intel NetBurst, Intel StrataFlash, Intel Viiv, Intel vPro, Intel Xeon, Intel XScale, Itanium, and Pentium are trademarks or registered trademarks of Intel Corporation...

  • Page 109
    ... of Contents INTEL CORPORATION SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS December 30, 2006, December 31, 2005, and December 25, 2004 (In Millions) Balance at Beginning of Year Additions Charged (Credited) to Expenses Deductions Balance at End of Year Allowance for doubtful receivables 1 2006...

  • Page 110
    ... 2005 10.2** Standard Terms and Conditions Relating to Non-Qualified Stock Options granted to U.S. employees on and after May 19, 2004 under the Intel Corporation 2004 Equity Incentive Plan 10.3** Notice of Grant of Non-Qualified Stock Option under the Intel Corporation 2004 Equity Incentive Plan 10...

  • Page 111
    ...10.28** Intel Corporation 2006 Stock Purchase Plan, Effective May 17, 2006 10.29** Standard Terms and Conditions relating to Restricted Stock Units granted to U.S. employees on and after May 17, 2006 under the Intel Corporation 2006 Equity Incentive Plan (for grants under the standard program) 10.30...

  • Page 112

  • Page 113
    ... Terms and Conditions relating to Nonqualified Stock Options granted to U.S. employees on and after May 17, 2006 under the Intel Corporation 2006 Equity Incentive Plan (for grants under the ELTSOP Program) 8-K 000-06217 10.19 7/6/06 10.37** International Nonqualified Stock Option Agreement under...

  • Page 114
    ... undersigned, thereunto duly authorized. INTEL CORPORATION Registrant By: /s/ ANDY D. BRYANT Andy D. Bryant Executive Vice President, Chief Financial and Enterprise Services Officer and Principal Accounting Officer February 23, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934...

  • Page 115

  • Page 116
    ..."Benefit" means the amount credited to a Participant's Cash Deferral Account pursuant to such Participant's Election Form plus dividend credits pursuant to Section 6(b). (c) "Board" means the Board of Directors of the Company. (d) "Closing Price" means the closing price, or last reported sales price...

  • Page 117
    ... or other securities of the Company or another corporation (whether by reason of merger, consolidation, recapitalization, split-up, combination of shares or otherwise), or if the number of shares of Common Stock shall be increased through a stock split or the payment of a stock dividend, then there...

  • Page 118
    ...under the Equity Plan) the market value of one Share, the grant, issuance, retention and/or vesting of which is subject to such conditions as are expressed in the documents(s) evidencing the award. (t) "Share" shall mean a share of common stock, $.001 par value, of the Company or the number and kind...

  • Page 119
    ... requirements of Section 409A. (d) Claims Procedure . The Company shall notify a Participant in writing within ninety (90) days of the Participant's written application for benefits of his eligibility or non-eligibility for benefits under the Plan. If the Company determines that a Participant is not...

  • Page 120
    ... than the 30 th day after taking office; provided that the election shall only apply to Director's Cash Compensation with respect to services performed after the election. (d) RSUs in Lieu of Cash follow the vesting rules as set forth in the Equity Plan. Any elections to further defer ownership of...

  • Page 121
    ... Cash Deferral Account are 100% vested. (b) Dividend Credits . The Participant's Cash Deferral Account will be credited, as of the applicable dividend payment date, with additional Deferred Compensation Units, equal to the per share dividend declared on the Company's Common Stock times the number of...

  • Page 122
    ... year, calculated using the balance in the Participant's Cash Deferral Account at the beginning of the calendar year (or, in the case of the first calendar year, on the Early Cash Benefit Distribution Date or the Regular Cash Distribution Date) and dividing it by the total number of annual payments...

  • Page 123
    ... RSUs in lieu of cash, the RSU will be issued through the Equity Plan. (b) Property of Company . Any amounts set aside for Benefits payable under the Plan are the property of the Company, except, and to the extent, of any assignment of such assets to an irrevocable trust. (c) No Claim on Specific...

  • Page 124
    ...any other person to the payment of any Benefits under this Plan shall not be assigned, transferred, pledged or encumbered. Any amounts so set aside for Benefits payable under the Plan are the property of the Company, except, and to the extent, of any assignment of such assets to an irrevocable trust...

  • Page 125
    ...Board has delegated such authority to amend; provided, however, any amendment which would alter the irrevocable nature of an election or which would reduce the amount credited to a Participant's Cash Deferral Account on the date of such amendment shall not be effective unless consented to in writing...

  • Page 126

  • Page 127
    ... 10.42 INTEL CORPORATION 2006 EQUITY INCENTIVE PLAN TERMS AND CONDITIONS RELATING TO NON-QUALIFIED STOCK OPTIONS GRANTED TO PAUL OTELLINI ON JANUARY 18, 2007 UNDER THE INTEL CORPORATION 2006 EQUITY INCENTIVE PLAN 1. TERMS OF OPTION The following standard terms and conditions ("Standard Terms") apply...

  • Page 128
    ... 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 employee. IF AN EXPIRATION DATE DESCRIBED HEREIN FALLS ON A WEEKDAY, YOU MUST EXERCISE YOUR OPTIONS BEFORE 3:45 P.M. NEW YORK TIME ON...

  • Page 129
    ...time equal to the duration of the PLOA. If you terminate employment after returning ...Corporation, an Authorized Officer, as defined in the 2006 Plan, may suspend your right to exercise the option, pending a decision by the Committee (or Board of Directors, as the case may be) or an Authorized Officer...

  • Page 130
    ... terminated if, prior to sixty (60) days after the date of termination from Intel or a Subsidiary, you are rehired by Intel or a Subsidiary on a basis that would make you eligible for future Intel stock option grants, nor would your transfer from Intel to any Subsidiary or from any one Subsidiary to...

  • Page 131
    ... 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 of...

  • Page 132
    ... altered by the Committee or the Board of Directors of Intel to the extent provided in the 2006 Plan. 15. THE 2006 PLAN AND OTHER AGREEMENTS; OTHER MATTERS (a) The provisions of these Standard Terms and the 2006 Plan are incorporated into the Notice of Grant by reference. You hereby acknowledge that...

  • Page 133
    ... quarterly report are available, without charge, at the Corporation's business office. Because these Standard Terms relate to terms and conditions under which you may purchase Common Stock of Intel, a Delaware corporation, an essential term of these Standard Terms is that it shall be governed by the...

  • Page 134

  • Page 135
    Exhibit 12.1 INTEL CORPORATION 2006 FORM 10-K STATEMENT SETTING FORTH THE COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES FOR INTEL CORPORATION (In millions, except ratios) Dec. 28, 2002 Dec. 27, 2003 Years Ended Dec. 25, 2004 Dec. 31, 2005 Dec. 30, 2006 Income before taxes Adjustments: Add - ...

  • Page 136

  • Page 137
    ... Corporation Intel Phils. Holding Corporation Intel Products (M) Sdn. Bhd. Intel Semiconductor Limited Intel Technology (US), LLC Intel Technology Phils., Inc. Intel Technology Sdn. Berhad Mission College Investments Ltd. Silicon Philippines Inc. Xircom International Holdings Pte. Ltd. Costa Rica...

  • Page 138

  • Page 139
    ...S-3 Nos. 333132865 33-20117, 33-54220, 33-58964, and 33-56107) of Intel Corporation of our reports dated February 20, 2007, with respect to the consolidated financial statements and schedule of Intel Corporation, Intel Corporation management's assessment of the effectiveness of internal control over...

  • Page 140

  • Page 141
    ... reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented...

  • Page 142

  • Page 143
    ... management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February 23, 2007 By: / s/ A NDY D. B RYANT Andy D. Bryant Executive Vice President, Chief Financial and Enterprise Services Officer and Principal Accounting Officer

  • Page 144

  • Page 145
    ... Intel and furnished to the Securities and Exchange Commission or its staff upon request. Date: February 23, 2007 By: /s / P AUL S. O TELLINI Paul S. Otellini President and Chief Executive Officer /s / A NDY D. B RYANT Andy D. Bryant Executive Vice President, Chief Financial and Enterprise Services...