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INTEL CORP
FORM 10-K
(Annual Report)
Filed 02/20/08 for the Period Ending 12/29/07
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
    ... Ending 12/29/07 Address 2200 MISSION COLLEGE BLVD RNB-4-151 SANTA CLARA, CA 95054 4087658080 0000050863 INTC 3674 - Semiconductors and Related Devices Semiconductors Technology 12/31 Telephone CIK Symbol SIC Code Industry Sector Fiscal Year http://www.edgar-online.com © Copyright 2008, EDGAR...

  • 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
    approximately $137.9 billion 5,788 million shares of common stock outstanding as of February 8, 2008 DOCUMENTS INCORPORATED BY REFERENCE (1) Portions of the registrant's Proxy Statement relating to its 2008 Annual Stockholders' Meeting, to be filed subsequently- Part III.

  • Page 5
    ... Staff Comments Properties Legal Proceedings Submission of Matters to a Vote of Security Holders PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial Condition...

  • Page 6
    ..., including environmental, health, and safety compliance. On our Investor Relations web site, located at www.intc.com , we post the following filings as soon as reasonably practicable after they are electronically filed with, or furnished to, the U.S. Securities and Exchange Commission (SEC): our...

  • Page 7
    ..., or other computing system, including a microprocessor, chipset, motherboard, memory, wired or wireless connectivity device, or software. We refer to the platform brands within our product offerings as processor technologies. We strive to design computing and communications systems and devices with...

  • Page 8
    ... processor technologies based on our microprocessors, chipsets, and motherboard products that are optimized for the desktop market segment. For business desktop PCs, we offer the Intel ® Core TM 2 processor with vPro TM technology, which is designed to provide increased security and manageability...

  • Page 9
    ... typically offer higher performance than standard desktop PCs, and are used for applications such as engineering design, digital content creation, and high-performance computing. Our new product offerings in 2007 and early 2008 include: • Quad-Core Intel Xeon processors designed for single-socket...

  • Page 10
    ...server is powered by either the Quad-Core Intel Xeon processor 5300 series or the Dual-Core Intel Xeon processor 5100 series. Mobility Group The Mobility Group's products include microprocessors and related chipsets designed for the notebook market segment, wireless connectivity products, and energy...

  • Page 11
    ... with rich audio and video capabilities, and consumer electronics devices such as digital TVs, high-definition media players, and set-top boxes. We offer the Intel ® Core TM 2 processor with Viiv TM technology, which is designed to make it easier for users to download, manage, and share the growing...

  • Page 12
    ..., and 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, and communications technology improvements. In line with these plans, we...

  • Page 13
    ... improved wireless capabilities, including expanding and proliferating WiMAX technologies and products. As part of our R&D efforts, we plan to introduce a new microarchitecture for our mobile, desktop, and Intel Xeon processors approximately every two years and ramp the next generation of silicon...

  • Page 14
    ... standard terms and conditions of sale typically provide that payment is due at a later date, generally 30 days after shipment, delivery, or the customer's use of the product. Our credit department sets accounts receivable and shipping limits for individual customers to control credit risk to Intel...

  • Page 15
    ..., 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 marketing as well as co-marketing programs. Our direct marketing activities include television, print and web-based advertising...

  • Page 16
    .../or improved energy-efficient performance at competitive prices. Some of our microprocessor competitors, such as Advanced Micro Devices, Inc. (AMD), market software-compatible products that compete with our processors. We also face competition from companies offering rival architecture designs, such...

  • Page 17
    ... NAND flash memory products, and "Note 7: Investments" for information on our investment in VMware, Inc. During the first quarter of 2008, we expect to complete the divestiture of our NOR flash memory assets to Numonyx, and we expect to receive an ownership interest in the new company. See...

  • Page 18
    ...including, at a minimum, those covering non-discrimination in the terms and conditions of employment, child labor, minimum wages, employee benefits, and work hours. In addition, we expect suppliers to abide by our policies, such as our Code of Conduct and the Electronic Industry Code of Conduct. 13

  • Page 19
    ..., GM of Sales and Marketing Group, Chief Sales and Marketing Officer • 2005 - 2006, Executive VP, GM of Mobility Group • 2001 - 2005, Executive VP, GM of Intel Communications Group • Member of AutoDesk, Inc. Board of Directors • Joined Intel 1982 David Perlmutter , age 54 • 2007 - present...

  • Page 20
    ... our revenue, increasing our costs, lowering our gross margin percentage, and requiring us to recognize impairments of our assets. Fluctuations in the mix of products sold may harm our financial results. Because of the wide price differences among mobile, desktop, and server microprocessors, the...

  • Page 21
    ... condition. We have sales offices, R&D, 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 ability to manufacture, assemble and test...

  • Page 22
    ... be time-consuming and costly or may not be possible; and/or • license technology from the third party claiming infringement, which license may not be available on commercially reasonable terms. The occurrence of any of the foregoing could result in unexpected expenses or require us to recognize...

  • Page 23
    ... comply with applicable environmental laws and regulations worldwide could harm our business and results of operations. The manufacturing and assembling and testing of our products require the use of hazardous materials that are subject to a broad array of environmental, health, and safety laws and...

  • Page 24

  • Page 25
    ... our strategic objectives and support our key business initiatives. Such investments include investments in equity securities of public companies and non-marketable equity investments in private companies, which range from early-stage companies that are often still defining their strategic direction...

  • Page 26
    ... of 2008. In addition, we are building a new wafer fabrication facility in China that is expected to begin production in 2010. Our assembly and test facilities are located overseas, specifically in Malaysia, China, the Philippines, and Costa Rica. We are building a new assembly and test facility in...

  • Page 27
    ...forward purchase agreement. Common stock repurchases under our authorized plan in each quarter of 2007 were as follows (in millions, except per share amounts): Total Number of Shares Purchased as Part of Publicly Announced Plans Period Total Number of Shares Purchased Average Price Paid Per Share...

  • Page 28
    ... with the cumulative total return of the Dow Jones Technology Index and the Standard & Poor's (S&P) 500 Index for the five fiscal years ended December 29, 2007. The graph and table assume that $100 was invested on December 27, 2002 (the last day of trading for the fiscal year ended December 28, 2002...

  • Page 29
    ... in Millions, Except Per Share Amounts) 2007 2006 2005 2004 2003 Net revenue Gross margin Research and development Operating income Net income Earnings per common share Basic Diluted Weighted average diluted shares outstanding Dividends per share Declared Paid Share-based compensation 1 (Dollars in...

  • Page 30
    ... scale is key to our strategy of ramping new manufacturing technologies and platforms quickly, delivering high-performance products, and lowering unit costs. As of December 29, 2007, our operating segments included the Digital Enterprise Group, Mobility Group, NAND Products Group, Flash Memory Group...

  • Page 31
    ... products using that technology in 2009. From a financial condition perspective, we ended 2007 with an investment portfolio valued at $19.3 billion, consisting of cash and cash equivalents, fixed-income debt instruments included in trading assets, and short- and long-term investments. During 2007...

  • Page 32
    ... our products. Our current investment focus areas include those that we believe help to enable mobile wireless devices, advance the digital home, enhance the digital enterprise, advance high-performance communications infrastructures, and develop the next generation of silicon process technologies...

  • Page 33
    ... for high-end enthusiast PCs, mainstream PCs with rich audio and video capabilities, and consumer electronic devices such as digital TVs, high-definition media players, and set-top boxes. The strategy for our Digital Health Group is to design and deliver technology-enabled products and explore...

  • Page 34
    ... we consider key accounting policies, such as those for revenue recognition, including the deferral of revenue on sales to distributors; however, these policies typically do not require us to make estimates or judgments that are difficult or subjective. Non-Marketable Equity Investments We regularly...

  • Page 35
    ...measured by comparing 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
    ... inventory, which would negatively impact our gross margin. Share-Based Compensation Effective January 1, 2006, we adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), "Shared-Based Payment" (SFAS No. 123(R)). SFAS No. 123(R) requires employee equity...

  • Page 37
    ... MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION (Continued) Higher volatility and longer expected lives result in an increase to share-based compensation determined at the date of grant. The effect that changes in the volatility and the expected life would...

  • Page 38
    ... of Revenue 2005 % of Dollars Revenue Net revenue Cost of sales Gross margin Research and development Marketing, general and administrative Restructuring and asset impairment charges Amortization of acquisition-related intangibles and costs Operating income Gains (losses) on equity investments, net...

  • Page 39
    ... in the gross margin percentage in the Mobility Group operating segment and costs associated with the ramp of our NAND flash memory business. We derived most of our overall gross margin dollars and operating profit in 2007 and 2006 from the sale of microprocessors in the Digital Enterprise Group and...

  • Page 40

  • Page 41
    ... compensation. Results for 2005 included a charge related to a settlement agreement with MicroUnity. Mobility Group The revenue and operating income for the Mobility Group (MG) for the three years ended December 29, 2007 were as follows: (In Millions) 2007 2006 2005 Microprocessor revenue Chipset...

  • Page 42
    ... for sale our fabrication facility in Colorado Springs, Colorado. This plan resulted in an impairment charge of $214 million to write down to fair value the land, building, and equipment asset grouping that has been principally used to support our communications and application processor business...

  • Page 43
    ...) During 2007, we incurred an additional $54 million in asset impairment charges as a result of softer than anticipated market conditions related to the Colorado Springs facility. Also, we recorded land and building write-downs related to certain facilities in Santa Clara, California. In addition...

  • Page 44
    .... 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" and related interpretations. Accordingly, no share-based compensation was recognized...

  • Page 45
    ...balance in 2007. In comparison, our inventory increased in 2006 as a result of higher product costs. In 2007, we began designating floating-rate securitized financial instruments purchased after 2006 as trading assets. For 2007 and 2006, our two largest customers accounted for 35% of our net revenue...

  • Page 46
    ... million. Financing Activities Financing cash flows consist primarily of repurchases and retirement of common stock, payment of dividends to stockholders, and proceeds from sales of shares through employee equity incentive plans. For 2007 compared to 2006, the lower cash used in financing activities...

  • Page 47
    ... 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 acquisitions or strategic investments...

  • Page 48
    ... 29, 2007, primarily due to the timing of the ramp of our latest silicon process technology. Other purchase obligations and commitments include payments due under various types of licenses, agreements to purchase raw materials or other goods, as well as payments due under non-contingent funding...

  • Page 49
    ... met, additional required payments would be approximately $254 million. For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net of the statutory withholding requirements that are paid by Intel on behalf of our employees. The...

  • Page 50
    ... a number of risks and uncertainties-in particular, our goals and strategies; new product introductions; plans to cultivate new businesses; pending divestitures; future economic conditions; revenue; pricing; gross margin and costs; capital spending; depreciation; R&D expenses; marketing, general...

  • Page 51
    ... to hedge the equity market risk. The marketable equity securities included in trading assets are held to generate returns that offset changes in liabilities related to the equity market risk of certain deferred compensation arrangements. The gains and losses from changes in fair value of these...

  • Page 52
    ...in companies that have been publicly traded for only a limited time, we analyzed the implied volatility of the related company based on freely traded options. Our marketable equity method investment is excluded from our analysis, as the carrying value does not fluctuate based on market price changes...

  • Page 53
    ... 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 Firm Supplemental Data: Financial...

  • Page 54
    ...INCOME Three Years Ended December 29, 2007 (In Millions, Except Per Share Amounts) 2007 1 2006 1 2005 Net revenue Cost of sales Gross margin Research and development Marketing, general and administrative Restructuring and asset impairment charges Amortization of acquisition-related intangibles and...

  • Page 55
    ... BALANCE SHEETS December 29, 2007 and December 30, 2006 (In Millions, Except Par Value) 2007 2006 Assets Current assets: Cash and cash equivalents Short-term investments Trading assets Accounts receivable, net of allowance for doubtful accounts of $27 ($32 in 2006) Inventories Deferred tax assets...

  • Page 56
    ... government grants 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...

  • Page 57
    ... from sales of shares through employee equity incentive plans, tax benefit of $351, and other Assumption of acquisition-related stock options and amortization of acquisition-related unearned stock compensation, net of adjustments Repurchase and retirement of common stock Cash dividends declared...

  • Page 58
    ... notes. The accounting estimates that require our most significant, difficult, and subjective judgments include: • the valuation of non-marketable equity investments; • the assessment of recoverability of long-lived assets; • the recognition and measurement of current and deferred income...

  • Page 59
    ... sale or exchange of marketable equity securities in gains (losses) on equity investments, net. Non-Marketable and Other Equity Investments We account for non-marketable and other equity investments under either the cost or equity method and include them in other long-term assets. Our non-marketable...

  • Page 60
    ... in a current transaction, and the fair values could change significantly. For a listing of fair values and carrying values of our trading assets and available-for-sale investments for 2007 and 2006, see "Note 7: Investments." For our marketable equity method investment, the fair value exceeded the...

  • Page 61
    53

  • Page 62
    ... Instruments Our primary objective for holding derivative financial instruments is to manage currency, interest rate, and certain equity market risks. Our derivative financial instruments are recorded at fair value and are included in other current assets, other long-term assets, other accrued...

  • Page 63
    ...dollar-denominated debt instruments classified as trading assets. The maturity of these instruments generally occurs within 12 months, except for derivatives associated with certain long-term equity-related investments that generally mature within five years. Changes in the U.S.-dollar-equivalent...

  • Page 64
    55

  • Page 65
    ...or excess inventory requires us to estimate the future demand for our products. Inventory in excess of saleable amounts is not valued, and the remaining inventory is valued at the lower of cost or market. Inventories at fiscal year-ends were as follows: (In Millions) 2007 2006 Raw materials Work in...

  • Page 66
    ...the cost of qualified assets and amortize it over the estimated useful lives of the assets. Capital-related government grants earned are recorded as a reduction to property, plant and equipment. Goodwill We record goodwill when the purchase price of an acquisition exceeds the estimated fair value of...

  • Page 67
    ...price of options is equal to the value of Intel common stock on the date of grant. Additionally, the stock purchase plan was deemed non-compensatory under APB No. 25. Accordingly, prior to 2006 we did not recognize any share-based compensation, other than insignificant amounts of acquisition-related...

  • Page 68
    ... fair value on the acquisition date. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred, restructuring costs generally be expensed in periods subsequent to the acquisition date, and changes in accounting for deferred tax asset...

  • Page 69
    ... grant. Equity awards granted to key officers, senior-level employees, and key employees in 2007 may have delayed vesting beginning 2 to 5 years from the date of grant, and options expire 7 to 10 years from the date of grant. The 2006 Stock Purchase Plan allows eligible employees to purchase shares...

  • Page 70
    ...average assumptions used in calculating these values, on estimates at the date of grant, as follows: Stock Options 2006 2005 1 Stock Purchase Plan 2007 2006 2005 1 2007 Estimated values Expected life (in years) Risk-free interest rate Volatility Dividend yield 1 $ 5.79 $ 5.21 $ 6.02 $ 5.18 $ 4.56...

  • Page 71
    ... with a fair value of $1.4 billion completed vesting during 2007. As of December 29, 2007, there was $524 million in unrecognized compensation costs related to stock options granted under our equity incentive plans. We expect to recognize those costs over a weighted average period of 1.1 years. 62

  • Page 72
    ... exercise price and the value of Intel stock at the time of exercise. The following table summarizes information about options outstanding at December 29, 2007: Outstanding Options Weighted Average Remaining Weighted Number of Contractual Average Shares Life Exercise (In Millions) (In Years) Price...

  • Page 73
    ... employees to satisfy the statutory tax withholding requirements. On the grant date, the fair value for these vested awards was $111 million. As of December 29, 2007, there was $707 million in unrecognized compensation costs related to restricted stock units granted under our equity incentive plans...

  • Page 74
    ... 3: Employee Equity Incentive Plans." For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net of the statutory withholding requirements that we pay on behalf of our employees. During 2007, we withheld 1.7 million shares to...

  • Page 75
    ... all or part of the debentures for the principal amount, plus any accrued and unpaid interest, if the closing price of Intel common stock has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading-day period prior to the date on which...

  • Page 76
    ...Investments Trading Assets Trading assets outstanding at fiscal year-ends were as follows: 2007 Net Unrealized Estimated Gains Fair Value 2006 Net Unrealized Estimated Gains Fair Value (In Millions) Marketable debt instruments Equity securities offsetting deferred compensation Total trading assets...

  • Page 77
    ... publicly traded company, in exchange for 9.5 million shares of their common stock. Our investment is recorded in marketable equity securities at a fair value of $794 million as of December 29, 2007, based on the quoted closing stock price on December 28, 2007. We sold available-for-sale investments...

  • Page 78
    ... $50 million of unrealized loss for marketable equity securities was attributed to the fair value decline in our investment in Micron. As of December 29, 2007, Micron had been trading at levels below our cost basis for less than two months, as its stock price has been impacted by weakened DRAM and...

  • Page 79
    ... "The Equity Method of Accounting for Investments in Common Stock." The remaining $105 million represents our share of the difference between fair value and book value for Clearwire's net assets, of which $48 million is being amortized with a weighted average remaining life of approximately 18 years...

  • Page 80
    ... credit insurance for all or a portion of the account balance if necessary. Note 9: Gains (Losses) on Equity Investments, Net Gains (losses) on equity investments, net for the three years ended December 29, 2007 were as follows: (In Millions) 2007 2006 2005 Impairment charges Gains on sales...

  • Page 81
    ... for gain on investments included in net income Change in unrealized holding gain or loss on derivatives Less: adjustment for amortization of gain or loss on derivatives included in net income Change in prior service costs Change in actuarial loss Minimum pension liability Total other comprehensive...

  • Page 82
    ...: Retirement Benefit Plans." Note 12: Acquisitions Consideration for acquisitions that qualify as business combinations includes the cash paid and the value of any options assumed, less any cash acquired, and excludes contingent employee compensation payable in cash and any debt assumed. During 2007...

  • Page 83
    ... a cash purchase price of $600 million, plus the assumption of certain liabilities. We included the operating results associated with the divested assets of our communications and application processor business in the Mobility Group operating segment. Intel and Marvell also entered into an agreement...

  • Page 84
    ..., acquisition-related developed technology in amortization of acquisition-related intangibles and costs, and other intangible assets as either a reduction of revenue or amortization of acquisition-related intangibles and costs. The amortization expense for the three years ended December 29, 2007...

  • Page 85
    ... techniques. During 2007, we incurred an additional $54 million in asset impairment charges as a result of softer than anticipated market conditions related to the Colorado Springs facility. Also, we recorded land and building write-downs related to certain facilities in Santa Clara, California. In...

  • Page 86
    ... a current liability within accrued compensation and benefits. From the third quarter of 2006 through the fourth quarter of 2007, we incurred a total of $1.1 billion in restructuring and asset impairment charges related to this plan. These charges include a total of $527 million related to employee...

  • Page 87
    ...taxed at different rates Settlements Research and development tax credits Domestic manufacturing deduction benefit Export sales benefit Repatriation of prior years' permanently reinvested earnings Share-based compensation Other Income tax rate 35.0% 0.6 (4.7) (5.3) (1.3) (1.1) - - 0.3 0.4 23.9% 35...

  • Page 88
    ... fiscal year-ends were as follows: (In Millions) 2007 2006 Deferred tax assets Accrued compensation and other benefits Accrued advertising Deferred income Share-based compensation Inventory valuation Impairment losses on equity investments State credits and net operating losses Intercompany profit...

  • Page 89
    ...taken during current period December 29, 2007 $ 1,896 (1,243) - 106 (26) 61 $ 794 During 2007, the U.S. Internal Revenue Service (IRS) closed its examination of our tax returns for the years 1999 through 2002, resolving the issues related to the tax benefits for export sales as well as a number of...

  • Page 90
    ... targets to comply with the PPA. Non-U.S. Pension Benefits. We also provide defined-benefit pension plans in certain other countries. Consistent with the requirements of local law, we deposit funds for certain plans with insurance companies, third-party trustees, or into government-managed accounts...

  • Page 91
    ...in an Intel-sponsored medical plan. If the available credits are not sufficient to pay the entire cost of the coverage, the remaining cost is the responsibility of the retiree. Funding Policy. Our practice is to fund the various pension plans in amounts sufficient to meet the minimum requirements of...

  • Page 92
    ... benefit plan, an increase in the assumed healthcare cost trend rate of one percentage point each year would not have a significant impact on the benefit obligation because the plan provides defined credits that the retiree can use to pay all or a portion of the cost to purchase medical coverage...

  • Page 93
    ...an investment in a particular equity security. The fund does not engage in speculative futures transactions. The expected long-term rate of return for the U.S. plan assets is 5.1%. The asset allocation for our U.S. Pension Plan at the end of fiscal years 2007 and 2006, and the target allocation rate...

  • Page 94
    ... investment manager makes investment decisions within the guidelines set by us or local regulations. Performance is evaluated by comparing the actual rate of return to the return on other similar assets. Investments managed by qualified insurance companies or pension funds under standard contracts...

  • Page 95
    ... intangible asset is being amortized into cost of sales over its expected five-year life. Costs that Intel and Micron have incurred for product and process development related to IMFT are generally split evenly between Intel and Micron and are classified in R&D. Subject to certain conditions, we...

  • Page 96
    ... claims by AMD that we used unfair business practices to persuade clients to buy our microprocessors. The European Commission sent us a Statement of Objections in July 2007 alleging that certain Intel marketing and pricing practices amounted to an abuse of a dominant position that infringed European...

  • Page 97
    ...sale of microprocessors in violation of federal or New York antitrust laws. We intend to cooperate with and respond to these investigations as appropriate and we expect that these matters will be acceptably resolved. Barbara's Sales, et al. v. Intel Corporation, Gateway Inc., Hewlett-Packard Company...

  • Page 98
    ... Group. Includes microprocessors and related chipsets designed for the notebook market segment, wireless connectivity products, and products designed for the ultra-mobile market segment. In the fourth quarter of 2006, we completed the sale of certain assets of our communications and application...

  • Page 99
    ...the accounting policies for segment reporting are the same as for Intel as a whole. Operating segment net revenue and operating income (loss) for the three years ended December 29, 2007 were as follows: (In Millions) 2007 2006 2005 Net revenue Digital Enterprise Group Microprocessor revenue Chipset...

  • Page 100
    ... years ended December 29, 2007 is based on the location of the customer. Revenue from unaffiliated customers by geographic region/country was as follows: (In Millions) 2007 2006 2005 Asia-Pacific Taiwan China Other Asia-Pacific Americas United States Other Americas Europe Japan Total net revenue...

  • Page 101
    ...benefit pension and other postretirement plans during 2006, and its method of accounting for stock-based compensation as of January 1, 2006. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Intel Corporation...

  • Page 102
    ... with the standards of the Public Company Accounting Oversight Board (United States), the 2007 consolidated financial statements of Intel Corporation and our report dated February 19, 2008 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP San Jose, California February 19, 2008 93

  • Page 103
    ...) 2007 For Quarter Ended (In Millions, Except Per Share Amounts) December 29 September 29 June 30 March 31 Net revenue Gross margin Net income 1 Basic earnings per common share 1 Diluted earnings per common share 1 Dividends per share Declared Paid Market price range common stock 2 High Low...

  • Page 104
    ... the Committee of Sponsoring Organizations of the Treadway Commission. Management's assessment included evaluation of elements such as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment. Based on...

  • Page 105
    ... 2008 Proxy Statement is incorporated by reference in this section. The Intel Code of Conduct (Code) is our code of ethics document 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...

  • Page 106
    ... by the Compensation Committee, which has the power to determine matters related to outstanding option awards under the 1997 Plan, including conditions of vesting and exercisability. Options granted under the 1997 Plan expire no later than 10 years from the grant date. Options granted before 2003...

  • Page 107
    ... or incorporated by reference as part of this Form 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 Viiv, Intel vPro, Intel Xeon, Intel XScale, Itanium, and Pentium are trademarks of Intel Corporation in the...

  • Page 108
    Table of Contents INTEL CORPORATION SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS December 29, 2007, December 30, 2006, and December 31, 2005 (In Millions) Balance at Beginning of Year Additions Charged (Credited) to Expenses Net Deductions (Recoveries) Balance at End of Year Allowance for ...

  • Page 109
    ...of Grant of Restricted Stock Units 10.12** Form of Intel Corporation Nonqualified Stock Option Agreement under the 2004 Equity Incentive Plan 10.13** Standard Terms and Conditions relating to Restricted Stock Units granted to U.S. employees under the Intel Corporation 2004 Equity Incentive Plan 100

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    ...16** Standard Terms and Conditions relating to Restricted Stock Units granted to U.S. employees under the Intel Corporation 2004 Equity Incentive Plan (for grants under the ELTSOP Program) 10.17** Standard International Restricted Stock Unit Agreement under the 2004 Equity Incentive Plan (for grants...

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    ... by Reference Exhibit Number Exhibit Description Form File Number Exhibit Filing Date Filed Herewith 10.29** 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...

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    ... Incorporated by Reference Exhibit Number Exhibit Description Form File Number Exhibit Filing Date Filed Herewith 23.1 31.1 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act...

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    ... by the undersigned, thereunto duly authorized. INTEL CORPORATION Registrant By: /s/ STACY J. SMITH Stacy J. Smith Vice President, Chief Financial Officer and Principal Accounting Officer February 19, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been...

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    Exhibit 4.2.3 INTEL CORPORATION, as Issuer, AND WELLS FARGO BANK, National Association, as Successor Trustee FIRST SUPPLEMENTAL INDENTURE Dated as of July 25, 2007 2.95% Junior Subordinated Convertible Debentures due 2035

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    ... shall initially be the applicable Corporate Trust Office of the Trustee. The Company shall give prompt written notice to the Trustee of the location, and any change 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...

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    ... States of America for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. ARTICLE 2 Section 2.01. Definitions. Capitalized terms used but not defined in this First...

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    ... duly executed all as of the day and year first above written. INTEL CORPORATION, a Delaware corporation /s/ Ravi Jacob Name: Ravi Jacob Title: Vice President, Finance and Enterprises Services Group and Treasurer WELLS FARGO BANK, National Association /s/ Maddy Hall Name: Maddy Hall Title: Assistant...

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    Exhibit 4.2.4 Execution Copy INTEL CORPORATION, as Issuer, AND WELLS FARGO BANK, National Association, as Successor Trustee FIRST SUPPLEMENTAL INDENTURE Dated as of December 3, 2007 Debt Securities

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    ...dated as of December 3, 2007 among Intel Corporation, a Delaware corporation, as Issuer (the " Company "), and Wells Fargo Bank, N.A., a national banking association, as Successor Trustee (the " Trustee "). RECITALS A. Company... amended to delete the reference to "Place of Payment" so that Section 902...

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    ... 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...

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    ...any other provision of this Indenture, then the Company will maintain with respect to each such series of Securities, or as so required, at least one exchange rate agent." ARTICLE TWO Section 201. Definitions. Capitalized terms used but not defined in this First Supplemental Indenture shall have the...

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    ... First Supplemental Indenture to be duly executed all as of the day and year first above written. INTEL CORPORATION, a Delaware corporation /s/ Ravi Jacob Name: Ravi Jacob Title: Vice President WELLS FARGO BANK, National Association /s/ Maddy Hall Name: Maddy Hall Title: Assistant Vice President 4

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    ... the term "(as defined in the Intel Corporation Profit Sharing Retirement Plan)". 8. Effective January 1, 2007, Section 6(c) of the Intel Corporation Sheltered Employee Retirement Plan Plus is amended in its entirety to read as follows: (c) The percentage of a Participant's Profit Sharing Account...

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    ...reemployed by the Company after beginning to receive Plan Benefits, the Company will continue to pay out those Plan Benefits under the Participant's original Distribution election. 10. Effective January 1, 2008, Section 7(a) of the Intel Corporation Sheltered Employee Retirement Plan Plus is amended...

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    ... terminates employment prior to January 1, 2008, the new election will be effective provided that it does not violate Section 409A of the Code, as determined in the Company's sole discretion. 14. Effective January 1, 2007, Section 8(c)(1) of the Intel Corporation Sheltered Employee Retirement Plan...

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    ... be made in a cash lump sum as soon as reasonably practicable after the Participant's Termination date, regardless of outstanding elections. 16. Effective January 1, 2008, the last sentence of Section 13(j) of the Intel Corporation Sheltered Employee Retirement Plan Plus is amended by replacing the...

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    ... January 1, 2008, Section 13 of the Intel Corporation Sheltered Employee Retirement Plan Plus is amended by adding the following sentence at the end of the section: (dd) "Commission" means compensation paid to an Employee under the ASMO Commissions Pay Plan in effect for the applicable Plan Year. IN...

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    Exhibit 10.38 SECOND AMENDMENT TO THE INTEL CORPORATION SHELTERED EMPLOYEE RETIREMENT PLAN PLUS The document, as amended and restated effective January 1, 2006 1. Effective January 1, 2008, Section 13(m) of the Intel Corporation Sheltered Employee Retirement Plan Plus is amended by deleting "In any ...

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    Exhibit 12.1 INTEL CORPORATION 2007 FORM 10-K STATEMENT SETTING FORTH THE COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES FOR INTEL CORPORATION (In Millions, Except Ratios) Dec. 27, 2003 Dec. 25, 2004 Years Ended Dec. 31, 2005 Dec. 30, 2006 Dec. 29, 2007 Income before taxes Adjustments: Add - ...

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    .... 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. Costa Rica Delaware, US Cayman Islands Denmark England and Wales Cayman Islands Israel California, US...

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    ...consolidated financial statements and schedule of Intel Corporation, and the effectiveness of internal control over financial reporting of Intel Corporation, included in this Annual Report (Form 10-K) for the year ended December 29, 2007. /s/ Ernst & Young LLP San Jose, California February 19, 2008

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    ...31.1 The following certification includes references to an evaluation of the effectiveness of the design and operation of the company's "disclosure controls and procedures" and to certain matters related to the company's "internal control over financial reporting." Item 9A of Part II of this Form 10...

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    ...31.2 The following certification includes references to an evaluation of the effectiveness of the design and operation of the company's "disclosure controls and procedures" and to certain matters related to the company's "internal control over financial reporting." Item 9A of Part II of this Form 10...

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    ... has been provided to Intel and will be retained by Intel and furnished to the Securities and Exchange Commission or its staff upon request. Date: February 19, 2008 By: /s/ PAUL S. OTELLINI Paul S. Otellini President and Chief Executive Officer Date: February 19, 2008 By: /s/ STACY J. SMITH Stacy...