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INTEL CORP
FORM 10-K
(Annual Report)
Filed 02/18/11 for the Period Ending 12/25/10
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 2011, 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 02/18/11 for the Period Ending 12/25/10 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
    ... of each exchange on which registered Common stock, $0.001 par value The NASDAQ Global Select Market* Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No...

  • Page 4
    ... is a shell company (as defined in Rule 12b-2 of the Act). Yes 3 No Aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of June 25, 2010, based upon the closing price of the common stock as reported by The NASDAQ Global Select Market* on such...

  • Page 5
    ... Unresolved Staff Comments Properties Legal Proceedings 1 14 20 20 20 PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Item 6. Selected Financial Data Item 7. Management's Discussion and Analysis of Financial Condition and Results...

  • Page 6
    ... to sign up to automatically receive e-mail alerts when we post news releases and financial information. The SEC's web site, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The content on any web site...

  • Page 7

  • Page 8
    ... network adapters and embedded wireless cards, based on industry-standard protocols used to translate and transmit data across networks. Wireless connectivity products based on WiFi technology allow users to wirelessly connect to high-speed local area networks, typically within a close range...

  • Page 9

  • Page 10
    ... Group, the Software and Services Group, and the Digital Health Group. Percentage of Revenue by Major Operating Segment (Dollars in Millions) Revenue from sales of microprocessors and revenue from sales of chipsets, motherboards, and other, presented as a percentage of our consolidated net revenue...

  • Page 11
    ... offer power-saving features to improve battery life, enable smaller form factors, allow for wireless network connectivity, and improve boot times. For the notebook and desktop market segments, we offer Intel ® vPro TM technology, which is designed to provide businesses with increased manageability...

  • Page 12
    ... integration of Internet, television, and personal content with search capability. Ultra-Mobility Group The Ultra-Mobility Group offers energy-efficient Intel Atom processors and related chipsets designed for the handheld market segment. In 2010, we introduced an Intel Atom processor-based platform...

  • Page 13
    ..., and purchase certain communications networking products from external vendors in the Asia-Pacific region. Following the manufacturing process, the majority of our components are subject to assembly and test. We perform our components assembly and test at facilities in Malaysia, China, Costa Rica...

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  • Page 15
    ..., we have an agreement with Micron for joint development of NAND flash memory technologies. Employees As of December 25, 2010, we had 82,500 employees worldwide, with approximately 55% of those employees located in the U.S. Sales and Marketing Customers We sell our products primarily to original...

  • Page 16

  • Page 17
    ... 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 allow the customer to review inventory availability and track the progress of specific goods ordered. Pricing...

  • Page 18
    .... 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 Internet advertising, as well as press relations, consumer and trade events, and industry and consumer communications. We...

  • Page 19
    ... using ARM-based designs are also targeting the notebook, netbook, and server market segments. ARM does not manufacture microprocessors; they design and license semiconductor intellectual property and offer supporting software and services. Our ability to compete with ARM-based competitors depends...

  • Page 20
    ...: Acquisitions" in Part II, Item 8 of this Form 10-K. Intellectual Property and Licensing Intellectual property rights that apply to our products and services include patents, copyrights, trade secrets, trademarks, and maskwork rights. We maintain a program to protect our investment in technology by...

  • Page 21
    ... to power management, addressing the challenge at the silicon, package, circuit, micro/macro architecture, platform, and software levels. We recognize that climate change may cause general economic risk. For further information on the risks of climate change, see "Risk Factors" in Part I, Item...

  • Page 22
    ... VP, Chief Financial and Enterprise Services Officer • Member of Columbia Sportswear Company Board of Directors • Member of McKesson Corporation Board of Directors • Joined Intel 1981 William M. Holt , age 58 • 2006 - present, Senior VP, GM, Technology and Manufacturing Group • 2005 - 2006...

  • Page 23
    ... Internet-connected devices increase, we need to improve the cost, energy efficiency, and security functionality of our microprocessors to succeed in these new market segments. In addition, we need to focus on the acquisition and development of our software capabilities in order to provide customers...

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  • Page 25
    ...marketing expenses, as well as conduct certain investing and financing activities, in local currencies. Our hedging programs reduce, but do not entirely eliminate, the impact of currency exchange rate movements; therefore, fluctuations in exchange rates could harm our results and financial condition...

  • Page 26
    ...or selling particular products subject to infringement claims; • discontinue using the technology or processes subject to infringement claims; • develop other technology not subject to infringement claims, which could be time-consuming and costly or may not be possible; or • license technology...

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    16

  • Page 28
    ... still defining their strategic direction to more mature companies with established revenue streams and business models. The success of these companies is dependent on product development, market acceptance, operational efficiency, and other key business factors. The companies in which we invest may...

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  • Page 30
    ... return on the investment we make; • we may not be able to retain key personnel of the acquired business; • we may experience difficulty in integrating new employees, business systems, and technology; • acquired businesses may not have adequate controls, processes, and procedures to...

  • Page 31
    ... other, net in our consolidated statements of income to fluctuate include: • fixed-income, equity, and credit market volatility; • fluctuations in foreign currency exchange rates; • fluctuations in interest rates; • changes in the credit standing of financial instrument counterparties; and...

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    19

  • Page 33
    ...-edge technology fabrication facility in Arizona. Outside the U.S., we have wafer fabrication at our facilities in Israel, Ireland, and China. Our assembly and test facilities are located in Malaysia, China, Costa Rica, and Vietnam. In addition, we have sales and marketing offices worldwide that...

  • Page 34
    ... limit by $10 billion. Common stock repurchases under our authorized plan in each quarter of 2010 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 35
    ... return on our common stock with the cumulative total return of the Dow Jones U.S. Technology Index* and the Standard & Poor's S&P 500* Index for the five years ended December 25, 2010. The graph and table assume that $100 was invested on December 30, 2005 (the last day of trading for the year ended...

  • Page 36
    Table of Contents ITEM 6. SELECTED FINANCIAL DATA 2010 2009 2008 2007 2006 (In Millions, Except Per Share Amounts) Net revenue Gross margin Research and development Operating income Net income Earnings per common share Basic Diluted Weighted average diluted common shares outstanding Dividends per ...

  • Page 37
    ... and consumer PC market segments as well as the continued build-out of the data center, the leadership of our product portfolio, and improvements to our cost structure all contributed to the most profitable year in our history. Revenue increased 24% in 2010 compared to 2009. Our 2010 gross margin...

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  • Page 39
    ...a financial condition perspective, we ended 2010 with an investment portfolio of $21.5 billion, consisting of cash and cash equivalents, short-term investments, and marketable debt instruments included in trading assets. During 2010, we purchased $5.2 billion in capital assets, returned $3.5 billion...

  • Page 40
    ... through our technology, program, and policy leadership, as well as funding through the Intel Foundation. In addition, we strive to cultivate a work environment where engaged, energized employees can thrive in their jobs and in their communities. Our continued investment in developing our assets and...

  • Page 41
    26

  • Page 42
    ... Intel architecture as a solution for embedded applications by delivering long life-cycle support, software and architectural scalability, and platform integration; • continuing to develop and offer products that enable handheld devices to deliver digital content and the Internet to users in new...

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  • Page 44
    ... defining their strategic direction to more mature companies with established revenue streams and business models. The carrying value of our non-marketable equity investment portfolio, excluding equity derivatives, totaled $2.6 billion as of December 25, 2010 ($3.4 billion as of December 26, 2009...

  • Page 45
    ... MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) IMFT/IMFS IMFT and IMFS are variable interest entities that are designed to manufacture and sell NAND products to Intel and Micron at manufacturing cost. We determine the fair value of our investment...

  • Page 46
    29

  • Page 47
    ... in the inventory valuation process include a review of the customer base, the stage of the product life cycle of our products, consumer confidence, and customer acceptance of our products, as well as an assessment of the selling price in relation to the product cost. If our demand forecast for...

  • Page 48
    ..., Except Per Share Amounts) Net revenue Cost of sales Gross margin Research and development Marketing, general and administrative Restructuring and asset impairment charges Amortization of acquisition-related intangibles Operating income Gains (losses) on equity method investments, net Gains...

  • Page 49
    ... and chipset unit sales increased, compared to 2008, primarily due to the ramp of Intel Atom processors and chipsets, which generally have lower average selling prices than our other microprocessor and chipset products. Revenue from the sale of NOR flash memory products and communications products...

  • Page 50
    ... AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) For 2009, net revenue for the PCCG operating segment decreased by $1.8 billion, or 6%, compared to 2008. The decrease in microprocessor revenue was primarily due to lower notebook microprocessor average selling prices, and...

  • Page 51

  • Page 52
    Table of Contents MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Operating Expenses Operating expenses for the three years ended December 25, 2010 were as follows: (In Millions) 2010 2009 2008 Research and development Marketing, general and ...

  • Page 53
    ... of Contents MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The following table summarizes the restructuring and asset impairment activity for the 2009 restructuring program during 2009 and 2010: Employee Severance and Benefits Asset Impairments...

  • Page 54
    ...AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The following table summarizes the restructuring and asset impairment activity for the 2006 efficiency program during 2009: Employee Severance and Benefits Asset Impairments (In Millions) Total Accrued restructuring balance...

  • Page 55
    ...flash memory market segment. See "Note 11: Equity Method and Cost Method Investments" in Part II, Item 8 of this Form 10-K. Gains (Losses) on Other Equity Investments, Net Gains (losses) on other equity investments, net were as follows: (In Millions) 2010 2009 2008 Impairment charges Gains on sales...

  • Page 56
    ...our Intel 6 Series Express Chipset family (see "Note 20: Chipset Design Issue" in Part II, Item 8 of this Form 10-K) on our future financial and operating results, including on revenue, gross margin, and inventory valuation, based on our preliminary analysis. Among the factors related to the chipset...

  • Page 57

  • Page 58
    ... business of Infineon and the expected acquisition of McAfee in the first quarter of 2011. We expect these decreases to be partially offset by lower platform unit cost and higher platform revenue. • Total Spending. We expect spending on R&D, plus marketing, general and administrative expenses, in...

  • Page 59
    ...Contents MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Liquidity and Capital Resources (Dollars in Millions) Dec. 25, 2010 Dec. 26, 2009 Cash and cash equivalents, marketable debt instruments included in trading assets, and short-term investments...

  • Page 60
    .... We base our level of common stock repurchases on internal cash management decisions, and this level may fluctuate. Proceeds from the sale of shares through employee equity incentive plans totaled $587 million in 2010 compared to $400 million in 2009. Our total dividend payments were $3.5 billion...

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  • Page 62
    ... for worldwide manufacturing and assembly and test; working capital requirements; and potential dividends, common stock repurchases, and acquisitions or strategic investments. Fair Value of Financial Instruments When determining fair value, we consider the principal or most advantageous market in...

  • Page 63
    ... and non-U.S. pension plans and other postretirement benefit plans of $56 million to be made during 2011 are also included; however, funding projections beyond 2011 are not practical to estimate. Total generally excludes contractual obligations already recorded on our consolidated balance sheet as...

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  • Page 65
    ... agreements with Micron related to intellectual property rights, and R&D funding related to NAND flash manufacturing. The obligation to purchase our proportion of IMFT's inventory was approximately $100 million as of December 25, 2010. See "Note 11: Equity Method and Cost Method Investments" in Part...

  • Page 66
    ... primarily to manage currency exchange rate and interest rate risk, and, to a lesser extent, equity market and commodity price risk. All of the potential changes noted below are based on sensitivity analyses performed on our financial positions as of December 25, 2010 and December 26, 2009. Actual...

  • Page 67
    ... Corporation, and were carried at a total fair market value of $968 million, or 65% of our marketable equity portfolio, as of December 25, 2010. Our marketable equity method investment in SMART is excluded from our analysis, as the carrying value does not fluctuate based on market price changes...

  • Page 68
    ... 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 69
    ... of Contents INTEL CORPORATION CONSOLIDATED STATEMENTS OF INCOME Three Years Ended December 25, 2010 (In Millions, Except Per Share Amounts) 2010 2009 2008 Net revenue Cost of sales Gross margin Research and development Marketing, general and administrative Restructuring and asset impairment...

  • Page 70
    ...2009 Assets Current assets: Cash and cash equivalents Short-term investments Trading assets Accounts receivable, net of allowance for doubtful accounts of $28 ($19 in 2009) Inventories Deferred tax assets Other current assets Total current assets Property, plant and equipment, net Marketable equity...

  • Page 71
    ...Trading assets Accounts receivable Inventories Accounts payable Accrued compensation and benefits Income taxes payable and receivable Other assets and liabilities Total adjustments Net cash provided by operating activities Cash flows provided by (used for) investing activities: Additions to property...

  • Page 72

  • Page 73
    ... of Contents INTEL CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Common Stock and Capital in Excess of Par Value Number of Shares Amount Accumulated Other Comprehensive Income (Loss) Three Years Ended December 25, 2010 (In Millions, Except Per Share Amounts) Retained Earnings Total...

  • Page 74
    ...-week year. Our consolidated financial statements include the accounts of Intel Corporation and our wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated. We use the equity method to account for equity investments in instances in which we own common stock or similar...

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  • Page 76
    ... promotion of business and strategic objectives. To the extent that these investments continue to have strategic value, we typically do not attempt to reduce or eliminate the equity market risks through hedging activities. We record the realized gains or losses on the sale or exchange of marketable...

  • Page 77
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  • Page 78
    ...) on equity method investments, net for equity method investments. Derivative Financial Instruments Our primary objective for holding derivative financial instruments is to manage currency exchange rate and interest rate risk, and, to a lesser extent, equity market and commodity price risk. Our...

  • Page 79
    ... rate. Inventories We compute inventory cost on a currently adjusted standard basis (which approximates actual cost on an average or first-in, first-out basis). Inventories at year-ends were as follows: (In Millions) 2010 2009 Raw materials Work in process Finished goods Total inventories Property...

  • Page 80
    ... technology obsolescence in the industry, we defer product revenue and related costs of sales from sales made to distributors under agreements allowing price protection or right of return until the distributors sell the merchandise. The right of return granted generally consists of a stock rotation...

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  • Page 82
    ... cash paid over the fair value of the advertising benefit received as a reduction in revenue. Advertising costs, including direct marketing costs, recorded within marketing, general and administrative expenses were $1.8 billion in 2010 ($1.4 billion in 2009 and $1.9 billion in 2008). Employee Equity...

  • Page 83
    ... financial statements. For further discussion, see "Note 7: Available-for-Sale Investments." In the third quarter of 2009, we adopted amended standards for the fair value measurement of liabilities. These amended standards clarify that in circumstances in which a quoted price in an active market...

  • Page 84
    ... in the first quarter of 2011. We do not expect these new standards to significantly impact our consolidated financial statements. In October 2009, the FASB issued new standards for the accounting for certain revenue arrangements that include software elements. These new standards amend the scope of...

  • Page 85
    ... 26, 2009 Fair Value Measured and Recorded at Reporting Date Using Level 1 Level 2 Level 3 (In Millions) Total Total Assets Cash equivalents: Commercial paper Government bonds Bank deposits Money market fund deposits Short-term investments: Government bonds Commercial paper Corporate bonds Bank...

  • Page 86

  • Page 87
    ...of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Marketable Debt Instruments Marketable debt instruments include instruments such as commercial paper, corporate bonds, government bonds, bank deposits, asset-backed securities, municipal bonds, and money market fund...

  • Page 88

  • Page 89
    ... Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) For all periods presented, gains and losses (realized and unrealized) included in earnings were primarily reported in interest and other, net. During 2010 and 2009, we transferred corporate bonds from Level 3 to Level...

  • Page 90
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Assets Measured and Recorded at Fair Value on a Non-Recurring Basis Our non-marketable equity investments and non-financial assets, such as intangible assets and property, plant and equipment, are recorded at ...

  • Page 91
    ... of market segment size, market segment share, and costs are developed by the investee and/or Intel using historical data and available market data. The valuation of these non-marketable equity investments also takes into account variables such as conditions reflected in the capital markets, recent...

  • Page 92

  • Page 93
    ... 26, 2009). Our marketable equity method investment is our ownership interest in SMART Technologies, Inc. The fair value of our ownership interest in SMART was $167 million based on the quoted closing stock price as of December 25, 2010. For further information, see "Note 11: Equity Method and Cost...

  • Page 94
    ... Losses 2009 Gross Gross Adjusted Unrealized Unrealized Cost Gains Losses (In Millions) Fair Value Fair Value Government bonds Commercial paper Corporate bonds Bank deposits Marketable equity securities Asset-backed securities Money market fund deposits Total available-for-sale investments $10...

  • Page 95
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Currency Exchange Rate Risk We are exposed to currency exchange rate risk and generally hedge our exposures with currency forward contracts, currency options, or currency interest rate swaps. Substantially all...

  • Page 96
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Equity Market Risk Our marketable investments include marketable equity securities and equity derivative instruments. To the extent that our marketable equity securities have strategic value, we typically do ...

  • Page 97
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The gross notional amounts for currency forwards, currency interest rate swaps, and currency options (presented by currency) as of December 25, 2010, December 26, 2009, and December 27, 2008 were as follows: ...

  • Page 98
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Derivatives in Cash Flow Hedging Relationships The before-tax effects of derivative instruments in cash flow hedging relationships for the three years ended December 25, 2010 were as follows: Gains (Losses) ...

  • Page 99
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  • Page 100
    ... credit insurance for all or a portion of the account balance if necessary. Note 10: Other Long-Term Assets Other long-term assets as of December 25, 2010 and December 26, 2009 were as follows: (In Millions) 2010 2009 Equity method investments Non-marketable cost method investments Identified...

  • Page 101
    ... used for those capital expenditures reduced the amount of cash provided by IMFT to us as a return of equity method investment in 2010. Under the accounting standards for consolidating variable interest entities, the consolidating investor is the entity with the power to direct the activities of the...

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  • Page 103
    ... under the senior credit facility. The Numonyx senior credit facility that was supported by our guarantee was repaid in connection with the closing of Micron's acquisition of Numonyx. Intel-GE Care Innovations, LLC Subsequent to the end of 2010, Intel and General Electric Company (GE) formed an...

  • Page 104
    ...Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 14: Interest and Other, Net The components of interest and other, net were as follows: (In Millions) 2010 2009 2008 Interest income Interest expense Other, net Total interest and other, net Note 15: Acquisitions...

  • Page 105
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Pending Acquisition of McAfee, Inc. In the third quarter of 2010, we entered into a definitive agreement to acquire McAfee, and expect to complete the acquisition in the first quarter of 2011. Upon completion ...

  • Page 106
    ... benefits expected to be generated for each group resulting from enhanced market presence for existing businesses. During 2010, we completed three acquisitions. The goodwill recognized from these acquisitions was assigned to our Digital Home Group, our Software and Services Group, our Ultra...

  • Page 107
    ...as cost of sales, amortization of acquisition-related intangibles, or a reduction of revenue. Amortization expenses for the three years ended December 25, 2010 were as follows: (In Millions) 2010 2009 2008 Intellectual property assets Acquisition-related developed technology Other intangible assets...

  • Page 108
    ... Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the restructuring and asset impairment activity for the 2009 restructuring program during 2009 and 2010: Employee Severance and Benefits Asset Impairments (In Millions) Total Accrued...

  • Page 109
    ...TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the restructuring and asset impairment activity for the 2006 efficiency program during 2009: Employee Severance and Benefits Asset Impairments (In Millions) Total Accrued restructuring balance as of December 27, 2008...

  • Page 110
    ... certain conditions, into shares of our common stock. Holders can surrender the 2009 debentures for conversion 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 the 30 consecutive trading-day period ending on...

  • Page 111
    ... in connection with certain share exchanges, mergers, or consolidations involving Intel. Arizona Bonds In 2007, we guaranteed repayment of principal and interest on bonds issued by the Industrial Development Authority of the City of Chandler, Arizona, which constitute an unsecured general obligation...

  • Page 112
    ... Intel 401(k) Savings Plan. 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, with third-party trustees, or into government-managed accounts...

  • Page 113
    ...2010 2009 (In Millions) Change in projected benefit obligation: Beginning benefit obligation Service cost Interest cost Plan participants' contributions Actuarial (gain) loss Currency exchange rate changes Plan amendments Plan curtailments Plan settlements Benefits paid to plan participants Ending...

  • Page 114
    ...actuarial assumptions used to determine costs for the plans were as follows: U.S. Pension Benefits 2010 2009 2008 Non-U.S. Pension Benefits 2010 2009 2008 U.S. Postretirement Medical Benefits 2010 2009 2008 Discount rate Expected long-term rate of return on plan assets Rate of compensation increase...

  • Page 115
    ...for an investment in a particular equity security. The fund does not engage in speculative futures transactions. The allocation to each asset class will fluctuate with market conditions, such as volatility and liquidity concerns, and will typically be rebalanced when outside the target ranges, which...

  • Page 116
    ... 2010 and December 26, 2009: December 25, 2010 Fair Value Measured at Reporting Date Using Level 1 Level 2 Level 3 Total (In Millions) Equity securities: U.S. Large Cap Stock Fund U.S. Small Cap Stock Fund International Stock Fund Fixed income: U.S. treasuries U.S. corporate bonds Global Bond Fund...

  • Page 117
    ... INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Non-U.S. Plan Assets The investments of the non-U.S. plans are managed by insurance companies, third-party trustees, or pension funds, consistent with regulations or market practice of the country where the assets are invested...

  • Page 118
    ...U.S. postretirement medical benefits plan assets were invested in a money market fund that complies with Rule 2A-7 of the Investment Company Act of 1940, and were measured at fair value using Level 1 inputs. Concentrations of Risk We manage a variety of risks, including market, credit, and liquidity...

  • Page 119
    ...fair value of the eligible stock options exchanged, resulting in insignificant incremental share-based compensation. In 2009, we began issuing restricted stock units with both a market condition and a service condition (market-based restricted stock units), referred to in our 2010 Proxy Statement as...

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  • Page 121
    ... of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Equity awards granted to employees in 2010 under our equity incentive plans generally vest over 4 years from the date of grant, and options expire 7 years from the date of grant, with the exception of market-based...

  • Page 122
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Restricted Stock Unit Awards Information with respect to outstanding restricted stock unit (RSU) activity is as follows: Weighted Average Grant-Date Fair Value (In Millions, Except Per RSU Amounts) Number of...

  • Page 123
    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Additional information with respect to stock option activity is as follows: Number of Options Weighted Average Exercise Price (In Millions, Except Per Option Amounts) December 29, 2007 Grants Exercises ...

  • Page 124
    ... in 2010 and 2009 and a portion of our purchases in 2008 were executed in privately negotiated transactions. Restricted Stock Unit Withholdings We issue restricted stock units as part of our equity incentive plans. For the majority of restricted stock units granted, the number of shares issued...

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    ...) 2010 2009 Accumulated net unrealized holding gain (loss) on available-for-sale investments Accumulated net change in deferred tax asset valuation allowance Accumulated net unrealized holding gain on derivatives Accumulated net prior service costs Accumulated net actuarial losses Total accumulated...

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    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Note 28: Taxes Income before taxes and the provision for taxes consisted of the following: (Dollars in Millions) 2010 2009 2008 Income before taxes: U.S. Non-U.S. Total income before taxes Provision for ...

  • Page 128
    ...components of our deferred tax assets and liabilities at year-ends were as follows: (In Millions) 2010 2009 Deferred tax assets Accrued compensation and other benefits Deferred income Share-based compensation Inventory Unrealized losses on investments and derivatives State credits and net operating...

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    Table of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The aggregate changes in the balance of gross unrecognized tax benefits were as follows: (In Millions) December 29, 2007 Settlements and effective settlements with tax authorities and related remeasurements ...

  • Page 130
    ...graphics processing units (GPUs), including certain licensing practices and our actions in connection with developing and disclosing potentially competitive technology. We believe that we compete lawfully and that our marketing, business, intellectual property, and other challenged practices benefit...

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    98

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    ... of certain intellectual property agreements between Intel and AMD, Intel and NVIDIA Corporation, and Intel and VIA Technologies, Inc.; provisions with respect to Intel's sales, marketing, pricing, and promotional activities for certain Intel microprocessors and chipsets; provisions concerning...

  • Page 133
    ... General Corporation Law, and in November 2009, Smilow and the Rosenfeld Family Foundation filed an action in Delaware Chancery Court to enforce that demand. In June 2008, Christine Del Gaizo filed a putative stockholder derivative suit in the Santa Clara County Superior Court against the Board...

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    ... the Delaware Court of Chancery concerning a chipset patent license agreement signed by Intel and NVIDIA in 2004. The lawsuit sought a declaratory judgment that chipsets for Intel microprocessors with integrated memory controllers are not licensed products under the chipset agreement. NVIDIA denied...

  • Page 135
    ... Group, Digital Home Group, Ultra-Mobility Group, NAND Solutions Group, Wind River Software Group, Software and Services Group, and Digital Health Group. Subsequent to year-end, we divested of the Digital Health Group. For further information, see "Note 11: Equity Method and Cost Method Investments...

  • Page 136
    ...) 2010 2009 2008 Net revenue PC Client Group Microprocessor revenue Chipset, motherboard, and other revenue Data Center Group Microprocessor revenue Chipset, motherboard, and other revenue Other Intel architecture operating segments Other operating segments Corporate Total net revenue Operating...

  • Page 137
    ... of Contents INTEL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Geographic revenue information for the three years ended December 25, 2010 is based on the location of the customer. Revenue from unaffiliated customers was as follows: (In Millions) 2010 2009 2008 Asia-Pacific...

  • Page 138
    ...of the company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and...

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    ... with the standards of the Public Company Accounting Oversight Board (United States), the 2010 consolidated financial statements of Intel Corporation and our report dated February 18, 2011 expressed an unqualified opinion thereon. /s/ Ernst & Young LLP San Jose, California February 18, 2011 106

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    ...) 2010 for Quarter Ended (In Millions, Except Per Share Amounts) December 25 September 25 June 26 March 27 Net revenue Gross margin Net income Basic earnings per common share Diluted earnings per common share Dividends per common share Declared Paid Market price range common stock 1 High Low 2009...

  • Page 141
    ...design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment. Based on our assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year...

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    ...AND RELATED STOCKHOLDER MATTERS The information appearing in our 2011 Proxy Statement under the heading "Security Ownership of Certain Beneficial Owners and Management" is incorporated by reference in this section. Information regarding shares authorized for issuance under equity compensation plans...

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    Table of Contents PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 1. Financial Statements: See "Index to Consolidated Financial Statements" in Part II, Item 8 of this Form 10-K. 2. Financial Statement Schedule: See "Schedule II-Valuation and Qualifying Accounts" in this section of this ...

  • Page 145
    ... ACCOUNTS December 25, 2010, December 26, 2009, and December 27, 2008 (In Millions) Balance at Beginning of Year Additions Charged (Credited) to Expenses Net (Deductions) Recoveries Balance at End of Year Allowance for doubtful receivables 2010 2009 2008 Valuation allowance for deferred tax assets...

  • Page 146
    ... Qualified Stock Options granted to U.S. employees on and after February 1, 2006 under the Intel Corporation 2004 Equity Incentive Plan (other than grants made under the SOP Plus or ELTSOP programs) 10-Q 000-06217 10.9 5/8/2006 Standard Terms and Conditions relating to Restricted Stock Units granted...

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    Corporation 2004 Equity Incentive Plan (for grants under the ELTSOP Program) 112

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    ... Equity Incentive Plan (for grants under the standard program after May 17, 2006) Form of Stock Option Agreement with Continued Post-Retirement Exercisability Terms and Conditions relating to Nonqualified Stock Options granted to U.S. employees on and after May 17, 2006 under the Intel Corporation...

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    ...Non-Employee Director Compensation Intel Corporation 2006 Deferral Plan for Outside Directors, effective November 15, 2006 Standard Terms and Conditions relating to Restricted Stock Units granted on and after March 27, 2009 under the Intel Corporation 2006 Equity Incentive Plan (standard OSU program...

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    114

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    ... 101.DEF 101.LAB 101.PRE Standard Terms and Conditions relating to Non10-K 000-06217 Qualified Stock Options granted to A. Douglas Melamed on January 22, 2010 under the Intel Corporation 2006 Equity Incentive Plan (standard option program) Intel Corporation Non-Employee Director Restricted 10-Q 000...

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    115

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    ... duly authorized. INTEL CORPORATION Registrant By: /s/ STACY J. SMITH Stacy J. Smith Senior Vice President, Chief Financial Officer, and Principal Accounting Officer February 18, 2011 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the...

  • Page 155
    ... 2010 FORM 10-K STATEMENT SETTING FORTH THE COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES FOR INTEL CORPORATION (In Millions, Except Ratios) Dec. 25, 2010 Dec. 26, 2009 Years Ended Dec. 27, 2008 Dec. 29, 2007 Dec. 30, 2006 Earnings 1 Adjustments: Add - Fixed charges Subtract - Capitalized...

  • Page 156
    ...Kaisha Intel Malaysia Sdn. Berhad Intel Massachusetts, Inc. Intel Overseas Funding Corporation Intel Products (M) Sdn. Bhd. Intel Semiconductor (Dalian) Ltd. Intel Semiconductor (US) Limited Intel Technology Sdn. Berhad Mission College Investments Ltd. Wind River Systems, Inc. 1 Costa Rica Delaware...

  • Page 157
    ...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 on Form 10-K for the year ended December 25, 2010. /s/ Ernst & Young LLP San Jose, California February 18, 2011

  • Page 158
    ... officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have...

  • Page 159
    ... officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have...

  • Page 160
    ..., the Annual Report of Intel on Form 10-K for the period ended December 25, 2010, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and...