Intel 2012 Annual Report Download

Download and view the complete annual report

Please find the complete 2012 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 126

  • 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

®
™
2012 Annual Report
historical nancial information.
Paul S. Otellini, President and Chief Executive Ofcer

Table of contents

  • Page 1
    ® ™ 2012 Annual Report

  • Page 2
    ...across the business in 2012 as we entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation and growth in the data center. Our strong product pipeline has us well-positioned to bring a new wave of Intel innovations across the spectrum...

  • Page 3
    ... on Newsweek's annual Green Rankings U.S. 500 list. Our company also ranked number seven on the global Gartner Supply Chain Top 25 list for 2012, and we continued to lead the industry in addressing the issue of "conflict minerals" in the electronics supply chain. We helped empower our employees to...

  • Page 4
    ... strategic investments in 2012, so that Intel can continue to build innovative products at competitive costs. Most of Intel's 2012 capital spending of $11 billion went toward From teraflops to milliwatts building and equipping factories with leading-edge technologies. We also signed agreements...

  • Page 5
    ... the closing price of the common stock as reported by The NASDAQ Global Select Market* on such date, was $133.5 billion 4,946 million shares of common stock outstanding as of February 8, 2013 DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement related to its 2013 Annual...

  • Page 6
    ... Safety Disclosures ... 1 16 22 22 22 22 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 of Operations ...Item 7A...

  • Page 7
    ... sell software and services primarily focused on security and technology integration. We were incorporated in California in 1968 and reincorporated in Delaware in 1989. Company Strategy Our goal is to be the preeminent computing solutions company that powers the worldwide digital economy. Over time...

  • Page 8
    ... technologies for users. • Strategic Investments. We make investments in companies around the world that we believe will further our strategic objectives, support our key business initiatives, and generate financial returns. Our investments-including those made through our Intel Capital program...

  • Page 9
    ... and input, display, and storage devices, such as the keyboard, mouse, monitor, hard drive or solid-state drive, and optical disc drives. Chipsets extend the audio, video, and other capabilities of many systems and perform essential logic functions, such as balancing the performance of the...

  • Page 10
    ... mobile phone platforms, including Bluetooth* wireless technology and Global Positioning Systems (GPS) receivers, software solutions, customization, and essential interoperability tests. Our mobile phone solutions based on multiple industry standards help enable mobile voice and high-speed data...

  • Page 11
    ... on-demand network access to a shared pool of configurable software, services, and computing devices. Such products include the introduction in 2012 of our manycore Intel® Xeon Phi™ coprocessor with 60 or more high-performance, low-power Intel processor cores, as well as our server platform that...

  • Page 12
    ...low power consumption, innovative designs, and multi-standard platform solutions. • Our strategy for the embedded market segment, addressed by our Intelligent Systems Group (ISG), is to drive Intel architecture as a solution for embedded applications by delivering long life-cycle support, software...

  • Page 13
    ..., as well as ARM* architecture licensees from ARM Limited, such as QUALCOMM Incorporated, NVIDIA Corporation, Samsung Electronics Co., Ltd. and Texas Instruments Incorporated. The primary competitor for our McAfee family of security products and services is Symantec Corporation. We face emerging...

  • Page 14
    ...22nm 32nm 45nm 65nm 90nm 130nm Israel, Arizona, Oregon New Mexico New Mexico China, Arizona, Ireland Ireland Massachusetts As of December 29, 2012, most of our microprocessors were manufactured on 300mm wafers using our 22nm and 32nm process technology. As we move to each succeeding generation of...

  • Page 15
    ... microprocessors and chipsets, improving our platform initiatives, and developing software solutions and tools. Our R&D efforts are intended to enable new levels of performance and address areas such as energy efficiency, security, scalability for multi-core architectures, system manageability, and...

  • Page 16
    ... 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 17
    ... new form factors such as Ultrabook systems, and for increased performance, improved energy efficiency, and other capabilities such as Internet connectivity and security. Purchases by customers often allow them to participate in cooperative advertising and marketing programs such as the Intel Inside...

  • Page 18
    ... advertising programs with customers to promote our brands and to identify products containing genuine Intel components. We also protect details about our processes, products, and strategies as trade secrets, keeping confidential the information that we believe provides us with a competitive...

  • Page 19
    ...the market for green power, leading to additional generating capacity and, ultimately, lower costs. Distribution of Company Information Our Internet address is www.intel.com. We publish voluntary reports on our web site that outline our performance with respect to corporate responsibility, including...

  • Page 20
    ...GM, Technology and Manufacturing Group Executive VP, GM, Software and Services Group • 2005 - 2012, Senior VP, GM, Software and Services Group • 2002 - 2005, VP, Developer Programs • Member of VMware, Inc. Board of Directors • Member of Vodafone Group plc Board of Directors • Joined Intel...

  • Page 21
    ...GM, Intel Architecture Group, Chief Product Officer Executive VP, GM, Intel Architecture Group Executive VP, GM, Mobility Group Senior VP, GM, Mobility Group Executive VP, Chief Financial Officer, Director of Corporate Strategy • 2010 - 2012, Senior VP, Chief Financial Officer • 2007 - 2010, VP...

  • Page 22
    ... commodity prices; • the level of customers' inventories; • competitive and pricing pressures, including actions taken by competitors; • customer product needs; • market acceptance of our products and maturing product cycles; and • the technology supply chain, including supply constraints...

  • Page 23
    ... compliance with these laws, our employees, contractors, or agents may violate our policies. Although most of our sales occur in U.S. dollars, expenses such as payroll, utilities, tax, and marketing expenses may be paid in local currencies. We also conduct certain investing and financing activities...

  • Page 24
    ... our network or data centers or those of our customers or end users, steal proprietary information related to our business, products, employees and customers, or interrupt our systems and services or those of our customers or others. We believe such attempts are increasing in number and in technical...

  • Page 25
    ... a return on our investments. We make investments in companies around the world to further our strategic objectives and support key business initiatives. These investments include equity or debt instruments of public or private companies, and many of these instruments are non-marketable at the time...

  • Page 26
    ... key personnel; • we may experience difficulty in integrating new employees, business systems, and technology; • acquired businesses may not have adequate controls, processes, and procedures to ensure compliance with laws and regulations, and our due diligence process may not identify compliance...

  • Page 27
    ..., scientists, engineers, technical staff, and sales representatives are critical to our business, and competition for experienced employees in the semiconductor industry can be intense. Our current Chief Executive Officer (CEO) plans to retire in May 2013, and the Board of Directors is working to...

  • Page 28
    ... fabrication at our facilities in Ireland, China, and Israel. Our assembly and test facilities are located in Malaysia, China, Costa Rica, and Vietnam. In addition, we have sales and marketing offices worldwide that are generally located near major concentrations of customers. We believe that the...

  • Page 29
    PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Information regarding the principal U.S. market in which Intel common stock is traded, including the market price range of Intel common stock and dividend information, can be...

  • Page 30
    ...for our common stock, the Dow Jones U.S. Technology Index, and the S&P 500 Index are based on our fiscal year. Comparison of Five-Year Cumulative Return for Intel, the Dow Jones U.S. Technology Index*, and the S&P 500* Index 2007 2008 2009 2010 2011 2012 Intel Corporation ...$ 100 $ Dow Jones...

  • Page 31
    ITEM 6. SELECTED FINANCIAL DATA 2012 2011 2010 2009 2008 (In Millions, Except Per Share Amounts and Percentages) Net revenue ...$ Gross margin ...$ Gross margin percentage ...Research and development (R&D)...$ Marketing, general and administrative $ (MG&A) ...R&D and MG&A as percentage of revenue...

  • Page 32
    ... of Operations. An analysis of our financial results comparing 2012 to 2011 and comparing 2011 to 2010. • Liquidity and Capital Resources. An analysis of changes in our balance sheets and cash flows, and discussion of our financial condition and potential sources of liquidity. • Fair Value of...

  • Page 33
    .... The agreements included Intel's purchase of ASML equity securities totaling $3.2 billion. We also took advantage of the low interest rate environment in 2012 and issued $6.2 billion of senior notes. From a financial condition perspective, we ended the year with an investment portfolio of...

  • Page 34
    ... determine the fair value of our non-marketable equity investments using the market and income approaches. The market approach includes the use of financial metrics and ratios of comparable public companies, such as projected revenues, earnings, and comparable performance multiples. The selection of...

  • Page 35
    ... short-term business planning and forecasting. We test the reasonableness of the inputs and outcomes of our discounted cash flow analysis against available comparable market data. The market method is based on financial multiples of comparable companies and applies a control premium. The reporting...

  • Page 36
    ... and liabilities, excluding certain corporate assets and liabilities, such as cash, investments, and debt. For the annual impairment assessment in 2012, we determined that for each of our reporting units with significant amounts of goodwill, it was more likely than not that the fair value of the...

  • Page 37
    ... in the inventory valuation process include a review of our 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 38
    ... PC Client Group and Data Center Group platform unit costs in 2012 were offset by lower start-up costs and no impact in 2012 for the Intel 6 Series Express Chipset design issue. We derived a substantial majority of our overall gross margin dollars in 2012 and 2011 from the sale of platforms in the...

  • Page 39
    ...22nm process technology. Higher platform unit costs and inventory write-offs as compared to 2010 also contributed to the offset. Data Center Group The revenue and operating income for the Data Center Group for the three years ended December 29, 2012 were as follows: (In Millions) 2012 2011 2010 Net...

  • Page 40
    ... the other Intel architecture operating segments, including the Intelligent Systems Group, Intel Mobile Communications, the Netbook Group, the Tablet Group, the Phone Group, and the Service Provider Group for the three years ended December 29, 2012 were as follows: (In Millions) 2012 2011 2010 Net...

  • Page 41
    ... related to the acquisitions of McAfee and the WLS business of Infineon in 2011. For further information, see "Note 13: Acquisitions" and "Note 16: Identified Intangible Assets" in Part II, Item 8 of this Form 10-K. Share-Based Compensation Share-based compensation totaled $1.1 billion in 2012...

  • Page 42
    ... of our ownership interest in Numonyx B.V., and a gain of $67 million on the sale of shares in Micron Technology, Inc. in 2010. Our share of equity method investee losses recognized in 2011 and 2010 was primarily related to Clearwire Communications, LLC (Clearwire LLC) ($145 million and $116 million...

  • Page 43
    Liquidity and Capital Resources (Dollars in Millions) Dec. 29, 2012 Dec. 31, 2011 Cash and cash equivalents, short-term investments, and marketable debt instruments $ 18,162 included in trading assets...Loans receivable and other long-term investments...$ 1,472 Short-term and long-term debt ...$ 13...

  • Page 44
    ... in cash paid for acquisitions. Net purchases of available-for-sale investments in 2012 included our purchase of $3.2 billion of equity securities in ASML during the third quarter of 2012. Our capital expenditures were $11.0 billion in 2012 ($10.8 billion in 2011 and $5.2 billion in 2010). Cash used...

  • Page 45
    ... repurchase authorization limit. 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 $2.1 billion in 2012 compared to $2.0 billion in 2011. Our total...

  • Page 46
    ... as Level 1 because the valuations were based on quoted prices for identical securities in active markets. Our assessment of an active market for our marketable equity securities generally takes into consideration the number of days that each individual equity security trades over a specified period...

  • Page 47
    ...products, IP, and R&D funding related to nonvolatile memory manufacturing. The obligation to purchase our proportion of IMFT's inventory was approximately $28 million as of December 29, 2012. For further information, see "Note 10: Equity Method and Cost Method Investments" in Part II, Item 8 of this...

  • Page 48
    ... net investment position. For further information on how credit risk is factored into the valuation of our investment portfolio and debt issuances, see "Note 4: Fair Value" in Part II, Item 8 of this Form 10-K. Equity Prices Our investments include marketable equity securities and equity derivative...

  • Page 49
    ...million as of December 31, 2011). Our marketable equity investment in ASML was carried at a total fair market value of $4.0 billion, or 90% of our marketable equity portfolio, as of December 29, 2012. Our marketable equity method investments are excluded from our analysis, as the carrying value does...

  • Page 50
    ... ...Consolidated Balance Sheets ...Consolidated Statements of Cash Flows...Consolidated Statements of Stockholders' Equity...Notes to Consolidated Financial Statements...Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm ...Supplemental Data: Financial Information by Quarter...

  • Page 51
    ...STATEMENTS OF INCOME Three Years Ended December 29, 2012 (In Millions, Except Per Share Amounts) 2012 2011 2010 Net revenue ...$ 53,341 $ Cost of sales...20,190 Gross margin ...33,151 Research and development...10,148 Marketing, general and administrative...8,057 Amortization of acquisition-related...

  • Page 52
    ... STATEMENTS OF COMPREHENSIVE INCOME Three Years Ended December 29, 2012 (In Millions) 2012 2011 2010 Net income ...$ 11,005 $ Other comprehensive income, net of tax: Change in net unrealized holding gain (loss) on available-for-sale investments...470 Change in net deferred tax asset valuation...

  • Page 53
    ... investments ...493 Goodwill ...9,710 Identified intangible assets, net ...6,235 Other long-term assets ...4,148 Total assets ...$ Liabilities and stockholders' equity Current liabilities: Short-term debt ...$ Accounts payable ...Accrued compensation and benefits ...Accrued advertising...Deferred...

  • Page 54
    ... Proceeds from government grants...63 Excess tax benefit from share-based payment arrangements...142 Issuance of long-term debt, net of issuance costs...6,124 Repayment of debt...(125) Proceeds from sales of shares through employee equity incentive plans ...2,111 Repurchase of common stock ...(5,110...

  • Page 55
    ..., 2011 ...Components of comprehensive income, net of tax: Net income ...Other comprehensive income (loss)...Total comprehensive income ...Proceeds from sales of shares through employee equity incentive plans, net excess tax benefit, and other ...Share-based compensation...Repurchase of common stock...

  • Page 56
    ... ends on the last Saturday in December. Fiscal years 2012 and 2010 were 52-week years. Fiscal year 2011 was a 53-week year. The next 53-week year will end on December 31, 2016. Our consolidated financial statements include the accounts of Intel Corporation and our subsidiaries. We have eliminated...

  • Page 57
    ...to mitigating equity market risk through the sale or use of derivative instruments at the time of original classification, and when there is no plan to sell the investment at the time of original classification. We acquire these equity investments to promote business and strategic objectives. To the...

  • Page 58
    ... for accounting purposes in the line item on the consolidated statements of income most closely associated with the related exposures, primarily in interest and other, net and gains (losses) on equity investments, net. As part of our strategic investment program, we also acquire equity derivative...

  • Page 59
    ... and risk management programs, see "Note 7: Derivative Financial Instruments." Securities Lending We may enter into securities lending agreements with financial institutions, generally to facilitate hedging and certain investment transactions. Selected securities may be loaned, secured by collateral...

  • Page 60
    ...subject to amortization as of December 29, 2012 are as follows: (In Years) Estimated Useful Life Acquisition-related developed technology ...Acquisition-related customer relationships ...Acquisition-related trade names ...Licensed technology and patents ... 3-13 5-8 5-7 5-17 We perform a quarterly...

  • Page 61
    ... 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 $2.0 billion in 2012 ($2.1 billion in 2011 and $1.8 billion in 2010). Employee Equity...

  • Page 62
    ...units for accounting purposes. Additionally, these new standards modify the method by which revenue is allocated to the separately identified deliverables. The adoption of these new standards did not have a significant impact on our consolidated financial statements. In the first quarter of 2011, we...

  • Page 63
    ... Reporting Date Using Level 1 Level 2 Level 3 Total Assets Cash equivalents: Bank deposits...$ Commercial paper...Government bonds...Money market fund deposits...Reverse repurchase agreements ...Short-term investments: Bank deposits...Commercial paper...Corporate bonds ...Government bonds...Trading...

  • Page 64
    ... to the fair value measurements, and the valuations required management judgment due to the absence of quoted market prices. Impairment charges recognized on non-marketable equity investments held as of December 29, 2012 were $68 million during 2012 ($62 million during 2011 on non-marketable equity...

  • Page 65
    ..., and forecast data. The valuation of these non-marketable cost method investments also takes into account variables such as conditions reflected in the capital markets, recent financing activities by the investees, the investees' capital structure, the terms of the investees' issued interests...

  • Page 66
    ...) Fair Value Fair Value Asset-backed $ 14 $ securities ...Bank deposits ...1,417 Commercial paper ...4,184 Corporate bonds...635 Government bonds ...2,235 Marketable equity 3,356 securities ...Money market fund 1,086 deposits ...Total available-for$ 12,927 $ sale investments ...Reverse repurchase...

  • Page 67
    ... to fund our acquisition of McAfee. The gross realized gains on sales of available-for-sale investments were $166 million in 2012 ($268 million in 2011 and $160 million in 2010) and were primarily related to our sales of marketable equity securities. We determine the cost of an investment sold on an...

  • Page 68
    ... market risk management program includes equity derivatives without hedge accounting designation that utilize warrants, equity options, or other equity derivatives. We recognize changes in the fair value of such derivatives in gains (losses) on equity investments, net. We also utilize total return...

  • Page 69
    ...for outstanding derivatives (recorded at fair value) as of December 29, 2012, December 31, 2011, and December 25, 2010 were as follows: (In Millions) 2012 2011 2010 Currency forwards ...Currency interest rate swaps...Embedded debt derivatives ...Equity options ...Interest rate swaps ...Total return...

  • Page 70
    ... balance sheets, we do not offset fair value amounts recognized for derivative instruments under master netting arrangements. We generally place investments with high-credit-quality counterparties and, by policy, we limit the amount of credit exposure to any one counterparty based on our analysis...

  • Page 71
    ... credit insurance. Note 9: Other Long-Term Assets Other long-term assets as of December 29, 2012 and December 31, 2011 were as follows: (In Millions) 2012 2011 Equity method investments ...Non-marketable cost method investments ...Non-current deferred tax assets ...Loans receivable ...Other...Total...

  • Page 72
    ... industry, that focuses on independent living and delivery of health-related services by means of telecommunications. The company was formed by combining assets of GE Healthcare's Home Health division and Intel's Digital Health Group. As a result of forming Care Innovations, we recognized a gain of...

  • Page 73
    ...million in 2010). In 2011, we recognized a gain upon forming the Intel and GE joint venture, Care Innovations, of $164 million, which is included within "other, net," in the preceding table. For further information, see "Note 10: Equity Method and Cost Method Investments." Note 13: Acquisitions 2012...

  • Page 74
    ... mobile security. In addition to managing the existing McAfee business, the objective of the acquisition was to accelerate and enhance Intel's combination of hardware and software security solutions, thereby improving the overall security of our platforms. Total consideration to acquire McAfee was...

  • Page 75
    ... intangible assets assumed in the acquisitions completed during 2011, excluding McAfee, were recognized as follows: Fair Value (In Millions) Estimated Useful Life (In Years) Developed technology ...Customer relationships...Other intangible assets...Total identified intangible assets subject to...

  • Page 76
    ... a new healthcare company focused on independent living and delivery of health-related services via telecommunications. The new company, Care Innovations, was formed by combining assets of GE Healthcare's Home Health division and Intel's Digital Health Group. During the first quarter of 2011, as...

  • Page 77
    ... our acquisitions in 2012, we recorded acquisition-related developed technology of $168 million with a weighted average life of 10 years. During 2012, we purchased licensed technology and patents of $815 million with a weighted average useful life of nine years, including wireless patents purchased...

  • Page 78
    .... Amortization expenses for the three years ended December 29, 2012 were as follows: (In Millions) 2012 2011 2010 Acquisition-related developed technology ...$ Acquisition-related customer relationships ...$ Acquisition-related trade names ...$ Licensed technology and patents ...$ Other intangible...

  • Page 79
    ... pursuant to our authorized common stock repurchase program, and for general corporate purposes. Our senior notes pay a fixed rate of interest semiannually. We may redeem our senior notes, in whole or in part, at any time at our option at specified redemption prices. The senior notes rank equally...

  • Page 80
    ... 31, 2011 2005 Debentures Dec. 29, 2012 Dec. 31, 2011 Outstanding principal...$ Equity component carrying amount ...$ Unamortized discount...$ Net debt carrying amount ...$ Conversion rate (shares of common stock per $1,000 principal amount of debentures) ...Effective conversion price (per share of...

  • Page 81
    ... investment managers. The discretionary employer contributions made to the Intel 401(k) Savings Plan are participant-directed. For the benefit of eligible U.S. employees, we also provide a non-tax-qualified supplemental deferred compensation plan for certain highly compensated employees. This plan...

  • Page 82
    ... Benefits 2012 2011 2011 Change in plan assets: Beginning fair value of plan assets...$ 648 $ Actual return on plan assets ...49 Plan acquisitions...- Employer contributions ...- Plan participants' contributions...- Currency exchange rate changes...- Plan settlements ...- Benefits paid to plan...

  • Page 83
    ... on the consolidated balance sheets as of December 29, 2012 and December 31, 2011: U.S. Pension Benefits (In Millions) 2012 2011 Non-U.S. Pension Benefits 2012 2011 U.S. Postretirement Medical Benefits 2012 2011 Other long-term assets ...$ - $ Accrued compensation and benefits ...- Other long...

  • Page 84
    ... used to determine costs for the plans were as follows: U.S. Pension Benefits 2012 2011 2010 Non-U.S. Pension Benefits 2012 2011 2010 2012 U.S. Postretirement Medical Benefits 2011 2010 Discount rate ...4.7% Expected long-term rate of return on 5.0% plan assets ...Rate of compensation 4.5% increase...

  • Page 85
    ... direct investment. In general, the investment strategy is designed to accumulate a diversified portfolio among markets, asset classes, or individual securities to reduce market risk and to assure that the pension assets are available to pay benefits as they come due. The average expected long-term...

  • Page 86
    ..., 2011: December 29, 2012 Fair Value Measured at Reporting Date Using (In Millions) Level 1 Level 2 Level 3 Total Equity securities: Global equities ...$ Real estate ...Non-U.S. venture capital ...Fixed income: Non-U.S. government bonds...Money market funds...Investments held by insurance companies...

  • Page 87
    ... medical benefits plan assets were invested in exchange-traded equity securities and were measured at fair value using Level 1 inputs. Concentrations of Risk We manage a variety of risks, including market, credit, and liquidity risks, across our plan assets through our investment managers. We define...

  • Page 88
    ... market condition and a service condition (market-based restricted stock units), referred to in our 2012 Proxy Statement as outperformance stock units, to a small group of senior officers and nonemployee directors. For market-based restricted stock units issued in 2012, the number of shares of Intel...

  • Page 89
    ... stock purchase plan, as well as the weighted average assumptions used in calculating the fair value, on estimates at the date of grant, as follows: Stock Options 2012 2011 2010 2012 Stock Purchase Plan 2011 2010 Estimated values ...Expected life (in years) ...Risk-free interest rate ...Volatility...

  • Page 90
    ... during 2011 and $240 million during 2010). As of December 29, 2012, there was $96 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 1.0 years. Additional information with...

  • Page 91
    ... in 2010). Employees purchased 17.4 million shares in 2012 for $355 million under the 2006 Stock Purchase Plan (18.5 million shares for $318 million in 2011 and 17.2 million shares for $281 million in 2010). As of December 29, 2012, there was $13 million in unrecognized compensation costs related to...

  • Page 92
    ...Borrowings." For 2012, we excluded 29 million outstanding weighted average stock options (90 million in 2011 and 161 million in 2010) from the calculation of diluted earnings per common share because the exercise prices of these stock options were greater than or equal to the average market value of...

  • Page 93
    ...the activity, were as follows: Other Comprehensive Income (In Millions) 2011 2012 Accumulated net unrealized holding gain (loss) on available-for-sale $ 231 $ investments ...Accumulated net deferred tax asset valuation allowance...104 Accumulated net unrealized holding gain (loss) on derivatives...

  • Page 94
    ... tax holiday benefits for 2011 and 2010 were $554 million ($0.10 per diluted share) and $256 million ($0.04 per diluted share), respectively. During 2012, net income tax benefits attributable to equity-based compensation transactions that were allocated to stockholders' equity totaled $137 million...

  • Page 95
    ... for financial reporting purposes and the amounts for income tax purposes. Significant components of our deferred tax assets and liabilities at year-ends were as follows: (In Millions) 2012 2011 Deferred tax assets Accrued compensation and other benefits ...$ Share-based compensation...Deferred...

  • Page 96
    ... in 2012 ($24 million in 2011 and insignificant in 2010). As of December 29, 2012, we had $66 million of accrued interest and penalties related to unrecognized tax benefits ($90 million as of December 31, 2011). Although the timing of the resolution and/or closure on audits is highly uncertain...

  • Page 97
    ... compete lawfully and that our marketing, business, intellectual property, and other challenged practices benefit our customers and our stockholders, and we will continue to conduct a vigorous defense in the remaining proceedings. Government Competition Matters and Related Consumer Class Actions In...

  • Page 98
    ... we had agreed to acquire all of McAfee's common stock for $48.00 per share. Four McAfee shareholders filed putative class-action lawsuits in Santa Clara County, California Superior Court challenging the proposed transaction. The cases were ordered consolidated in September 2010. Plaintiffs filed an...

  • Page 99
    ... 2012 include: • PC Client Group • Data Center Group • Other Intel architecture operating segments • Intelligent Systems Group • Intel Mobile Communications • Netbook Group • Tablet Group • Phone Group • Service Provider Group • Software and services operating segments • McAfee...

  • Page 100
    ...consumer and mobile security from our McAfee business; software optimized products for the embedded and mobile market segments; and software products and services that promote Intel® architecture as the platform of choice for software development. We have sales and marketing, manufacturing, finance...

  • Page 101
    ... (loss) for the three years ended December 29, 2012 were as follows: (In Millions) 2012 2011 2010 Net revenue PC Client Group ...Data Center Group ...Other Intel architecture operating segments ...Software and services operating segments ...All other ...Total net revenue ...Operating income (loss...

  • Page 102
    ...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...

  • Page 103
    ... audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2012 consolidated financial statements of Intel Corporation and our report dated February 19, 2013 expressed an unqualified opinion thereon. San Jose, California February 19, 2013 97

  • Page 104
    ... 0.56 0.54 $ $ $ $ $ 12,847 7,885 3,160 0.58 0.56 0.3624 0.1812 22.14 19.72 0.42 $ 0.21 $ 23.23 $ 19.19 $ - $ 0.1812 $ 23.88 $ 19.49 $ Intel's common stock (symbol INTC) trades on The NASDAQ Global Select Market*. All stock prices are closing prices per The NASDAQ Global Select Market*. 98

  • Page 105
    ... our financial reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Management assessed our internal control over financial reporting as of December 29, 2012, the end of our fiscal year. Management...

  • Page 106
    ...AND RELATED STOCKHOLDER MATTERS The information appearing in our 2013 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...

  • Page 107
    ...-K. Financial Statement Schedule: See "Schedule II-Valuation and Qualifying Accounts" in this section of this Form 10-K. Exhibits: The exhibits listed in the accompanying index to exhibits are filed, furnished, or incorporated by reference as part of this Form 10-K. Certain of the agreements filed...

  • Page 108
    INTEL CORPORATION SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS December 29, 2012, December 31, 2011, and December 25, 2010 Additions Charged to Expenses/ Other Accounts (In Millions) Balance at Beginning of Year Net (Deductions) Recoveries Balance at End of Year Allowance for doubtful ...

  • Page 109
    ...Intel Corporation 2004 Equity Incentive Plan 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 8-K 8-K 10-K 000-06217 000-06217 000-06217 3.1 3.1 4.2 5/22/2006 7/27/2011...

  • Page 110
    ....4.2** Terms and Conditions relating to Restricted Stock Units granted on and after May 17, 2006 to U.S. employees under the Intel Corporation 2006 Equity Incentive Plan (for grants under the ELTSOP Program) 10.4.3** International Restricted Stock Unit Agreement under the 2006 Equity Incentive Plan...

  • Page 111
    ... Standard Terms and Conditions relating to Non-Qualified 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 standard program) Standard International Nonqualified Stock Option Agreement under the 2006 Equity...

  • Page 112
    ... MCMRSU program) Intel Corporation 2006 Equity Incentive Plan, as amended and restated, effective May 19, 2011 Restricted Stock Unit Agreement under the 2006 Equity Incentive Plan (for RSUs granted on or after January 24, 2012 with Year 2 to Year 5 Vesting) Standard Terms and Conditions Relating to...

  • Page 113
    ....10** Form of Indemnification Agreement with Directors and Executive Officers 10.11** Listed Officer Compensation 10.12** Intel Corporation Sheltered Employee Retirement Plan Plus, as amended and restated, effective January 1, 2009 10.13** Intel Corporation 2006 Stock Purchase Plan, effective May 17...

  • Page 114
    ... Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document X X X X X X X ** Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate. 108

  • Page 115
    .... INTEL CORPORATION Registrant By: /S/ STACY J. SMITH Stacy J. Smith Executive Vice President, Chief Financial Officer, Director of Corporate Strategy, and Principal Accounting Officer February 19, 2013 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed...

  • Page 116
    Exhibit 12.1 INTEL CORPORATION 2012 FORM 10-K STATEMENT SETTING FORTH THE COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES FOR INTEL CORPORATION Years Ended (In Millions, Except Ratios) Earnings1 ...$ Adjustments: Add - Fixed charges ...Subtract - Capitalized interest ...Earnings and fixed ...

  • Page 117
    ...) Corporation Intel Capital Corporation Intel China Ltd. Intel Corporation (UK) Ltd. Intel Electronics Finance Limited Intel Electronics Ltd. Intel Europe, Inc. Intel Holdings B.V. Intel International Intel Investment Management Limited Intel Ireland Limited Intel Israel (74) Limited Intel Israel...

  • Page 118
    ...to the Employees' Savings Plan of Intel Corporation; of our reports dated February 19, 2013, with respect to the 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...

  • Page 119
    ... registrant's other certifying 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...

  • Page 120
    ... management or other employees who have a significant role in the registrant's internal control over financial reporting. b) Date: February 19, 2013 By: /S/ STACY J. SMITH Stacy J. Smith Executive Vice President, Chief Financial Officer, Director of Corporate Strategy, and Principal Accounting...

  • Page 121
    ...officer of Intel Corporation (Intel), that, to his knowledge, the Annual Report of Intel on Form 10-K for the period ended December 29, 2012, 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...

  • Page 122
    ... D. Daniels Director, System-on-Chip Engineering Shmuel (Mooly) Eden President, Intel Israel Gregory R. Pearson General Manager, World Wide Sales and Operations Group Boyd A. Davis General Manager, Datacenter Software Division FORMER CEOs AND CHAIRMEN OF THE BOARD Craig R. Barrett Retired Chief...

  • Page 123
    ...General Manager, Intel World Ahead Program Ardine Williams Director, Human Resources Enterprise Services James A. Johnson General Manager, Mobile and Communications Group Customer Technology Solutions Group Ahmad A. Zaidi General Manager, Chipset and SoC IP Group Richard P. Dwyer General Manager...

  • Page 124
    ..., Portland Technology Development John R. Pemberton General Manager, Corporate Services Global Construction Richard L. Coulson Director, Storage Technologies Group Keshavan K. Tiruvallur Platform Validation Engineering Sunit Rikhi General Manager, Intel Custom Foundry Ian A. Young Director...

  • Page 125
    ... our progress each year by soliciting employee feedback through our annual Organizational Health Survey. In 2012, Intel was again named to Fortune magazine's Best Companies to Work For list. More information is available at www.intel.com/jobs. Caring for the planet. We believe that technology plays...

  • Page 126
    www.intel.com News and information about Intel® products and technologies, customer support, careers, worldwide locations, and more. www.intc.com Stock information, earnings and conference webcasts, annual reports, and corporate governance and historical financial information.