UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 29, 1996
OR
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 0-6217
INTEL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 94-1672743
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2200 Mission College Boulevard, Santa Clara, California 95052-8119
(Address of principal executive offices) (Zip Code)
(408) 765-8080
(Registrant's telephone number, including area code)
N/A
(Former name, former address, and former fiscal year, if changed since
last report.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes_X_ No___
Shares outstanding of the Registrant's common stock:
Class Outstanding at June 29, 1996
Common Stock, $.001 par value 824.3 million
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Intel Corporation
Consolidated Condensed Statements of Income (unaudited)
(in millions, except per share amounts)
Three Months Ended Six Months Ended
Jun. 29, Jul. 1, Jun. 29, Jul. 1,
1996 1995 1996 1995
Net revenues $ 4,621 $ 3,894 $ 9,265 $ 7,451
Costs and expenses:
Cost of sales 2,150 1,805 4,571 3,414
Research and
development 438 316 839 610
Marketing, general and
administrative 518 447 1,035 834
------- ------- ------- -------
Operating costs and expenses 3,106 2,568 6,445 4,858
------- ------- ------- -------
Operating income 1,515 1,326 2,820 2,593
Interest expense (3) (10) (8) (17)
Interest and other
income, net 89 83 165 239
------- ------- ------- -------
Income before provision
for taxes 1,601 1,399 2,977 2,815
Provision for taxes 560 520 1,042 1,047
------- ------- ------- -------
Net income $ 1,041 $ 879 $ 1,935 $ 1,768
======= ======= ======= =======
Earnings per common and
common equivalent share $ 1.17 $ 0.99 $ 2.19 $ 2.01
======= ======= ======= =======
Cash dividends declared
per common share $ 0.05 $ 0.04 $ 0.09 $ 0.07
======= ======= ======= =======
Weighted average number
of common and common
equivalent shares
outstanding 888 888 884 880
======= ======= ======= =======
(See Notes to Consolidated Condensed Financial Statements.)
3
PART I - (continued)
Item 1. Financial Statements (Continued)
Intel Corporation
Consolidated Condensed Balance Sheets Jun. 29, Dec. 30,
(in millions) 1996 1995
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,809 $ 1,463
Short-term investments 1,906 995
Accounts receivable, net 2,900 3,116
Inventories:
Raw materials 382 674
Work in process 693 707
Finished goods 404 623
------- -------
1,479 2,004
------- -------
Deferred tax assets 417 408
Other current assets 114 111
------- -------
Total current assets 9,625 8,097
------- -------
Property, plant and equipment, at cost 13,216 11,792
Less: Accumulated depreciation (5,074) (4,321)
------- -------
Property, plant and equipment, net 8,142 7,471
Long-term investments 1,327 1,653
Other assets 206 283
------- -------
TOTAL ASSETS $19,300 $17,504
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 241 $ 346
Accounts payable 756 864
Accrued compensation and benefits 629 758
Accrued advertising 298 218
Other accrued liabilities 468 328
Deferred income on shipments to distributors 306 304
Income taxes payable 815 801
------- -------
Total current liabilities 3,513 3,619
------- -------
Long-term debt 399 400
Deferred tax liabilities 754 620
Put warrants 750 725
Stockholders' equity:
Preferred stock -- --
Common stock and capital in excess
of par value 2,747 2,583
Retained earnings 11,137 9,557
------- -------
Total stockholders' equity 13,884 12,140
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $19,300 $17,504
======= =======
(See Notes to Consolidated Condensed Financial Statements.)
4
PART I - (continued)
Item 1. Financial Statements (Continued)
Intel Corporation
Consolidated Condensed Statements of Cash Flows (unaudited, in millions)
Six Months
Ended
Jun. 29, Jul. 1,
1996 1995
Cash flows provided by (used for) operating
activities:
Net income $ 1,935 $ 1,768
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 873 622
Net loss on retirements of property, plant and
equipment 60 39
Amortization of debt discount -- 9
Change in deferred tax assets and liabilities 103 111
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 216 (906)
Decrease (increase) in inventories 525 (358)
Decrease (increase) in other assets 136 (170)
(Decrease) increase in accounts payable (108) 161
(Decrease) in accrued compensation and
benefits (129) (48)
Increase in income taxes payable 14 311
Increase (decrease) in other liabilities 214 (73)
Tax benefit from employee stock plans 62 69
Purchases of trading assets (75) --
Gain on trading assets (4) --
------- -------
Total adjustments 1,887 (233)
------- -------
Net cash provided by operating activities 3,822 1,535
------- -------
Cash flows provided by (used for) investing
activities:
Additions to property, plant and equipment (1,604) (1,614)
Purchases of long-term, available-for-sale
investments (36) (98)
Sales of long-term, available-for-sale
investments -- 67
Maturities and other changes in available-for-
sale investments, net (466) 536
------- -------
Net cash (used for) investing activities (2,106) (1,109)
Cash flows provided by (used for) financing
activities:
(Decrease) in short-term debt, net (105) (19)
Proceeds from sales of shares through employee
stock plans and other 134 120
Proceeds from sales of put warrants 36 16
Repurchase and retirement of common stock (369) (650)
Payment of dividends to stockholders (66) (50)
------- -------
Net cash (used for) financing activities (370) (583)
------- -------
Net increase (decrease) in cash and cash
equivalents $ 1,346 $ (157)
======= =======
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 24 $ 50
Income taxes $ 819 $ 556
Certain 1995 amounts have been reclassified to conform to the 1996
presentation.
(See Notes to Consolidated Condensed Financial Statements.)
5
PART I - (continued)
Item 1. Financial Statements (Continued)
Intel Corporation, Notes to Consolidated Condensed Financial Statements
1. The accompanying interim consolidated condensed financial
statements of Intel Corporation ("Intel," the "Company" or the
"Registrant") have been prepared in conformity with generally
accepted accounting principles, consistent in all material
respects with those applied in the Annual Report on Form 10-K for
the year ended December 30, 1995. The interim financial
information is unaudited, but reflects all normal adjustments
which are, in the opinion of management, necessary to provide a
fair statement of results for the interim periods presented. The
interim financial statements should be read in connection with the
financial statements in the Company's Annual Report on Form 10-K
for the year ended December 30, 1995.
2. Interest and other income includes (in millions):
Three Months Six Months
Ended Ended
Jun. 29, Jul. 1, Jun. 29, Jul. 1,
1996 1995 1996 1995
----------------- -----------------
Interest income $ 78 $ 75 $158 $149
Foreign currency
gains 7 4 14 10
Other income
(expense), net 4 4 (7) 80
---- ---- ---- ----
Total $ 89 $ 83 $165 $239
==== ==== ==== ====
Other income for the six months ended July 1, 1995 included
approximately $58 million from the settlement of all ongoing
litigation with Advanced Micro Devices, Inc. and $23 million from
the sale of a portion of the Company's interest in VLSI
Technologies, Inc.
3. Earnings per common and common equivalent share as presented on
the face of the statements of income represent primary earnings
per share. Dual presentation of primary and fully diluted earnings
per share has not been made because the differences are
insignificant.
4. The Company's available-for-sale investments are reported at fair
value, with unrealized gains and losses, net of tax, recorded in
stockholders' equity. Realized gains or losses and declines in
value, if any, judged to be other than temporary on available-for-
sale securities are reported in other income or expense. Beginning
in the first quarter of 1996, the Company purchased securities
classified as trading assets. The Company's trading assets ($79
million at June 29, 1996) are held to generate returns to offset
changes in certain liabilities related to deferred compensation
arrangements. The trading assets consist of marketable equity
securities and are stated at fair value. Both realized and
unrealized gains and losses are included in other income or
expense and generally offset the change in the deferred
compensation liability which is also included in other income or
expense.
5. As more fully described in the Company's Annual Report, Intel
enters into derivative financial instruments to reduce financial
market risks. These instruments are used to hedge foreign
currency, equity and interest rate market exposures of underlying
assets, liabilities and other obligations. The Company does not
use derivative financial instruments for speculative or trading
purposes. The Company's accounting policies for these instruments
are based on the Company's designation of such instruments as
hedging transactions. The criteria the Company uses for
designating an instrument as a hedge include its effectiveness in
risk reduction and one-to-one matching of derivative instruments
to underlying transactions. Gains and losses on currency forward
contracts, and options that are designated and effective as hedges
of anticipated transactions, for which a firm commitment has been
attained, are deferred and recognized in income in the same period
that the underlying transactions are settled.
6
PART I - (continued)
Item 1. Financial Statements (Continued)
Intel Corporation, Notes to Consolidated Condensed Financial Statements
(continued)
Gains and losses on currency forward contracts, options and swaps
that are designated and effective as hedges of existing
transactions are recognized in income in the same period as losses
and gains on the underlying transactions are recognized and
generally offset. Gains and losses on options hedging investments
in non-marketable instruments are deferred and recognized in
income in the same period as the hedges mature or when the
underlying transaction is sold, whichever comes first. Income or
expense on swaps is accrued as an adjustment to the yield of the
related investments or debt they hedge.
6. During the second quarter of 1996, the Company repurchased 2.0
million shares of Common Stock under the Company's authorized
repurchase program at a cost of $135 million. As of June 29, 1996,
after reserving shares to cover the outstanding put warrants,
approximately 24.1 million shares remained available under the
repurchase program (total authorization of 110 million shares)
authorized by the Board of Directors. (See Item 2. Management's
Discussion and Analysis for subsequent activity.)
7. In a series of private placements during the 1991-1996 period, the
Company sold put warrants that entitle the holder of each warrant
to sell one share of Common Stock to the Company, at a specified
price, if the holder exercises the warrant. Activity during the
first half of 1996 is summarized as follows:
Put Warrants Outstanding
Cumulative
Proceeds Number Potential
(In millions) Received Of Warrants Obligation
-----------------------------------------------------------
December 30, 1995 $ 279 12.0 $ 725
Sales 18 3.0 175
Exercises (1.8) (108)
Expirations -- (1.5) (58)
----- ----- -----
March 30, 1996 $297 11.7 $734
Sales 18 3.0 202
Expirations -- (3.0) (186)
----- ----- -----
June 29, 1996 $315 11.7 $750
===== ===== =====
The amount related to the Company's potential buyback obligation
has been reclassified from Stockholders' Equity and recorded as
put warrants. The 11.7 million put warrants outstanding on June
29, 1996 expire on various dates between July 1996 and May 1997
and have exercise prices ranging from $56 to $69 per share, with
an average exercise price of $64. There is no material dilutive
effect on earnings per share for the periods presented. (See Item
2. Management's Discussion and Analysis for subsequent activity.)
8. On March 29, 1995, Thorn EMI North America Inc. brought suit in
Federal Court in Delaware against Intel alleging that certain
Intel manufacturing processes infringe a U.S. patent. In April
1996, the plaintiff filed documents with the Federal Court in
Delaware indicating that in addition to an injunction it plans to
seek damages, if it prevails, equal to between one (1) and one and
one half (1 1/2) percent of Intel's net revenues derived from
sales of Intel486(TM), Pentium(R) and Pentium(R) Pro processors.
On May 28, 1996, the Court granted Intel's motion for summary
judgment as to several of the fabrication processes at issue,
including all processes currently used to make Pentium and Pentium
Pro processors. In June 1996, the Court held a "Markman" hearing
to resolve remaining disputed issues of claim interpretation, and
on June 11, 1996 announced its rulings, which were largely
consistent with Intel's proposed interpretations. The parties
subsequently agreed to dismiss the jury, and Intel moved for
summary judgment on the processes remaining in the case. This
motion is currently under consideration. The Company believes this
lawsuit to be without merit and will defend the case vigorously.
Although the ultimate outcome of this lawsuit cannot be determined
at this time, management, including internal counsel, continues to
believe that the ultimate outcome will not have a material adverse
effect on Intel's financial position or overall trends in results
of operations. This estimate of the potential impact on the
Company could change in the future.
7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations - Second Quarter of 1996 Compared to Second
Quarter of 1995
Revenues for Q2 1996 increased by 19% compared to Q2 1995. Higher
volumes of the rapidly ramping Pentium(R) processor family, partially
offset by lower prices and decreasing revenues from sales of related
board level products, drove the overall growth in revenues. Revenues
from the Intel486(TM) microprocessor family declined substantially,
primarily due to a major shift in market demand toward the Company's
more advanced microprocessors. Chipsets and flash memory also showed
significant revenue growth between these periods. Revenue from
royalties was higher than normal during the second quarter of 1996.
Cost of sales rose by 19% from Q2 1995 to Q2 1996, primarily due to
increased unit volumes. Gross margin was 53% in Q2 1996 versus 54% in
Q2 1995. Although the Company's gross margin percentage had been
declining since Q2 1995, it returned to the prior year's level,
primarily due to lower memory inventory write offs than the Company has
been experiencing recently. In addition, gross margin in the second
quarter of 1996 benefited from the higher than normal royalties during
the period.
A majority and growing portion of the Company's revenues, and a
substantial majority of its gross margin, are derived from sales of the
Pentium processor family including related board level products.
Although sales of the Intel486 microprocessor family represented a
significant portion of Q2 1995 revenues and gross margin, revenues and
gross margin for these products were negligible for Q2 1996.
Research and development expenses and marketing, general and
administrative expenses rose by a total of $193 million, or 25%, from
Q2 1995 to Q2 1996. Spending for internal product and process
development programs, personnel related spending and Intel Inside(R)
and other advertising and marketing expenses accounted for most of the
increase.
Interest and other income for Q2 1996 increased by $6 million over the
prior year due primarily to the higher average investment balance in Q2
1996, offset in part by lower average interest rates on investments.
The $7 million decrease in interest expense between Q2 1995 and Q2 1996
is primarily the result of lower weighted average borrowing balances.
The Company utilizes investments and corresponding interest rate swaps
to preserve principal while enhancing the yield on its investment
portfolio without significantly increasing risk, and uses forward
contracts, options and swaps to hedge foreign currency, equity and
interest rate market exposures. Gains and losses on these instruments
are generally offset by those on the underlying hedged transactions; as
a result, there was no net impact on the Company's financial results in
either Q2 1996 or Q2 1995 from hedging activities.
The provision for taxes increased by $40 million, or 8%, primarily as a
result of higher pretax earnings in 1996. In addition, the effective
tax rate decreased from 37.2% for Q2 1995 to 35% for Q2 1996.
8
Results of Operations - First Half of 1996 Compared to First Half of 1995
Revenues for the first half of 1996 increased by 24% compared to the
first half of 1995. Higher volumes of the rapidly ramping Pentium
processor family, partially offset by lower prices and decreasing
revenues from sales of related board level products drove the overall
growth in revenues. Revenues from the Intel486 microprocessor family
declined substantially, primarily due to a major shift in market demand
toward the Company's more advanced microprocessors. Chipsets and flash
memory also showed significant revenue growth between these periods.
Revenue from royalties was higher than normal during the first half of
1996.
Results of Operations - First Half of 1996 Compared to First Half of
1995 (continued)
Cost of sales rose by 34% from the first half of 1995 to the first half
of 1996, primarily due to increased unit volumes. Gross margin was 51%
in the first half of 1996 versus 54% in the first half of 1995 as 1996
costs were impacted by inventory reserves and increased costs
associated with bringing on advanced manufacturing processes.
A majority and growing portion of the Company's revenues, and a
substantial majority of its gross margin, are derived from sales of the
Pentium processor family including related board level products.
Although sales of the Intel486 microprocessor family represented a
significant portion of revenues and gross margin in the first half of
1995, revenues and gross margin for these products were negligible for
the first half of 1996.
Research and development expenses and marketing, general and
administrative expenses rose by a total of $430 million, or 30%, from
the first half of 1995 to the first half of 1996. Spending for internal
product and process development programs, personnel related spending
and Intel Inside(R) and other advertising and marketing expenses
accounted for most of the increase.
Interest and other income for the first half 1996 decreased by $74
million over the prior year due primarily to the gains in the first
half of 1995 from the settlement of litigation with Advanced Micro
Devices, Inc. and the sale of a portion of Intel's interest in VLSI
Technology, Inc.
The $9 million decrease in interest expense between the first half of
1995 and the first half of 1996 is primarily the result of lower
weighted average borrowing balances.
The Company utilizes investments and corresponding interest rate swaps
to preserve principal while enhancing the yield on its investment
portfolio without significantly increasing risk, and uses forward
contracts, options and swaps to hedge foreign currency, equity and
interest rate market exposures. Gains and losses on these instruments
are generally offset by those on the underlying hedged transactions; as
a result, there was no net impact on the Company's financial results in
either the first half 1996 or the first half 1995 from hedging
activities.
The provision for taxes decreased by $5 million, primarily due to a
decrease in the effective tax rate from 37.2% for the first half of
1995 to 35% for the first half of 1996, offset substantially by an
increase in pretax earnings in 1996.
Financial Condition
The Company's financial condition remains very strong. As of June 29,
1996, Intel's portfolio of cash and investments totaled $6.04 billion,
up from $4.11 billion at December 30, 1995. The Company's other sources
of liquidity include credit lines and commercial paper borrowing
arrangements that exceed $1.8 billion in the aggregate. The Company
also retains the authority to issue an aggregate of approximately $1.4
billion in debt, equity and other securities under SEC shelf
registration statements.
The Company funded most of its investment needs during the first half
of 1996 with cash generated from operations, which totaled $3.82
billion. Major uses of cash during the first half of 1996 included
capital spending of $1.6 billion for property, plant and equipment,
primarily for microprocessor manufacturing capacity.
Inventory levels, particularly raw material and finished goods,
decreased significantly during the first half of 1996, primarily
attributable to the sell-through of purchased parts inventory and lower
costs of manufacturing in the first half of 1996.
The Company's five largest customers accounted for approximately 30% of
net revenues for the six month period ended June 29, 1996. At June 29,
1996, these customers accounted for approximately 22% of net accounts
receivable.
9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Financial Condition (continued)
Key financing activities in the first half of 1996 included the
repurchase of 6.1 million shares of Common Stock for $369 million as
part of the Company's authorized stock repurchase program, including
1.8 million shares for $108 million upon the exercise of outstanding
put warrants. The Company also sold 6 million put warrants, receiving
proceeds of $36 million, while 4.5 million previously outstanding put
warrants expired unexercised. Through August 9, 1996, the Company
repurchased 8 million shares of its Common Stock for $598 million,
issued 3 million put warrants and 2.7 million put warrants expired
unexercised. As of August 9, 1996, Intel had the potential obligation
to repurchase 12 million shares of Common Stock at an aggregate cost of
$795 million under outstanding put warrants. The exercise price of
these warrants ranges from $56.25 to $80.75 per share, with an average
exercise price of $66 per share. Certain of these put warrants expire
upon the Company's stock price reaching certain levels above the
exercise price for such put warrants. As of August 9, 1996, 15.8
million shares remained available for repurchase under the repurchase
authorization, after reserving shares to cover outstanding put
warrants.
Management considers cash flow from operations and available sources of
liquidity to be adequate to meet business requirements in the
foreseeable future, including planned capital expenditure programs,
working capital requirements, the put warrant obligation and the
dividend program.
Outlook
The statements contained in this Outlook are based on current
expectations. These statements are forward looking and actual results
may differ materially.
Although the Company's book-to-bill ratio was above 1.0 for Q2 1996,
the Company expects revenue for the third quarter of 1996 to be
approximately equal to the second quarter revenue of $4.6 billion. The
Company believes that many customers will continue to place orders for
immediate delivery ("turns"), consistent with the second quarter. In a
turns environment, however, customer order patterns are inherently
difficult to predict. Revenue is also a function of the distribution of
microprocessor speed and performance levels, which is difficult to
forecast. Because of the large price difference between the highest and
lowest performance microprocessors, this distribution affects the
average price Intel will realize and has a large impact on Intel's
revenues.
Intel's strategy has been and continues to be to introduce ever higher
performance microprocessors and work with the software industry to
develop compelling applications that can take advantage of this higher
performance, thus driving demand toward the newer products. In line
with this strategy, the Company continues to be on track to position
the 120-MHz and 133-MHz Pentium processors as the entry-level
processors in the fourth quarter of 1996. If the market demand does not
continue to grow and move rapidly toward higher performance products,
revenue and gross margin may be impacted, the manufacturing capacity
installed might be under-utilized and capital spending may be slowed.
The Company may continue to reduce microprocessor prices aggressively
and systematically to bring its technology to market. The Company
recently announced that it will cut prices on certain members of the
Pentium processor family more than previously planned in Q3 1996 and
plans to hold those prices through the end of 1996. The Company's
pricing policy is subject to change.
10
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Outlook (continued)
The Company expects gross margin percentage in the third quarter to be
at the upper end of the model of 50 percent plus or minus a couple of
points. Intel's gross margin percentage varies depending in part on the
mix of microprocessors and related motherboards within a product family
because motherboards generally have lower gross margin percentages than
microprocessors. Various other factors, including unit volumes and
costs and yield issues, sell-through of purchased components, processor
speed mix and mix of shipments of other semiconductors will also
continue to affect the amount of cost of sales and the variability of
gross margin percentages.
To implement its strategy, Intel continues to build capacity to produce
high-performance microprocessors and other products. The Company
currently expects capital expenditures for 1996 to be about $3.6
billion. This spending plan is dependent upon delivery times of various
machines and construction schedules for new facilities. The current
estimate is lower than the previous estimate of $4 billion due to
delays in beginning a new facility, improvements in the rate of
equipment re-utilization, and early conversion and high yields on the
.35 micron manufacturing process.
Spending on research and development and marketing, general and
administrative expenses is expected to increase about 3 to 4 percent in
the third quarter of 1996 from the $956 million in the second quarter
of 1996. Expense projections in the third quarter of 1996 are subject
to changes based primarily on utilization of cooperative marketing
programs by customers.
The Company's future results of operations and the other forward
looking statements contained in this outlook involve a number of risks
and uncertainties. In addition to the factors discussed above, among
the other factors that could cause actual results to differ materially
are the following: business conditions and growth in the personal
computer industry and general economy; changes in customer order
patterns, including timing of delivery and changes in seasonal
fluctuations in PC buying patterns; competitive factors, such as rival
chip architectures, competing software-compatible microprocessors,
acceptance of new products and price pressures; risk of nonpayment of
customer receivables; risk of inventory obsolescence due to shifts in
market demand; variations in inventory valuation; timing of software
industry product introductions; continued success in technological
advances, including the manufacturing ramp; excess or shortage of
manufacturing capacity; risks associated with foreign operations;
changes in the mix of microprocessor speeds and related motherboards;
costs and yield issues associated with initiating production at new
factories; and litigation involving intellectual property and consumer
issues.
Intel believes that it has the product offerings, facilities,
personnel, and competitive and financial resources for continued
business success, but future revenues, costs, margins, product mix and
profits are all influenced by a number of factors, as discussed above.
11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
A. Litigation
Reference is made to Item 3. Legal Proceedings, in the Registrant's
Annual Report on Form 10-K for the year ended December 30, 1995 and
Part II, Item 1. Legal Proceedings, in the Registrant's Quarterly
Report on Form 10-Q for the quarterly period ended April 1, 1996 for a
description of the following legal proceeding.
Thorn EMI North America, Inc.
vs. Intel, DEL (C95-199)
On May 28, 1996, the Court granted Intel's motion for summary judgment
as to several of the fabrication processes at issue, including all
processes currently used to make Pentium(R) and Pentium(R) Pro
processors. In June 1996, the Court held a "Markman" hearing to
resolve remaining disputed issues of claim interpretation, and on June
11, 1996 announced its rulings, which were largely consistent with
Intel's proposed interpretations. The parties subsequently agreed to
dismiss the jury, and Intel moved for summary judgment on the processes
remaining in the case. This motion is currently under consideration.
The Company believes this lawsuit to be without merit and will defend
the case vigorously. Although the ultimate outcome of this lawsuit
cannot be determined at this time, management, including internal
counsel, continues to believe that the ultimate outcome will not have a
material adverse effect on Intel's financial position or overall trends
in results of operations. This estimate of the potential impact on the
Company could change in the future.
Item 2. Changes in Securities
On July 17, 1996, the Board of Directors amended the Bylaws of Intel
Corporation to require stockholders to give written notice to the
Company not less than 60 days nor more than 120 days prior to the first
anniversary of the preceding year's annual stockholders' meeting for
nominations or other business to be properly brought before an annual
stockholders' meeting. The amended Bylaws also specify certain
information that must be set forth in any such notice. Reference is
made to Exhibit 3.1 of this Quarterly Report on Form 10-Q for an
amended and restated copy of the Bylaws of Intel Corporation.
12
Item 4. Submission of Matters to a Vote of Security Holders
At Intel Corporation's Annual Meeting of Stockholders held on May
22, 1996, the following proposals were adopted by the margins indicated.
Number of Shares
Voted for Withheld
--------- --------
1. To elect a board of directors
to hold office until the next
annual meeting of stockholders or
until their respective successors
have been elected or appointed.
C. Barrett 722,842,763 1,322,666
W. Chen 722,889,225 1,276,204
A. Grove 722,876,011 1,289,418
J. Guzy 722,870,448 1,294,981
G. Moore 722,887,157 1,278,272
M. Palevsky 722,853,031 1,312,398
A. Rock 722,869,667 1,295,762
J. Shaw 722,881,807 1,283,622
L. Vadasz 722,835,502 1,329,927
D. Yoffie 722,847,351 1,318,078
C. Young 722,858,101 1,307,328
Number of Shares
Voted Voted No
For Against Abstained Vote
--------------------------------------------
2. To ratify the appointment 721,999,541 873,145 1,292,739 3
of the accounting firm of
Ernst & Young LLP as
independent auditors for the
Company for the current year.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Intel Corporation Bylaws, as amended
10.1 Intel Corporation Sheltered Employee Retirement Plan Plus, as
amended and restated effective July 15, 1996 (incorporated by
reference to Exhibit 4.1.1 of Registrant's Post-Effective
Amendment No. 1 to Form S-8 Registration Statement [Registration
Statement No. 33-63489] as filed on July 17, 1996).
11.1 Statement re: computation of earnings per share.
12.1 Statement setting forth the computation of ratios of earnings
to fixed charges.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the quarter ended June 29, 1996.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
INTEL CORPORATION
(Registrant)
Date: August 9, 1996 By: /s/Andy D. Bryant
----------------------------
Andy D. Bryant
Vice President and
Chief Financial and
Principal Accounting Officer