Exhibit 99.2
Intel Corporation
Unaudited operating segment results for 2003, 2002 and 2001 conformed
to reflect the company's new basis of segment reporting
The company designs, develops, manufactures and markets computing and
communications products at various levels of integration. In December 2003, the
company announced that in 2004 it would be consolidating its
communications-related businesses into a single organization, the Intel
Communications Group (ICG). Previously, these communications businesses were in
two separate product line operating segments: the former Intel Communications
Group and the Wireless Communications and Computing Group (WCCG). Beginning in
the first quarter of 2004, the company is presenting operating segment results
under the new organizational structure. The company now reports two product-line
operating segments: the Intel Architecture business, which is composed of the
Desktop Platforms Group, the Mobile Platforms Group and the Enterprise Platforms
Group; and ICG. Prior to the combining of the communications-related businesses,
the consumer electronics business, which was previously part of ICG, was moved
into the Intel Architecture business. As a result of the changes discussed
above, 2003, 2002 and 2001 amounts have been restated to reflect the new
operating segment presentation as well as certain additional minor
reorganizations effected through the second quarter of 2004.
The company's Executive Office consists of Chief Executive Officer (CEO)
Craig R. Barrett and President and Chief Operating Officer (COO) Paul S.
Otellini. The CEO and COO have joint responsibility as the Chief Operating
Decision Maker (CODM), as defined by SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." The CODM allocates resources to and
assesses the performance of each operating segment using information about their
revenue and operating profit before interest and taxes.
The Intel Architecture operating segment's products include microprocessors
and related chipsets and motherboards. Net revenue for the Intel Architecture
operating segment made up approximately 87% of the company's consolidated net
revenue in 2003 (83% in 2002 and 81% in 2001). Revenue from sales of
microprocessors within the Intel Architecture operating segment represented 73%
of consolidated net revenue in 2003 (70% in 2002 and 67% in 2001). ICG's
products include flash memory; wired Ethernet and wireless connectivity
products, communications infrastructure components such as network and embedded
processors and optical components; microcontrollers; application and cellular
processors used in cellular handsets and handheld computing devices; and
cellular baseband chipsets. The company's products in each operating segment are
sold directly to original equipment manufacturers, and through retail and
industrial distributors as well as reseller channels throughout the world.
In addition to these operating segments, the company has sales and
marketing, manufacturing, finance and administration groups. Expenses of these
groups are allocated to the operating segments and are included in the operating
results reported below.
The "all other" category includes acquisition-related costs, including
amortization of acquisition-related intangibles and charges for purchased
in-process research and development. In 2003, acquisition-related costs also
included a goodwill impairment charge of $611 million taken in the fourth
quarter for the remaining goodwill balance related to WCCG, and in 2002 included
a $127 million impairment of acquisition-related identified intangibles related
to prior-year acquisitions. "All other" also includes the results of operations
of seed businesses that support the company's initiatives, and the results for
2002 included a charge of $106 million related to the wind-down of the Intel
Online Services web hosting business. Finally, "all other" includes certain
corporate-level operating expenses, including a portion of profit-dependent
bonus and other expenses not allocated to the operating segments. For 2001, "all
other" also included goodwill amortization; however, beginning in 2002, goodwill
is no longer amortized.
The company does not identify or allocate assets by operating segment, and
does not allocate depreciation as such to the operating segments, nor does the
CODM evaluate operating segments on these criteria. Operating segments do not
record intersegment revenue, and, accordingly, there is none to be reported. The
company does not allocate interest and other income, interest expense or taxes
to operating segments. Except as discussed above, the accounting policies for
segment reporting are the same as for the company as a whole.
Net revenue and operating income or loss for reportable segments for the
three years ended December 27, 2003 were as follows:
(In Millions) 2003 2002 2001
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Intel Architecture Business
Net revenue $ 26,178 $ 22,347 $ 21,446
Operating income $ 10,354 $ 6,498 $ 6,277
Intel Communications Group
Net revenue $ 3,928 $ 4,288 $ 4,812
Operating loss $ (824) $ (817) $ (984)
All Other
Net revenue $ 35 $ 129 $ 281
Operating loss $ (1,997) $ (1,299) $ (3,037)
Total
Net revenue $ 30,141 $ 26,764 $ 26,539
Operating income $ 7,533 $ 4,382 $ 2,256
In 2003, one customer accounted for approximately 19% of the company's
revenue (16% in 2002) while another customer accounted for approximately 15% in
both 2003 and 2002. These customers each accounted for approximately 14% of the
company's revenue in 2001. A substantial majority of the sales to these
customers were Intel Architecture business products.