Intel Corporation
`Intel Corporation
`
`
`
`LIX, INC
`NETFLIX, INC
`Exhibit 1027
`Exhibit 1027
`|PR2018—01630
`IPR2018-01630
`
`Page 1
`
`

`

`Intel is
`
`Tn 1971, Intel introduced the world's first microprocessor, which sparked a computer revolution
`Ithat has changed the world. About 75 percent of the personal computers in use around the world
`today are based on Intel-architecture microprocessors. Today, Intel supplies the personal computing
`industry with the chips, boards, systems and software that are the "ingredients" of the most popular
`computing architecture. These products help create advanced computing systems for personal
`computer users.
`
`Major customers
`• Manufacturers of computer systems and computer peripherals.
`• PC users who buy Intel's PC enhancements, business communications products and networking
`products at retail stores.
`• Other manufacturers, including makers of automobiles and a wide range of industrial and
`telecommunications equipment.
`• Scientists and engineers working on the world's greatest computational problems.
`
`Principal products
`
`• Processor products
`Microprocessor chips, also called central processing units (CPUs), are frequently described as
`the "brains" of a computer, because they control the central processing of data in PCs and other
`computers. Microprocessor peripherals are special-purpose chips that work with a CPU to manage
`selected system functions. Motherboards are sold to original equipment manufacturers (OEMs),
`who incorporate them into their products.
`
`• Networking and communications products
`Network and communications products enhance the capabilities and ease of use of PC systems
`and networks, and are sold through retail outlets. They include ProShare- Personal Conferencing
`products, which let PC users in different locations share documents or engage in a video confer-
`ence via PC.
`
`• Semiconductor products
`Flash memory provides easily reprogrammable memory for cellular phones, computers and other
`systems. It retains data even when the computer's power is turned off. Embedded controllers are
`programmed to control specific functions in products such as automobile engines, laser printers,
`disk drives and home appliances.
`
`On the cover.• 1994 was the year of the consumer PC, as families flocked to outlets such as this Best Buy store in
`Hawthorne, California to buy affordable new multimedia PCs powered by the Intel Pentium' processor.
`
`Page 2
`
`

`

`To our stockholders
`
`hat a year. For our high-per-
`
`• We have been working steadily
`
`growth rate that we have achieved
`
`ormance Pentium* processor,
`
`1994 was the best of times—and the
`worst of times. Just as the Pentium
`
`processor was emerging at year-end
`
`as one of 1994's great successes,
`it was engulfed in a controversy over
`
`a floating-point problem in the pro-
`
`cessor. We ultimately took a $475
`million pretax charge in the fourth
`quarter to cover replacement and
`write-off of these microprocessors.
`
`to bring down the price and expand
`the capabilities of our chips to make
`PCs a better buy than ever before.
`Overall, our strategy seems to
`
`be working. Even throughout last
`
`December's crisis, sales of Pentium
`processor-based systems continued
`
`to set new records.
`Of course, the Pentium processor
`problem also illustrated that we must
`
`continue our efforts to understand
`
`This episode reflects a strategic
`
`and respond to a consumer-driven
`
`turning point. Quite
`
`simply, the PC is
`
`now a standard
`
`consumer tool used
`by a wide range
`of people, from
`preschoolers to uni-
`
`versity researchers.
`Many of these PC customers have
`more demanding—and varied—
`
`expectations for product quality, per-
`formance and service than computer
`users have in the past. In many ways,
`Intel has facilitated this transition:
`• We have invested heavily in devel-
`opment and manufacturing capacity so
`we can supply high-end processors in
`
`the volumes needed for a consumer
`marketplace. We continued the trend
`of record strategic spending this
`year, with investments of $3.55 billion
`
`in capital and R&D, a 22 percent
`increase over 1993 levels.
`• We have been promoting our
`microprocessors with wide-ranging
`education and marketing programs
`
`describing the benefits of Intel
`
`microprocessors.
`
`Gordon E. Moore
`Chairman
`
`Intel Corporation 1994
`
`market. For example, we approached
`the question of who should get a
`replacement processor from an
`engineering rather than a customer
`
`satisfaction point of view. We were
`
`initially selective about who should
`
`get a new processor, because we
`thought it was unnecessary for most
`
`people. This policy was unpopular,
`
`and we eventually adopted a no-
`questions-asked replacement policy.
`We received a crash course in con-
`sumer relations. In the future, we
`intend to be better prepared to meet
`the public expectations that come
`with our dramatically higher profile.
`
`A strong position in
`a competitive market
`
`Overall, 1994 was a very successful
`year. Revenue grew 31 percent, well
`above the 22 percent annualized
`
`si a,
`
`Andrew S. Grove
`President and
`Chief Executive Officer
`
`over the past ten years. Earnings per
`share rose only slightly versus 1993,
`
`due in part to the charge to cover the
`
`Pentium processor divide problem.
`
`Nearly half of our total sales were
`outside the U.S. Sales were strong
`
`in all geographies.
`Of course, as the leading supplier
`of microprocessors to the PC industry,
`Intel continued to attract significant
`competition, both from the PowerPC*
`
`and other RISC chips, and from
`imitators of the
`
`Intel architecture.
`
`Despite this
`
`competition, we
`continued to
`
`be No.1 in the
`
`microprocessor
`
`market segment.
`
`Our vision:
`PCs everywhere
`
`We believe that the personal computer
`has the potential to become the uni-
`versal general-purpose information
`appliance. The PC is the one tool that
`can incorporate interactive entertain-
`ment, networked information services
`and real-time multimedia communica-
`tions in one place. For more on how
`
`we are helping to make this goal a
`reality, see the "Highlights of 1994"
`
`section on page 2.
`Intel and its products are at the core
`of the information technology industry,
`which is, in turn, a critical element of
`the world economy. We feel fortunate
`to be a part of this exciting industry.
`
`Craig R. Barrett
`Executive Vice President and
`Chief Operating Officer
`
`1
`
`Page 3
`
`

`

`Highlights of 1994
`
`Tntel had an exciting 1994, with significant progress toward our top strategic goals. As the No.1
`Isupplier of microprocessors and other semiconductor products to the computing industry, Intel's
`success is linked to the continued growth of the personal computing industry. Fueling PC growth is
`a top priority for the company. Intel works to stimulate the PC market in two key ways. We provide
`a steady stream of high-performance microprocessors at prices that help make PCs affordable. And
`we work with industry leaders to develop the hardware and software technologies
`that will make PCs increasingly useful and productive.
`
`processor units accounted for 23
`
`percent of our desktop processor vol-
`
`ume, and that proportion is growing
`
`rapidly. In 1995, we will introduce
`
`the P6, our next-generation processor.
`
`We expect the Pentium processor to
`
`become the mainstream PC processor
`
`of choice.
`
`More and more OEM customers
`
`chose to buy Pentium processors
`
`already assembled onto motherboards.
`
`To meet the demand, we increased
`
`production capacity at all our systems
`
`manufacturing plants.
`
`Twice the processing
`bang for the buck
`
`Otte year ago, the typical PC pur-
`
`chase was a computer featuring
`
`the Inte1486- chip with the old style
`
`The Pentium®
`processor takes off
`
`ntel's growth in 1994 was largely
`
`'yen by continued strong sales of
`
`our high-end microprocessors, includ-
`
`data bus,' which often meant sluggish
`
`ing rapid growth of the Pentium®
`
`performance and limited graphics
`
`processor. Available for systems rang-
`
`capabilities. Today, the same amount
`
`ing from notebook computers to net-
`
`work servers, the Pentium processor
`
`of money can buy a Pentium proces-
`sor-based machine with the new, faster
`
`delivers the computing power neces-
`
`PCI bus, delivering revved-up perfor-
`
`sary to drive today's most exciting
`
`mance and a range of multimedia
`
`software, such as multimedia and
`
`capabilities. In the coming year, we
`
`communications packages.
`
`hope once again to double processor
`
`The Pentium processor production
`
`performance at key PC prices,
`
`curve has been our most successful
`
`helping to make more
`
`product transition ever. In 1994, the
`
`powerful PCs affordable
`
`first full year of the chip's production,
`Intel shipped millions of Pentium
`
`processors to PC makers around the
`
`world. In the fourth quarter, Pentium
`
`for everyone.
`
`'The "bus" is the pipeline
`that transmits messages
`among the CPU, mem-
`ory, input devices such as
`the keyboard and mouse,
`and output devices such
`as the monitor.
`
`Building for the future
`
`Our ability to bring the Pentium
`
`processor to full production
`
`capacity quickly and meet the demands
`
`of the PC market segment this year
`
`was due to the groundwork we've laid
`
`in past years. For exam-
`
`ple, we opened new state-
`
`of-the-art semiconductor
`
`plants this year in
`
`Ireland and New Mexico.
`
`At a total investment
`
`of approximately $1.5
`
`billion, these plants
`
`have already produced
`millions of Pentium
`
`processors.
`
`We have plans for
`
`even more sophisti-
`
`cated manufacturing
`
`facilities to make new,
`
`more complex products.
`
`For example, we broke
`
`ground this year on a
`$1.3 billion chip plant in Arizona,
`
`which should start production in
`
`early 1997. We will also open a
`
`high-end fabrication facility in New
`
`Mexico in 1995. This plant will make
`4 4/
`
`0.4-micron chips—
`
`microprocessors with
`
`more transistors
`
`than ever before,
`delivering signif-
`
`icantly higher
`
`computing power.
`
`2
`
`Intel Corporation 1994
`
`Page 4
`
`

`

`(A LAN connects individual PCs
`
`with devices such as printers and
`
`file-storage servers, and is the back-
`
`bone of electronic mail within a
`
`single office.) Intel's LAN products
`
`include hardware and software that
`
`make it easy to install, manage and
`
`use local area networks. We are
`
`proud that our LAN manage-
`
`' ment software, LANDesk®
`
`Manager, won PC/Computing
`
`magazine's "Most Valuable
`
`Product" award for 1994.
`
`• ProShare"'Personal Confer-
`
`encing products: In today's busi-
`
`ness environment, people must be
`
`able to work together effectively—
`
`whether they are in the next building
`
`or halfway around the world. To pro-
`
`vide more productive ways of working
`
`The new world of
`PC communications
`
`Over the last decade, the PC
`
`has evolved from a stand-alone
`
`office device to a widely connected
`
`information tool, and is becoming
`
`together, we introduced the ProShare
`
`the center of communications for
`
`family of personal conferencing prod-
`
`both home and business. Already the
`
`ucts. These PC add-in products let
`
`PC is used to send faxes and e-mail,
`
`people work together from their
`
`to share databases, to access on-line
`
`desktops, with the immedi-
`
`information services, even to hold
`
`ate interaction and free-
`
`Other product news
`
`Flash memory leader: In 1994,
`
`Intel once again shipped more
`
`flash memory chips than any other
`
`manufacturer. This memory product
`
`enjoys wide market acceptance, par-
`
`ticularly in products such as cellular
`
`phones and peripheral networking and
`
`communications devices for PCs. In a
`
`significant extension of the flash prod-
`
`uct line, we introduced a new kind of
`
`semiconductor memory chip that com-
`
`bines the best of two different memory
`types. The new flash RAM chips exe-
`cute software commands twice as fast
`
`as any previous flash memory, while
`
`retaining the instant-on, easily updat-
`
`able benefits of flash.
`
`• High-powered RISC chip: Intel
`
`also makes the world's best-selling
`
`RISC chip (in terms of units sold),
`
`the 32-bit i960® microprocessor used
`in many products, including com-
`
`puter networking systems
`
`and laser printers. In
`
`video conferences between users at
`
`dom of in-person
`
`different offices.
`
`meetings. With
`
`At Intel, we believe that communi-
`
`ProShare Personal
`
`cations and multimedia are decisive
`
`Conferencing prod-
`
`areas for the PC industry in the next
`
`ucts, users can
`
`decade, because they are expected to
`
`simultaneously edit
`
`generate the majority of new applica-
`
`documents or applica-
`
`tions and attract the majority of new
`
`tions on their PCs, or even
`
`users. The successful future of the PC
`
`meet "face to face" via PC-based
`
`as an appliance will depend on how
`
`video conferencing.
`
`useful the PC is as a platform for these
`
`• Built-in communications: In 1995,
`
`technologies. To continue this prog-
`
`we plan to continue the push to low-
`
`ress, Intel has introduced a range of
`
`cost and improved communications
`
`hardware and software products:
`
`and multimedia by putting audio,
`
`• LAN management products: Intel
`
`video and networking capabilities
`
`is a major manufacturer of local area
`
`directly on the PC motherboard.
`
`network (LAN) products worldwide.
`
`Known as native signal processing,
`
`this practice eliminates the need for
`
`add-in boards and makes PCs even
`
`easier to use.
`
`1994, three new high-
`
`end members of the
`
`i960 microproces-
`
`sor family incorpo-
`
`rated technological
`
`advancements in the
`
`chip's design, deliver-
`
`ing breakthrough perfor-
`
`mance for just one dollar per
`
`MIPS (million instructions per second).
`
`• The world's fastest computer: In
`
`December, a team of scientists from
`
`Sandia National Laboratories and Intel
`
`recaptured the world speed record
`
`for supercomputing. A linked system
`
`based on two Intel Paragon" XP/S 140
`
`supercomputers beat the existing world
`
`record for computing performance by
`
`more than 50 percent.
`
`Intel Corporaiton 1994
`
`Page 5
`
`

`

`Intel facts and figures
`
`Net revenues
`(Dollars in millions)
`
`Geographic breakdown of sales
`(Percent)
`
`Earnings (loss) per share
`(Dollars)
`
`Stock trading ranges by fiscal year
`(Dollars)
`
`40
`
`20
`
`SMISSIO
`1111•111 —
`
`VIII I on —
`11111
`
`85
`
`96
`
`87
`
`88
`
`89
`
`90
`
`91
`
`02
`
`93
`
`94
`
`0
`
`85
`
`86
`
`87
`
`BS
`
`89
`
`90
`
`91
`
`92
`
`93
`
`94
`
`El High
`— Claw
`Low
`•
`
`Return on average stockholders' equity
`
`Book value per share at year-end
`(Dollars)
`
`-20
`
`OS
`
`SS
`
`67
`
`SS
`
`SO
`
`SO
`
`01
`
`SS
`
`SO
`
`SS
`
`0
`
`91
`
`II
`
`65
`
`Oa
`
`4
`
`bud Corporaiion 1994
`
`Page 6
`
`

`

`Actual shares outstanding at year-end
`(75 millions)
`
`Capital additions to property, plant and equipment
`(Dollars in millions)
`
`2.000
`
`1.500
`
`1,000
`
`500
`
`86
`
`a.
`
`87
`
`86
`
`119
`
`90
`
`91
`
`92
`
`93
`
`94
`
`0
`
`88
`
`811
`
`87
`
`88
`
`89
`
`90
`
`91
`
`92
`
`93
`
`94
`
`Land buildings & improvements
`
`Machinery & equipment
`
`02
`
`MN
`
`Revenue and gross fixed assets per employee
`(Dollars in thousands)
`
`
`
`Gross fixed assets at year-end
`(Dollars in millions)
`
`400
`
`300
`
`300
`
`100
`
`0
`
`85
`
`98
`
`87
`
`118
`
`89
`
`90
`
`91
`
`92
`
`93
`
`94
`
`0
`
`55
`
`58
`
`87
`
`88
`
`89
`
`90
`
`91
`
`92
`
`93
`
`90
`
`Revenue/Employee
`
`S Fired Assets/Employee
`
`le
`
`II
`
`Employees at year-end
`(Thousands)
`
`Research and development
`(Dollars in millions)
`
`1,100
`
`85
`
`86
`
`87
`
`98
`
`89
`
`90
`
`91
`
`92
`
`93
`
`94
`
`85
`
`88
`
`87
`
`80
`
`89
`
`90
`
`91
`
`92
`
`93
`
`94
`
`Intel Corporation 1994
`
`5
`
`Page 7
`
`

`

`Movieg to the Pentium processor
`
`In 1994, the Pentium' processor became the mainstream microprocessor of choice because we increased produc-
`tion while dropping prices. Thanks to the wide range of affordable Pentium processor-based systems available
`today, this powerhouse processor is becoming the chip of choice for home and busines
`users around the world.
`
`Thinner than a dime and small as a postage stamp, the 75-MHz Pentium processor
`gives notebook computer makers more room for CD-ROM and other features. Intel's
`innovative tape carrier packaging is the reason the processor is so thin and light-
`weight. The chips are temporarily transported on a reel during package assembly.
`
`teractive Movie
`
`ACCE
`
` .•
`•••• ...... ••
`Today's exciting multimedia applications,
`such as video encyclopedias and challenging
`games, demand top processing power Intel
`and major software vendors have cooperated
`to create labels that identify software
`programs which will run even better
`on a Pentium processor-based system.
`
`Compatible with everyone's
`favorite PC software pack-
`ages, the Pentium processor
`allows users the widest
`selection of applications.
`From word processing
`programs, to financial
`management packages,
`to the latest multi-
`media games and
`learning software,
`users get maximum
`performance.
`
`Page 8
`
`

`

`The Pentium processor delivers top software
`performance in a range of systems, from
`servers that connect several office ~Cs,
`such as Compaq's ProLiant 4000 network
`server, to home PCs such as the Packard
`Bell Force 160CDT multimedia PC, to
`lightweight mobile computers such as the
`Toshiba T4900CT/810 notebook PC. At year
`end, users could buy a fully loaded Pentium
`processor-based system with monitor
`CD-ROM and software for under $2,000.
`
`Page 9
`
`

`

`it
`
` tl _r
`
`Home PC buyers him led the drive to increased PC capabilities. with
`their strong demand jiff multimedia PCs and software. Intel supplies
`the consumer markets with hardware and software products that make
`on-line services and multimedia software come alive. Shown here:
`"The Journey Inside "graphic downloaded from Hollywood Online.•
`
`Intel is a major
`networking prod-
`acts supplier.
`with a range of
`products that
`make PC networks
`easier to create,
`manage and use.
`
`PC communications become real
`
`Both at home and in the office, PCs are becoming more powerful and more connected via networks. This means
`exciting new opportunities for products that let people communicate with each other through their PCs. In 1994,
`Intel introduced networking and communications technologies to help make such communications easier and
`more productive.
`
`8
`
`Intel Corporation 1994
`
`Page 10
`
`

`

`Time is a critical factor in many
`medical diagnoses. To speed the
`process. Dr. Roger Stronell of
`Toronto's Radiology Telenetwork
`International Inc. uses Inters
`ProSharePersonal Conferencing
`products to transmit digital video
`files, such as MRI scans and
`this woman's skull X-ray results'
`in order to consult with medical
`experts at other sites via their PCs.
`
`-911=5=2
`F.+ MI
`
`Anetwwsofrrok;
`
`/Baca: de‘ew":sit5ra'
`scicrib pretiofn m g e nt
`their desks with CNN
`subscription
`ser-
`vice developed by Intel and CNN
`that delivers live programming to
`the PC via local area networks.
`
`Intel Corporation 1994
`
`9
`
`Page 11
`
`

`

`Making a name for Intel
`
`In 1994, Intel continued to invest in programs that educate PC users about the benefits of genuine Intel tech-
`nology. From year-end displays at CompUSA's New York City store (above) to marketing campaigns around the
`world, the message was consistent: everyone's favorite software runs best on Pentium' processor-based PCs.
`
`•••le
`
`What a prize in that but!
`In Canada, .20 families
`will win Pentium processor-
`powered multimedia PCs from
`Patriot Computer as part at
`a special sweepstakes promoted
`on Kellogg's cereal bases.
`
`10
`
`eeeur
`
`ep
`
`t i
`
`• •
`
`• I
`
`• • • • • • • • •
`
`Righ
`7:7P _
`
`:
`
`Astonishing Performance.
`Anywhere in the universe,
`
`Intel US. fall ad campaign
`illustrated that the Pentium
`processor provides top performance for the most exciting software
`
`Intel Corporation 1994
`
`Page 12
`
`

`

`In June, Intel president and
`CEO Andy Grove joined Vice
`President Al Gore and FCC
`chairman Reed Hunt in a
`roundtable discussion about
`the "information super-
`highway"on the popular
`"Larry King Live"TV show
`
`In July. entire cars of the Tokyo commuter trains
`were taken over by the Intel Inside Pentium processor
`logo ad campaign. The ads explained that the Pentium
`processor provides top performance for a range of
`professionals, from symphony conductors to CEO‘
`
`The Intel Inside logo reflects growing PC awareness in Beijing, where Intel
`distributed more than 60,000 bicycle reflectors to spread its message about
`the benefits of Intel microprocessors.
`
`> > >
`
`JE SCHNEL411111
`
`INFOS ANKOMMEN,
`
`DESTO
`
`SCHNELLER HABEN SIE
`ERSTE MILLION GEMACHT.
`
`IHRE
`, -
`
`>>>
`
`ARRIVE!
`VITE A
`PREMIEI
`
`fEtYrt,
`
`intel
`
`Intel Corporation 1994
`
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`
`Across Europe. the message was clear: business success starts
`with the Pentium processor.
`
`Page 13
`
`

`

`411.111••••••-
`
`Building production capaci
`
`New state-of-the-art semiconductor manufacturing and assembly facilities help Intel continue to provide high-
`performance processors at affordable prices. In 1994, Intel opened a new chip plant in Leixlip, Ireland and
`expanded production capacity at facilities in Oregon, New Mexico and Penang, Malaysia (top to bottom).
`
`12
`
`Intel Cmporation 1994
`
`Page 14
`
`

`

`Intel in the communi
`
`Kids in this third-grade Seattle class were among the thousands participating in the Intel-sponsored chess
`instruction programs and championships in schools around the country.
`
`111...016
`
`ihink 111
`
`Intel provided $1 million in Pentium
`processors to Arkenstone, a nonprofit
`organization that helps the visually im-
`paired "read"using voice synthesizers.
`Here. second-grade teacher Mike Jones,
`who is blind, uses a voice synthesizer
`to read a book of hihIrcn%
`
`To teach kids
`how computers
`work, Intel
`launched "The
`Journey Inside,"
`a national edu-
`cation program
`for grades 5 to 9.
`The program consists
`of hands-on learning
`materials for teachers and
`students that come in a box
`shaped like a PC (shown left)
`and "The Journey Inside" IMAX
`feature film now showing at
`theaters around the world.
`
`Intel works
`hard to protect the environment
`and to be sensitive and responsive to any
`community concerns. At Intel's New Mexico site,
`Intel managers, community members and state
`environmental officials gathered in August to cele-
`brate the opening of three new thermal oxidizers.
`installed to eliminate the solvent odors that some
`neighbors complained about. For more on Intel's
`environmental initiatives around the world, readers
`can request the Intel Environmental, Health and
`Safety annual report by calling 1-800-548-4725.
`
`Intel Corpora
`
`1994
`
`13
`
`Page 15
`
`

`

`Consolidated statements of income
`
`Three years ended December 31,1994
`
`(In millions—except per share amount%)
`
`Net revenues
`
`Cost of sales
`
`Research and development
`
`Marketing, general and administrative
`
`Operating costs and expenses
`
`Operating income
`
`Interest expense
`
`Interest income and other, net
`
`Income before taxes
`
`Provision for taxes
`
`Net income
`
`Earnings per common and common equivalent share
`
`Weighted average common and common equivalent shares outstanding
`
`See accompanying notes..
`
`1994
`
`1993
`
`1992
`
`$11,521
`
`$ 8,792
`
`$5,844
`
`5,576
`
`1,111
`
`1,447
`
`8,134
`
`3,252
`970
`
`1,168
`
`5,390
`
`3,387
`
`3,392
`
`(57)
`
`273
`
`3,603
`
`1,315
`
`( 50)
`188
`
`3,530
`
`1,235
`
`2,557
`
`780
`
`1,017
`
`4,354
`
`1,490
`
`(54)
`133
`
`1,569
`
`502
`
`$ 2,288
`
`$ 2,295
`
`$ 1,067
`
`S 5.24
`
`S 5.20
`
`$ 2.49
`
`437
`
`441
`
`429
`
`L
`
`Intel Corporation 1994
`
`Page 16
`
`

`

`Consolidated balance sheets
`
`December 31, 1994 and December 25,1993
`
`(In millions—except per share amounts)
`
`Assets
`Current assets:
`Cash and cash equivalents
`Short-term investments
`Accounts receivable, net of allowance for doubtful accounts of $32 ($22 in 1993)
`Inventories
`Deferred tax assets
`Other current assets
`
`Total current assets
`Property, plant and equipment:
`Land and buildings
`Machinery and equipment
`Construction in progress
`
`Less accumulated depreciation
`
`Property, plant and equipment, net
`
`Long-term investments
`
`Other assets
`
`Total assets
`
`Liabilities and stockholders' equity
`Current liabilities:
`Short-term debt
`Long-term debt redeemable within one year
`Accounts payable
`Deferred income on shipments to distributors
`Accrued compensation and benefits
`Other accrued liabilities
`Income taxes payable
`
`Total current liabilities
`
`Long-term debt
`
`Deferred tics liabilities
`
`Put warrants
`
`Commitments and contingencies
`Stockholders' equity:
`Preferred Stock, $.001 par value, 50 shares authorized; none issued
`Common Stock, $.001 par value, 1,400 shares authorized; 413 issued
`and outstanding in 1994 (418 in 1993) and capital in excess of par value
`Retained earnings
`
`Total stockholders' equity
`
`Total liabilities and stockholders' equity
`
`See accompanying notes.
`
`Intel Corporation 1994
`
`1994
`
`1993
`
`$ 1,180
`1,230
`1,978
`1,169
`552
`58
`
`$ 1,659
`1,477
`1,448
`838
`310
`70
`
`6,167
`
`5,802
`
`2,292
`5,374
`850
`8,516
`3,149
`
`5,367
`
`2,127
`
`155
`
`1,848
`4,148
`317
`6,313
`2,317
`
`3,996
`
`1,416
`
`130
`
`$13,816
`
`$11,344
`
`$ 399
`98
`427
`200
`544
`374
`391
`
`$ 517
`
`575
`269
`588
`646
`429
`
`3,024
`
`392
`
`389
`
`744
`
`2,306
`6,961
`
`9,267
`
`$13,816
`
`Page 17
`
`

`

`Consolidated statements of cash flows
`
`Three rears ended December 31, 1994
`
`(hi millions)
`
`Cash and cash equivalent, beginning of year
`Cash flows provided by (used for) operating activities:
`Net income
`Adjustments to reconcile net income to net cash provided by (used for) operating activities:
`Depreciation
`Net loss on retirements of property, plant and equipment
`Amortization of debt discount
`Change in deferred tax assets and liabilities
`Changes in assets and liabilities:
`(Increase) in accounts receivable
`(Increase) in inventories
`(Increase) in other assets
`Increase in accounts payable
`Tax benefit from employee stock plans
`Increase in income taxes payable
`Increase in accrued compensation and benefits
`Increase in other liabilities
`Total adjustments
`
`1994
`
`1993
`
`1992
`
`$ 1,659
`
`$ 1,843
`
`$ 1,519
`
`2,288
`
`2,295
`
`1,067
`
`1,028
`
`42
`
`19
`
`(150)
`
`(530)
`
`(331)
`
`(13)
`
`148
`
`61
`
`38
`
`44
`
`337
`
`693
`
`717
`
`36
`
`17
`
`12
`
`(379)
`
`(303)
`
`( 68)
`146
`
`68
`
`32
`
`109
`
`119
`
`506
`
`518
`
`57
`
`16
`
`13
`
`(371)
`
`(113)
`
`(61)
`
`112
`
`55
`
`207
`
`66
`
`70
`
`569
`
`2,801
`
`1,636
`
`Net cash provided by operating activities
`Cash flows provided by (used for) investing activities:
`Additions to property, plant and equipment
`Purchases of long-term, available-for-sale investments
`Sales of long-term, available-for-sale investments
`Maturities and other changes in available-for-sale investments, net
`
`Net cash (used for) investing activities
`Cash flows provided by (used for) financing activities:
`(Decrease) increase in short-term debt, net
`Additions to long-term debt
`Retirement of long-term debt
`Proceeds from sales of shares through employee stock plans and other
`Proceeds from sale of Step-Up Warrants, net
`Proceeds from sales of put warrants, net of repurchases
`Repurchase and retirement of Common Stock
`Payment of dividends to stockholders
`
`Net cash provided by (used for) financing activities
`
`Net (decrease) increase in cash and cash equivalents
`
`Cash and cash equivalents, end of year
`Supplemental disclosures of cash flow information:
`Cash paid during the year for
`Interest
`
`Income taxes
`Certain annninIA repelled In prevent, rears hare been nniassified to conform to the 1994 presentation. See accompanying notes.
`
`2,981
`
`(2,441)
`
`(975)
`
`10
`
`503
`
`(1,933)
`
`(1,165)
`
`5
`
`(244)
`
`(1,228)
`
`(293)
`
`13
`
`28
`
`(2,903)
`
`(3,337)
`
`(1,480)
`
`(63 )
`128
`(98)
`150
`
`76
`
`(658)
`
`(92)
`
`(557)
`
`(479)
`
`197
`
`148
`
`133
`
`287
`
`62
`
`(391)
`
`(84 )
`
`352
`
`(184)
`
`29
`
`(20)
`
`138
`
`42
`
`(21)
`
`168
`
`324
`
`$ 1,180
`
`$ 1,659
`
`$1,843
`
`76
`$
`$ 1,366
`
`39
`$
`$ 1,123
`
`32
`
`$
`$ 227
`
`Intel Corporation 1994
`
`Page 18
`
`

`

`Consolidated statements of stockholders' equity
`
`Three years ended December 31,1994
`
`(In millions)
`
`Balance at December 28, 1991
`
`Proceeds from sales of shares through employee stock plans, tax benefit of $55 and other
`
`Proceeds from sales of put warrants, net of repurchases
`
`Reclassification of put warrant obligation, net
`
`Cash dividends declared ($.10 per share)
`
`Net income
`
`Balance at December 26,1992
`
`Proceeds from sales of shares through employee stock plans, tax benefit of $68 and other
`Proceeds from sales of put warrants
`
`Reclassification of put warrant obligation, net
`
`Common Stock and
`capital in excess of par value
`
`Number
`of shares
`
`Amount
`
`Retained
`earnings
`
`Total
`
`408
`
`$ 1,641
`
`$ 2,777
`
`$ 4,418
`
`11
`
`—
`
`—
`
`—
`
`193
`
`42
`
`(100)
`
`—
`
`419
`
`1,776
`
`6
`
`—
`
`—
`
`201
`
`62
`
`(37)
`
`—
`
`—
`
`(133)
`
`(42)
`
`1,067
`
`3,669
`
`—
`
`193
`
`42
`
`(233)
`
`(42)
`
`1,067
`
`5,445
`
`201
`
`62
`
`(278)
`
`(315)
`
`Proceeds from sale of Step-Up Warrants
`
`Repurchase and retirement of Common Stock
`
`Cash dividends declared ($.20 per share)
`
`Net income
`
`Balance at December 25,1993
`
`Proceeds from sales of shares through employee stock plans, tax benefit of $61 and other
`Proceeds from sales of put warrants
`
`Reclassification of put warrant obligation, net
`
`Repurchase and retirement of Common Stock
`
`Redemption of Common Stock Purchase Rights
`
`Cash dividends declared ($.23 per share)
`
`Net income
`
`Balance at December 31, 1994
`
`See accompanying notes.
`
`—
`
`(7)
`—
`
`—
`
`418
`
`6
`
`(11)
`
`287
`
`(95 )
`—
`
`—
`
`2,194
`
`215
`
`76
`
`(15)
`
`(164)
`
`—
`
`—
`
`(296)
`
`(84)
`
`2,295
`
`$306
`
`—
`
`—
`
`(106)
`
`(429)
`
`(2)
`
`(96)
`2,288
`
`287
`
`(391)
`(84)
`2,295
`
`7,500
`
`215
`
`76
`
`(121)
`
`(593)
`
`(2)
`
`(96)
`2,288
`
`413
`
`$ 2,306
`
`$ 6,961
`
`$ 9,267
`
`Intel Corporation 1994
`
`Page 19
`
`

`

`Notes
`to consolidated financial statements
`
`Accounting policies
`Fiscal year. Intel Corporation ("Intel" or "the Company") has a
`fiscal year that ends the last Saturday in December. Fiscal 1994 was
`a 53-week year and ended on December 31, 1994. Fiscal 1993 and
`1992, each 52-week years, ended on December 25 and 26, respec-
`tively. The next 53-week year will end on December 30, 2000.
`Basis of presentation. The consolidated financial statements include
`the accounts of Intel and its wholly owned subsidiaries. Significant
`intercompany accounts and transactions have been eliminated.
`Accounts denominated in foreign currencies have been remeasured
`into the functional currency in accordance with Statement of
`Financial Accounting Standards (SFAS) No. 52, "Foreign Currency
`Translation," using the U.S. dollar as the functional currency.
`Cash and cash equivalents. Cash and cash equivalents are highly
`liquid investments with insignificant interest rate risk and original
`maturities of three months or less.
`Investments. In 1994, the Company adopted SFAS No. 115,
`"Accounting for Certain Investments in Debt and Equity
`Securities," effective as of the beginning of fiscal 1994. This adop-
`tion had no material effect on the Company's financial statements.
`All of the Company's short- and long-term investments are clas-
`sified as available-for-sale as of the balance sheet date and are
`reported at fair value, with unrealized gains and losses recorded
`as a component of stockholders' equity.
`Fair values of financial instruments. Fair values of cash and cash
`equivalents, short-term investments and short-term debt approxi-
`mate cost due to the short period of time to maturity. Fair values of
`long-term investments, long-term debt, swaps, currency forward
`contracts and currency options are based on quoted market prices
`or pricing models using current market rates.
`Inventories. Inventories are stated at the lower of cost or market.
`Cost is computed on a currently adjusted standard basis (which
`approximates actual cost on a current average or first-in, first-out
`basis). Inventories at fiscal year-ends are as follows:
`
`(In millions)
`
`Materials and purchased parts
`
`Work in process
`
`Finished goods
`
`Total
`
`1994
`
`$ 345
`
`528
`
`296
`
`$1,169
`
`1993
`
`$ 216
`321
`
`301
`
`$ 838
`
`Property, plant and equipment. Property, plant and equipment
`are stated at cost. Depreciation is computed for financial reporting
`purposes principally by use of the straight-line method over the
`following estimated useful lives: machinery and equipment, 2-4
`years; land and buildings, 4-45 years.
`Deferred income on shipments to distributors. Certain of the
`Company's sales are made to distributors under agreements allow-
`ing price protection and/or right of return on merchandise unsold
`by the distributors. Because of frequent sales price reductions and
`
`rapid technological obsolescence in the industry, Intel defers recog-
`nition of such sales until the merchandise is sold by the distributors.
`Interest. Interest as well as gains and