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 27, 1998
OR
Transition report pursuant to Section 13 or 15(d) of the Securities
- ----- Exchange Act of 1934
For the transition period from to
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Commission File Number 0-6217
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INTEL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 94-1672743
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(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
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(Registrant's telephone number, including area code)
N/A
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(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 27, 1998
Common Stock, $.001 par value 1,680 million
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Intel Corporation
Consolidated Condensed Statements of Income (unaudited)
(in millions, except per share amounts)
<TABLE>
Three Months Ended Six Months Ended
------------------ ----------------
Jun. 27, Jun. 28, Jun. 27, Jun 28,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $ 5,927 $ 5,960 $11,928 $12,408
Costs and expenses:
Cost of sales 3,027 2,343 5,776 4,650
Research and development 623 575 1,218 1,156
Marketing, general and administrative 671 704 1,382 1,397
Purchased in-process research and
development -- -- 165 --
------- ------- ------- -------
Operating costs and expenses 4,321 3,622 8,541 7,203
------- ------- ------- -------
Operating income 1,606 2,338 3,387 5,205
Interest expense (8) (7) (15) (14)
Interest income and other, net 152 219 359 434
------- ------- ------- -------
Income before taxes 1,750 2,550 3,731 5,625
Provision for taxes 578 905 1,286 1,997
------- ------- ------- -------
Net income $ 1,172 $ 1,645 $ 2,445 $ 3,628
======= ======= ======= =======
Basic earnings per common share $ 0.69 $ 1.01 $ 1.47 $ 2.22
======= ======= ======= =======
Diluted earnings per common share $ 0.66 $ 0.92 $ 1.38 $ 2.02
======= ======= ======= =======
Cash dividends declared per
common share $ 0.00 $ 0.03 $ 0.03 $ 0.055
======= ======= ======= =======
Weighted average common shares
outstanding 1,691 1,635 1,666 1,636
Dilutive effect of:
Employee stock options 78 106 83 106
1998 Step-Up Warrants -- 56 23 56
------- ------- ------- -------
Weighted average common shares
outstanding, assuming dilution 1,769 1,797 1,772 1,798
======= ======= ======= =======
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE> 3
Item 1. Financial Statements (continued)
<TABLE>
Intel Corporation
Consolidated Condensed Balance Sheets Jun. 27, Dec. 27,
(in millions) 1998 1997
---- ----
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,887 $ 4,102
Short-term investments 5,522 5,630
Trading assets 289 195
Accounts receivable, net 3,126 3,438
Inventories:
Raw materials 250 255
Work in process 988 928
Finished goods 465 514
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1,703 1,697
------- -------
Deferred tax assets 665 676
Other current assets 176 129
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Total current assets 13,368 15,867
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Property, plant and equipment 20,303 18,127
Less accumulated depreciation (8,300) (7,461)
------- -------
Property, plant and equipment, net 12,003 10,666
Long-term investments 2,040 1,839
Other assets 1,007 508
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TOTAL ASSETS $28,418 $28,880
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt $ 132 $ 212
Long-term debt redeemable within one year 110 110
Accounts payable 1,092 1,407
Accrued compensation and benefits 883 1,268
Deferred income on shipments to distributors 391 516
Accrued advertising 362 500
Other accrued liabilities 1,108 842
Income taxes payable 176 1,165
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Total current liabilities 4,254 6,020
------- -------
Long-term debt 472 448
Deferred tax liabilities 1,248 1,076
Put warrants 711 2,041
Stockholders' equity:
Preferred stock -- --
Common stock and capital in excess
of par value 4,853 3,311
Retained earnings 16,664 15,926
Accumulated other comprehensive income 216 58
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Total stockholders' equity 21,733 19,295
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $28,418 $28,880
======= =======
</TABLE>
Certain 1997 amounts have been reclassified to conform to the 1998 presentation.
See Notes to Consolidated Condensed Financial Statements.
<PAGE> 4
Item 1. Financial Statements (continued)
Intel Corporation
Consolidated Condensed Statements of Cash Flows (unaudited)
(in millions)
<TABLE>
Six Months Ended
----------------
Jun. 27, Jun. 28,
1998 1997
---- ----
<S> <C> <C>
Cash flows provided by (used for) operating
activities:
Net income $ 2,445 $ 3,628
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,304 1,050
Net loss on retirements of property, plant and
equipment 89 23
Deferred taxes 105 81
Purchased in-process research and development 165 --
Changes in assets and liabilities:
Accounts receivable 337 (227)
Inventories 46 (150)
Accounts payable (332) 53
Accrued compensation and benefits (385) (191)
Income taxes payable (993) (444)
Tax benefit from employee stock plans 181 117
Other assets and liabilities (489) 193
------- -------
Total adjustments 28 505
------- -------
Net cash provided by operating activities 2,473 4,133
------- -------
Cash flows provided by (used for) investing
activities:
Additions to property, plant and equipment (2,206) (1,758)
Purchase of Chips and Technologies, Inc.,
net of cash acquired (321) --
Purchase of Digital Equipment Corporation
semiconductor operations (625) --
Purchases of available-for-sale investments (4,528) (3,380)
Sales of available-for-sale investments 46 93
Maturities and other changes in available-for-sale
investments 4,717 3,047
------- -------
Net cash (used for) investing activities (2,917) (1,998)
------- -------
Cash flows provided by (used for) financing
activities:
(Decrease) in short-term debt, net (80) (208)
Additions to long-term debt 34 68
Retirement of long-term debt -- (300)
Proceeds from sales of shares through employee
stock plans and other 259 178
Proceeds from exercise of 1998 Step-Up Warrants 1,620 26
Proceeds from sales of put warrants 27 141
Repurchase and retirement of Common Stock (3,531) (2,121)
Payment of dividends to stockholders (100) (82)
------- -------
Net cash (used for) financing activities (1,771) (2,298)
------- -------
Net (decrease) in cash and cash equivalents $(2,215) $ (163)
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 18 $ 21
Income taxes $ 1,989 $ 2,243
</TABLE>
Certain 1997 amounts have been reclassified to conform to the 1998 presentation.
See Notes to Consolidated Condensed Financial Statements.
<PAGE> 5
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 27, 1997. 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 27, 1997.
2. As of the second quarter of 1998, the Company adopted a new dividend
declaration schedule which will result in the Board of Directors
considering two dividend declarations in the first and third quarters of
the year and no declarations in the second and fourth quarters of the year.
The new declaration schedule does not change the Company's historical
quarterly dividend payment schedule. In keeping with this new schedule, no
dividend was declared in the second quarter of 1998, and on July 22, 1998
the Board of Directors declared a dividend of $.03 per share payable
September 1, 1998 to stockholders of record on August 7, 1998.
3. Interest and other income includes (in millions):
<TABLE>
Three Months Ended Six Months Ended
------------------ ----------------
Jun. 27, Jun. 28, Jun. 27, Jun. 28,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income $ 143 $ 142 $ 303 $ 269
Foreign currency gains 3 12 3 25
Other income (expense), net 6 65 53 140
------- ------- ------- -------
Total $ 152 $ 219 $ 359 $ 434
======= ======= ======= =======
</TABLE>
Other income for the six months ended June 27, 1998 consists primarily of
gains on sales of equity investments.
4. The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income," as of the first
quarter of 1998. SFAS No. 130 establishes new rules for the reporting and
display of comprehensive income and its components, however it has no
impact on the Company's net income or total stockholders' equity.
The components of comprehensive income, net of tax, are as follows
(in millions):
<TABLE>
Three Months Ended Six Months Ended
------------------ ----------------
Jun. 27, Jun. 28, Jun. 27, Jun. 28,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 1,172 $ 1,645 $ 2,445 $ 3,628
Change in unrealized gain (loss) on
available-for-sale investments 61 33 158 (53)
------- ------- ------- -------
Total $ 1,233 $ 1,678 $ 2,603 $ 3,575
======= ======= ======= =======
</TABLE>
Accumulated other comprehensive income presented on the accompanying
consolidated condensed balance sheets consists of the accumulated net
unrealized gain on available-for-sale investments.
<PAGE> 6
Item 1. Financial Statements (continued)
Intel Corporation, Notes to Consolidated Condensed Financial Statements
(continued)
5. Between December 27, 1997 and March 14, 1998, approximately 78 million of
the Company's 1998 Step-Up Warrants to purchase shares of Common Stock
were exercised at a price of $20.875 per share. Approximately 78 million
shares of Common Stock were issued, and the Company received proceeds of
approximately $1.6 billion. The expiration date of these warrants was
March 14, 1998.
6. During the first half of 1998, the Company repurchased 44.3 million shares
of Common Stock under the Company's authorized repurchase program at a cost
of $3.5 billion, including $920 million to purchase 12 million shares upon
the exercise of outstanding put warrants. During the first quarter of 1998,
the Company's Board of Directors approved an increase in the repurchase
program of up to 100 million additional shares, bringing the total
authorization to 380 million shares. As of June 27, 1998, after allowing
for the outstanding put warrants, approximately 113.8 million shares
remained available under the repurchase program. (See Item 2. Management's
Discussion and Analysis for subsequent activity.)
7. In a series of private placements during the 1991-1998 period, the Company
sold put warrants that entitle the holder of each warrant to sell to the
Company, by physical delivery, one share of Common Stock at a specified
price. Activity during the first half of 1998 is summarized as follows:
<TABLE>
Put Warrants Outstanding
------------------------
Cumulative Proceeds Number Potential
(in millions) Received Of Warrants Obligation
------------- -------- ----------- ----------
<S> <C> <C> <C>
December 27, 1997 $ 623 26.3 $2,041
Exercises -- (1.7) (127)
Expirations -- (9.8) (729)
------- ------- -------
March 28, 1998 $ 623 14.8 $1,185
Sales 27 5.0 387
Exercises -- (10.3) (793)
Expirations -- (1.0) (68)
------- ------- -------
June 27, 1998 $ 650 8.5 $ 711
======= ======= =======
</TABLE>
A total of 5 million put warrants were sold to commercial and investment
banks during May 1998. They expire on various dates between October and
November 1998 and have exercise prices ranging from $70 to $80 per share,
with an average exercise price of $77. The 8.5 million put warrants
outstanding on June 27, 1998 expire on various dates between August and
November 1998 and have exercise prices ranging from $70 to $95 per share,
with an average exercise price of $84. The amount related to the Company's
potential buyback obligation has been reclassified from Stockholders'
Equity and recorded as put warrants. 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.)
<PAGE> 7
Item 1. Financial Statements (continued)
Intel Corporation, Notes to Consolidated Condensed Financial Statements
(continued)
8. In January 1998, the Company acquired the outstanding shares of Chips and
Technologies, Inc., a supplier of graphics accelerator chips for mobile
computing products. The purchase price was approximately $430 million ($321
million in net cash). During the first quarter of 1998, the Company
recorded a nondeductible charge of $165 million for purchased in-process
research and development, representing the appraised value of products
still in the development stage that were not considered to have reached
technological feasibility and had no alternative future use.
In May 1998, the Company purchased the semiconductor operations of Digital
Equipment Corporation, including manufacturing facilities in Massachusetts
as well as development operations in Israel and Texas, for approximately
$625 million in cash, subject to certain adjustments. Assets acquired
consisted primarily of property, plant and equipment. Following the
completion of the purchase, all lawsuits between the companies were
dismissed with prejudice.
9. SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," was issued by the Financial Accounting Standards Board in
June 1998. The Standard will require the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives that are
not hedges must be adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of the hedge, changes in
the fair value of derivatives will either be offset against the change
in fair value of the hedged assets, liabilities, or firm commitments
through earnings, or recognized in other comprehensive income until the
hedged item is recognized in earnings. The change in a derivative's fair
value related to the ineffective portion of a hedge, if any, will be
immediately recognized in earnings. The Company expects to adopt this
Standard as of the beginning of its fiscal year 2000. The effect of
adopting the Standard is currently being evaluated, but is not expected
to have a material effect on the Company's financial position or results
of operations.
10. In November 1997, Intergraph Corporation ("Intergraph") filed suit in
U.S. District Court in Alabama generally alleging that Intel attempted
to coerce Intergraph into relinquishing certain patent rights and
alleging infringement on three Intergraph patents as well as violations
of antitrust laws and various state law claims. In April 1998, the Court
ordered Intel to continue to treat Intergraph as it does allegedly
similarly-situated customers. In June 1998, Intel answered the Amended
Complaint of Intergraph and filed counter claims against Intergraph for
infringement of seven patents covering various aspects of computer
system performance. Also in June, Intel filed a motion for summary
judgment on Intergraph's patent claims on the grounds that Intel is
licensed to use those patents. In July, the Company received a letter
stating that Intergraph believes that the patent damages will be
"several billion dollars by the time of trial." In addition, Intergraph
alleges that Intel's infringement is willful and that any damages awarded
should be trebled. The letter also stated that Intergraph believes that
antitrust, unfair competition and tort and contract damages will be
"hundreds of millions of dollars by the time of trial." The Company
disputes Intergraph's claims and intends to defend the lawsuit vigorously.
The Company is currently party to various legal proceedings, including
that noted above. While management, including internal counsel, currently
believes that the ultimate outcome of these proceedings will not have a
material adverse effect on the Company's financial position or overall
trends in results of operations, litigation is subject to inherent
uncertainties. Were an unfavorable ruling to occur, there exists the
possibility of a material adverse impact on the net income of the period
in which it occurs.
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations - Second Quarter of 1998 Compared to Second Quarter
of 1997
Revenues for Q2 1998 were essentially flat compared to Q2 1997. Processor unit
volumes increased compared to Q2 1997, offset by lower processor prices and
decreasing revenues from sales of related board-level products, as well as
lower revenues from sales of flash memory and embedded control products.
Revenues from networking and graphics products increased. Unit volumes of
processors based on the P6 micro-architecture** increased and were partially
offset by lower volumes of Pentium(R) family processors.
Cost of sales increased by 29% from Q2 1997 to Q2 1998 due to the shift in
product mix to the Pentium(R) II processor, reflecting the cost of purchased
components for the Single Edge Contact ("SEC") cartridge, higher unit volumes,
and higher fixed costs. In addition, in Q2 1998 reductions in product costs on
the highest volume processors caused inventories to be written-down to the new
lower costs. Gross margin decreased to 49% in Q2 1998 from 61% in Q2 1997
primarily due to the lower processor prices, the impact of the SEC cartridge,
the inventory write-downs and higher fixed costs.
For Q2 1998, sales of microprocessors based on the P6 micro-architecture
represented a majority of the Company's revenues and a substantial majority of
its gross margin. For Q2 1997, these products represented a significant and
growing portion of both revenues and gross margin. Sales of Pentium family
microprocessors represented a significant but declining portion of the
Company's revenues and gross margin in Q2 1998, and they constituted a majority
of revenues and a substantial majority of gross margin in Q2 1997. No other
product group represented a significant portion of the Company's revenues or
gross margin during Q2 1998 or Q2 1997.
Operating expenses were essentially flat between Q2 1997 and Q2 1998. Research
and development spending on process and product development programs increased
while Intel Inside(R) and profit dependent expenses decreased. Operating
expenses were 21.8% of revenues in Q2 of 1998 and 21.5% in Q2 1997.
Interest and other income for Q2 1998 decreased by $67 million over the prior
year. Net gains associated with the Company's equity investments and foreign
currency gains were lower than in Q2 1997.
The provision for taxes for Q2 1998 decreased by $327 million over the prior
year primarily due to a decrease in pretax income in Q2 1998. The effective
tax rate decreased from 35.5% for Q2 1997 to 33% for Q2 1998.
Results of Operations - First Half of 1998 Compared to First Half of 1997
Revenues for the first half of 1998 decreased by 4% compared to the first half
of 1997, primarily due to lower processor prices and decreasing revenues from
sales of related board-level products, as well as lower revenues from sales of
flash memory and embedded control products. Revenues from networking and
graphics products increased. Processor unit volumes increased in comparison to
the first half of 1997, with higher volumes of processors based on the P6
micro-architecture partially offset by lower volumes of Pentium family
processors.
Cost of sales rose by 24% from the first half of 1997 to the first half of 1998
due to the shift in product mix to the Pentium II processor, reflecting the
cost of purchased components for the SEC cartridge, higher unit volumes, the
inventory write-downs due to cost reductions, and higher fixed costs. Gross
margin decreased to 52% in the first half of 1998 from 63% in the first half
1997 primarily due to the lower processor prices, the impact of the SEC
cartridge, the inventory write-downs and higher fixed costs.
- -----------------
** The P6 micro-architecture products include the Pentium(R) II, Pentium(R) II
Xeon(TM), Pentium(R) Pro and Intel(R) Celeron(TM) processors.
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Results of Operations - First Half of 1998 Compared to First Half of 1997
(continued)
For the first half of 1998, sales of microprocessors based on the P6
micro-architecture represented a significant and growing portion of the
Company's revenues and a majority of its gross margin. For first half of 1997,
these products represented a significant and growing portion of both revenues
and gross margin. Sales of Pentium family microprocessors represented a
significant but declining portion of the Company's revenues and gross margin
in the first half of 1998, and they constituted a majority of revenues and a
substantial majority of gross margin in the first half of 1997. No other
product group represented a significant portion of the Company's revenues or
gross margin during the first half of 1998 or 1997.
Operating expenses rose by a total of $212 million from the first half of
1997 to the first half of 1998, and included a one-time charge of $165 million
for in-process research and development related to the acquisition of Chips
and Technologies, Inc. which was completed in the first quarter of 1998. The
remaining increase was primarily due to higher levels of spending on product
development programs. Excluding the one-time charge, operating expenses were
21.8% of revenues in the first half of 1998 versus 20.6% in the first half of
1997.
Interest and other income for the first half of 1998 decreased by $75 million
over the prior year. Net gains associated with the Company's equity investments
and foreign currency gains were lower than in the first half of 1997, partially
offset by interest on a higher average investment balance.
The provision for taxes for the first half of 1998 decreased by $711 million
over the prior year primarily due to a decrease in pretax income. The effective
tax rate decreased from 35.5% for the first half of 1997 to 33% for the first
half of 1998, excluding the impact of the nondeductible charge related to the
acquisition of Chips and Technologies, Inc.
Financial Condition
The Company's financial condition remains very strong. As of June 27, 1998,
cash, trading assets and short- and long-term investments totaled $9.7 billion,
down from $11.8 billion at December 27, 1997. The Company's other sources of
liquidity include authorized commercial paper borrowings of up to $700 million.
The Company also maintains the authority to issue an aggregate of approximately
$1.4 billion in debt, equity and other securities under Securities and Exchange
Commission shelf registration statements.
Major sources of cash during the first half of 1998 included cash generated
from operations, which totaled $2.5 billion, and approximately $1.6 billion
received upon the exercise of the 1998 Step-Up Warrants. Major uses of cash
during the first half of 1998 included capital spending of $2.2 billion for
property, plant and equipment, primarily for microprocessor manufacturing
capacity, $3.5 billion to buy back 44.3 million shares of Common Stock and $946
million in net cash paid for the purchases of Chips and Technologies, Inc. and
the semiconductor manufacturing operations of Digital Equipment Corporation
("Digital").
The Company's five largest customers accounted for approximately 41% of net
revenues for the six month period ended June 27, 1998. At June 27, 1998, these
customers accounted for approximately 40% of net accounts receivable.
Key financing activities in the first half of 1998 included the repurchase of
44.3 million shares of Common Stock for $3.5 billion as part of the Company's
authorized stock repurchase program, including $920 million for the purchase
of 12 million shares upon the exercise of outstanding put warrants. The Company
also sold 5 million put warrants, receiving proceeds of $27 million, while 10.8
million previously outstanding put warrants expired unexercised. From June 27,
1998 through August 5, 1998, the Company repurchased 4 million shares of its
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Financial Condition (continued)
Common Stock at a cost of $336 million and sold 0.5 million put warrants. As of
August 5, 1998, Intel had the potential obligation to repurchase 9 million
shares of Common Stock at an aggregate cost of $751 million under outstanding
put warrants. The exercise price of these outstanding warrants ranged from $70
to $95 per share, with an average exercise price of $83 per share. During the
first quarter of 1998, the Company's Board of Directors approved an increase of
up to 100 million additional shares in the Company's repurchase program. This
increase brings the total authorization to 380 million shares. As of August 5,
1998, 109.3 million shares remained available for repurchase under the
repurchase authorization, after allowing for the 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 outlook section contains a number of forward-looking statements, all of
which are based on current expectations. Actual results may differ materially.
These statements do not reflect the potential impact of any future mergers or
acquisitions.
The Company expects revenue for the third quarter of 1998 to be flat to
slightly up from the second quarter revenue of $5.9 billion. Consistent with
the Company's earlier expectations, revenue in the second half of 1998 is
expected to be greater than revenue in the first half. Revenue is partly a
function of the mix of microprocessor types and speeds, purchased components
and other products, all of which are difficult to forecast. Because of the
large price difference between types of microprocessors, this mix affects the
average price Intel will realize and has a large impact on Intel's revenues.
Revenue is also subject to the rate of growth of the computing industry and the
impact of economic conditions in various geographic regions.
Intel's strategy is to introduce ever-higher performance microprocessors
tailored for the different segments of the worldwide computer market, using a
tiered branding approach. To implement this strategy, the Company plans to
cultivate new businesses and continue to 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 each computer
market segment. In line with this strategy, the Company is seeking to develop
higher performance microprocessors for each market segment, including servers,
workstations, high-end business PCs, the basic PC and other product lines.
During the second quarter, the Company introduced higher performance versions
of the Pentium II and Celeron(TM) brand processors and began shipping the
Pentium(R) II Xeon(TM) brand processor in support of its launch on June 29,
1998. The Company may continue to reduce microprocessor prices at such times as
it deems appropriate in order to bring its technology to market within each
relevant market segment.
The Company expects the gross margin percentage in the third quarter of 1998
to be up a couple of points from 49 percent in the second quarter. Intel's
gross margin expectation for the full year 1998 is unchanged at 52 percent,
plus or minus a few points. The Company's goal continues to be to grow gross
margin dollars, and the Company believes that over the long-term, the gross
margin percentage will be 50 percent plus or minus a few points. Intel's gross
margin percentage in any period varies depending on the level of revenues and
on the mix of types and speeds of microprocessors sold, as well as the mix of
microprocessors and purchased components. The Pentium II processor is packaged
with purchased components in the SEC cartridge, and the inclusion of purchased
components tends to increase unit costs. Accordingly, sales of the Pentium II
processor increase absolute dollar margins but tend to lower the gross margin
percentage. Various other factors (including unit volumes and costs, yield
issues associated with production at factories, ramp of new technologies,
excess or obsolete inventory, variations in inventory valuation 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.
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Outlook (continued)
The Company has expanded manufacturing capacity over the last few years and
continues to plan capacity based on the assumed continued success of its
strategy and the acceptance of its products in specific market segments. The
Company currently expects capital expenditures for 1998 to be approximately
$4.5 to $4.7 billion, flat to slightly up from $4.5 billion in 1997, but down
from previous guidance for the year of approximately $5.0 billion. The
acceleration of 0.18 micron manufacturing process technology in 1999 allows
the Company to reduce spending on current generation technology. The current
estimate includes the acquisition of the capital assets of Digital's
semiconductor manufacturing operations. This spending plan is dependent upon
expectations regarding manufacturing efficiencies, delivery times of various
machines and construction schedules for new facilities. Depreciation for 1998
is expected to be approximately $2.9 billion and depreciation in the third
quarter of 1998 is expected to be approximately $760 million.
Spending on research and development and marketing, general and administrative
expenses in the third quarter of 1998 is expected to be approximately 3 to 5
percent higher than the $1.3 billion in the second quarter of 1998. Expense
projections for the third quarter of 1998 incorporate expected higher spending
for research and development, merchandising and Intel Inside(R), and are subject
in part to changes in revenue and profit dependent expenses. Research and
development spending for 1998 is expected to be approximately $2.8 billion,
including the approximately $165 million for in-process research and
development associated with the acquisition of Chips and Technologies, Inc.
in the first quarter.
In an effort to control expenses, at the end of the first quarter of this year
the Company announced plans to reduce headcount by approximately 3,000 people
over a 6 month period. The timeframe to complete the reduction has been
extended by one quarter to the end of the year.
The Company expects interest and other income for the third quarter of 1998 to
be approximately $145 million, assuming no significant changes in interest
rates or expected cash balances, and no unanticipated items.
The tax rate for the remaining quarters of 1998 is expected to be 33%.
Intel has established a team to address the issues raised by the introduction
of the Single European Currency (Euro) for initial implementation as of
January 1, 1999 and during the transition period through to January 1, 2002.
Intel expects that its internal systems that will be affected by the initial
introduction of the Euro will be Euro capable by January 1, 1999, and does not
expect the costs of system modifications to be material. The Company does not
presently expect that introduction and use of the Euro will materially affect
the Company's foreign exchange and hedging activities, or the Company's use
of derivative instruments, or will result in any material increase in costs
to the Company. While Intel will continue to evaluate the impact of the Euro
introduction over time, based on currently available information, management
does not believe that the introduction of the Euro currency will have a
material adverse impact on the Company's financial condition or overall trends
in results of operations.
Like many other companies, the year 2000 computer issue creates risks for
Intel. If internal systems do not correctly recognize and process date
information beyond the year 1999, there could be an adverse impact on the
Company's operations. There are two other related issues which could also lead
to incorrect calculations or failures: i) some systems' programming assigns
special meaning to certain dates, such as 9/9/99, and ii) the year 2000 is a
leap year. To address these year 2000 issues with its internal systems, the
Company has initiated a comprehensive program which is designed to deal with
the most critical systems first. Assessment and remediation are proceeding in
tandem, and the Company currently plans to have changes to critical systems
completed and tested by mid-1999. These activities are intended to encompass
all major categories of systems in use by the Company, including manufacturing,
sales, finance and human resources. Intel is also actively working with
critical suppliers of products and services to determine that the suppliers'
operations and the products and services they provide are year 2000 capable
<PAGE> 12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Outlook (continued)
or to monitor their progress toward year 2000 capability. In addition, the
Company has commenced work on various types of contingency planning to
address potential problem areas with internal systems and with suppliers and
other third parties. It is expected that assessment, remediation and
contingency planning activities will be on-going throughout 1998 and 1999 with
the goal of appropriately resolving all material internal systems and third
party issues.
The Company also has a program to assess the capability of its products to
handle the year 2000. To assist customers in evaluating their year 2000 issues,
the Company has developed a list which indicates the capability of Intel's
current products, and certain products no longer being produced, to handle the
year 2000. Products are assigned to one of five categories as defined by the
Company: "Year 2000 Capable", "Year 2000 Capable" with update, not "Year 2000
Capable", under evaluation, or will not test. The list is located at the
Company's Year 2000 support website and is periodically updated as analysis on
additional products is completed. All Intel processors are "Year 2000 Capable."
However, the assessment of whether a complete system will operate correctly
depends on the BIOS capability and software design and integration, and for
many end-users this will include BIOS and software provided by companies other
than Intel. As described more fully at the support website, Intel offers a
"Year 2000 Capable" Limited Warranty on certain of its current products. Except
as specifically provided for in the Limited Warranty, the Company does not
believe it is legally responsible for costs incurred by customers related to
ensuring their year 2000 capability. Nevertheless, the Company is incurring
various costs to provide customer support and customer satisfaction services
regarding Year 2000 issues, and it is anticipated that these expenditures will
continue through 1999 and thereafter. As used by Intel, "Year 2000 Capable"
means that when used properly and in conformity with the product information
provided by Intel, the Intel product will accurately store, display, process,
provide, and/or receive data from, into, and between the twentieth and
twenty-first centuries, including leap year calculations, provided that all
other technology used in combination with the Intel product properly exchanges
date data with the Intel product.
The costs incurred to date related to these programs are less than $20 million.
The Company currently expects that the total cost of these programs, including
both incremental spending and redeployed resources, will not exceed $250
million. The total cost estimate does not include potential costs related to
any customer or other claims or the cost of internal software and hardware
replaced in the normal course of business. In some instances, the installation
schedule of new software and hardware in the normal course of business is being
accelerated to also afford a solution to year 2000 capability issues. The total
cost estimate is based on the current assessment of the projects and is subject
to change as the projects progress.
Based on currently available information, management does not believe that the
year 2000 matters discussed above related to internal systems or products sold
to customers will have a material adverse impact on the Company's financial
condition or overall trends in results of operations; however, it is uncertain
to what extent the Company may be affected by such matters. In addition, there
can be no assurance that the failure to ensure year 2000 capability by a
supplier or another third party would not have a material adverse effect on the
Company.
The Company is currently party to various legal proceedings. Although
litigation is subject to inherent uncertainties, management, including internal
counsel, does not believe that the ultimate outcome of these legal proceedings
will have a material adverse effect on the Company's financial position or
overall trends in results of operations. However, were an unfavorable ruling to
occur in any specific period, there exists the possibility of a material
adverse impact on the net income of that period. Management believes,
given the Company's current liquidity and cash and investments balances, that
even an adverse judgment would not have a material impact on cash and
investments or liquidity.
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Outlook (continued)
The Company's future results of operations and the other forward-looking
statements contained in this outlook, in particular the statements regarding
revenues, pricing, new product development, gross margin, capital spending,
depreciation, research and development expenses, marketing and general and
administrative expenses, headcount reductions, net interest and other, tax
rate, conversion to the Euro, year 2000 issues and legal proceedings 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: changes in customer order patterns, including
changes in customer and channel inventory levels; competitive factors, such as
rival chip architectures and manufacturing technologies, competing
software-compatible microprocessors and acceptance of new products in specific
market segments; pricing pressures; development and timing of introduction of
compelling software applications; continued success in technological advances,
including development and implementation of new processes and strategic
products for specific market segments; execution of the manufacturing ramp;
costs associated with excess manufacturing capacity; the ability to grow new
businesses and successfully integrate and operate any acquired businesses;
unanticipated costs or other adverse effects associated with processors and
other products containing errata (deviations from published specifications);
impact on the Company's business due to internal systems or systems of
suppliers and other third parties adversely affected by year 2000 problems;
claims due to year 2000 issues allegedly related to the Company's products
or year 2000 remediation efforts; and litigation involving antitrust,
intellectual property, consumer and other 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 and profits are all influenced by a number of factors,
as discussed above, all of which are inherently difficult to forecast.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Reference is made to Part II, Item 7A, Quantitative and Qualitative Disclosures
About Market Risk, in the Registrant's Annual Report on Form 10-K for the year
ended December 27, 1997 and to the subheading "Financial Market Risks" under
the heading "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on page 23 of the Registrant's 1997 Annual Report to
Stockholders.
<PAGE> 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Digital Equipment Corporation v. Intel,
U.S. District Court, District of Mass. (97-40080)
-------------------------------------------------
Effective as of May 19, 1998, all lawsuits between the companies have been
dismissed with prejudice.
Intergraph Corporation v. Intel
U.S. District Court, Northern District of Alabama, Northeastern Division
(CV-97-N-3023-NE)
-----------------
In June of this year, Intel answered the Amended Complaint of Intergraph and
filed counter claims against Intergraph for infringement of seven patents
covering various aspects of computer system performance. Also in June, Intel
filed a motion for summary judgment on Intergraph's patent claims on the
grounds that Intel is licensed to use those patents. In July, the Company
received a letter stating that Intergraph believes that the patent damages
will be "several billion dollars by the time of trial." In addition, Intergraph
alleges that Intel's infringement is willful and that any damages awarded
should be trebled. The letter also stated that Intergraph believes that
antitrust, unfair competition and tort and contract damages will be "hundreds
of millions of dollars by the time of trial." The Company disputes
Intergraph's claims and intends to defend the lawsuit vigorously. Although
litigation is subject to inherent uncertainties and the ultimate outcome of
this lawsuit cannot be determined at this time, management, including internal
counsel, does not believe that the ultimate outcome will have a material
adverse effect on Intel's financial position or overall trends in results of
operations.
Item 2. Changes in Securities
(c) Unregistered sales of equity securities.
Reference is made to the information on sales of put warrants appearing in
Note 7 under the heading "Intel Corporation, Notes to Consolidated Condensed
Financial Statements" in Part I, Item 1 hereof. All such transactions are
exempt from registration under Section 4 (2) of the Securities Act of 1933.
Each transaction was privately negotiated and each offeree and purchaser was
an accredited investor/qualified institutional buyer. No public offering or
public solicitation was used by the registrant in the placement of these
securities.
<PAGE> 15
Item 4. Submission of Matters to a Vote of Security Holders
At Intel Corporation's Annual Meeting of Stockholders held on May 20, 1998, the
following proposals were adopted or rejected by the margins indicated.
<TABLE>
Number of Shares
Voted for Withheld
--------- --------
<S> <C> <C>
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 1,492,905,143 3,466,432
J. Browne 1,492,774,105 3,597,470
W. Chen 1,492,957,078 3,414,497
A. Grove 1,492,959,473 3,412,102
J. Guzy 1,492,834,624 3,536,951
G. Moore 1,492,921,584 3,449,991
A. Rock 1,492,797,748 3,573,827
J. Shaw 1,492,802,914 3,568,661
L. Vadasz 1,492,794,176 3,577,399
D. Yoffie 1,492,785,113 3,586,462
C. Young 1,492,836,998 3,534,577
</TABLE>
<TABLE>
Number of Shares
Voted For Voted Withheld No Vote
--------- ----- -------- -------
Against
-------
<S> <C> <C> <C> <C>
2. To ratify the appointment 1,492,221,795 2,062,984 2,086,386 411
of the accounting firm of
Ernst & Young LLP as
independent auditors for the
Company for the current year.
</TABLE>
<TABLE>
Number of Shares
Voted For Voted Withheld No Vote
--------- Against -------- -------
-------
<S> <C> <C> <C> <C>
3. To consider a stockholder 101,703,872 859,335,577 64,887,177 470,444,950
proposal to endorse the CERES
Principles.
</TABLE>
Item 5. Other Information
(1) As announced in a press release dated May 29, 1998, the Company has
notified customers of a change in the production schedule for the
Merced(TM) processor. According to the newly communicated schedule,
sample volumes of the 64-bit processor are now expected in 1999, with
planned production volumes moving from 1999 to mid-2000. The Merced
processor will be the first processor in Intel's IA-64 product family.
Products based on the IA-64 architecture are expected to be initially
targeted at the high-performance server and workstation market segments.
(2) On July 22, 1998 the Board of Directors approved an amendment to the
Company's Bylaws to revise the "advance notice" bylaw governing the
requirement of prior notice for stockholder proposals being submitted
for Annual and Special meetings. This revision reflects recent amendments
to Rules 14a-4 and 14a-8 under the Securities Exchange Act of 1934. The
amended and restated Bylaws are attached hereto as Exhibit 3.1.
<PAGE> 16
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Intel Corporation Bylaws as amended.
10.1 Intel Corporation 1984 Stock Option Plan as amended and restated,
effective July 16, 1997.
10.2 Intel Corporation 1988 Executive Long Term Stock Option Plan as amended
and restated, effective July 16, 1997.
12.1 Statement setting forth the computation of ratios of earnings to fixed
charges.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
Intel filed a report on Form 8-K, dated April 14, 1998, relating to
financial information for Intel Corporation for the quarter ended
March 28, 1998 and forward-looking statements relating to 1998, the
2nd Quarter of 1998 and the 2nd Half of 1998, as presented in a press
release of April 14, 1998.
<PAGE> 17
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 10, 1998 By: /s/ Andy D. Bryant
-----------------------
Andy D. Bryant
Vice President, Chief Financial
Officer and Principal Accounting
Officer
Exhibit 3.1
INTEL CORPORATION
BYLAWS
ARTICLE I
Offices
-------
Section 1. Registered Office.
--------- ----------------- The registered office of the
corporation in the State of Delaware shall be in the City of Wilmington,
County of New Castle.
Section 2. Other Offices.
--------- ------------- The corporation shall also have and
maintain an office or principal place of business at 2200 Mission College
Boulevard, Santa Clara, County of Santa Clara, State of California, and may
also have offices at such other places, both within and without the State of
Delaware, as the Board of Directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
Stockholders' Meetings
----------------------
Section 1. Place of Meetings.
--------- ----------------- Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 of Article I hereof.
Section 2. Annual Meetings.
--------- --------------- The annual meetings of the
stockholders of the corporation, commencing with the year 1990, for the purpose
of election of directors and for such other business as may lawfully come
before it, shall be held on such date and at such time as may be designated
from time to time by the Board of Directors, but in no event more than fifteen
months after the date of the preceding annual meeting.
Section 3. Special Meetings.
--------- ---------------- Special meetings of the stockholders
of the corporation may be called, for any purpose or purposes, by the Chairman
of the Board or the President or the Board of Directors at any time.
Section 4. Notice of Meetings.
--------- ------------------
(a) Except as otherwise provided by law or the Certificate of
Incorporation, written notice of each meeting of stockholders, specifying the
place, date and hour and purpose or purposes of the meeting, shall be given not
less than ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote thereat, directed to his address as it appears
upon the books of the corporation.
(b) If at any meeting action is proposed to be taken which, if
taken, would entitle stockholders fulfilling the requirements of section
262(d) of the Delaware General Corporation Law to an appraisal of the fair
value of their shares, the notice of such meeting shall contain a statement
of that purpose and to that effect and shall be accompanied by a copy of that
statutory section.
(c) When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken unless the
adjournment is for more than thirty days, or unless after the adjournment a
new record date is fixed for the adjourned meeting, in which event a notice
of the adjourned meeting shall be given to each stockholder of record
<PAGE>
entitled to vote at the meeting.
(d) Notice of the time, place and purpose of any meeting of
stockholders may be waived in writing, either before or after such meeting, and
to the extent permitted by law, will be waived by any stockholder by his
attendance thereat, in person or by proxy. Any stockholder so waiving notice
of such meeting shall be bound by the proceedings of any such meeting in all
respects as if due notice thereof had been given.
(e) Unless and until voted, every proxy shall be revocable at the
pleasure of the person who executed it or of his legal representatives or
assigns, except in those cases where an irrevocable proxy permitted by statute
has been given.
Section 5. Quorum and Voting.
--------- -----------------
(a) At all meetings of stockholders, except where otherwise
provided by law, the Certificate of Incorporation, or these Bylaws, the
presence, in person or by proxy duly authorized, of the holders of a majority
of the outstanding shares of stock entitled to vote shall constitute a quorum
for the transaction of business. Shares, the voting of which at said meeting
have been enjoined, or which for any reason cannot be lawfully voted at such
meeting, shall not be counted to determine a quorum at said meeting. In the
absence of a quorum, any meeting of stockholders may be adjourned, from time
to time, by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting. At such
adjourned meeting at which a quorum is present or represented, any business
may be transacted which might have been transacted at the original meeting.
The stockholders present at a duly called or convened meeting, at which a
quorum is present, may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
(b) Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, all action taken by the holders of a majority
of the voting power represented at any meeting at which a quorum is present
shall be valid and binding upon the corporation.
Section 6. Voting Rights.
--------- -------------
(a) Except as otherwise provided by law, only persons in whose
names shares entitled to vote stand on the stock records of the corporation
on the record date for determining the stockholders entitled to vote at said
meeting shall be entitled to vote at such meeting. Shares standing in the
names of two or more persons shall be voted or represented in accordance with
the determination of the majority of such persons, or, if only one of such
persons is present in person or represented by proxy, such person shall have
the right to vote such shares and such shares shall be deemed to be represented
for the purpose of determining a quorum.
(b) Every person entitled to vote or execute consents shall have
the right to do so either in person or by an agent or agents authorized by a
written proxy executed by such person or his duly authorized agent, which proxy
shall be filed with the Secretary of the corporation at or before the meeting
at which it is to be used. Said proxy so appointed need not be a stockholder.
No proxy shall be voted on after three years from its date unless the proxy
provides for a longer period.
Section 7. List of Stockholders.
--------- -------------------- The officer who has charge of
the stock ledger of the corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at said meeting, arranged in alphabetical order, showing the
address of and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at
least ten days prior to the meeting, either at a place within the city where
the meeting is to be held and which place shall be specified in the notice of
the meeting, or, if not specified, at the place where said meeting is to be
held, and the list shall be produced and kept at the time and place of meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
<PAGE>
Section 8. Action Without Meeting.
--------- ---------------------- Unless otherwise provided in
the Certificate of Incorporation, any action required by statute to be taken
at any annual or special meeting of stockholders of the corporation, or any
action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without
a vote, if a consent or consents in writing, setting forth the action so taken,
are signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. To be effective, a written consent must be delivered to the
corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to a corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. Every written consent
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated consent delivered in
the manner required by this Section to the corporation, written consents signed
by a sufficient number of holders to take action are delivered to the
corporation in accordance with this Section. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
Section 9. Nominations and Stockholder Business.
--------- ------------------------------------
(a) Nominations of persons for election to the Board of Directors
of the Corporation and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (a) pursuant to
the Corporation's notice of meeting, (b) by or at the direction of the Board of
Directors, or (c) by any stockholder of the Corporation who is a stockholder of
record at the time of giving of notice provided for in this Section 9, who is
entitled to vote at the meeting and who complied with the notice procedures set
forth in this Section 9.
(b) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to this Section 9, the
stockholder must have given timely notice thereof in writing to the Secretary
of the Corporation, and such business must be a proper subject for stockholder
action under the Delaware General Corporation Law. To be timely, a
stockholder's notice shall be delivered to the secretary at the principal
executive offices of the Corporation not less than 45 days nor more than 120
days prior to the date on which the Corporation first mailed its proxy
materials for the prior year's annual meeting of stockholders; provided,
however, that in the event that the date of the annual meeting is advanced by
more than 30 days or delayed (other than as a result of adjournment) by more
than 30 days from the anniversary of the previous year's annual meeting,
notice by the stockholder to be timely must be delivered not later than the
close of business on the later of the 60th day prior to such annual meeting or
the 10th day following the day on which public announcement of the date of such
meeting is first made. Such stockholder's notice shall set forth (a) as to
each person whom the stockholder proposes to nominate for election or
reelection as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (including
such person's written consent to being named in the proxy statement as a
nominee and to serving as a director if elected); (b) as to any other business
that the stockholder proposes to bring before the meeting, a brief description
of the business desired to be brought before the meeting, the reasons for
conducting such business at the meting and any material interest in such
business of such stockholder and the beneficial owner, if any, on whose behalf
the proposal is made; and (c) as to the stockholder giving the notice and the
beneficial owners if any on whose behalf the nomination or proposal is made
the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, and (ii) the class and
number of shares of the Corporation which are owned beneficially and of record
by such stockholder and such beneficial owner.
(c) Notwithstanding anything in this Section 9 to the contrary,
in the event that the number of directors to be elected to the Board of
Directors of the Corporation is increased and there is no public announcement
<PAGE>
specifying the size of the increased Board of Directors made by the
Corporation at least 70 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this Section 9 shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary
at the principal executive offices of the Corporation not later than the close
of business on the 10th day following the day on which such public announcement
is first made by the Corporation.
(d) Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting
by or at the direction of the Board of Directors or (b) by any stockholder
of the Corporation who is a stockholder of record at the time of giving of
notice provided for in this section, who is entitled to vote at the meeting and
who complies with the notice procedures set forth in this section. Nominations
by stockholders of persons for election to the Board of Directors may be made
at such a special meeting of Stockholders if the stockholder's notice required
by this section shall be delivered to the secretary at the principal executive
offices of the Corporation not earlier than the 120th day prior to such special
meeting and not later than the close of business on the later of the 60th day
prior to such special meeting or the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Board of Directors to be elected at such meeting.
(e) Only those persons who are nominated in accordance with the
procedures set forth in this section shall be eligible for election as
directors at any meeting of stockholders. Only such business shall be
conducted at a meeting of stockholders as shall have been brought before the
meeting in accordance with the procedures set forth in this section. The
chairman of the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made
in accordance with the procedures set forth in this section and, if any
proposed nomination or business is not in compliance with this section, to
declare that such defective proposal shall be disregarded.
(f) For purposes of this section, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant
to Section 9 13, 14 or 15(d) of the Exchange Act.
(h) Notwithstanding the foregoing provisions of this Section 9,
a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 9. Nothing in this Section 9 shall be
deemed to affect any rights of stockholders to request inclusion of proposals
in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange
Act.
ARTICLE III
Directors
---------
Section 1. Number and Term of Office.
--------- ------------------------- The number of directors
which shall constitute the whole of the Board of Directors shall be twelve
(12). With the exception of the first Board of Directors, which shall be
elected by the incorporator, and except as provided in Section 3 of this
Article III, the directors shall be elected by a plurality vote of the shares
represented in person or by proxy, at the stockholders annual meeting in each
year and entitled to vote on the election of directors. Elected directors
shall hold office until the next annual meeting and until their successors
shall be duly elected and qualified. Directors need not be stockholders. If,
for any cause, the Board of Directors shall not have been elected at an annual
meeting, they may be elected as soon thereafter as convenient at a special
meeting of the stockholders called for that purpose in the manner provided in
these Bylaws.
<PAGE>
Section 2. Powers.
--------- ------ The powers of the corporation shall be
exercised, its business conducted and its property controlled by or under
the direction of the Board of Directors.
Section 3. Vacancies.
--------- --------- Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, although less than a quorum, or
by a sole remaining director, and each director so elected shall hold office
for the unexpired portion of the term of the director whose place shall be
vacant, and until his successor shall have been duly elected and qualified. A
vacancy in the Board of Directors shall be deemed to exist under this Section
in the case of the death, removal or resignation of any director, or if the
stockholders fail at any meeting of stockholders at which directors are to be
elected (including any meeting referred to in Section 4 below) to elect the
number of directors then constituting the whole Board.
Section 4. Resignations and Removals.
--------- -------------------------
(a) Any director may resign at any time by delivering his written
resignation to the Secretary, such resignation to specify whether it will be
effective at a particular time, upon receipt by the Secretary or at the
pleasure of the Board of Directors. If no such specification is made, it
shall be deemed effective at the pleasure of the Board of Directors. When one
or more directors shall resign from the Board, effective at a future date, a
majority of the directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
director so chosen shall hold office for the unexpired portion of the term of
the director whose place shall be vacated and until his successor shall have
been duly elected and qualified.
(b) Except as provided in Section 141 of the Delaware General
Corporation Law, at a special meeting of stockholders called for the purpose
in the manner hereinabove provided, the Board of Directors, or any individual
director, may be removed from office, with or without cause, and a new director
or directors elected by a vote of stockholders holding a majority of the
outstanding shares entitled to vote at an election of directors.
Section 5. Meetings.
--------- --------
(a) The annual meeting of the Board of Directors shall be held
immediately after the annual stockholders' meeting and at the place where such
meeting is held or at the place announced by the Chairman at such meeting. No
notice of an annual meeting of the Board of Directors shall be necessary and
such meeting shall be held for the purpose of electing officers and transacting
such other business as may lawfully come before it.
(b) Except as hereinafter otherwise provided, regular meetings of
the Board of Directors shall be held in the office of the corporation required
to be maintained pursuant to Section 2 of Article I hereof. Regular meetings
of the Board of Directors may also be held at any place within or without the
State of Delaware which has been designated by resolutions of the Board of
Directors or the written consent of all directors. Notice of regular meetings
of the directors is hereby dispensed with and no notice whatever of any such
meetings need be given.
(c) Special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
Chairman of the Board, the President or by any two of the directors.
(d) Written notice of the time and place of all special meetings
of the Board of Directors shall be delivered personally to each director or
sent by telegram at least 24 hours before the start of the meeting, or sent by
first class mail at least 72 hours before the start of the meeting. Notice of
any meeting may be waived in writing at any time before or after the meeting
and will be waived by any director by attendance thereat.
Section 6. Quorum and Voting.
--------- -----------------
(a) A quorum of the Board of Directors shall consist of a majority
<PAGE>
of the exact number of directors fixed from time to time in accordance with
Section 1 of Article III of these Bylaws, but not less than one; provided,
however, at any meeting whether a quorum be present or otherwise, a majority of
the directors present may adjourn from time to time until the time fixed for
the next regular meeting of the Board of Directors, without notice other than
by announcement at the meeting.
(b) At each meeting of the Board at which a quorum is present,
all questions and business shall be determined by a vote of a majority of the
directors present, unless a different vote be required by law, the Certificate
of Incorporation, or these Bylaws.
(c) Notwithstanding any of the foregoing, any action stated in
any Rights Agreement between this Corporation and the rights agent appointed
thereunder from time to time, as such Rights Agreement may be entered into or
adopted by this Corporation and amended from time to time (the "Rights
Agreement") to be taken by the Board of Directors after a Person has become an
Acquiring Person shall require the presence in office of Continuing Directors
and the concurrence of a majority of the Continuing Directors. Capitalized
terms in this paragraph shall have the meanings indicated in the Rights
Agreement.
(d) Any member of the Board of Directors, or of any committee
thereof, may participate in a meeting by means of conference telephone or
similar communication equipment by means of which all persons participating
in the meeting can hear each other, and participation in a meeting by such
means shall constitute presence in person at such meeting.
(e) The transactions of any meeting of the Board of Directors, or
any committee thereof, however called or noticed, or wherever held, shall be
as valid as though had at a meeting duly held after regular call and notice, if
a quorum be present and if, either before or after the meeting, each of the
directors not present shall sign a written waiver of notice, or a consent to
holding such meeting, or an approval of the minutes thereof. All such waivers,
consents or approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.
Section 7. Action Without Meeting.
--------- ---------------------- Unless otherwise restricted
by the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board
or of such committee, as the case may be, consent thereto in writing, and such
writing or writings are filed with the minutes of proceedings of the Board or
committee.
Section 8. Fees and Compensation.
--------- --------------------- Directors shall not receive
any stated salary for their services as directors but by resolution of the
Board, a fixed fee, with or without expense of attendance, may be allowed for
attendance at each meeting and at each meeting of any committee of the Board
of Directors. Nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee, or otherwise, and receiving compensation therefor.
Section 9. Committees.
--------- ----------
(a) Executive Committee:
------------------- The Board of Directors may, by
resolution passed by a majority of the whole Board, appoint an Executive
Committee of not less than one member, each of whom shall be a director.
The Executive Committee, to the extent permitted by law, shall have and may
exercise when the Board of Directors is not in session all powers of the
Board in the management of the business and affairs of the corporation,
including, without limitation, the power and authority to declare a dividend
or to authorize the issuance of stock, except such committee shall not have
the power or authority to amend the Certificate of Incorporation, to adopt an
agreement of merger or consolidation, to recommend to the stockholders the
sale, lease or exchange of all or substantially all of the corporation's
property and assets, to recommend to the stockholders of the Corporation a
dissolution of the Corporation or a revocation of a dissolution, or to amend
these Bylaws.
<PAGE>
(b) Other Committees:
---------------- The Board of Directors may, by resolution
passed by a majority of the whole Board, from time to time, appoint such
other committees as may be permitted by law. Such other committees appointed
by the Board of Directors shall have such powers and perform such duties as
may be prescribed by the resolution or resolutions creating such committee,
but in no event shall any such committee have the powers denied to the
Executive Committee in these Bylaws.
(c) Term:
---- The members of all committees of the Board of Directors
shall serve a term coexistent with that of the Board of Directors which shall
have appointed such committee. The Board, subject to the provisions of
subsections (a) or (b) of this Section 9, may at any time increase or decrease
the number of members of a committee or terminate the existence of a committee;
provided, that no committee shall consist of less than one member. The
membership of a committee member shall terminate on the date of his death or
voluntary resignation, but the Board may at any time for any reason remove any
individual committee member and the Board may fill any committee vacancy
created by death, resignation, removal or increase in the number of members of
the committee. The Board of Directors may designate one or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of the committee, and, in addition, in the absence or
disqualification of any member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board
of Directors to act at the meeting in the place of any such absent or
disqualified member.
(d) Meetings:
-------- Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 9 shall be held at such times and places as
are determined by the Board of Directors, or by any such committee, and when
notice thereof has been given to each member of such committee, no further
notice of such regular meetings need be given thereafter; special meetings of
any such committee may be held at the principal office of the corporation
required to be maintained pursuant to Section 2 of Article I hereof; or at any
place which has been designated from time to time by resolution of such
committee or by written consent of all members thereof, and may be called by
any director who is a member of such committee, upon written notice to the
members of such committee of the time and place of such special meeting given
in the manner provided for the giving of written notice to members of the Board
of Directors of the time and place of special meetings of the Board of
Directors. Notice of any special meeting of any committee may be waived in
writing at any time after the meeting and will be waived by any director by
attendance thereat. A majority of the authorized number of members of any
such committee shall constitute a quorum for the transaction of business, and
the act of a majority of those present at any meeting at which a quorum is
present shall be the act of such committee.
Section 10. Emeritus Director.
---------- ----------------- The Board of Directors may, from
time to time, elect one or more Emeritus Directors, each of whom shall serve,
at the pleasure of the Board, until the first meeting of the Board next
following the Annual Meeting of Stockholders and for a maximum period of 3
years, subject to an annual review, or until earlier resignation or removal by
the Board (except that founders of the company may remain as Emeritus
Directors, subject to the annual review, or until earlier resignation or
removal by the Board). Emeritus Directors shall serve as advisors and
consultants to the Board of Directors and may be appointed by the Board to
serve as advisors and consultants to committees of the Board. Emeritus
Directors may be invited to attend meetings of the Board or any committee of
the Board for which they have been appointed to serve as advisors and
consultants and, if present, may participate in the discussions occurring
during such meetings. Emeritus Directors shall not be permitted to vote on
matters brought before the Board or any committee thereof and shall not be
counted for the purpose of determining whether a quorum of the Board or the
committee is present. Emeritus Directors shall receive no fee for their
services as Emeritus Directors. Emeritus Directors will not be entitled to
receive reimbursement for expenses of meeting attendance, except as approved
by the Chairman of the Board. Emeritus Directors may be removed at any time
by the Board of Directors.
<PAGE>
ARTICLE IV
Officers
--------
Section 1. Officers Designated.
--------- ------------------- The officers of the
corporation shall be a Chairman of the Board of Directors who shall be a
member of the Board of Directors, a President, one or more Vice Presidents,
a Secretary, and a Treasurer. The order of the seniority of the Vice
Presidents shall be in the order of their nomination, unless otherwise
determined by the Board of Directors. The Board of Directors or the Chairman
of the Board or the President may also appoint one or more assistant
secretaries, assistant treasurers, and such other officers and agents with
such powers and duties as it or he shall deem necessary. The Board of
Directors may assign such additional titles to one or more of the officers as
they shall deem appropriate. Any one person may hold any number of offices of
the corporation at any one time unless specifically prohibited therefrom by
law. The salaries and other compensation of the officers of the corporation
shall be fixed by or in the manner designated by the Board of Directors.
Section 2. Tenure and Duties of Officers.
--------- -----------------------------
(a) General:
------- All officers shall hold office at the pleasure of the
Board of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If
the office of any officer becomes vacant for any reason, the vacancy may be
filled by the Board of Directors. Nothing in these Bylaws shall be construed
as creating any kind of contractual right to employment with the corporation.
(b) Duties of the Chairman of the Board of Directors:
------------------------------------------------ The Chairman
of the Board of Directors (if there be such an officer appointed) shall preside
at all meetings of the stockholders and the Board of Directors. The Chairman
of the Board of Directors shall perform such other duties and have such other
powers as the Board of Directors shall designate from time to time.
(c) Duties of President:
------------------- The President shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors,
unless the Chairman of the Board of Directors has been appointed and is
present. The President shall perform such other duties and have such other
powers as the Board of Directors shall designate from time to time.
(d) Duties of Vice Presidents:
------------------------- The Vice Presidents, in the
order of their seniority, may assume and perform the duties of the
President in the absence or disability of the President or whenever the
office of the President is vacant. The Vice President shall perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time.
(e) Duties of Secretary:
------------------- The Secretary shall attend all
meetings of the stockholders and of the Board of Directors and any committee
thereof, and shall record all acts and proceedings thereof in the minute book
of the corporation and shall keep the seal of the corporation in safe custody.
The Secretary shall give notice, in conformity with these Bylaws, of all
meetings of the stockholders, and of all meetings of the Board of Directors and
any Committee thereof requiring notice. The Secretary shall perform such other
duties and have such other powers as the Board of Directors shall designate
from time to time. The President may direct any Assistant Secretary to assume
and perform the duties of the Secretary in the absence or disability of the
Secretary, and each Assistant Secretary shall perform such other duties and
have such other powers as the Board of Directors or the President shall
designate from time to time.
(f) Duties of Chief Financial Officer and Treasurer:
----------------------------------------------- The Chief
Financial Officer and Treasurer shall control, audit and arrange the financial
affairs of the corporation. He or she shall receive and deposit all monies
<PAGE>
belonging to the corporation and shall pay out the same only in such manner
as the Board of Directors may from time to time determine, and he or she shall
perform such other further duties as the Board of Directors may require. It
shall be the duty of the assistant treasurers to assist the Treasurer in the
performance of the Treasurer's duties and generally to perform such other
duties as may be delegated to them by the Board of Directors.
ARTICLE V
Execution of Corporate Instruments, and
Voting of Securities Owned by the Corporation
---------------------------------------------
Section 1. Execution of Corporate Instruments.
--------- ----------------------------------
(a) The Board of Directors may, in its discretion, determine the
method and designate the signatory officer or officers, or other person or
persons, to execute any corporate instrument or document, or to sign the
corporate name without limitation, except where otherwise provided by law, and
such execution or signature shall be binding upon the corporation.
(b) Unless otherwise specifically determined by the Board of
Directors or otherwise required by law, formal contracts of the corporation,
promissory notes, deeds of trust, mortgages and other evidences of
indebtedness of the corporation, and other corporate instruments or documents
requiring the corporate seal, and certificates of shares of stock owned by the
corporation, shall be executed, signed or endorsed by the Chairman of the
Board (if there be such an officer appointed), the President, any Vice
President or the Secretary. All other instruments and documents requiring
the corporate signature, but not requiring the corporate seal, may be executed
as aforesaid or in such other manner as may be directed by the Board of
Directors.
(c) All checks and drafts drawn on banks or other depositaries on
funds to the credit of the corporation, or in special accounts of the
corporation, shall be signed by such person or persons as the Board of
Directors shall authorize so to do.
Section 2. Voting of Securities Owned by Corporation.
--------- ----------------------------------------- All stock
and other securities of other corporations owned or held by the corporation
for itself, or for other parties in any capacity, shall be voted, and all
proxies with respect thereto shall be executed, by the person authorized so to
do by resolution of the Board of Directors or, in the absence of such
authorization, by the Chairman of the Board (if there be such an officer
appointed), or by the President, or by any Vice President.
ARTICLE VI
Shares of Stock
---------------
Section 1. Form and Execution of Certificates.
--------- ---------------------------------- Certificates for
the shares of stock of the corporation shall be in such form as is consistent
with the Certificate of Incorporation and applicable law. Every holder of
stock in the corporation shall be entitled to have a certificate signed by, or
in the name of the corporation by, the Chairman of the Board (if there be such
an officer appointed), or by the President or any Vice President and by the
Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary,
certifying the number of shares owned by him in the corporation. Any or all
of the signatures on the certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued with
the same effect as if he were such officer, transfer agent, or registrar at
the date of issue. If the corporation shall be authorized to issue more than
one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
<PAGE>
that, except as otherwise provided in section 202 of the Delaware General
Corporation Law, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
Section 2. Lost Certificates.
--------- ----------------- The Board of Directors may direct
a new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors may,
in its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost or destroyed certificate or certificates, or his legal
representative, to indemnify the corporation in such manner as it shall require
and/or to give the corporation a surety bond in such form and amount as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost or destroyed.
Section 3. Transfers.
--------- --------- Transfers of record of shares of stock of
the corporation shall be made only upon its books by the holders thereof, in
person or by attorney duly authorized, and upon the surrender of a certificate
or certificates for a like number of shares, properly endorsed.
Section 4. Fixing Record Dates.
--------- -------------------
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record
date is adopted by the Board of Directors, and which record date shall not be
more than sixty nor less than ten days before the date of such meeting. If no
record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the date on which the meeting is held. A
determination of stockholders of record entitled notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent (if such written consent is permitted under these Bylaws
and the Certificate of Incorporation) corporate action in writing without a
meeting, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which date shall not be more than ten
days after the date upon which the resolution fixing the record date is adopted
by the Board of Directors. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to consent
to corporate action in writing without a meeting, when no prior action by the
Board of Directors is required by the Delaware General Corporation Law, shall
be the first date on which a signed written consent setting forth the action
taken or proposed to be taken is delivered to the corporation by delivery to
its registered office in Delaware, its principal place of business, or an
officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed by the Board
of Directors and prior action by the Board of Directors is required by law,
the record date for determining stockholders entitled to consent to corporate
action in writing without a meeting shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior
action.
(c) In order that the corporation may determine the stockholders
<PAGE>
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect
of any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 5. Registered Stockholders.
--------- ----------------------- The corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, and to vote as such owner, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.
ARTICLE VII
Other Securities of the Corporation
-----------------------------------
All bonds, debentures and other corporate securities of the
corporation, other than stock certificates, may be signed by the Chairman of
the Board (if there be such an officer appointed), or the President or any
Vice President or such other person as may be authorized by the Board of
Directors and the corporate seal impressed thereon or a facsimile of such seal
imprinted thereon and attested by the signature of the Secretary or an
Assistant Secretary, or the Treasurer or an Assistant Treasurer; provided,
however, that where any such bond, debenture or other corporate security shall
be authenticated by the manual signature of a trustee under an indenture
pursuant to which such bond, debenture or other corporate security shall be
issued, the signature of the persons signing and attesting the corporate seal
on such bond, debenture or other corporate security may be the imprinted
facsimile of the signatures of such persons. Interest coupons appertaining to
any such bond, debenture or other corporate security, authenticated by a
trustee as aforesaid, shall be signed by the Treasurer or Assistant Treasurer
of the corporation, or such other person as may be authorized by the Board of
Directors, or bear imprinted thereon the facsimile signature of such person.
In case any officer who shall have signed or attested any bond, debenture or
other corporate security, or whose facsimile signature shall appear thereon or
before the bond, debenture or other corporate security so signed or attested
shall have been delivered, such bond, debenture or other corporate security
nevertheless may be adopted by the corporation and issued and delivered as
though the person who signed the same or whose facsimile signature shall have
been used thereon had not ceased to be such officer of the corporation.
ARTICLE VIII
Corporate Seal
--------------
The corporation shall have a common seal, upon which shall be inscribed:
"Intel Corporation
Incorporated March 1, 1989
Delaware"
In the event the corporation changes its name, the corporate seal
shall be changed to reflect such new name.
<PAGE>
ARTICLE IX
Indemnification of
Officers, Directors, Employees and Agents
-----------------------------------------
Section 1. Right to Indemnification.
--------- ------------------------ Each person who was or is
a party or is threatened to be made a party to or is involved (as a party,
witness, or otherwise), in any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative
(hereinafter a "Proceeding"), by reason of the fact that he, or a person of
whom he is the legal representative, is or was a director, officer, employee,
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another corporation
or of a partnership, joint venture, trust, or other enterprise, including
service with respect to employee benefit plans, whether the basis of the
Proceeding is alleged action in an official capacity as a director, officer,
employee, or agent or in any other capacity while serving as a director,
officer, employee, or agent (hereafter an "Agent"), shall be indemnified and
held harmless by the corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended or interpreted (but, in the case of any such amendment or
interpretation, only to the extent that such amendment or interpretation
permits the corporation to provide broader indemnification rights than were
permitted prior thereto) against all expenses, liability, and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties, and amounts
paid or to be paid in settlement, and any interest, assessments, or other
charges imposed thereon, and any federal, state, local, or foreign taxes
imposed on any Agent as a result of the actual or deemed receipt of any
payments under this Article) reasonably incurred or suffered by such person
in connection with investigating, defending, being a witness in, or
participating in (including on appeal), or preparing for any of the foregoing
in, any Proceeding (hereinafter "Expenses"); provided, however, that except as
to actions to enforce indemnification rights pursuant to Section 3 of this
Article, the corporation shall indemnify any Agent seeking indemnification in
connection with a Proceeding (or part thereof) initiated by such person only
if the Proceeding (or part thereof) was authorized by the Board of Directors
of the corporation. The right to indemnification conferred in this Article
shall be a contract right.
Section 2. Authority to Advance Expenses.
--------- ----------------------------- Expenses incurred by
an officer or director (acting in his capacity as such) in defending a
Proceeding shall be paid by the corporation in advance of the final disposition
of such Proceeding, provided, however, that if required by the Delaware General
Corporation Law, as amended, such Expenses shall be advanced only upon delivery
to the corporation of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the corporation as authorized in this Article
or otherwise. Expenses incurred by other Agents of the corporation (or by the
directors or officers not acting in their capacity as such, including service
with respect to employee benefit plans) may be advanced upon such terms and
conditions as the Board of Directors deems appropriate. Any obligation to
reimburse the corporation for Expense advances shall be unsecured and no
interest shall be charged thereon.
Section 3. Right of Claimant to Bring Suit.
--------- ------------------------------- If a claim under
Section 1 or 2 of this Article is not paid in full by the corporation within
thirty (30) days after a written claim has been received by the corporation,
the claimant may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense (including
attorneys' fees) of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred
in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation) that the claimant
has not met the standards of conduct that make it permissible under the
Delaware General Corporation Law for the corporation to indemnify the claimant
for the amount claimed. The burden of proving such a defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
<PAGE>
determination prior to the commencement of such action that indemnification of
the claimant is proper under the circumstances because he has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant
had not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that claimant has not met the applicable
standard of conduct.
Section 4. Provisions Nonexclusive.
--------- ----------------------- The rights conferred on any
person by this Article shall not be exclusive of any other rights that such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office. To the extent that any
provision of the Certificate, agreement, or vote of the stockholders or
disinterested directors is inconsistent with these Bylaws, the provision,
agreement, or vote shall take precedence.
Section 5. Authority to Insure.
--------- ------------------- The corporation may purchase and
maintain insurance to protect itself and any Agent against any Expense, whether
or not the corporation would have the power to indemnify the Agent against such
Expense under applicable law or the provisions of this Article.
Section 6. Survival of Rights.
--------- ------------------ The rights provided by this
Article shall continue as to a person who has ceased to be an Agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
Section 7. Settlement of Claims.
--------- -------------------- The corporation shall not be
liable to indemnify any Agent under this Article (a) for any amounts paid in
settlement of any action or claim effected without the corporation's written
consent, which consent shall not be unreasonably withheld; or (b) for any
judicial award if the corporation was not given a reasonable and timely
opportunity, at its expense, to participate in the defense of such action.
Section 8. Effect of Amendment.
--------- ------------------- Any amendment, repeal, or
modification of this Article shall not adversely affect any right or
protection of any Agent existing at the time of such amendment, repeal, or
modification.
Section 9. Subrogation.
--------- ----------- In the event of payment under this
Article, the corporation shall be subrogated to the extent of such payment
to all of the rights of recovery of the Agent, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the corporation
effectively to bring suit to enforce such rights.
Section 10. No Duplication of Payments.
---------- -------------------------- The corporation shall
not be liable under this Article to make any payment in connection with any
claim made against the Agent to the extent the Agent has otherwise actually
received payment (under any insurance policy, agreement, vote, or otherwise)
of the amounts otherwise indemnifiable hereunder.
ARTICLE X
Notices
-------
Whenever, under any provisions of these Bylaws, notice is required
to be given to any stockholder, the same shall be given in writing, timely and
duly deposited in the United States Mail, postage prepaid, and addressed to his
last know post office address as shown by the stock record of the corporation
or its transfer agent. Any notice required to be given to any director may be
given by the method hereinabove stated, or by telegram, except that such notice
other than one which is delivered personally, shall be sent to such address as
such director shall have filed in writing with the Secretary of the
<PAGE>
corporation, or, in the absence of such filing, to the last known post office
address of such director. If no address of a stockholder or director be known,
such notice may be sent to the office of the corporation required to be
maintained pursuant to Section 2 of Article I hereof. An affidavit of mailing,
executed by a duly authorized and competent employee of the corporation or its
transfer agent appointed with respect to the class of stock affected,
specifying the name and address or the names and addresses of the stockholder
or stockholders, director or directors, to whom any such notice or notices was
or were given, and the time and method of giving the same, shall be conclusive
evidence of the statements therein contained. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing
and all notices given by telegram shall be deemed to have been given as at the
sending time recorded by the telegraph company transmitting the same. It
shall not be necessary that the same method of giving be employed in respect
of all directors, but one permissible method may be employed in respect of any
one or more, and any other permissible method or methods may be employed in
respect of any other or others. The period or limitation of time within which
any stockholder may exercise any option or right, or enjoy any privilege or
benefit, or be required to act, or within which any director may exercise any
power or right, or enjoy any privilege, pursuant to any notice sent him in the
manner above provided, shall not be affected or extended in any manner by the
failure of such a stockholder or such director to receive such notice.
Whenever any notice is required to be given under the provisions of the
statutes or of the Certificate of Incorporation, or of these Bylaws, a waiver
thereof in writing signed by the person or persons entitled to said notice,
whether before or after the time stated therein, shall be deemed equivalent
thereto. Whenever notice is required to be given, under any provision of law
or of the Certificate of Incorporation or Bylaws of the corporation, to any
person with whom communication is unlawful, the giving of such notice to such
person shall not be required and there shall be no duty to apply to any
governmental authority or agency for a license or permit to give such notice to
such person. Any action or meeting which shall be taken or held without notice
to any such person with whom communication is unlawful shall have the same
force and effect as if such notice had been duly given. In the event that the
action taken by the corporation is such as to require the filing of a
certificate under any provision of the Delaware General Corporation Law, the
certificate shall state, if such is the fact and if notice is required, that
notice was given to all persons entitled to receive notice except such
persons with whom communication is unlawful.
ARTICLE XI
Amendments
----------
Unless otherwise provided in the Certificate of Incorporation,
these Bylaws may be repealed, altered or amended or new Bylaws adopted by
written consent of stockholders in the manner authorized by Section 8 of
Article II, or at any meeting of the stockholders, either annual or special,
by the affirmative vote of a majority of the stock entitled to vote at such
meeting. The Board of Directors shall also have the authority to repeal,
alter or amend these Bylaws or adopt new Bylaws (including, without
limitation, the amendment of any Bylaws setting forth the number of directors
who shall constitute the whole Board of Directors) by unanimous written consent
or at any annual, regular, or special meeting by the affirmative vote of a
majority of the whole number of directors, subject to the power of the
stockholders to change or repeal such Bylaws and provided that the Board of
Directors shall not make or alter any Bylaws fixing the qualifications,
classifications, term of office or compensation of directors.
Exhibit 10.1
INTEL CORPORATION
1984 STOCK OPTION PLAN
(Amended and Restated Effective July 16, 1997)
1. PURPOSE
The purpose of this amended and restated Intel Corporation 1984 Stock
Option Plan (the "Plan") is to advance the interests of Intel
Corporation, a Delaware corporation and its subsidiaries (hereinafter
collectively "Intel" or the "Corporation"), by stimulating the efforts of
key employees on behalf of Intel, heightening the desire of key
employees to continue in employment with Intel, assisting Intel in
competing effectively with other enterprises for the services of new
employees necessary for the continued improvement of operations, and to
attract and retain the best available personnel for service as
directors of the Corporation. This Plan, among other matters, permits
the grant of incentive stock options as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as options
which are not incentive stock options pursuant to Code Section 422, and
includes the individual grant limitations required by Section 162(m) of
the Code for the option income of certain individuals to be tax deductible
by the Corporation.
2. DEFINITIONS
(a) "Board of Directors" means the Board of Directors of the Corporation.
(b) "Committee" shall mean the Compensation Committee appointed by the
Board of Directors from among its members to administer this Plan
pursuant to Section 9.
(c) "Disablement" means a physical condition arising from an illness
or injury which renders an individual incapable of performing
work. The determination of the Corporation as to an individual's
Disablement shall be made in accordance with the standards and
procedures of the Corporation's then-current Long-Term Disability
Plan and shall be conclusive on all of the parties.
(d) "Plan" means the Intel Corporation 1984 Stock Option Plan, as
amended and restated herein.
(e) "Retirement" shall have the meaning specified by the Committee
in the terms of an option grant or, in the absence of any such
term, shall mean retirement from active employment with Intel at
or after age 60. The determination of the Committee as to
an individual's Retirement shall be conclusive on all parties.
(f) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with Intel Corporation where each of the
corporations in the unbroken chain other than the last corporation
owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
(g) "Immediate Family" means the spouse, children and grandchildren of the
Participant (as defined in Section 3 hereof).
3. PARTICIPANTS
"Participants" in the Plan shall be those key Intel employees to whom
options may be granted from time to time by the Committee. Participants
shall also include non-employee directors of the Corporation to whom
options are granted in accordance with Section 6. No option shall be
granted to any person if immediately after the grant of such option such
person would own stock, including stock subject to outstanding options held
<PAGE>
by him or her, amounting to more than five percent (5%) of the total
combined voting power or value of all classes of stock of the Corporation
or any Subsidiary.
4. EFFECTIVE DATE AND TERMINATION OF PLAN
This Plan was last approved by the stockholders on May 4, 1994, and
became effective on May 4, 1994. The Plan was amended and restated by
the Board of Directors in certain non-material respects on March 26,
The Plan was amended and restated by the Board of Directors on
July 16, 1997, to provide for limited transferability of options.
The Plan shall remain available for the grant of options until all
shares of stock available for option grants under this Plan shall
have been acquired through exercise of such options or on May 3,
2004, whichever is earlier or at such earlier time as the Board
of Directors may determine. Termination of the Plan will not
affect the rights and obligations arising under options theretofore
granted and then in effect.
5. SHARES SUBJECT TO THE PLAN AND TO OPTIONS
The stock subject to options authorized to be granted under the Plan
shall consist of 340,000,000 shares (as adjusted automatically by
the Plan's terms effective July 13, 1997, to reflect a stock split
effected in the form of a stock distribution) of the Corporation's common
stock, $.001 par value ("Common Stock"), or the number and kind of shares
of stock or other securities which shall be substituted or adjusted for
such shares as provided in Section 7. Such shares may be authorized and
unissued shares of the Corporation's common stock. All or any shares of
stock subject to an option which for any reason terminates unexercised
may again be made subject to an option under the Plan.
6. GRANT, TERMS AND CONDITIONS OF OPTIONS
Options may be granted at any time and from time to time prior to the
termination of the Plan to those key employees of Intel who, in the
Committee's judgment, are largely responsible through their judgment,
interest, ability and special efforts for the successful conduct of
Intel's operations. However, no Participant shall be granted options
in any year to purchase a number of shares of the Corporation's Common
Stock in excess of one percent (1%) of the number of shares of the
Corporation's common stock outstanding on January 1, 1994.
Options may be granted to non-employee directors as follows. The number
of shares subject to each option grant to non-employee directors, or the
formula pursuant to which such number shall be determined, the date
of grant and the vesting, expiration and other terms applicable to such
options shall be specified from time to time by the Board of
Directors. Subject to adjustment pursuant to Section 7, the maximum
number of shares of Common Stock subject to options granted under this
Plan to any person on account of his or her service as a non-employee
director from the date of his or her election or appointment as a director
until the date of the next regular annual stockholders' meeting shall
not exceed 5,000. All options granted to non-employee directors will
be non-qualified stock options.
No Participant or optionholder shall have any rights as a stockholder
with respect to any shares of stock subject to option hereunder until
said shares have been issued. Option grants may be evidenced by a
written stock option agreement and/or such other written arrangements as
may be approved from time to time by the Committee. Each option grant
will expressly identify the option as an incentive stock option or as
a non-qualified stock option. Furthermore, the grant of an incentive
option pursuant to this Plan shall in no way be construed as an
alternative to the right of an optionee to purchase stock pursuant
to any present or future grant of a non-qualified option under any of
Intel's current or future stock option plans. Options granted pursuant
to the Plan need not be identical but each option is subject to the
terms of the Plan and must contain and be subject to the following terms
<PAGE>
and conditions:
(a) Price:
----- The purchase price under each option granted to
employees shall be established by the Committee. In no event will
the option price be less than 100% of the fair market value of the
stock on the date of grant, except as otherwise provided in
accordance with subsection (g) below. The option price must be
paid in full at the time of the exercise. The price may be
paid in cash, cash equivalents or secured notes acceptable to
the Committee, by arrangement with a broker which is acceptable
to the Committee where payment of the option price is made
pursuant to an irrevocable direction to the broker to deliver all
or part of the proceeds from the sale of the option shares to
the Corporation, by the surrender of shares of common stock owned
by the optionee exercising the option and having a fair market
value on the date of exercise equal to the option price or in any
combination of the foregoing.
(b) Duration and Exercise or Termination of Option:
---------------------------------------------- Each option
granted to an employee shall be exercisable in such manner and at
such times as the Committee shall determine. Each option granted
must expire within a period of not more than ten (10) years from
the grant date. An employee's stock option may provide for
accelerated exercisability in the event of the employee's death,
Disablement or Retirement or other events in accordance with
policies established by the Committee and may provide for
expiration prior to the end of its terms in the event of the
termination of the employee's service.
Unless the Board of Directors specifies otherwise, each option
granted to a non-employee director will become fully exercisable
beginning one year from the date on which the option was granted.
If the Board of Directors has provided for periodic option
grants to all non-employee directors, then when a non-employee
director is elected by the Board of Directors to begin serving as
director on a date not coincident with a grant date for such
options, that director will be granted an initial non-employee
director option as of the date of the first meeting of the
Board of Directors at which he or she serves as director for
a number of shares calculated on a pro-rata basis, based on
the number of months remaining until the next regular grant
of options to non-employee directors.
(c) Suspension or Termination of Option:
----------------------------------- If at any time (including
after a notice of exercise has been delivered) the Chief
Executive Officer, President, Chief Operating Officer, Vice
President for Human Resources, General Counsel or any of their
designees (any such person, an "Authorized Officer") reasonably
believes that a Participant or other optionholder, other
than a non-employee director, has committed an act of misconduct
as described in this Section, the Authorized Officer may suspend
the Participant's or optionholder's rights to exercise any
option pending a determination of whether an act of misconduct
has been committed. If the Board of Directors or an Authorized
Officer determines a Participant or other optionholder, other
than a non-employee director, has committed an act of
embezzlement, fraud, dishonesty, nonpayment of any obligation owed
to Intel, breach of fiduciary duty or deliberate disregard of Intel
rules resulting in loss, damage or injury to Intel, or if a
Participant or other optionholder makes an unauthorized
disclosure of any Intel trade secret or confidential information,
engages in any conduct constituting unfair competition, induces
any Intel customer to breach a contract with Intel or induces any
principal for whom Intel acts as agent to terminate such
agency relationship, neither the Participant or optionholder nor
his or her estate shall be entitled to exercise any option
whatsoever. In making such determination, the Board of Directors
or an Authorized Officer shall act fairly and shall give
<PAGE>
the Participant an opportunity to appear and present evidence on
his or her behalf at a hearing before a committee of the Board
of Directors. For any Participant who is an "executive officer"
for purposes of Section 16 of the Securities Exchange Act of
1934 (the "Exchange Act"), the determination of the Board of
Directors or of the Authorized Officer shall be subject to
the approval of the Committee.
(d) Termination of Non-Employee Director's Service:
---------------------------------------------- Subject to Section
6(b) and unless the Board of Directors specifies otherwise, upon
the termination of the Participant's service as a non-employee
director, his or her rights to exercise an option then held
shall be only as follows:
(1) Death.
----- Upon the death of a non-employee director while
in service as a non-employee director of Intel, the
non-employee director's rights will be exercisable by his
or her estate or beneficiary at any time during the twelve
months next succeeding the date of death. The
number of shares exercisable by the estate or beneficiary
will be the total number of unexercised shares under
the non-employee director's option on the date of his or
her death. If a non-employee director should die within
thirty (30) days of his or her termination of service
as a non-employee director with Intel, an option will be
exercisable by his or her estate or beneficiary at any time
during the twelve (12) months succeeding the date of
termination, but only to the extent of the number of shares
as to which such option was exercisable as of the date of
such termination. A non-employee director's estate shall
mean his or her legal representative or other person who
so acquires the right to exercise the option.
(2) Disablement.
----------- Upon the Disablement of a non-employee
director, any option which he or she holds, whether or not
exercisable on the date of Disablement, may be exercised after
the date of the Disablement within twelve (12) months.
(3) Retirement.
---------- Upon Retirement of a non-employee director,
the non-employee director's rights to non-qualified stock options
which he or she holds, whether or not otherwise exercisable on
the date of Retirement, may be exercised at any time during the
twelve (12) months after Retirement.
(4) Other Reasons.
------------- Upon termination of a non-employee director's
service as a non-employee director for any reason other than
those stated above, the non-employee director may, within ninety
days following such termination exercise the option to the
extent such option was exercisable on the date of termination.
(e) Transferability of Option:
------------------------- Unless otherwise provided by the Committee
and subject to the establishment of procedures by the Committee, each
option shall be transferable only:
(1) by will or the laws of descent and distribution, or
(2) in case of an option which is not an incentive stock option, by
gift to the Immediate Family, partnerships whose only
partners are the Participant or members of the Immediate Family,
limited liability companies whose only shareholders are the
Participant or members of the Immediate Family, and trusts
established solely for the benefit of the Participant or
members of the Immediate Family.
<PAGE>
The transferees described in this subsection (e) of Section 6 shall be
referred to as "Permitted Transferees".
Options are transferable only to the extent the options are
exercisable at the time of transfer. Any purported assignment,
transfer or encumbrance that does not qualify under subsections (1)
and (2) above shall be void and unenforceable against the
Corporation.
The terms of stock options granted pursuant to this Plan shall
apply to the beneficiaries, executors and administrators of the
Participant and to Permitted Transferees (including the beneficiaries,
executors and administrators of Permitted Transferees), including the
right to agree to any amendment of the applicable option agreement,
except that options transferred to Permitted Transferees shall not be
transferable except by will or the laws of descent and distribution.
(f) Modification or Assumption of Options:
------------------------------------- The Committee may modify,
extend or assume outstanding options (whether granted by Intel or
by another issuer) in return for the grant of new options for
the same or a different number of shares and at the same or a
different exercise price.
(g) Conditions and Restrictions Upon Securities Subject to Options:
--------------------------------------------------------------
Subject to the express provisions of the Plan, the Committee may
provide that the shares of Common Stock issued upon exercise of
an option shall be subject to such further conditions or agreements
as the Committee in its discretion may specify prior to the exercise
of such option, including without limitation, conditions on
vesting or transferability, forfeiture or repurchase provisions
and method of payment for the shares issued upon exercise (including
the actual or constructive surrender of Common Stock already
owned by the Participant or optionholder). The Committee may
establish rules for the deferred delivery of Common Stock upon
exercise of an option with the deferral evidenced by use of "Stock
Units" equal in number to the number of shares of Common Stock
whose delivery is so deferred. A "Stock Unit" is a bookkeeping
entry representing an amount equivalent to the fair market value
of one share of Common Stock. Unless the Committee specifies
otherwise, Stock Units represent an unfunded and unsecured
obligation of the Corporation. Settlement of Stock Units upon
expiration of the deferral period shall be made in Common Stock
or otherwise as determined by the Committee. The amount of Common
Stock, or other settlement medium, to be so distributed may be
increased by an interest factor or by dividend equivalents. Until
a Stock Unit is so settled, the number of shares of Common Stock
represented by a Stock Unit shall be subject to adjustment
pursuant to Section 7. Any Stock Units that are settled after
the holder's death shall be distributed to the holder's designated
beneficiary(ies) or, if none was designated, the holder's estate.
(h) Other Terms and Conditions:
-------------------------- Options may also contain such other
provisions, which shall not be inconsistent with any of the
foregoing terms, as the Committee shall deem appropriate. No
option, however, nor anything contained in the Plan shall
confer upon any Participant any right to continue in Intel's employ
or service nor limit in any way Intel's right to terminate his or
her employment or service at any time.
7. ADJUSTMENT OF AND CHANGES IN THE STOCK
(a) In the event that the shares of Common Stock of the Corporation
shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Corporation or of
another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split-up, combination of
shares, or otherwise), or if the number of shares of Common Stock
of the Corporation shall be increased through a stock split or the
<PAGE>
payment of a stock dividend, then there shall be substituted for
or added to each share of common stock of the Corporation
theretofore appropriated or thereafter subject or which may
become subject to an option under the Plan, the number and kind of
shares of stock or other securities into which each outstanding
share of common stock of the Corporation shall so be changed, or
for which each such share shall be exchanged, or to which each
such share shall be entitled, as the case may be. Outstanding
options shall also be amended as to price and other terms if
necessary to reflect the foregoing events. In the event there
shall be any other change in the number or kind of the outstanding
shares of Common Stock of the Corporation, or any stock or other
securities into which such Common Stock shall have been changed,
or for which it shall have been exchanged, then if the Committee
shall, in its sole discretion, determine that such change
equitably requires an adjustment in any option theretofore granted
or which may be granted under the Plan, such adjustment shall be
made in accordance with such determination.
(b) No right to purchase fractional shares shall result from any
adjustment in options pursuant to this Section 7. In case of any
such adjustment, the shares subject to the option shall be
rounded down to the nearest whole share. Notice of any adjustment
shall be given by the Corporation to each Participant or
optionholder which shall have been so adjusted and such
adjustment (whether or not notice is given) shall be effective and
binding for all purposes of the Plan.
(c) Any other provision hereof to the contrary notwithstanding (except
Section 6(b)) in the event Intel is a party to a merger or other
reorganization, outstanding options shall be subject to the
agreement of merger or reorganization. Such agreement may
provide, without limitation, for the assumption of outstanding
options by the surviving corporation or its parent, for their
continuation by Intel (if Intel is a surviving corporation), for
accelerated vesting and accelerated expiration, or for settlement
in cash.
8. LISTING OR QUALIFICATION OF STOCK
In the event that the Board of Directors determines in its discretion
that the listing or qualification of the Plan shares on any
securities exchange or quotation or trading system or under any
applicable law or governmental regulation is necessary as a condition to
the issuance of such shares under the option, the option may not be
exercised in whole or in part unless such listing, qualification, consent
or approval has been unconditionally obtained.
9. ADMINISTRATION AND AMENDMENT OF THE PLAN
The Plan shall be administered by the Committee. The Committee shall
consist of two or more directors of Intel, who shall be appointed
by the Board of Directors. The Board shall fill vacancies and may
from time to time remove or add members. All members of the Committee
will be "non-employee directors" as defined in Rule 16b-3 under the
Exchange Act and "outside directors" as defined under Section 162(m) of
the Code, but in each case only when required to exempt any grant intended
to qualify for an exemption under such provisions. Notwithstanding the
foregoing, unless otherwise restricted by the Board of Directors,
the Committee may appoint one or more separate committees (any
such committee, a "Subcommittee") composed of one or more directors of
Intel (who may but need not be members of the Committee) and may
delegate to any such Subcommittee(s) the authority to grant options
under the Plan to Participants, to determine all terms of such
options, and/or to administer the Plan or any aspect of it. Any
action by any such Subcommittee within the scope of such delegation shall
be deemed for all purposes to have been taken by the Committee.
Subject to the express provisions of this Plan, the Committee shall be
authorized and empowered to do all things necessary or desirable in
<PAGE>
connection with the administration of this Plan, including, without
limitation: (a) to prescribe, amend and rescind rules and regulations
relating to this Plan and to define terms not otherwise defined
herein; (b) to determine which persons are Participants (as defined in
Section 3 hereof), to which of such Participants, if any, an
option shall be granted hereunder and the timing of any such
option grants; (c) to determine the number of shares of Common Stock
subject to an option and the exercise or purchase price of such
shares; (d) to establish and verify the extent of satisfaction of
any conditions to exercisability applicable to an option; (e) to
waive conditions to and/or accelerate exercisability of an option,
either automatically upon the occurrence of specified events (including
in connection with a change of control of the Corporation) or otherwise
in its discretion; (f) to prescribe and amend the terms of option
grants made under this Plan (which need not be identical); (g) to
determine whether, and the extent to which, adjustments are required
pursuant to Section 7 hereof; and (h) to interpret and construe this
Plan, any rules and regulations under the Plan and the terms and
conditions of any option granted hereunder, and to make exceptions to any
such provisions in good faith and for the benefit of the Corporation.
All decisions, determinations and interpretations by the Committee
regarding the Plan, any rules and regulations under the Plan and the
terms and conditions of any option granted hereunder, shall be final
and binding on all Participants and optionholders. The Committee
shall consider such factors as it deems relevant, in its sole and
absolute discretion, to making such decisions, determinations
and interpretations including, without limitation, the recommendations
or advice of any officer or other employee of the Corporation
and such attorneys, consultants and accountants as it may select.
The Board of Directors may amend or terminate the Plan as desired,
without further action by the Corporation's stockholders except to
the extent required by applicable law.
Notwithstanding the above, the provisions of Section 6 relating to
non-employee directors may not be amended more than once every six
months, except to comply with changes to the Code or the rules
thereunder.
10. TIME OF GRANTING OPTIONS
The effective date of each option granted hereunder shall be the
date on which the grant was made. Within a reasonable time thereafter,
Intel will deliver the option to the Participant.
11. WITHHOLDING
To the extent required by applicable federal, state, local or foreign
law, a Participant or optionholder shall make arrangements satisfactory
to the Corporation for the satisfaction of any withholding tax
obligations that arise by reason of an option exercise or any sale
of shares. The Corporation shall not be required to issue shares or
to recognize the disposition of such shares until such obligations
are satisfied. The Committee may permit these obligations to be
satisfied by having the Corporation withhold a portion of the
shares of stock that otherwise would be issued to him or her upon
exercise of the option, or to the extent permitted, by tendering
shares previously acquired.
Exhibit 10.2
INTEL CORPORATION
1988 EXECUTIVE LONG TERM
STOCK OPTION PLAN
(Amended and Restated Effective as of July 16, 1997)
1. PURPOSE
The purpose of this amended and restated Intel Corporation 1988
Executive Long Term Stock Option Plan (the "Plan") is to advance
the interests of Intel Corporation, a Delaware corporation
and its subsidiaries (hereinafter collectively "Intel" or the
"Corporation"), by stimulating the efforts of certain key employees
employed by Intel and heightening the desire of such key
employees to continue in employment with Intel. The stock options
granted pursuant to this Plan are non-qualified stock options and shall
not be incentive stock options, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"). This amended
and restated Plan includes the individual grant limitations required by
Section 162(m) of the Code for the option income of certain
individuals to be tax deductible by the Corporation.
2. DEFINITIONS
(a) "Board of Directors" means the Board of Directors of the
Corporation.
(b) "Committee" means the Compensation Committee appointed by
the Board of Directors in accordance with Section 11.
(c) "Disablement" means a physical condition arising from an illness or
injury which renders an individual incapable of performing work.
The determination of the Corporation as to an individual's
Disablement shall be made in accordance with the standards and
procedures of the Corporation's then-current Long-Term Disability
Plan and shall be conclusive on all of the parties.
(d) "Plan" means the Intel Corporation 1988 Executive Long Term Stock
Option Plan, as amended and restated herein.
(e) "Retirement" shall have the meaning specified by the Committee
in the terms of an option grant or, in the absence of any such
term, shall mean retirement from active employment with Intel (i)
at or after age 55 and with the approval of the Committee or (ii)
at or after age 65. The determination of the Committee as to
an individual's Retirement shall be conclusive on all parties.
(f) "Subsidiary" means any corporation in an unbroken chain of
corporations beginning with Intel Corporation where each of the
corporations in the unbroken chain other than the last
corporation owns stock possessing 50 percent or more of the
total combined voting power of all classes of stock in one of the
other corporations in such chain.
(g) "Immediate Family" means the spouse, children and grandchildren
of the Participant (as defined in Section 3 hereof).
3. PARTICIPANTS
"Participants" in the Plan shall be those key employees who have been
employed by Intel for at least two years and to whom options may be
granted from time to time by the Committee.
No option shall be granted to any employee if immediately after the
<PAGE>
grant of such option such employee would own stock, including stock
subject to outstanding options held by him or her, amounting to more
than five percent (5%) of the total combined voting power or value of
all classes of stock of the Corporation or any Subsidiary. Options may
not be granted to non-employee directors or members of the Committee.
4. EFFECTIVE DATE AND TERMINATION OF PLAN
This Plan was last approved by the Corporation's stockholders on
May 4, 1994. The Plan was amended and restated by the Board of
Directors in certain non-material respects on March 26, 1997. The
Plan was amended and restated by the Board of Directors on July 16,
1997, to provide for limited transferability of options.
The Plan shall remain available for the grant of options until all
shares of stock available for grant under this Plan shall have
been acquired through exercise of options or until September 19,
1998 whichever is earlier. The Plan may be terminated at such
earlier time as the Board of Directors may determine. Termination
of the Plan will not affect the rights and obligations arising
under options theretofore granted and then in effect.
5. SHARES SUBJECT TO THE PLAN AND TO OPTIONS
The stock subject to options authorized to be granted under the
Plan shall consist of 80,000,000 shares (as adjusted automatically
by the Plan's terms effective July 13, 1997, to reflect a stock split
effected in the form of a stock distribution) of the Corporation's
common stock, par value $.001 ("Common Stock"), or the number and
kind of shares of stock or other securities which shall be
substituted or adjusted for such shares as provided in Section 8.
Such shares may be authorized and unissued shares of the Corporation's
Common Stock. All or any shares of stock subject to an option
which for any reason terminates unexercised may again be made subject
to an option under the Plan.
6. GRANT, TERMS AND CONDITIONS OF OPTIONS
Options may be granted at any time and from time to time prior to the
termination of the Plan, to certain key employees of Intel selected
by the Committee. However, no Participant shall be granted options
in any year, to purchase shares of common stock in excess of one
percent (1%) of the number of shares of the Corporation's Common
Stock outstanding on January 1, 1994. In addition, no Participant or
optionholder shall have any rights as a stockholder with respect to
any shares of stock subject to option hereunder until said shares have
been issued. Each option may be evidenced by a written stock option
agreement and/or such other written arrangements as may be approved
from time to time by the Committee. Options granted pursuant to
the Plan need not be identical but each option much contain and
be subject to the following terms and conditions:
(a) Price:
----- The purchase price under each option shall be
established by the Committee. In no event will the option
price be less than the fair market value of the stock on
the date of grant. The option price must be paid in full at
the time of exercise. The price may be paid in cash or, as
acceptable to the Committee, by loan (as described in
Section 7), by arrangement with a broker where payment of the
option price is made pursuant to an irrevocable direction to
the broker to deliver all or part of the proceeds from the sale
of the option shares to the Corporation, by the surrender of
shares of Common Stock of the Corporation owned by the
Participant exercising the option and having a fair market
value on the date of exercise equal to the option price or in any
combination of the foregoing.
(b) Duration and Exercise or Termination of Option:
---------------------------------------------- Each option shall
be exercisable in such manner and at such times as the Committee
shall determine. However, each option granted must expire
within a period of not more than ten (10) years from the grant date.
<PAGE>
(c) Suspension or Termination of Option:
----------------------------------- If at any time (including
after a notice of exercise has been delivered) the Chief
Executive Officer, President, Chief Operating Officer, Vice
President for Human Resources, General Counsel or any of their
designees (any such person, an "Authorized Officer") reasonably
believes that a Participant or optionholder has committed an act
of misconduct as described in this Section, the Authorized
Officer may suspend the Participant's or optionholder's
rights to exercise any option pending a determination of
whether an act of misconduct has been committed.
If the Board of Directors or an Authorized Officer determines
a Participant or optionholder has committed an act of
embezzlement, fraud, dishonesty, nonpayment of any obligation
owed to Intel, breach of fiduciary duty or deliberate
disregard of Intel rules resulting in loss, damage or injury
to Intel, or if a Participant or optionholder makes an
unauthorized disclosure of any Intel trade secret or
confidential information, engages in any conduct constituting
unfair competition, induces any Intel customer to breach a
contract with Intel or induces any principal for whom Intel
acts as agent to terminate such agency relationship, neither
the Participant nor optionholder nor his or her estate shall be
entitled to exercise any option whatsoever. In making such
determination, the Board of Directors or an Authorized Officer
shall act fairly and shall give the Participant an opportunity
to appear and present evidence on his or her behalf at a hearing
before a committee of the Board of Directors. For any
Participant who is an "executive officer" for purposes of
Section 16 of the Securities Exchange Act of 1934 (the
"Exchange Act"), the determination of the Board of Directors or
of the Authorized Officer shall be subject to the approval of the
Committee.
(d) Termination of Employment:
------------------------- Subject to Section 6(b), unless the
Committee specifies otherwise, upon the termination of the
Participant's employment, his or her rights to exercise an option
then held shall be only as follows:
(1) Death.
----- Upon the death of a Participant while in employ of
Intel, the Participant's rights will be exercisable by his
or her estate or beneficiary at any time during the twelve
months next succeeding the date of death.
If the Participant's option has been held by the Participant
for a minimum of four (4) years at the time of death,
then the number of shares exercisable by the estate or
beneficiary of the deceased Participant will be the total
number of unexercised shares, whether or not exercisable,
under such option on the date of the Participant's death.
If the Participant's option has been held for a period of
less than four (4) years at the time of death, then the
number of shares exercisable by the estate or beneficiary
of the deceased Participant will be the total number of
shares which were exercisable under such option on the
date of the Participant's death.
If a Participant should die within thirty (30) days of his
or her termination of employment with Intel, an option will
be exercisable by his or her estate or beneficiary at any
time during the twelve (12) months succeeding the date of
termination, but only to the extent of the number of shares
as to which such option was exercisable as of the date of
such termination. A Participant's estate shall mean his or
her legal representative or other person who so acquires the
right to exercise the option.
(2) Disablement.
----------- Upon the Disablement of any Participant, the
Participant's rights to options may be exercised for at any
<PAGE>
time during the twelve (12) months after termination. If
the Participant's option has been held for a minimum of four
years, then the number of shares exercisable by the
Participant will be the total number of unexercised shares,
whether or not exercisable, under such option on the date of
the Participant's termination. If the Participant's option
has been held for a period of less than four (4) years,
then the number of shares exercisable by the Participant
will be the total number of shares which were exercisable
under such option on the date of the Participant's termination.
(3) Retirement.
---------- Upon Retirement of a Participant, the
Participant's rights to options may be exercised at any time
during the twelve (12) months after Retirement. The
number of shares exercisable will be the total number of
shares which were exercisable under the Participant's option
on the date of his or her Retirement.
(4) Other Reasons.
------------- Upon termination of a Participant's employment
for any reason other than those stated above, a Participant
may, within thirty (30) days following such termination
exercise the option to the extent such option was exercisable
on the date of termination.
For purposes of this Section 6(d), unless the Committee specifies
otherwise, a Participant's employment shall not be deemed
terminated (i) if, within sixty (60) days such Participant is
rehired by Intel, (ii) if Participant is transferred from the
Corporation to any Subsidiary or from any one Subsidiary to
another or from a Subsidiary to the Corporation, or (iii) at the
discretion of the Committee, during any period of a Participant's
leave of absence, provided that the Committee may delay the
Participant's rights to exercise options as a result of such leave
of absence. In addition, a Participant's employment with any
partnership, joint venture or corporation not meeting the
requirements of a Subsidiary in which the Corporation or a
Subsidiary is a party and which is designated by the Committee
as subject to this provision, shall be considered employment for
purposes of this Section 6(d).
(e) Transferability of Option: Unless otherwise provided by the
Committee and subject to the establishment of procedures by
the Committee, each option shall be transferable only:
(1) by will or the laws of descent and distribution, or
(2) by gift to the Immediate Family, partnerships whose only
partners are the Participant or members of the Immediate
Family, limited liability companies whose only shareholders
are the Participant or members of the Immediate Family, and
trusts established solely for the benefit of the Participant
or members of the Immediate Family.
The transferees described in this subsection (e) of Section
6 shall be referred to as "Permitted Transferees".
Options are transferable only to the extent the options are
exercisable at the time of transfer. Any purported
assignment, transfer or encumbrance that does not qualify
under subsections (1) and (2) above shall be void and
unenforceable against the Corporation.
The terms of stock options granted pursuant to this Plan
shall apply to the beneficiaries, executors and
administrators of the Participant and to Permitted
Transferees (including the beneficiaries, executors and
administrators of Permitted Transferees), including the right
to agree to any amendment of the applicable option agreement,
except that options transferred to Permitted Transferees
shall not be transferable except by will or the laws of
descent and distribution.
<PAGE>
(f) Cancellation:
------------ The Committee may, at any time prior to
exercise and subject to consent of the Participant, cancel
any options previously granted and may or may not substitute
in their place options at a different price and different
type under different terms or in different amounts.
(g) Conditions and Restrictions Upon Securities Subject to
------------------------------------------------------
Options:
------- Subject to the express provisions of the Plan,
the Committee may provide that the shares of Common Stock
issued upon exercise of an option shall be subject to such
further conditions or agreements as the Committee in its
discretion may specify prior to the exercise of such option,
including without limitation, conditions on vesting or
transferability, forfeiture or repurchase provisions and
method of payment for the shares issued upon exercise
(including the actual or constructive surrender of Common
Stock already owned by the Participant or optionholder).
The Committee may establish rules for the deferred delivery
of Common Stock upon exercise of an option with the deferral
evidenced by use of "Stock Units" equal in number to the
number of shares of Common Stock whose delivery is so
deferred. A "Stock Unit" is a bookkeeping entry
representing an amount equivalent to the fair market value
of one share of Common Stock. Unless the Committee specifies
otherwise, Stock Units represent an unfunded and unsecured
obligation of the Corporation. Settlement of Stock Units
upon expiration of the deferral period shall be made in
Common Stock or otherwise as determined by the Committee.
The amount of Common Stock, or other settlement medium, to be
so distributed may be increased by an interest factor
or by dividend equivalents. Until a Stock Unit is so settled,
the number of shares of Common Stock represented by a Stock
Unit shall be subject to adjustment pursuant to Section 8.
Any Stock Units that are settled after the holder's death
shall be distributed to the holder's designated
beneficiary(ies) or, if none was designated, the holder's
estate.
(h) Other Terms and Conditions:
-------------------------- Options may also contain such
other provisions, which shall not be inconsistent with any of
the foregoing terms, as the Committee shall deem
appropriate. No option, however, nor anything contained in
the Plan shall confer upon any Participant any right to
continue in Intel's employ or service nor limit in any way
Intel's right to terminate his or her employment at any time.
7. LOANS
The Corporation may make loans, at the request of the Participant
and in the sole discretion of the Board or its Committee, for
the purpose of enabling the Participant to exercise options granted
under the Plan and to pay the tax liability resulting from an option
exercise under the Plan. The Board or its Committee shall have
full authority to determine the terms and conditions of such loans.
Such loans may be secured by the shares received upon exercise of
such option.
8. ADJUSTMENT OF AND CHANGES IN THE STOCK
In the event that the number of shares of Common Stock of the
Corporation shall be increased or decreased through
reclassification, combination of shares, a stock split or the
payment of a stock dividend, or otherwise, then each share of
common stock of the Corporation which has been authorized for
issuance under the Plan, whether such share is then currently
subject to or may become subject to an option under the
Plan, shall be proportionately adjusted to reflect such increase
or decrease. Outstanding options shall also be amended as to price
and other terms if necessary to reflect the foregoing events.
In the event there shall be any other change in the number or
<PAGE>
kind of the outstanding shares of Common Stock of the Corporation,
or any stock or other securities into which such Common Stock
shall have been changed, or for which it shall have been exchanged,
whether by reason of merger, consolidation or otherwise, then if
the Committee shall, in its sole discretion, determine that such
change equitably requires an adjustment to shares currently subject
to options or which may become subject to options under the Plan,
or to prices or terms of outstanding options, such adjustment shall
be made in accordance with such determination. In addition, in the
event of such change described in this paragraph, the Board of
Directors may accelerate the time or times at which any option may
be exercised and may provide for cancellation of such accelerated
options which are not exercised within a time prescribed by the
Board of Directors in its sole discretion.
No right to purchase fractional shares shall result from any
adjustment in options pursuant to this Section. In case of any
such adjustment, the shares subject to the option shall be
rounded down to the nearest whole share. Notice of any adjustment
shall be given by the Corporation to each Participant or
optionholder which shall have been so adjusted and such adjustment
(whether or not notice is given) shall be effective and binding for
all purposes of the Plan.
9. LISTING OR QUALIFICATION OF STOCK
In the event that the Board of Directors determines in its
discretion that the listing or qualification of the Plan shares on
any securities exchange or quotation or trading system or under any
applicable law or governmental regulation is necessary as a
condition to the issuance of such shares under the option, the
option may not be exercised in whole or in part unless such listing,
qualification, consent or approval has been unconditionally obtained.
10. WITHHOLDING
To the extent required by applicable federal, state, local or
foreign law, a Participant or optionholder shall make arrangements
satisfactory to the Corporation for the satisfaction of any
withholding tax obligations that arise by reason of an option
exercise. The Corporation shall not be required to issue shares or
to recognize the disposition of such shares until such obligations
are satisfied. The Committee may permit these obligations to be
satisfied by having the Corporation withhold a portion of the shares
of stock that otherwise would be issued to him or her upon exercise
of the option, or to the extent permitted, by tendering shares
previously acquired.
11. ADMINISTRATION AND AMENDMENT OF THE PLAN
The Plan shall be administered by the Committee which shall consist
of at least two persons appointed by the Board of Directors. The
Board of Directors shall fill vacancies and may from time to time
remove or add members. All members of the Committee will
be "non-employee directors" as defined in Rule 16b-3 under the
Exchange Act and "outside directors" as defined under Section
162(m) of the Code, but in each case only when required to exempt
any grant intended to qualify for an exemption under
such provisions. Notwithstanding the foregoing, unless otherwise
restricted by the Board of Directors, the Committee may appoint one
or more separate committees (any such committee, a "Subcommittee")
composed of one or more directors of Intel (who may but need not be
members of the Committee) and may delegate to any such
Subcommittee(s) the authority to grant options under the Plan to
Participants, to determine all terms of such options, and/or to
administer the Plan or any aspect of it. Any action by any such
Subcommittee within the scope of such delegation shall be deemed for
all purposes to have been taken by the Committee. The Committee
shall act pursuant to a majority vote or majority written consent.
<PAGE>
Subject to the express provisions of this Plan, the Committee
shall be authorized and empowered to do all things necessary
or desirable in connection with the administration of this Plan,
including, without limitation: (a) to prescribe, amend and
rescind rules and regulations relating to this Plan and to
define terms not otherwise defined herein; (b) to determine
which persons are Participants (as defined in Section 3 hereof),
to which of such Participants, if any, an option shall be granted
hereunder and the timing of any such option grants; (c) to
determine the number of shares of Common Stock subject to an option
and the exercise or purchase price of such shares; (d) to establish
and verify the extent of satisfaction of any conditions to
exercisability applicable to an option; (e) to waive conditions to
and/or accelerate exercisability of an option, either
automatically upon the occurrence of specified events (including in
connection with a change of control of the Corporation) or
otherwise in its discretion; (f) to prescribe and amend the terms
of option grants made under this Plan (which need not be
identical); (g) to determine whether, and the extent to which,
adjustments are required pursuant to Section 8 hereof; and (h) to
interpret and construe this Plan, any rules and regulations under
the Plan and the terms and conditions of any option granted
hereunder, and to make exceptions to any such provisions in good
faith and for the benefit of the Corporation.
All decisions, determinations and interpretations by the Committee
regarding the Plan, any rules and regulations under the Plan
and the terms and conditions of any option granted hereunder,
shall be final and binding on all Participants and optionholders.
The Committee shall consider such factors as it deems relevant,
in its sole and absolute discretion, to making such decisions,
determinations and interpretations including, without
limitation, the recommendations or advice of any officer or other
employee of the Corporation and such attorneys, consultants and
accountants as it may select. The interpretation and construction
of any provision of the Plan by the Board of Directors shall
be final and conclusive. The Board of Directors may periodically
adopt rules and regulations for carrying out the Plan, and amend
the Plan as desired, without further action by the Corporation's
stockholders except to the extent required by applicable law.
12. TIME OF GRANTING OPTIONS
The effective date of such option shall be the date on which the
grant was made. Within a reasonable time thereafter, Intel will
deliver the option to the Participant.
Exhibit 12.1
INTEL CORPORATION
STATEMENT SETTING FORTH THE COMPUTATION
OF RATIOS OF EARNINGS TO FIXED CHARGES
(in millions)
<TABLE>
Six Months Ended
June 27, June 28,
1998 1997
----------------------
<S> <C> <C>
Income before taxes $ 3,731 $ 5,625
Add fixed charges net of
capitalized interest 23 23
-------- --------
Income before taxes and fixed
charges (net of capitalized
interest) $ 3,754 $ 5,648
======== ========
Fixed charges:
Interest $ 15 $ 14
Capitalized interest 4 5
Estimated interest component
of rental expense 8 9
-------- --------
Total $ 27 $ 28
======== ========
Ratio of earnings before taxes and
fixed charges, to fixed charges 139 202
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from Intel Corporation's
CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND CONSOLIDATED CONDENSED BALANCE
SHEETS and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-END> JUN-27-1998
<CASH> 1887
<SECURITIES> 5811
<RECEIVABLES> 3126<F3>
<ALLOWANCES> 0
<INVENTORY> 1703
<CURRENT-ASSETS> 13368
<PP&E> 20303
<DEPRECIATION> 8300
<TOTAL-ASSETS> 28418
<CURRENT-LIABILITIES> 4254
<BONDS> 472
711<F1>
0
<COMMON> 4853
<OTHER-SE> 16880
<TOTAL-LIABILITY-AND-EQUITY> 28418
<SALES> 11928
<TOTAL-REVENUES> 11928
<CGS> 5776
<TOTAL-COSTS> 5776
<OTHER-EXPENSES> 1383<F2>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15
<INCOME-PRETAX> 3731
<INCOME-TAX> 1286
<INCOME-CONTINUING> 2445
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2445
<EPS-PRIMARY> 1.47<F4>
<EPS-DILUTED> 1.38
<FN>
<F1>Item consists of put warrants.
<F2>Item consists of research and development, including $165 million
for purchased in-process research and development.
<F3>Item shown net of allowance, consistent with the balance sheet
presentation.
<F4>Item consists of basic earnings per share
</FN>
</TABLE>
