SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
_X_ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the year ended: December 31, 1997
___ TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
----------- -----------
Commission file number: 333-20951
INTEL PUERTO RICO RETIREMENT SAVINGS PLAN
P.O. BOX 125
LAS PIEDRAS, PUERTO RICO, 00671
(Full title of the Plan and address of the Plan if different
from that of the issuer named below)
INTEL CORPORATION
(Name of issuer of the securities held pursuant to the Plan)
2200 MISSION COLLEGE BOULEVARD
SANTA CLARA, CALIFORNIA, 95052-8119
(address of principal executive office of issuer)
INTEL PUERTO RICO RETIREMENT SAVINGS PLAN
Index to Financial Statements and Exhibit
Item
- -------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
Statement of Net Assets Available for Benefits With Fund
Information at December 31, 1997 and 1996
Statement of Changes in Net Assets Available
for Benefits With Fund Information for the Year Ended
December 31, 1997
Notes to Financial Statements
Signature
Exhibit 23 - Consent of Ernst & Young LLP, Independent Auditors
<PAGE>
Financial Statements
Intel Puerto Rico
Retirement Savings Plan
Year ended December 31, 1997
with Report of Independent Auditors
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Financial Statements
Year ended December 31, 1997
Contents
Report of Independent Auditors.............................................. 1
Audited Financial Statements
Statements of Net Assets Available for Benefits, With Fund Information...... 2
Statement of Changes in Net Assets Available for Benefits,
With Fund Information..................................................... 6
Notes to Financial Statements............................................... 8
<PAGE>
Report of Independent Auditors
The Plan Administrative Committee
Intel Puerto Rico Retirement Savings Plan
We have audited the accompanying statements of net assets available for
benefits of the Intel Puerto Rico Retirement Savings Plan as of December 31,
1997 and 1996, and the related statement of changes in net assets available for
benefits for the year ended December 31, 1997. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Intel
Puerto Rico Retirement Savings Plan at December 31, 1997 and 1996, and the
changes in its net assets available for benefits for the year ended December
31, 1997, in conformity with generally accepted accounting principles.
The Fund Information in the statements of net assets available for benefits
and the statement of changes in net assets available for benefits is presented
for purposes of additional analysis rather than to present the net assets
available for plan benefits and changes in net assets available for plan
benefits of each fund. The Fund Information has been subjected to the
auditing procedures applied in our audits of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
ERNST & YOUNG LLP
San Jose, California
May 20, 1998
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Statement of Net Assets Available for Benefits, With Fund Information
December 31, 1997
<TABLE>
Participant-Directed Fund Information
-------------------------------------------------------------------------------------
Fidelity Fidelity
Insti- Scudder Capital Vanguard Fidelity
tutional Fixed & Fidelity Insti- Growth & Fidelity Fidelity
Cash Income Income Puritan tutional Income Magellan Contra-
Portfolio Fund Fund Fund Index Fund Portfolio Fund fund
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Cash and cash equivalents $ - $ 27,314 $ - $ - $ - $ - $ - $ -
Shares of registered
investment companies 952,370 - 37,044 45,845 172,286 119,571 204,689 144,286
Loan participations and
corporate bonds, notes,
and certificates - 130,131 - - - - - -
Guaranteed investment
contracts - 22,785 - - - - - -
Equity securities - - - - - - - -
-------------------------------------------------------------------------------------
952,370 180,230 37,044 45,845 172,286 119,571 204,689 144,286
Employee receivables - - - - - - - -
Interest and dividends
receivable 5 931 - - 2,296 1 375 -
-------------------------------------------------------------------------------------
Total assets 952,375 181,161 37,044 45,845 174,582 119,572 205,064 144,286
LIABILITIES
Payable to brokers for
securities purchased - - - - - - - -
-------------------------------------------------------------------------------------
Net assets available for
benefits $952,375 $181,161 $37,044 $45,845 $174,582 $119,572 $205,064 $144,286
=====================================================================================
</TABLE>
See accompanying notes
2
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Statement of Net Assets Available for Benefits,
With Fund Information (continued)
December 31, 1997
<TABLE>
Participant-Directed Fund Information
-------------------------------------------------------
American
Fidelity Fidelity Funds
Low- Growth Twentieth EuroPacific
Priced Company Century Growth Intel
Stock Fund Fund Ultra Fund Fund Stock Fund Other Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Cash and cash equivalents $ - $ - $ - $ - $ 6,094 $19,684 $ 53,092
Shares of registered
investment companies 75,456 111,870 194,014 60,530 - - 2,117,961
Loan participations and
corporate bonds, notes,
and certificates - - - - - - 130,131
Guaranteed investment
contracts - - - - - - 22,785
Equity securities - - - - 444,893 - 444,893
-------------------------------------------------------------------------------
75,456 111,870 194,014 60,530 450,987 19,684 2,768,862
Employee receivables - - - - - 13,462 13,462
Interest and dividends
receivable 1 - - (1,309) 21 107 2,428
-------------------------------------------------------------------------------
Total assets 75,457 111,870 194,014 59,221 451,008 33,253 2,784,752
LIABILITIES
Payable to brokers for
securities purchased - - - - 6,062 - 6,062
-------------------------------------------------------------------------------
Net assets available for
benefits $75,457 $111,870 $194,014 $59,221 $444,946 $33,253 $2,778,690
===============================================================================
</TABLE>
See accompanying notes
3
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Statement of Net Assets Available for Benefits,
With Fund Information (continued)
December 31, 1996
<TABLE>
Participant-Directed Fund Information
---------------------------------------------------------------------------------------
Fidelity Fidelity
Insti- Scudder Capital Vanguard Fidelity
tutional Fixed & Fidelity Insti- Growth & Fidelity Fidelity
Cash Income Income Puritan tutional Income Magellan Contra-
Portfolio Fund Fund Fund Index Fund Portfolio Fund fund
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Cash and cash equivalents $ - $ 11,588 $ - $ - $ (567) $ - $ - $ -
Shares of registered
investment companies 1,028,593 - 23,020 32,106 108,162 54,459 125,528 100,141
Loan participations and
corporate bonds, notes,
and certificates - 107,721 - - - - - -
Guaranteed investment
contracts - 28,338 - - - - - -
Equity securities - - - - - - - -
---------------------------------------------------------------------------------------
1,028,593 147,647 23,020 32,106 107,595 54,459 125,528 100,141
Employee receivables - - - - - - - -
Interest and dividends
receivable 4,681 734 - - 2,448 - - -
---------------------------------------------------------------------------------------
Total assets 1,033,274 148,381 23,020 32,106 110,043 54,459 125,528 100,141
---------------------------------------------------------------------------------------
Net assets available for
benefits $1,033,274 $148,381 $23,020 $32,106 $110,043 $54,459 $125,528 $100,141
=======================================================================================
</TABLE>
See accompanying notes
4
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Statement of Net Assets Available for Benefits,
With Fund Information (continued)
December 31, 1996
<TABLE>
Participant-Directed Fund Information
--------------------------------------------
American
Fidelity Fidelity Funds
Low- Growth Twentieth EuroPacific
Priced Company Century Growth
Stock Fund Fund Ultra Fund Fund Other Total
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Cash and cash equivalents $ - $ - $ - $ - $31,283 $ 42,304
Shares of registered
investment companies 47,563 77,475 158,924 41,616 - 1,797,587
Loan participations and
corporate bonds, notes
and certificates - - - - - 107,721
Guaranteed investment
contracts - - - - - 28,338
Equity securities - - - - - -
-------------------------------------------------------------------
47,563 77,475 158,924 41,616 31,283 1,975,950
Employee receivables - - - - 18,056 18,056
Interest and dividends
receivable - - - - 130 7,993
--------------------------------------------------------------------
Total assets 47,563 77,475 158,924 41,616 49,469 2,001,999
-------------------------------------------------------------------
Net assets available for
benefits $47,563 $77,475 $158,924 $41,616 $49,469 $2,001,999
===================================================================
</TABLE>
See accompanying notes
5
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits,
With Fund Information
Year ended December 31, 1997
<TABLE>
Participant-Directed Fund Information
--------------------------------------------------------------------------------------
Fidelity Fidelity
Insti- Scudder Capital Vanguard Fidelity
tutional Fixed & Fidelity Insti- Growth & Fidelity Fidelity
Cash Income Income Puritan tutional Income Magellan Contra-
Portfolio Fund Fund Fund Index Fund Portfolio Fund fund
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Net realized and
unrealized
appreciation
(depreciation) in fair
value of interest in
Master Trust $ - $ 918 $ 2,092 $ 3,852 $ 34,207 $ 17,824 $ 23,294 $ 9,782
Interest and dividends 47,294 10,821 2,135 3,371 1,240 4,869 12,555 13,583
Employee contributions - - - - - - - -
---------------------------------------------------------------------------------------
Total additions 47,294 11,739 4,227 7,223 35,447 22,693 35,849 23,365
Deductions from net assets
attributed to:
Benefits paid to
participants and
participant withdrawals - - - - - - - -
---------------------------------------------------------------------------------------
Total deductions - - - - - - - -
Net transfers between funds (128,193) 21,041 9,797 6,516 29,092 42,420 43,687 20,780
---------------------------------------------------------------------------------------
Net increase (decrease) (80,899) 32,780 14,024 13,739 64,539 65,113 79,536 44,145
Net assets available for
benefits:
Beginning of year 1,033,274 148,381 23,020 32,106 110,043 54,459 125,528 100,141
---------------------------------------------------------------------------------------
End of year $ 952,375 $181,161 $37,044 $45,845 $174,582 $119,572 $205,064 $144,286
=======================================================================================
</TABLE>
See accompanying notes
6
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits,
With Fund Information (continued)
Year ended December 31, 1997
<TABLE>
Participant-Directed Fund Information
-----------------------------------------------------------
American
Fidelity Fidelity Funds
Low- Growth Twentieth EuroPacific
Priced Company Century Growth Intel
Stock Fund Fund Ultra Fund Fund Stock Fund Other Total
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Net realized and
unrealized
appreciation
(depreciation) in fair
value of interest in
Master Trust $ 7,005 $ 4,428 $ 32,807 $ 2,024 $(28,500) $ - $ 109,733
Interest and dividends 4,796 10,535 75 263 758 1,247 113,542
Employee contributions - - - - - 731,922 731,922
--------------------------------------------------------------------------------
Total additions 11,801 14,963 32,882 2,287 (27,742) 733,169 955,197
Deductions from net assets
attributed to:
Benefits paid to
participants and
participant withdrawals - - - - - 178,506 178,506
--------------------------------------------------------------------------------
Total deductions - - - - - 178,506 178,506
Net transfers between funds 16,093 19,432 2,208 15,318 472,688 (570,879) -
--------------------------------------------------------------------------------
Net increase (decrease) 27,894 34,395 35,090 17,605 444,946 (16,216) 776,691
Net assets available for
benefits:
Beginning of year 47,563 77,475 158,924 41,616 - 49,469 2,001,999
--------------------------------------------------------------------------------
End of year $ 75,457 $111,870 $194,014 $59,221 $444,946 $ 33,253 $2,778,690
================================================================================
</TABLE>
See accompanying notes
7
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements
December 31, 1997
1. DESCRIPTION OF THE PLAN
The following description of the Intel Puerto Rico Retirement Savings Plan
(the Plan) provides only general information. Participants should refer to the
plan document for a more complete description of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering all employees of Intel Puerto
Rico, Inc. and Intel Microprocessor Corporation - Puerto Rico Branch (the
Companies). Employees are eligible to participate in the Plan, effective the
first day of the calendar quarter following one month of service.
The Plan is intended to be qualified under Section 1165(a) and Section 1165(e)
of the Puerto Rico Internal Revenue Code of 1994, as amended, and pursuant to
Section 1022(i)(2) of the Employee Retirement Income Security Act of 1974
(ERISA) under Section 401(a) and Section 401(k) of the Internal Revenue Code
of 1986 (the Code).
TRUSTEE
Mellon Bank N.A. is the Plan's custodian, and Chase Manhattan Bank is the
trustee of the Plan.
CONTRIBUTIONS AND PARTICIPANT ACCOUNTS
Participant Contributions
- -------------------------
Participants are allowed to contribute from 1% to 10% (limited to certain
percentages for highly compensated individuals) of their annual compensation
on a before-tax basis (to a maximum amount of $7,500 in 1997). Such
contributions are withheld by the Companies from each participant's
compensation and deposited in the appropriate fund in accordance with the
participant's directives. Participants may change their investment elections
on a monthly basis.
Participant contributions and the allocation of the Companies' contributions
and forfeitures to each participant in total for the Plan and the Intel Puerto
Rico Profit Sharing Retirement Plan are limited to the lesser of $30,000 or 25%
of a participant's compensation.
8
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (continued)
Participant Accounts
- --------------------
Separate accounts are maintained for each participant. The account balances
are generally adjusted as follows:
- Monthly for participant contributions.
- Daily for a pro rata share of gains or losses on the Plan's investments
based on the ratio that each participant's account bears to the total of
all such accounts.
VESTING
Participants are immediately 100% vested with respect to contributions to all
accounts in the Plan as well as the related earnings from such contributions.
PAYMENT OF BENEFITS
Participants are eligible for a distribution of plan benefits upon termination
of service, financial hardship (as defined by the Plan), or death. Upon
termination of service, the normal form of benefit is an annuity. However, a
participant may elect, with spousal consent, to have benefits paid in a single
lump sum. In the event of financial hardship or death, the benefits are usually
paid in a single lump sum.
ADMINISTRATIVE EXPENSES
All administrative expenses are paid by the Companies.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements are prepared on the accrual basis of
accounting.
Certain amounts reported in the prior year have been reclassified to conform
to the current year's presentation.
9
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INVESTMENT VALUATION AND INCOME RECOGNITION
Investments in the Master Trust (see Note 4) are stated at the Plan's
proportionate share of participation in the Master Trust, based upon the fair
market value of Master Trust investments held at year end.
Investments in shares of registered investment companies, cash and cash
equivalents, loan participations, corporate bonds, and notes and certificates
are stated at fair value as of the last day of the year. The fair value for
securities traded on a national securities exchange or over-the-counter market
is the last reported sales price as of the valuation date. The shares of
registered investment companies are valued at quoted market prices that
represent the net asset values of shares held by the Plan at year end.
Investments not traded in an active market are stated at fair value, computed
using pricing models at current rates. Investment income includes the gain
(loss) realized on the sale of securities and unrealized appreciation
(depreciation) in the fair market value of investments held by the Plan, which
is the difference between the fair value of investments at the beginning of
the year and the end of the year.
The Master Trust holds wrapper contracts specifically allocated to the Plan in
order to manage market risks and to alter the return characteristics of
underlying securities to match certain Fixed Income Fund objectives (see
Note 5). Wrapper contracts with insurance companies are stated at fair market
value as of the last day of the year and are netted against the fair value of
the related underlying investment.
Investment transactions are recognized as of their trade dates, and collateral
has been obtained and secured against investments whenever deemed necessary.
Interest is accrued monthly; dividends are accrued when declared.
Guaranteed investment contracts are entered into with insurance companies. The
contracts, which are unallocated in nature, are valued at contract value,
which approximates fair value, as reported to the Plan by the respective
insurance companies. Contract value represents contributions made under the
contracts plus interest at the contract rates less withdrawals and
administrative expenses. If the funds in the guaranteed investment contracts
are needed for benefit payments prior to contract maturity, they may be
withdrawn without penalty.
10
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
PAYMENT OF BENEFITS
Benefits are recorded when paid.
CONTRIBUTIONS
Participant contributions are accrued by the Plan when the deferrals are made
from the participants' salaries.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
3. INVESTMENTS
INVESTMENT OPTIONS
During 1997, participants had the option to direct the investment of their
voluntary contributions to the Plan in increments of 10% among the following
investment funds:
Fidelity Institutional Cash Portfolio
------------------------------------- - This mutual fund invests in
high-quality, short-term money market securities of U.S. issuers. The
objective of the fund is to preserve the participant's investment,
maintain a stable price, and provide current income.
Scudder Fixed Income Fund
------------------------- - The objective of this fund is to provide
participants with a stable fixed-rate return of investment and
protection of principal from changes in market interest rates. This
fund invests in guaranteed investment contracts with insurance companies
and approved financial institutions and other debt instruments with
similar characteristics.
Fidelity Capital and Income Fund
-------------------------------- - This mutual fund invests primarily in
higher yielding, lower quality debt securities.
11
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (continued)
INVESTMENT OPTIONS (continued)
Fidelity Puritan Fund
--------------------- - This mutual fund invests in securities of U.S.
and foreign issuers, including those in emerging markets. The securities
include bonds of any quality, common stocks, and preferred stocks.
Vanguard Institutional Index Fund
--------------------------------- - This mutual fund seeks to replicate the
overall market performance as measured by the Standard & Poor's 500 Index
(S&P 500 Index). This fund holds the same 500 stocks that are included in
the S&P 500 Index.
Fidelity Growth and Income Portfolio
------------------------------------ - This mutual fund invests
primarily in U.S. and foreign stocks, focusing on those that pay current
dividends.
Fidelity Magellan Fund
---------------------- - This mutual fund invests primarily in common
stocks of small, medium, and large foreign and U.S. companies. Investments
are broadly diversified across many different types and sizes of companies
and industries.
Fidelity Contrafund
------------------- - The objective of this mutual fund is to increase the
value of the participant's investment by investing in common stocks that
are currently out of public favor.
Fidelity Low-Priced Stock Fund
------------------------------ - This mutual fund invests primarily in
undervalued stocks of smaller, less well-known companies that have
potential for significant growth or stocks of companies that are out of
favor with other investors.
Fidelity Growth Company Fund
---------------------------- - This mutual fund invests primarily in stocks
of companies with earnings or revenues that indicate the potential for
above-average growth.
Twentieth Century Ultra Fund
---------------------------- - This mutual fund invests primarily in
common stocks of small- and mid-size companies whose earnings and revenues
are accelerating. Investments are broadly diversified across many different
types and sizes of companies and industries.
12
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (continued)
INVESTMENT OPTIONS (continued)
American Funds EuroPacific Growth Fund
-------------------------------------- - This mutual fund invests primarily
in stocks of companies whose principal business activities are outside the
U.S. Usually, at least 65% of the fund's total assets will be invested in
securities of issuers from Europe or the Pacific Basin. The fund can invest
in many types of companies, ranging from large multinational corporations
located in major world markets to smaller companies located in emerging
markets.
Intel Stock Fund
---------------- - This fund provides participants the option to have their
voluntary Section 165(e) contributions invested solely in Intel common
stock. Transactions within this fund qualify as party-in-interest
transactions.
GUARANTEED INVESTMENT CONTRACTS
The Plan holds guaranteed investment contracts with insurance companies in
order to provide participants with a stable, fixed-rate return of investment
and protection of principal from changes in market interest rates. As of
December 31, 1997, the Master Trust held guaranteed investment contracts in
the amount of $4,607,000 with insurance companies that have Standard & Poor's
ratings of AA or better at the time of purchase. No more than approximately
$2,741,000 of the guaranteed investment contracts is with any one insurance
company.
As of December 31, 1996, the Master Trust held a guaranteed investment contract
of approximately $3,257,000 with Confederation Life Insurance Company
(Confederation Life). In August 1994, Canadian regulators seized the assets of
Confederation Life due to concerns over the quality of the investment
portfolio. A trustee was appointed until a realization of the Company's
assets was completed. As of August 1994, the Confederation Life portion of
each participant's account had been segregated into a separate account.
The Master Trust made the election for the Scudder Fixed Income Fund to
receive a total recovery of principal and interest estimated to be 119% of
the asset contract value. As of December 31, 1997, there was no significant
remaining Master Trust amount related to this guaranteed investment contract.
13
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
4. INTEREST IN THE MASTER TRUST
All of the investments of the Plan are held in the Master Trust which consists
of the assets of the Plan, the Intel Corporation Profit Sharing Retirement
Plan, the Intel Corporation Defined Benefit Pension Plan, the Intel Puerto
Rico Profit Sharing Plan, the Intel Corporation 401(k) Savings Plan, and the
Intel Puerto Rico Defined Benefit Pension Plan. Each plan shares in the
assets and earnings of the Master Trust in proportion to its respective
interests in the Master Trust. The trustee holds all investments of the Master
Trust. Assets within mutual funds are managed by the respective mutual fund
managers. Scudder, Stevens & Clark has discretionary authority for the purchase
and sale of investments in the Fixed Income Fund, subject to the general
investment policies of the Investment Policy Committee of the Plan.
The following is a summary of the assets and liabilities of the Master Trust
and the interest of the Plan in the Master Trust as of December 31:
<TABLE>
1997 1996
----------------------------------
(In Thousands, Except Percentages)
<S> <C> <C>
Total assets $2,797,183 $1,973,427
Total liabilities $ 2,178 $ 5,095
Increase in net trust assets for
the years then ended $ 826,673 $ 575,277
Ownership percentage of the Plan 0.1% 0.1%
</TABLE>
5. WRAPPER CONTRACTS
The Master Trust holds wrapper contracts in order to manage market risks and
to alter the return characteristics of underlying securities to match certain
Fixed Income Fund objectives. Wrapper contracts generally change the investment
characteristics of underlying securities (such as corporate debt or U.S.
government securities) to those of guaranteed investment contracts. Guaranteed
investment contracts provide participants with a stable, fixed-rate return of
investment and protection of principal from changes in market interest rates.
The wrapper contracts provide that benefit-responsive distributions for
specific underlying securities may be withdrawn at contract or face value.
Benefit-responsive distributions are generally defined as a withdrawal because
of a participant's retirement, disability, death, or participant-directed
transfers, in accordance with the terms of the Plan. As of December 31, 1997
and 1996, the Master Trust held wrapper contracts with a notional amount of
$26,444,000 and $24,785,000 with a fair value of approximately ($113,000) and
$30,346, respectively.
14
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
6. CONCENTRATION OF CREDIT RISK
The Plan's exposure to a concentration of credit risk is limited by the
diversification of investments across thirteen participant-directed fund
elections. Additionally, the investments within each participant-directed
fund election are further diversified into varied financial markets. The Plan's
exposure to credit risk on the wrapper contracts in the Scudder Fixed Income
Fund is limited to the fair value of the contracts with each counterparty.
7. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND THE FORM 5500
The following is a reconciliation of net assets available for benefits per
the statement of net assets available for benefits to the Form 5500 as of
December 31:
<TABLE>
1997 1996
-----------------------------
<S> <C> <C>
Net assets available for benefits
per the financial statements $ 2,778,690 $ 2,001,999
Amounts allocated to withdrawing
participants (5,171) -
-----------------------------
Net assets available for benefits
per the Form 5500 $ 2,773,519 $ 2,001,999
=============================
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
December 31, 1997 but not yet paid as of that date.
The following is a reconciliation of benefits paid to participants per the
statement of changes in net assets available for benefits to the Form 5500:
<TABLE>
1997
---------------
<S> <C>
Benefits paid to participants per
the financial statements $178,506
Amounts allocated on the Form 5500
to withdrawn participants at December 31, 1997 5,171
---------------
Benefits paid to participants per
the Form 5500 $183,677
===============
</TABLE>
15
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
8. INCOME TAX STATUS
The Internal Revenue Service has informed the Companies by a letter, dated
December 10, 1992, that the Plan is qualified and the trust established under
the Plan is tax exempt under the appropriate sections of the Code. The
Companies have also received a determination letter, dated May 11, 1993, from
the Puerto Rico Department of the Treasury that the Plan meets the
requirements for qualification under Puerto Rico income tax laws and that the
trust forming a part of the Plan is exempt from income taxes. The Plan has been
amended since receiving the determination letters. However, the plan
administrator and the Plan's tax counsel believe that the Plan is designed and
is currently being operated in compliance with the Code and Puerto Rico income
tax law.
9. PLAN TERMINATION
Although they have not expressed any intent to do so, the Companies have the
right under the Plan to amend or terminate the Plan at any time and for any
reason. The Plan may be amended by the Board of Directors of the Companies. No
amendment of the Plan shall reduce the benefit of any participant, which
accrued under the Plan prior to the date when such amendment is adopted. In the
event of a plan termination, participants will remain 100% vested in their
accounts.
10. YEAR 2000 COMPLIANCE (Unaudited)
The Companies have developed a plan to modify their internal information
technology to be ready for the year 2000 and have begun converting critical
data processing systems. The Companies plan to establish year 2000 compliance
in all internal applications relevant to the Plan by June 30, 1999. The
Companies' plans also include determining whether third-party service providers
have reasonable plans in place to become year 2000 compliant. The Companies
requested action plans and implementation schedules that will accommodate year
2000 compliance from the administrator and the trustee. The Companies have
been informed that the administrator and the trustee expect implementation and
testing of action plans to be complete prior to June 30, 1999. The Companies
do not expect the year 2000 projects discussed above to have a significant
effect on plan operations.
16
<PAGE>
SIGNATURE
The Plan. Pursuant to the requirements of the Securities and Exchange Act of
1934, the Plan Administrator has duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
INTEL PUERTO RICO RETIREMENT SAVINGS PLAN
(Full Title of the Plan)
Date: June 23, 1998 By: /s/ Andy D. Bryant
----------------------------------
Andy D. Bryant
Vice President and Chief Financial
Officer of Intel Corporation,
Plan Administrator
<PAGE>
EXHIBIT 23
Consent of Ernst & Young LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333-20951) pertaining to the Intel Puerto Rico Retirement
Savings Plan of our report dated May 20, 1998, with respect to the financial
statements of the Intel Puerto Rico Retirement Savings Plan included in this
Annual Report (Form 11-K) for the year ended December 31, 1997.
ERNST & YOUNG LLP
San Jose, California
June 23, 1998
