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, 1998
___ 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, 1998 and 1997
Statement of Changes in Net Assets Available
for Benefits With Fund Information for the Year Ended
December 31, 1998 and 1997
Notes to Financial Statements
Signature
Exhibit 23 - Consent of Ernst & Young LLP, Independent Auditors
<PAGE>
Financial Statements
Intel Puerto Rico
Retirement Savings Plan
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
<PAGE>
Intel Puerto Rico Retirement Savings Plan
Financial Statements
Years ended December 31, 1998 and 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............................................ 10
<PAGE> 1
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, 1998 and 1997, and the related statements of changes in net assets
available for benefits for the years then ended. 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, 1998 and 1997,
and the changes in its net assets available for benefits for the years
then ended, in conformity with generally accepted accounting principles.
The Fund Information in the statements of net assets available for
benefits and the statements 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.
/s/ ERNST & YOUNG LLP
April 14, 1999
<PAGE> 2
Intel Puerto Rico Retirement Savings Plan
Statement of Net Assets Available for Benefits,
With Fund Information
December 31, 1998
<TABLE>
<CAPTION>
Participant-Directed Fund Information
----------------------------------------------------------------------
Fidelity Fidelity
Insti- Scudder Capital Vanguard Fidelity
tutional Fixed & Fidelity Insti- Growth & Fidelity
Cash Income Income Puritan tutional Income Magellan
Total Portfolio Fund Fund Fund Index Fund Portfolio Fund
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Interest bearing cash
and money market funds $ 40,757 $ - $ 19,747 $ - $ - $ - $ - $ -
Shares of registered
investment companies 2,992,879 910,847 - 46,912 86,837 341,376 231,758 361,915
Loan participations
and corporate
bonds, notes,
and certificates 199,446 - 199,446 - - - - -
Guaranteed investment
contracts 23,037 - 23,037 - - - - -
Equity securities 967,589 - - - - - - -
-----------------------------------------------------------------------------
4,223,708 910,847 242,230 46,912 86,837 341,376 231,758 361,915
Employee receivables 31,041 - - - - - - -
Interest and dividends
receivable 1,411 1 1,258 - - - - -
---------------------------------------------------------------------------
Total assets 4,256,160 910,848 243,488 46,912 86,837 341,376 231,758 361,915
LIABILITIES
Payable to brokers for
securities purchased 27,217 - - - - - - -
Accrued administrative
fees 23,563 - - - - - - -
--------------------------------------------------------------------------
Total liabilites 50,780 - - - - - - -
--------------------------------------------------------------------------
Net assets available for
benefits $4,205,380 $910,848 $243,488 $46,912 $86,837 $341,376 $231,758 $361,915
==========================================================================
See accompanying notes.
</TABLE>
<PAGE> 3
Intel Puerto Rico Retirement Savings Plan
Statement of Net Assets Available for Benefits,
With Fund Information (continued)
December 31, 1998
<TABLE>
Participant-Directed Fund Information
---------------------------------------------------------------
American
Fidelity Fidelity Funds
Low-Priced Growth Twentieth EuroPacific
Fidelity Stock Company Century Growth Intel
Contrafund Fund Fund Ultra Fund Fund Stock Fund Other
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Interest bearing cash
and money market
funds $ - $ - $ - $ - $ - $ 102 $20,908
Shares of registered
investment companies 228,489 201,634 167,306 321,103 94,702 - -
Loan participations and
corporate bonds,
notes, and
certificates - - - - - - -
Guaranteed investment
contracts
Equity securities - - - - - 967,589 -
--------------------------------------------------------------------
228,489 201,634 167,306 321,103 94,702 967,691 20,908
Employee receivables - - - - - - 31,041
Interest and dividends
receivable - - - - - 23 129
---------------------------------------------------------------------
Total assets 228,489 201,634 167,306 321,103 94,702 967,714 52,078
LIABILITIES
Payable to brokers for
securities purchased - - - 27,217 - - -
Accrued administrative
fees - - - - - - 23,563
----------------------------------------------------------------------
Total liabilities - - - 27,217 - - 23,563
Net assets available for
benefits $228,489 $201,634 $167,306 $293,886 $94,702 $967,714 $28,515
======================================================================
See accompanying notes.
</TABLE>
<PAGE> 4
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
Cash Income Income Puritan tutional Income Magellan
Total Portfolio Fund Fund Fund Index Fund Portfolio Fund
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Interest bearing cash
and money market
funds $ 53,092 $ - $ 27,314 $ - $ - $ - $ - $ -
Shares of registered
investment companies 2,117,961 952,370 - 37,044 45,845 172,286 119,571 204,689
Loan participations and
corporate bonds, notes,
and certificates 130,131 - 130,131 - - - - -
Guaranteed investment
contracts 22,785 - 22,785 - - - - -
Equity securities 444,893 - - - - - - -
--------------------------------------------------------------------------------
2,768,862 952,370 180,230 37,044 45,845 172,286 119,571 204,689
Employee receivables 13,462 - - - - - - -
Interest and dividends
receivable 2,428 5 931 - - 2,296 1 375
------------------------------------------------------------------------------
Total assets 2,784,752 952,375 181,161 37,044 45,845 174,582 119,572 205,064
LIABILITIES
Payable to brokers for
securities purchased 6,062 - - - - - - -
-----------------------------------------------------------------------------
Total liabilites 6,062 - - - - - - -
-----------------------------------------------------------------------------
Net assets available for
benefits $2,778,690 $952,375 $181,161 $37,044 $45,845 $174,582 $119,572 $205,064
==============================================================================
See accompanying notes.
</TABLE>
<PAGE> 5
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-Priced Growth Twentieth EuroPacific
Fidelity Stock Company Century Growth Intel
Contrafund Fund Fund Ultra Fund Fund Stock Fund Other
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Interest bearing cash
and money
market funds $ - $ - $ - $ - $ - $ 6,094 $ 19,684
Shares of registered
investment companies 144,286 75,456 111,870 194,014 60,530 - -
Loan participations and
corporate bonds,
notes, and
certificates - - - - - - -
Guaranteed investment
contracts - - - - - - -
Equity securities - - - - - 444,893 -
-----------------------------------------------------------------------
144,286 75,456 111,870 194,014 60,530 450,987 19,684
Employee receivables - - - - - - 13,462
Interest and dividends
receivable - 1 - - (1,309) 21 107
------------------------------------------------------------------------
Total assets 144,286 75,457 111,870 194,014 59,221 451,008 33,253
LIABILITIES
Payable to brokers for
securities purchased - - - - - 6,062 -
------------------------------------------------------------------------
Total liabilities - - - - - 6,062 -
------------------------------------------------------------------------
Net assets available for
benefits $114,286 $75,457 $111,870 $194,014 $59,221 $444,946 $33,253
=========================================================================
See accompanying notes.
</TABLE>
<PAGE> 6
Intel Puerto Rico Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits,
With Fund Information
Year ended December 31, 1998
<TABLE>
Participant-Directed Fund Information
--------------------------------------------------------------------
Fidelity Fidelity
Insti- Scudder Capital Vanguard Fidelity
tutional Fixed & Fidelity Insti- Growth & Fidelity
Cash Income Income Puritan tutional Income Magellan
Total Portfolio Fund Fund Fund Index Fund Portfolio Fund
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income from
Master Trust:
Net realized and
unrealized
appreciation
(depreciation) in fair
value of interest $ 622,289 $ - $ 1,147 $(3,592) $ 1,536 $59,211 $ 31,967 $ 65,672
Interest and dividends 142,897 48,433 11,745 4,396 6,421 1,487 8,012 14,760
Employee contributions 862,187 - - - - - - -
---------------------------------------------------------------------------
Total additions 1,627,373 48,433 12,892 804 7,957 60,698 39,979 80,432
Deductions from net assets
attributed to:
Benefits paid to
participants
and participant
withdrawals 177,120 - - - - - - -
Administrative fees 23,563
---------------------------------------------------------------------------
Total deductions 200,683 - - - - - - -
Net transfers between funds - (89,960) 49,435 9,064 33,035 106,096 72,207 76,419
---------------------------------------------------------------------------
Net increase (decrease) 1,426,690 (41,527) 62,327 9,868 40,992 166,794 112,186 156,851
Net assets available
for benefits:
Beginning of year 2,778,690 952,375 181,161 37,044 45,845 174,582 119,572 205,064
---------------------------------------------------------------------------
End of year $4,205,380 $910,848 $243,488 $46,912 $86,837 $341,376 $231,758 $361,915
============================================================================
See accompanying notes.
</TABLE>
<PAGE> 7
Intel Puerto Rico Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits,
With Fund Information (continued)
Year ended December 31, 1998
<TABLE>
Participant-Directed Fund Information
---------------------------------------------------------------
American
Fidelity Fidelity Funds
Low-Priced Growth Twentieth EuroPacific
Fidelity Stock Company Century Growth Intel
Contrafund Fund Fund Ultra Fund Fund Stock Fund Other
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income from
Master Trust:
Net realized and unrealized
appreciation
(depreciation) in fair
value of interest $35,750 $(11,823) $ 22,814 $47,611 $10,153 $361,843 $ -
Interest and dividends 16,828 14,525 11,468 2 2,352 1,222 1,246
Employee contributions - - - - - - 862,187
----------------------------------------------------------------------
Total additions 52,578 2,702 34,282 47,613 12,505 363,065 863,433
Deductions from net assets
attributed to:
Benefits paid to participants
and participant
withdrawals - - - - - - 177,120
Administrative fees - - - - - - 23,563
--------------------------------------------------------------------
Total deductions - - - - - - 200,683
Net transfers between funds 31,625 123,475 21,154 52,259 22,976 159,703 (667,488)
----------------------------------------------------------------------
Net increase (decrease) 84,203 126,177 55,436 99,872 35,481 522,768 (4,738)
Net assets available
for benefits:
Beginning of year 144,286 75,457 111,870 194,014 59,221 444,946 33,253
---------------------------------------------------------------------
End of year $228,489 $201,634 $167,306 $293,886 $94,702 $967,714 $28,515
=======================================================================
See accompanying notes.
</TABLE>
<PAGE> 8
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
Cash Income Income Puritan tutional Income Magellan
Total Portfolio Fund Fund Fund Index Fund Portfolio Fund
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income from
Master Trust:
Net realized and unrealized
appreciation
(depreciation) in fair
value of interest $ 109,733 $ - $ 918 $ 2,092 $ 3,852 $ 34,207 $ 17,824 $ 23,294
Interest and dividends 113,542 47,294 10,821 2,135 3,371 1,240 4,869 12,555
Employee contributions 731,922 - - - - - - -
---------------------------------------------------------------------------------------------
Total additions 955,197 47,294 11,739 4,227 7,223 35,447 22,693 35,849
Deductions from net assets
attributed to:
Benefits paid to
participants
and participant
withdrawals 178,506 - - - - - - -
---------------------------------------------------------------------------------------------
Total deductions 178,506 - - - - - - -
Net transfers between funds - (128,193) 21,041 9,797 6,516 29,092 42,420 43,687
---------------------------------------------------------------------------------------------
Net increase (decrease) 776,691 (80,899) 32,780 14,024 13,739 64,539 65,113 79,536
Net assets available
for benefits:
Beginning of year 2,001,999 1,033,274 148,381 23,020 32,106 110,043 54,459 125,528
---------------------------------------------------------------------------------------------
End of year $2,778,690 $ 952,375 $181,161 $37,044 $45,845 $174,582 $119,572 $205,064
=============================================================================================
See accompanying notes.
</TABLE>
<PAGE> 9
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-Priced Growth Twentieth EuroPacific
Fidelity Stock Company Century Growth Intel
Contrafund Fund Fund Ultra Fund Fund Stock Fund Other
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income from
Master Trust:
Net realized and unrealized
appreciation
(depreciation) in fair
value of interest $ 9,782 $ 7,005 $ 4,428 $ 32,807 $ 2,024 $ (28,500) $ -
Interest and dividends 13,583 4,796 10,535 75 263 758 1,247
Employee contributions - - - - - - 731,922
----------------------------------------------------------------------
Total additions 23,365 11,801 14,963 32,882 2,287 (27,742) 733,169
Deductions from net assets
attributed to:
Benefits paid to participants
and participant
withdrawls - - - - - - 178,506
--------------------------------------------------------------------
Total deductions - - - - - - 178,506
Net transfers between funds 20,780 16,093 19,432 2,208 15,318 472,688 (570,879)
---------------------------------------------------------------------
Net increase (decrease) 44,145 27,894 34,395 35,090 17,605 444,946 (16,216)
Net assets available
for benefits:
Beginning of year 100,141 47,563 77,475 158,924 41,616 - 49,469
--------------------------------------------------------------------
End of year $144,286 $75,457 $111,870 $194,014 $59,221 $444,946 $33,253
====================================================================
See accompanying notes.
</TABLE>
<PAGE> 10
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements
December 31, 1998
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, (the Company). Employees are eligible to participate in the Plan,
effective the first day of the calendar quarter following thirty days 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 U.S. Internal Revenue
Code of 1986 (the Code).
TRUSTEE
Mellon Bank N.A. (the Custodian) is the Plan's custodian, and Banco Popular de
Pureto Rico (the Trustee) is the trustee of the Plan. Prior to February 1998,
Chase Manhattan Bank was 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 $8,000 in 1998 and $7,500 in
1997). Such contributions are withheld by the Company 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 Company 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.
<PAGE> 11
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (continued)
CONTRIBUTIONS AND PARTICIPANT ACCOUNTS (continued)
Participant Accounts
- --------------------
Separate accounts are maintained for each participant. The account balances
are generally adjusted as follows:
- Biweekly 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
In 1998, all audit and trustee-related expenses were paid by the Plan. All
other administrative expenses were paid by the Company. In 1997, all
administrative expenses were paid by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements are prepared on the accrual basis of
accounting.
<PAGE> 12
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 value of Master Trust investments held at year end.
Investments in interest bearing cash, money market funds, shares of registered
investment companies, loan participations, corporate bonds, 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.
Interest bearing cash and money market funds are stated at cost plus accrued
interest which approximates fair value.
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 value of investments held by the Plan, which is the
difference between the fair value of investments at the beginning 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 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.
<PAGE> 13
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.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133). The Plan anticipates adoption of FAS 133 no
earlier than in the year 2000. Management of the Plan is currently evaluating
the effects of the statement, but because the Plan accounts for all financial
instruments at fair value (or amounts that approximate fair value), the Plan's
management does not anticipate that the adoption of the new statement will have
a significant effect on the recognized investment income or the net assets
available for benefits of the Plan.
3. INVESTMENTS
INVESTMENT OPTIONS
During 1998, 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. and foreign issuers.
The objective of the fund is to preserve the participant's investment,
maintain a stable price, and provide current income.
<PAGE> 14
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
INVESTMENT OPTIONS (CONTINUED)
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.
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.
<PAGE> 15
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
3. INVESTMENTS (CONTINUED)
INVESTMENT OPTIONS (CONTINUED)
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.
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 165 (e) contributions invested solely in Intel Corporation
common stock. Transactions within this fund qualify as party-in-interest
transactions.
GUARANTEED INVESTMENT CONTRACTS
The Master Trust held guaranteed investment contracts with insurance companies
allocated to the Plan 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, 1998, the Master Trust held guaranteed
investment contracts in the amount of $4,891,000 with insurance companies that
have Standard & Poor's ratings of AA or better at the time of purchase. No more
than approximately $2,904,000 of the guaranteed investment contracts is with
any one insurance company.
<PAGE> 16
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 Retirement 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 Custodian 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 Scudder 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 (in
thousands, except percentages):
<TABLE>
1998 1997
--------------------------------
<S> <C> <C>
Total assets $3,983,080 $2,797,183
Total liabilities $ 38,055 $ 2,178
Increase in net trust assets for
the years then ended $1,150,020 $ 826,673
The Plan's ownership percentage 0.11% 0.10%
</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 on
account of a participant's retirement, disability, death, or participant-
directed transfers in accordance with the terms of the Plan. As of December 31,
1998 and 1997, the Master Trust held wrapper contracts with a notional amount
of $33,832,000 and $26,444,000 with a fair value of approximately ($36,000) and
($113,000), respectively.
<PAGE> 17
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>
1998 1997
-------------------------------
<S> <C> <C>
Net assets available for benefits
per the financial statements $ 4,205,380 $ 2,778,690
Amounts allocated to withdrawing
participants (10,752) (5,171)
-------------------------------
Net assets available for benefits
per the Form 5500 $ 4,194,628 $ 2,773,519
===============================
</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, 1998 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>
1998 1997
-------------------------------
<S> <C> <C>
Benefits paid to participants per
the financial statements $177,120 $178,506
Amounts allocated on the Form 5500 to
withdrawn participants at December 31, 1998 10,752 -
Amounts allocated on the Form 5500 to
withdrawn participants at December 31, 1997 (5,171) 5,171
------------------------------
Benefits paid to participants per
the Form 5500 $182,701 $183,677
==============================
</TABLE>
<PAGE> 18
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
8. INCOME TAX STATUS
The Internal Revenue Service has informed the Company by a letter dated,
December 10, 1992, that the Plan and related trust is qualified and the trust
established under the Plan is tax exempt under the appropriate sections of the
Code. The Company has 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 internal 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 it has not expressed any intent to do so, the Company has 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 Company. 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 Company has developed a plan to modify its internal information technology
to be ready for the year 2000 and has begun converting critical data processing
systems. The Company plans to have internal applications relevant to the Plan
year 2000 capable by mid-1999. The Company's plan also includes determining
whether third-party service providers have reasonable plans in place to become
year 2000 capable. The Company has been informed that the administrator and the
Trustee of the Plan expect implementation and testing of action plans to be
complete prior to July 31, 1999. The Company has also been informed that the
investment managers expect implementation and testing of action plans to be
complete prior to September 30, 1999. The Company does not expect the year 2000
projects discussed above to have a significant effect on plan operations.
<PAGE> 19
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 25, 1999 By: /s/ Andy D. Bryant
----------------------------------
Andy D. Bryant
Senior Vice President and
Chief Financial Officer of Intel Corporation,
Plan Administrator
<PAGE> 20
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 April 14, 1999, 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, 1998.
/s/ ERNST & YOUNG LLP
San Jose, California
June 25, 1999
