<PAGE>
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: 033-63489
INTEL CORPORATION 401(k) SAVINGS PLAN
(Full title of the Plan)
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)
INTEL CORPORATION 401(K) 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 Years Ended December 31, 1998 and 1997
Notes to Financial Statements
Signature
Exhibit 23 - Consent of Ernst & Young LLP, Independent Auditors
<PAGE>
Financial Statements
Intel Corporation
401(k) Savings Plan
Years ended December 31, 1998 and 1997
with Report of Independent Auditors
<PAGE>
Intel Corporation 401(k) 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
Statements 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 Corporation 401(k) Savings Plan
We have audited the accompanying statements of net assets available for
benefits of the Intel Corporation 401(k) 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
Corporation 401(k) 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
May 14, 1999
<PAGE> 2
Intel Corporation 401(k) 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
-------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Interest bearing cash
and money market
funds $ 11,348 $ - $ 4,048 $ - $ - $ - $ - $ -
Shares of registered
investment companies 933,857 87,518 - 19,103 28,319 200,295 125,886 96,627
Loan participations
and corporate
bonds, notes,
and certificates 40,720 - 40,720 - - - - -
Guaranteed investment
contracts 4,703 - 4,703 - - - - -
Equity securities 471,065 - - - - - - -
Participant loans
receivable 11,555 - - - - - - -
------------------------------------------------------------------------------
1,473,248 87,518 49,471 19,103 28,319 200,295 125,886 96,627
Employee receivables 6,973 - - - - - - -
Interest and dividends
receivable 271 - 257 - - - - -
-------------------------------------------------------------------------------
Total assets 1,480,492 87,518 49,728 19,103 28,319 200,295 125,886 96,627
LIABILITIES
Payable to brokers for
securities purchased 2,549 5 - 1 2 2,145 8 7
Accrued administrative
fees 208 - - - - - - -
-----------------------------------------------------------------------------
Total liabilities 2,757 5 - 1 2 2,145 8 7
-----------------------------------------------------------------------------
Net assets available
for benefits $1,477,735 $87,513 $49,728 $19,102 $28,317 $198,150 $125,878 $96,620
===============================================================================
See accompanying notes.
</TABLE>
<PAGE> 3
Intel Corporation 401(k) Savings Plan
Statement of Net Assets Available for Benefits,
With Fund Information (continued)
December 31, 1998
<TABLE>
<CAPTION>
Participant-Directed Fund Information
----------------------------------------------------------------------
American
Fidelity Fidelity Funds
Low-Priced Growth Twentieth EuroPacific
Fidelity Stock Company Century Growth Intel Participant
Contrafund Fund Fund Ultra Fund Fund Stock Fund Loans Other
-----------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Interest bearing cash
and money market
funds $ - $ - $ - $ - $ 32 $ 2,059 $ 90 $ 5,119
Shares of registered
investment companies 94,692 67,277 62,221 115,815 36,104 - - -
Loan participations
and corporate
bonds, notes,
and certificates - - - - - - - -
Guaranteed investment
contracts - - - - - - - -
Equity securities - - - - - 471,065 - -
Participant loans
receivable - - - - - - 11,555 -
-----------------------------------------------------------------------------
94,692 67,277 62,221 115,815 36,136 473,124 11,645 5,119
Employee receivables - - - - - - - 6,973
Interest and dividends
receivable - - - - - 6 - 8
------------------------------------------------------------------------------
Total assets 94,692 67,277 62,221 115,815 36,136 473,130 11,645 12,100
LIABILITIES
Payable to brokers for
securities purchased 5 5 4 7 34 326 - -
Accrued administrative
fees - - - - - - - 208
-----------------------------------------------------------------------------
Total liabilities 5 5 4 7 34 326 - 208
-----------------------------------------------------------------------------
Net assets available
for benefits $94,687 $67,272 $62,217 $115,808 $36,102 $472,804 $11,645 $11,892
==============================================================================
See accompanying notes.
</TABLE>
<PAGE> 4
Intel Corporation 401(k) Savings Plan
Statement of Net Assets Available for Benefits,
With Fund Information
December 31, 1997
<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
-------------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Interest bearing cash
and money market
funds $ 9,156 $ 14 $ 5,447 $ - $ - $ - $ - $ -
Shares of registered
investment companies 618,745 76,965 - 14,410 17,721 98,196 70,952 61,910
Loan participations
and corporate
bonds, notes,
and certificates 25,903 - 25,903 - - - - -
Guaranteed investment
contracts 4,535 - 4,535 - - - - -
Equity securities 292,782 - - - - - - -
Participant loans
receivable 5,424 - - - - - - -
------------------------------------------------------------------------------
956,545 76,979 35,885 14,410 17,721 98,196 70,952 61,910
Employee receivables 32 - - - - - - -
Interest and dividends
receivable 228 - 211 - - - - -
Receivable from broker
for securities
sold 24 - - - - - - -
-------------------------------------------------------------------------------
Total assets 956,829 76,979 36,096 14,410 17,721 98,196 70,952 61,910
LIABILITIES
Payable to brokers for
securities purchased 2,172 - - - - - - -
Accrued administrative
fees 52 - - - - - - -
-----------------------------------------------------------------------------
Total liabilities 2,224 - - - - - - -
-----------------------------------------------------------------------------
Net assets available
for benefits $ 954,605 $76,979 $36,096 $14,410 $17,721 $98,196 $70,952 $61,910
==============================================================================
See accompanying notes.
</TABLE>
<PAGE> 5
Intel Corporation 401(k) Savings Plan
Statement of Net Assets Available for Benefits,
With Fund Information (continued)
December 31, 1997
<TABLE>
<CAPTION>
Participant-Directed Fund Information
---------------------------------------------------------------------
American
Fidelity Fidelity Funds
Low-Priced Growth Twentieth EuroPacific
Fidelity Stock Company Century Growth Intel Participant
Contrafund Fund Fund Ultra Fund Fund Stock Fund Loanms Other
----------------------------------------------------------------------------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in Master
Trust, at fair value:
Interest bearing cash
and money market
funds $ - $ - $ - $ - $ - $ 3,574 $ 76 $ 45
Shares of registered
investment companies 65,834 62,568 47,817 73,420 28,952 - - -
Loan participations
and corporate
bonds, notes,
and certificates - - - - - - - -
Guaranteed investment
contracts - - - - - - - -
Equity securities - - - - - 292,782 - -
Participant loans
receivable - - - - - - 5,424 -
-----------------------------------------------------------------------------
65,834 62,568 47,817 73,420 28,952 296,356 5,500 45
Employee receivables - - - - - - - 32
Interest and dividends
receivable - - - - - 13 - 4
Receivable from broker
for securities
sold - - - - - 24 - -
------------------------------------------------------------------------------
Total assets 65,834 62,568 47,817 73,420 28,952 296,393 5,500 81
LIABILITIES
Payable to brokers for
securities purchased - - - - - 2,172 - -
Accrued administrative
fees - - - - - - - 52
-----------------------------------------------------------------------------
Total liabilities - - - - - 2,172 - 52
-----------------------------------------------------------------------------
Net assets available
for benefits $ 65,834 $62,568 $47,817 $73,420 $28,952 $294,221 $5,500 $29
==============================================================================
See accompanying notes.
</TABLE>
<PAGE> 6
Intel Corporation 401(k) Savings Plan
Statement of Changes in Net Assets Available
for Benefits, With Fund Information
Year Ended 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
-------------------------------------------------------------------------------
(In Thousands)
<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 $ 312,521 $ - $ 235 $(1,506) $ 1,020 $ 34,864 $ 18,971 $ 19,087
Interest and
dividends 38,812 4,620 2,398 1,824 2,178 1,276 4,358 4,239
Transfer of assets from
Digital Equipment
Corporation Savings and
Investment Plan and
Chips and Technologies,
Incorporated 401 (k)
Plan 53,206 37,222 - - - - - -
Employee contributions 169,921 - - - - - - -
-------------------------------------------------------------------------------
Total additions 574,460 41,842 2,633 318 3,198 36,140 23,329 23,326
Deductions from net
assets attributed to:
Benefits paid to
participants and
participant
withdrawals 51,059 113 1,157 - - - - -
Administrative fees 271 - - 1 - - - -
-------------------------------------------------------------------------------
Total deductions 51,330 113 1,157 1 - - - -
Net transfers
between funds - (31,195) 12,156 4,375 7,398 63,814 31,597 11,384
-------------------------------------------------------------------------------
Net increase 523,130 10,534 13,632 4,692 10,596 99,954 54,926 34,710
Net assets available
for benefits:
Beginning of year 954,605 76,979 36,096 14,410 17,721 98,196 70,952 61,910
-------------------------------------------------------------------------------
End of year $1,477,735 $87,513 $49,728 $19,102 $28,317 $198,150 $125,878 $96,620
===============================================================================
See accompanying notes.
</TABLE>
<PAGE> 7
Intel Corporation 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits,
With Fund Information (continued)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Participant-Directed Fund Information
---------------------------------------------------------------------
American
Fidelity Fidelity Funds
Low-Priced Growth Twentieth EuroPacific
Fidelity Stock Company Century Growth Intel Participant
Contrafund Fund Fund Ultra Fund Fund Stock Fund Loans Other
-----------------------------------------------------------------------------
(In Thousands)
<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 $ 15,410 $ (5,083) $ 8,904 $ 28,171 $ 4,208 $188,240 $ - $ -
Interest and
dividends 6,980 4,847 4,357 - 429 633 613 60
Transfer of assets from
Digital Equipment
Corporation Savings and
Investment Plan and
Chips and Technologies,
Incorporated 401 (k)
Plan - - - - - - 19 15,965
Employee contributions - - - - - - - 169,921
----------------------------------------------------------------------------
Total additions 22,390 (236) 13,261 28,171 4,637 188,873 632 185,946
Deductions from net
assets attributed to:
Benefits paid to
participants and
participant
withdrawals - - - - - 2,912 - 46,877
Administrative fees - - - - - - - 270
-----------------------------------------------------------------------------
Total deductions - - - - - 2,912 - 47,147
Net transfers between
funds 6,463 4,940 1,139 14,217 2,513 (7,378) 5,513 (126,936)
----------------------------------------------------------------------------
Net increase 28,853 4,704 14,400 42,388 7,150 178,583 6,145 11,863
Net assets available
for benefits:
Beginning of year 65,834 62,568 47,817 73,420 28,952 294,221 5,500 29
-------------------------------------------------------------------------------
End of year $94,687 $67,272 $62,217 $115,808 $36,102 $472,804 $11,645 $11,892
===============================================================================
See accompanying notes.
</TABLE>
<PAGE> 8
Intel Corporation 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits,
With Fund Information
Year Ended December 31, 1997
<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
-------------------------------------------------------------------------------
(In Thousands)
<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 $ 77,160 $ - $ 199 $ 879 $ 1,710 $ 20,522 $ 12,120 $ 9,025
Interest and
dividends 35,662 4,267 2,591 909 1,375 1,603 3,107 4,011
Employee contributions 144,749 - - - - - - -
-------------------------------------------------------------------------------
Total additions 257,571 4,267 2,790 1,788 3,085 22,125 15,227 13,036
Deductions from net
assets attributed to:
Benefits paid to
participants and
participant
withdrawals 29,025 (24) - - - (1) - -
Administrative fees 94 - - - - - - -
-------------------------------------------------------------------------------
Total deductions 29,119 (24) - - - (1) - -
Transfer of assets (to)
from the Intel
Corporation Defined
Benefit Plan (186) (142) (19) - - - - -
Net transfers between
funds - (17,460) (50) 1,197 1,339 20,541 9,574 (3,846)
-------------------------------------------------------------------------------
Net increase(decrease) 228,266 (13,311) 2,721 2,985 4,424 42,667 24,801 9,190
Net assets available
for benefits:
Beginning of year 726,339 90,290 33,375 11,425 13,297 55,529 46,151 52,720
-------------------------------------------------------------------------------
End of year $954,605 $76,979 $36,096 $14,410 $17,721 $98,196 $70,952 $61,910
===============================================================================
See accompanying notes.
</TABLE>
<PAGE> 9
Intel Corporation 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits,
With Fund Information (continued)
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Participant-Directed Fund Information
---------------------------------------------------------------------
American
Fidelity Fidelity Funds
Low-Priced Growth Twentieth EuroPacific
Fidelity Stock Company Century Growth Intel Participant
Contrafund Fund Fund Ultra Fund Fund Stock Fund Loans Other
-----------------------------------------------------------------------------
(In Thousands)
<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
in fair value of
interest $ 5,829 $ 7,806 $ 2,962 $ 11,864 $ 1,294 $ 2,950 $ - $ -
Interest and
dividends 6,235 4,164 4,530 1,441 744 524 124 37
Employee contributions - - - - - - - 144,749
-------------------------------------------------------------------------------
Total additions 12,064 11,970 7,492 13,305 2,038 3,474 124 144,786
Deductions from net
assets attributed to:
Benefits paid to
participants and
participant
withdrawals (1) - (1) - - 2,320 - 26,732
Administrative fees - - - - - - - 94
-------------------------------------------------------------------------------
Total deductions (1) - (1) - - 2,320 - 26,826
Transfer of assets (to)
from the Intel
Corporation Defined
Benefit Plan - - - - - (25) - -
Net transfers between
funds 3,899 12,859 (2,177) (3,976) 5,355 93,914 41 (121,210)
-------------------------------------------------------------------------------
Net increase(decrease) 15,964 24,829 5,316 9,329 7,393 95,043 165 (3,250)
Net assets available
for benefits:
Beginning of year 49,870 37,739 42,501 64,091 21,559 199,178 5,335 3,279
------------------------------------------------------------------------------
End of year $65,834 $62,568 $47,817 $73,420 $28,952 $294,221 $5,500 $ 29
==============================================================================
See accompanying notes.
</TABLE>
<PAGE> 10
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
December 31, 1998
1. DESCRIPTION OF THE PLAN
The following description of the Intel Corporation 401(k)
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 domestic
employees of Intel Corporation (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 subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA).
CREATION OF THE PLAN
The Intel Corporation Profit Sharing Retirement Plan (the Predecessor
Plan), authorizing discretionary employer contributions, has historically
included a cash or deferred arrangement under Section 401(k) of the Internal
Revenue Code (the Code). Effective January 1, 1996, the Predecessor Plan was
divided into two components for purposes of ERISA: the Intel Corporation
401(k) Savings Plan and the Intel Corporation Profit Sharing Retirement Plan.
The Intel Corporation 401(k) Savings Plan consists of participants' deferred
accounts, employee accounts, PAYSOP accounts, and rollover accounts.
The basic and discretionary Intel Corporation contribution accounts remain
in the Intel Corporation Profit Sharing Retirement Plan.
TRUSTEE
Mellon Bank N.A. (the Trustee) is the Plan's trustee.
CONTRIBUTIONS AND PARTICIPANT ACCOUNTS
Company Contributions
- --------------------- - Prior to 1987, the Company contributed shares of its
common stock (PAYSOP contributions) based on a percentage of each participant's
qualified compensation as defined in the Predecessor Plan. Participants may not
transfer funds from the PAYSOP account to other investment options. Effective
January 1, 1987, the PAYSOP program was amended so that no further contributions
would be made.
<PAGE> 11
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
(continued)
1. DESCRIPTION OF THE PLAN (continued)
CONTRIBUTIONS AND PARTICIPANT ACCOUNTS (continued)
PAYSOP contributions are held in a separate fund by the Trustee. For financial
statement purposes, this fund has been combined with the Intel Stock Fund. The
value of the PAYSOP shares in the Intel Stock Fund as of December 31, 1998 is
approximately $100,518,000 (approximately $65,003,000 for 1997). For the year
ended December 31, 1998, PAYSOP investment income was $39,491,000 ($3,381,000
for 1997) and benefits paid were $158,000 ($1,827,000 for 1997).
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 $10,000 in 1998 and $9,500 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 Company contributions and
forfeitures to each participant in total for the Plan and the Intel Corporation
Profit Sharing Retirement Plan are limited to the lesser of $30,000 or 25% of a
participant's compensation.
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.
<PAGE> 12
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
(continued)
1. DESCRIPTION OF THE PLAN (continued)
TRANSFER OF PLAN ASSETS
In May 1998, the Company purchased the semiconductor operations of Digital
Equipment Corporation (Digital). At the time of purchase, Digital maintained
the Digital Equipment Corporation Savings and Investment Plan (the Digital
Plan), a defined contribution plan that provided for employee deferrals
and employer matching contributions. The participants in the Digital Plan
who became employees of the Company became eligible to participate in the
Plan subsequent to the purchase by the Company. The Digital Plan assets
of those participants who became employees of the Company were transferred
to the Plan in September 1998.
In January 1998, the Company acquired the outstanding shares of Chips and
Technologies, Inc. (C&T). At the time of purchase, C&T maintained the Chips
and Technologies, Inc. 401(k) Plan (the C&T Plan), a defined contribution
plan that provided for employee deferrals and employer matching
contributions. The participants in the C&T Plan who became employees of
the Company became eligible to participate in the Plan subsequent to the
acquisition by the Company. The C&T Plan assets were transferred to the
Plan in September 1998.
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.
<PAGE> 13
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
(continued)
1. DESCRIPTION OF THE PLAN (continued)
PARTICIPANT LOANS
All participants are permitted to obtain loans of up to 50% of their combined
vested account balances in the Plan and the Intel Corporation Profit Sharing
Retirement Plan up to a maximum of $50,000. The loan provisions are established
and administered by the Company's Sheltered Employee Retirement Plan (SERP)
Administration Department. Loan accounts are maintained in a separate
account by the Trustee.
The amounts borrowed by the participants are first withdrawn from the vested
value of the Intel Corporation Profit Sharing Retirement Plan accounts until
these funds are exhausted and then withdrawn from the accounts of the Plan.
Repayments of loans are transferred to the participants' accounts in
the Plan and Intel Corporation Profit Sharing Retirement Plan in the
ratio in which such accounts provided funding for the loan.
Loan activity for 1998 included approximately $7,473,000 of loans made to
and $1,960,000 of repayments from the Plan's participants
($4,188,000 and $4,147,000 for 1997).
ADMINISTRATIVE EXPENSES
The Company pays a portion of the expenses for administration of the Plan.
All other administrative expenses are paid directly by the Plan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements are prepared on the accrual basis of
accounting.
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.
<PAGE> 14
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
(continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INVESTMENT VALUATION AND INCOME RECOGNITION (continued)
Investments in interest bearing cash, money market funds, shares of registered
investment companies, loan participations, corporate bonds, notes, certificates,
and participant loans receivable 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 approximate fair value. Participant loans receivable
are valued at their outstanding balances which approximate 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 market 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
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.
<PAGE> 15
Intel Corporation 401(k) 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 the year 2000. Management of the Plan is currently evaluating the
effects of FAS 133 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.
<PAGE> 16
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
(continued)
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.
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.
<PAGE> 17
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
(continued)
3. INVESTMENTS (continued)
INVESTMENT OPTIONS (continued)
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.
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 401(k) contributions invested solely in Intel Corporation
common stock. Transactions within this fund qualify as party-in-interest
transactions.
<PAGE> 18
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
(continued)
3. INVESTMENTS (continued)
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.
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 Puerto Rico Retirement 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 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 year ended $1,150,020 $ 826,673
The Plan's ownership percentage 36.93% 33.89%
</TABLE>
<PAGE> 19
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
(continued)
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.
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 (in thousands):
<TABLE>
1998 1997
-------------------------------
<S> <C> <C>
Net assets available for benefits
per the financial statements $ 1,477,735 $ 954,605
Amounts allocated to withdrawing
participants (7,089) (2,981)
-------------------------------
Net assets available for benefits
per the Form 5500 $ 1,470,646 $ 951,624
===============================
</TABLE>
<PAGE> 20
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
(continued)
7. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND THE FORM 5500 (continued)
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 (in thousands):
<TABLE>
1998 1997
-------------------------------
<S> <C> <C>
Benefits paid to participants per
the financial statements $51,059 $29,025
Amounts allocated on the Form 5500 to
withdrawn participants at December 31, 1998 7,089 -
Amounts allocated on the Form 5500 to
withdrawn participants at December 31, 1997 (2,981) 2,981
Amounts allocated on the Form 5500 to
withdrawn participants at December 31, 1996 - (2,748)
------------------------------
Benefits paid to participants per
the Form 5500 $55,167 $29,258
==============================
</TABLE>
8. INCOME TAX STATUS
The Internal Revenue Service has informed the Company by a letter, dated
September 6, 1994, that the Intel Corporation Profit Sharing Retirement
Plan (the Predecessor Plan) is qualified and the trust established under
the Predecessor Plan is tax exempt under the appropriate sections of the
Code. The Predecessor Plan has been amended to segregate the 401(k)
Savings component to a separate plan since receiving the determination
letter. However, the plan administrator and its internal tax counsel
believe that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Code.
<PAGE> 21
Intel Corporation 401(k) Savings Plan
Notes to Financial Statements
(continued)
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> 22
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 CORPORATION 401(k) 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> 23
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-63489) pertaining to the Intel Corporation 401(k)
Savings Plan and the Intel Corporation Sheltered Employee Retirement Plan
Plus of our report dated May 14, 1999, with respect to the financial
statements of the Intel Corporation 401(k) 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
