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, 1999
___ TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
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Commission file number: 333-20951
INTEL PUERTO RICO RETIREMENT SAVINGS PLAN
P.O. BOX 125
LAS PIEDRAS, PUERTO RICO, 00771
(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 at December 31, 1999 and 1998
Statement of Changes in Net Assets Available for Benefits for the Year Ended
December 31, 1999
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, 1999
with Report of Independent Auditors
<PAGE>
Intel Puerto Retirement Savings Plan
Financial Statements
Year ended December 31, 1999
CONTENTS
Report of Independent Auditors 1
Audited Financial Statements
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
<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,
1999 and 1998, and the related statement of changes in net assets available
for benefits for the year ended December 31, 1999. 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 auditing standards generally
accepted in the United States. 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, 1999 and 1998, and the
changes in its net assets available for benefits for the year ended December
31, 1999, in conformity with accounting principles generally accepted in the
United States.
/s/ ERNST & YOUNG LLP
April 4, 2000
<PAGE> 2
Intel Puerto Rico Retirement Savings Plan
Statements of Net Assets Available for Benefits
DECEMBER 31,
1999 1998
--------------------------
ASSETS
Value of interest in the Master Trust $5,506,049 $4,197,902
Employee receivables 17,549 31,041
---------------------------
Total assets 5,523,598 4,228,943
LIABILITIES
Accrued administrative fees 775 23,563
---------------------------
Net assets available for benefits $5,522,823 $4,205,380
===========================
See accompanying notes.
<PAGE> 3
Intel Puerto Rico Retirement Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended
December 31,
1999
-------------
Additions:
Employee contributions $ 998,328
Deductions:
Benefits paid to participants and participant withdrawals 1,002,711
Administrative fees (19,835)
-------------
Total deductions 982,876
Net investment gain from participation in the Master Trust 1,301,991
-------------
Net increase 1,317,443
Net assets available for benefits:
Beginning of year 4,205,380
-------------
End of year $5,522,823
=============
See accompanying notes.
<PAGE> 4
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements
December 31, 1999
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. Upon hire, 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 Sections 1165(a) and (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) and under Sections 401(a) and (k) of the U.S. Internal
Revenue Code of 1986 (the Code), as amended.
TRUSTEE
Mellon Bank, N.A. is the Plan's custodian, and Banco Popular de Puerto Rico
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 $8,000 in 1999 and 1998). 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 elect to invest in eleven mutual
funds, the Intel Stock Fund and the Scudder Fixed Income Fund. Scudder Kemper
Investments 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 company.
Participants may change their investment elections on a monthly basis.
<PAGE> 5
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
1. DESCRIPTION OF THE PLAN (continued)
CONTRIBUTIONS AND PARTICIPANT ACCOUNTS (continued)
Participant Contributions (continued)
-------------------------------------
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.
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, which may be in the form of a direct transfer to
another eligible retirement plan. In the event of financial hardship or
death, the benefits are usually paid in a single lump sum.
ADMINISTRATIVE EXPENSES
In 1999, all trustee-related expenses were paid by the Plan. All
other administrative expenses were paid by the company.
The administrative fees of ($19,835) resulted from the reversal
of certain prior year expenses that were accrued by the Plan in 1998 but
paid by the company in 1999.
<PAGE> 6
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
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 3) are stated at each 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, mutual funds, debt
securities, equity securities, and participant loans 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. Mutual funds are valued at quoted
market prices that represent the net asset values of shares held at year end.
Interest bearing cash and money market funds are stated at cost plus accrued
interest which approximate fair value. Participant loans are valued at their
outstanding balances which approximate fair value.
Investments not traded in active markets are stated at the estimated 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,
which is the difference between the fair value of investments at the
beginning and the end of the year.
The Master Trust holds derivative financial instruments in order to manage
market risks and to alter the return characteristics of underlying securities
to match certain fund objectives. Interest rate swap contracts and 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. Foreign currency forward contracts and Standard &
Poor's 500 Index (S&P 500 Index) options are stated at fair value as of the
last day of the year. Realized and unrealized appreciation (depreciation) in
the fair value of all derivative financial instruments are currently
recognized in income.
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.
<PAGE> 7
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
INVESTMENT VALUATION AND INCOME RECOGNITION (continued)
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 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.
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.
RECLASSIFICATION
Certain amounts for 1998 have been reclassified to conform with the 1999
presentation.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 1999, the American Institute of Certified Public Accountants
issued Statement of Position 99-3, "Accounting for and Reporting of Certain
Defined Contribution Benefit Plan Investments and Other Disclosure Matters
(SOP 99-3)." The 1999 financial statements have been prepared in accordance
with SOP 99-3.
<PAGE> 8
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
RECENT ACCOUNTING PRONOUNCEMENTS (continued)
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 the
adoption of FAS 133 no earlier than the year 2001. Management of the Plan
is currently evaluating the effects of FAS 133, but because the Plan
accountsfor 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. 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 401(k) Savings
Plan, the Intel Corporation Profit Sharing Retirement Plan, the Intel
Corporation Defined Benefit Pension Plan, the Intel Puerto Rico Profit
Sharing Retirement 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.
Mellon Bank, N.A. holds all investments of the Master Trust. The company's
Treasury Department manages all assets of the Master Trust that pertain
to company contributions and has discretionary authority for the related
purchases and sales of investments, subject to the general investment
policies of the Investment Policy Committee of the company.
The value of the Plan's interest in the Master Trust included in the
statements of net assets available for benefits represents 0.10% of undivided
interests in the net assets of the Master Trust at December 31, 1999 and
1998. Interest, dividends, net appreciation (depreciation) in the fair value
of investments, and expenses are allocated to the Plan based upon its pro
rata share in the net assets of the Master Trust.
<PAGE> 9
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
3. INTEREST IN THE MASTER TRUST (continued)
The Master Trust net assets available for benefits consisted of the following
at December 31:
1999 1998
---------------------------
(In Thousands)
Assets:
Investments, at fair value:
Interest bearing cash and money
market funds $ 131,497 $ 35,551
Mutual funds 1,234,191 465,785
Debt securities and debt swaps 681,185 1,086,791
Guaranteed investment contracts 5,152 4,891
Intel common stock 774,398 472,033
Other equity securities and equity derivatives 2,410,699 1,922,311
Participant loans receivable 94,650 89,386
---------------------------
Total investments 5,331,772 4,076,748
Receivables:
Interest and dividends receivable 578 19,015
Receivable from brokers for securities sold 12,000 14,758
---------------------------
Total assets 5,344,350 4,110,521
Liabilities:
Payable to brokers for securities purchased 7,017 38,055
---------------------------
Net assets available for benefits $5,337,333 $4,072,466
===========================
<PAGE> 10
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
3. INTEREST IN THE MASTER TRUST (continued)
The following is a summary of the investment income in the Master Trust for
the year ended December 31:
1999
----------------
(In Thousands)
Net appreciation in fair value of investments
determined by quoted market price:
Other equity securities and equity derivatives $ 493,018
Mutual funds 219,101
Intel common stock 196,181
----------------
908,300
Net appreciation in fair value of investments
estimated by the trustee:
Debt securities and debt swaps 6,255
Interest and dividends 121,128
----------------
$1,035,683
================
The Master Trust held investments in interest bearing cash and money market
funds, mutual funds, debt securities, wrapper contracts, and guaranteed
investment contracts specifically allocated to the Plan at December 31, 1999
and 1998.
Certain Master Trust investments are shares of the company's common stock
specifically allocated to the Plan. Transactions in shares of the company's
common stock qualify as party-in-interest transactions under the provisions
of ERISA. During 1999, the Master Trust made purchases and sales of the
company's common stock of approximately $136,451,000 and $10,783,000,
respectively. The Plan had a 0.22% and 0.21% interest in the company's common
stock held by the Master Trust at December 31, 1999 and 1998, respectively.
<PAGE> 11
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
4. GUARANTEED INVESTMENT CONTRACTS
The Master Trust held guaranteed investment contracts with insurance
companies specifically 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, 1999, the Master
Trust held guaranteed investment contracts in the amount of $5,152,000
($4,891,000 at December 31, 1998) with insurance companies that have S&P 500
Index's ratings of AA or better at the time of purchase. No more than
approximately $3,064,000 ($2,904,000 in 1998) of the guaranteed investment
contracts is with any one insurance company.
5. WRAPPER CONTRACTS
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. 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, 1999
and 1998, the Master Trust held wrapper contracts with notional amounts of
$44,974,000 and $33,832,000 with a fair value of approximately $1,274,000 and
($36,000), 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 is limited to the
fair value of the contracts with each counterparty.
<PAGE> 12
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
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:
1999 1998
--------------------------
Net assets available for benefits per the
financial statements $5,522,823 $4,205,380
Amounts allocated to withdrawing participants (184,129) (10,752)
--------------------------
Net assets available for benefits per the
Form 5500 $5,338,694 $4,194,628
==========================
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, 1999 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:
1999
-------------
Benefits paid to participants per the financial statements $1,002,711
Amounts allocated on the Form 5500 to
withdrawn participants at December 31, 1999 184,129
Amounts allocated on the Form 5500 to
withdrawn participants at December 31, 1998 (10,752)
-------------
Benefits paid to participants per the Form 5500 $1,176,088
=============
<PAGE> 13
Intel Puerto Rico Retirement Savings Plan
Notes to Financial Statements (continued)
8. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue
Service, dated December 10, 1992, stating that the Plan is qualified under
Section 401(a) of the Code, and therefore, the related trust is exempt from
taxation. Once qualified, the Plan is required to operate in conformity with
the Code to maintain its qualification. The Plan has also received a
determination letter, dated May 11, 1993, from the Puerto Rico Department of
the Treasury stating that the Plan meets the requirements for qualification
under Puerto Rico income tax laws, and the trust that forms 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. SUBSEQUENT EVENT
On April 1, 2000, the Plan began transferring certain recordkeeping functions
from Merrill Lynch/Howard Johnson & Company to Fidelity Employer Services
Company, a division of Fidelity Investments Institutional Services Company,
Inc. On June 7, 2000, the transfer of the recordkeeping function was
completed, and full recordkeeping services were available to participants.
<PAGE> 14
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 22, 2000 By: /s/ Andy D. Bryant
-----------------------
Andy D. Bryant
Senior Vice President and
Chief Financial and
Enterprise Services
Officer of Intel
Corporation,
Plan Administrator
