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