Intel 1995 Annual Report Download - page 25

Concentrations of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of investments and trade
receivables. Intel places its investments with high-credit-quality counterparties and, by policy, limits the amount of credit exposure to any one
counterparty. A substantial majority of the Company's trade receivables are derived from sales to manufacturers of microcomputer systems,
with the remainder spread across various other industries.
During 1995, the Company experienced an increase in its concentration of credit risk due to increasing trade receivables from sales to
manufacturers of microcomputer systems. The Company's five largest customers accounted for approximately 33% of net revenues for 1995.
At December 30, 1995, these customers accounted for approximately 34% of net accounts receivable. A portion of the receivable balance from
one of the Company's five largest customers has been converted into a loan. The total amount receivable from this customer was approximately
$400 million at December 30, 1995.
The Company endeavors to keep pace with the evolving computer industry and has adopted credit policies and standards intended to
accommodate industry growth and inherent risk. Management believes that credit risks are moderated by the diversity of its end customers and
geographic sales areas. Intel performs ongoing credit evaluations of its customers' financial condition and requires collateral as deemed
necessary.
Other income for 1995 included approximately $58 million from the settlement of ongoing litigation and $60 million from sales of a portion of
the Company's investment in marketable equity securities. Other income for 1994 included non- recurring gains from the settlement of various
insurance claims. Other income for 1993 included non-recurring gains from the sale of certain benefits related to the Company's Irish
expansion and dividend income earned on equity investments.
Provision for taxes
The provision for taxes consisted of the following:
The tax benefit associated with dispositions from employee stock plans reduced taxes currently payable for 1995 by $116 million ($61 million
and $68 million for 1994 and 1993, respectively).
The provision for taxes reconciled to the amount computed by applying the statutory federal rate of 35% to income before taxes as follows:
Long-term debt $ (400) $ (399) $ (392) $ (384)
Swaps hedging debt $ -- $ (1) $ -- $ (12)
Currency forward contracts $ 3 $ 4 $ 1 $ 5
Currency options $ -- $ -- $ -- $ --
Interest income and other
(In millions) 1995 1994 1993
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Interest income $ 272 $ 235 $ 155
Foreign currency gains 29 15 --
Other income 114 23 33
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Total $ 415 $ 273 $ 188
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(In millions) 1995 1994 1993
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Income before taxes:
U.S. $ 3,427 $ 2,460 $ 2,587
Foreign 2,211 1,143 943
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Total income before taxes $ 5,638 $ 3,603 $ 3,530
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Provision for taxes:
Federal:
Current $ 1,169 $ 1,169 $ 946
Deferred 307 (178) 35
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1,476 991 981
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State:
Current 203 162 150
Foreign:
Current 354 134 127
Deferred 39 28 (23)
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393 162 104
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Total provision for taxes $ 2,072 $ 1,315 $ 1,235
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Effective tax rate 36.8% 36.5% 35.0%
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(In millions) 1995 1994 1993
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Computed expected tax $ 1,973 $ 1,261 $ 1,235