Intel 1997 Annual Report Download - page 60

Notes to consolidated
financial statements
The funded status of the foreign defined-benefit plans as of December 27, 1997 and December 28, 1996 is summarized below:
Plan assets of the foreign plans consist primarily of listed stocks, bonds and cash surrender value life insurance policies.
Other postemployment benefits. The Company accounts for other postemployment benefits in accordance with SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," and SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
These benefits had no material impact on the Company's financial statements for the periods presented.
Commitments
The Company leases a portion of its capital equipment and certain of its facilities under operating leases that expire at various dates through
2010. Rental expense was $69 million in 1997, $57 million in 1996 and $38 million in 1995. Minimum rental commitments under all non-
cancelable leases with an initial term in excess of one year are payable as follows: 1998-$37 million; 1999-$33 million; 2000-$18 million;
2001-$13 million; 2002-$12 million; 2003 and beyond-$17 million. Commitments for construction or purchase of property, plant and
equipment approximated $3.3 billion at December 27, 1997. In connection with certain manufacturing arrangements, Intel had minimum
purchase commitments of approximately $191 million at December 27, 1997 for flash memories and other memory components.
In October 1997, the Company and Digital Equipment Corporation ("Digital") announced that they have agreed to establish a broad-based
business relationship. The agreement includes sale of Digital's semiconductor manufacturing operations to Intel for approximately $700
million, a 10
-
year patent cross
-
license, supply of both Intel and Alpha microprocessors by Intel to Digital, development by Digital of future
Assets Accu-
exceed mulated
accu- benefits
1997 mulated exceed
(In millions) benefits assets
--------------------------------------------------------------------------------
Vested benefit obligation $ (43) $ (11)
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Accumulated benefit obligation $ (49) $ (17)
======== ========
Projected benefit obligation $ (71) $ (26)
Fair market value of plan assets 78 4
-------- --------
Projected benefit obligation less than
(in excess of) plan assets 7 (22)
Unrecognized net loss 3 2
Unrecognized net transition obligation 2 1
-------- --------
Prepaid (accrued) pension costs $ 12 $ (19)
======== ========
Assets Accu-
exceed mulated
accu- benefits
mulated exceed
(In millions) benefits assets
--------------------------------------------------------------------------------
Vested benefit obligation $ (43) $ (9)
======== ========
Accumulated benefit obligation $ (46) $ (15)
======== ========
Projected benefit obligation $ (62) $ (23)
Fair market value of plan assets 68 3
-------- --------
Projected benefit obligation less than
(in excess of) plan assets 6 (20)
Unrecognized net loss 3 3
Unrecognized net transition obligation 2 1
-------- --------
Prepaid (accrued) pension costs $ 11 $ (16)
======== ========
At fiscal year-ends, significant assumptions used were as follows:
1997 1996 1995
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Discount rate 5.5%-14% 5.5%-14% 5.5%-14%
Rate of compensation increase 4.5%-11% 4.5%-11% 4.5%-11%
Expected long-term return on assets 5.5%-14% 5.5%-14% 5.5%-14%