Intel 2000 Annual Report Download - page 45

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Excluding charges of $109 million for purchased in-process research and development (IPR&D) related to the current year's acquisitions,
$392 million in 1999 and $165 million in 1998, research and development spending increased $786 million, or 25%, in 2000 compared to 1999
and $602 million, or 24%, in 1999 compared to 1998. The increase for both periods was primarily due to increased spending on product
development programs, including product development of companies acquired. Marketing, general and administrative expenses increased
$1.2 billion, or 31%, in 2000 compared to 1999, primarily due to increases for the Intel Inside® cooperative advertising program; profit-
dependent bonus expenses; and marketing, general and administrative expenses from companies acquired. Marketing, general and
administrative expenses increased $796 million, or 26%, from 1998 to 1999, primarily due to increases for the Intel Inside cooperative
advertising program, merchandising spending related to new product launches and profit-dependent bonus expenses.
Amortization of goodwill and other acquisition-related intangibles and costs increased to $1.6 billion in 2000 compared to $411 million in
1999, primarily due to the additional acquisitions and a full year's impact of prior year acquisitions. This amortization increased $355 million
from 1998 to 1999, primarily due to the impact of the acquisitions made in 1999. For 2000 and 1999, a substantial majority of this amortization
was included in the calculation of the operating loss for the "all other" category for segment reporting purposes.
Gains on investments, net increased to $3.8 billion in 2000, including a significant gain on the sale of our holdings of Micron
Technology, Inc., compared to $883 million in 1999. For 2000, the gains were net of $297 million in impairment losses taken on investments.
For 1999 compared to 1998, gains on investments increased by $698 million.
Interest and other, net increased $409 million from 1999 to 2000. Interest income increased due to higher average investment balances and
higher interest rates in 2000 compared to 1999. In addition, we
recognized a $117 million gain on our Interactive Media Services business contributed to Convera Corporation in 2000. For 1999 compared to
1998, interest and other, net increased $5 million, primarily due to higher interest income from higher average investment balances.
Our effective income tax rate was 30.4% in 2000, 34.9% in 1999 and 33.6% in 1998. Excluding a one-time benefit for the reversal in 2000
of previously accrued taxes, and the impact of non-deductible charges for IPR&D and amortization of goodwill, our effective income tax rate
was 31.8% in 2000. Excluding the impact of the non-deductible charges, our effective rate was approximately 33% for both 1999 and 1998.
The lower rate in 2000 compared to 1999 and 1998 reflected the impact of the resolution reached with the Internal Revenue Service in 2000 on
a number of issues, including adjustments related to the intercompany allocation of profits.
Purchased in-process research and development