Intel 2003 Annual Report Download - page 13

Table of Contents
Index to Financial Statements
We maintain a program of insurance coverage for various types of property, casualty and other risks. We place our insurance coverage
with various carriers in numerous jurisdictions. The policies are subject to deductibles and exclusions that result in our retention of a level of
risk on a self-insurance basis. The types and amounts of insurance obtained vary from time to time and from location to location depending on
availability, cost and our decisions with respect to risk retention. Our worldwide risk and insurance programs are continually evaluated to seek
to obtain the most favorable terms and conditions.
For information regarding environmental matters and proceedings related to certain facilities, refer to the headings “Compliance with
Environmental, Health and Safety Regulations” below in this Item and “Legal Proceedings” in Part I, Item 3 of this Form 10-K.
Employees
As of December 27, 2003, we employed approximately 79,700 people worldwide, with approximately 60% of these employees located in
the U.S.
Sales and Marketing
In 2003, we conducted business with more than 2,000 direct customers worldwide. Most of our products are sold or licensed through
sales offices located near major concentrations of users, primarily throughout the Americas, Europe, Asia-Pacific and Japan. Sales agreements
typically contain standard terms and conditions covering matters such as pricing, payment terms and warranties, as well as indemnities for
issues specific to our products, such as patent and copyright indemnities. From time to time we may enter into additional agreements with
customers covering, for example, changes from our standard terms and conditions, new product development and marketing, private-label
branding and other matters. Sales of particular products are generally conducted with purchase orders issued under the sales agreements. Most
of Intel’s sales are made using electronic and web-based processes that allow the customer to review inventory availability and to track the
progress of specific goods under order. Pricing on particular products may vary based on volumes ordered and other factors.
We sell our products worldwide directly to original equipment manufacturers (OEMs) and original design manufacturers (ODMs). ODMs
provide design and/or manufacturing services to branded and unbranded private-
label resellers. We also sell our products to industrial and retail
distributors. Dell Inc. contributed approximately 19% to our total sales, and Hewlett-Packard Company contributed approximately 15% to our
total sales, in 2003. A substantial majority of the sales to these customers consisted of Intel Architecture business products. No other customer
accounted for more than 10% of our total revenue. For the information regarding revenue and operating profit by reportable segments and
revenue from unaffiliated customers by geographic region/country, see “Note 22: Operating Segment and Geographic Information” in Part II,
Item 8 of this Form 10-K and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of
this Form 10-K.
Typically, distributors handle a wide variety of products, including those that compete with our products, and fill orders for many
customers. Most of our sales to distributors are made under agreements allowing for price protection on unsold merchandise and a right of
return on stipulated quantities of unsold merchandise. We also utilize third-party sales representatives who generally do not offer directly
competitive products but may carry complementary items manufactured by others. Sales representatives do not maintain a product inventory;
instead, their customers place orders directly with us or through distributors.
Our worldwide reseller sales channel consists of thousands of indirect customers that are systems builders who purchase Intel
microprocessors and other products from our distributors. These systems builders receive various levels of technical and marketing services
and support directly from Intel. We have a “boxed processor program” that allows distributors to sell Intel microprocessors in small quantities
to these systems-builder customers; boxed processors are also made available in direct retail outlets. Since 1994, our worldwide reseller sales
channel has grown substantially and has become increasingly important to our business.
Our global marketing strategy is designed to associate our brands with advanced technology and innovation. Under the Intel
®
brand
umbrella, the Intel Inside
®
brand is intended to represent technology leadership, quality and reliability. At the product level, the Itanium, Intel
Xeon, Pentium, Celeron and Intel Centrino brands are part of the Intel Inside brand family.
We promote brand awareness and generate demand through our direct marketing and co-marketing programs. Our direct marketing
activities include television, print and web-based advertising as well as press relations, consumer and trade events, and industry and consumer
communications. In 2003, the primary focus of our direct marketing activities was the Intel Centrino mobile technology launch, with the Intel
Pentium 4 processor with HT Technology and other product-level brands receiving targeted support.
10