Intel 2003 Annual Report Download - page 71

Table of Contents
Index to Financial Statements
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A majority of the company’s trade receivables are derived from sales to original equipment manufacturers and original design
manufacturers of computer systems, cellular handsets and handheld computing devices, networking and communications equipment, and
peripherals. The company’s three largest customers accounted for approximately 42% of net revenue for 2003, an increase from 38% for 2002
(35% of net revenue for 2001). At December 27, 2003, the three largest customers accounted for approximately 43% of net accounts receivable
(39% of net accounts receivable at December 28, 2002).
The company has adopted credit policies and standards intended to accommodate industry growth and inherent risk. Management
believes that credit risks are moderated by the financial stability of the company’s end customers and the diverse geographic sales areas. To
assess the credit risk of counterparties, a quantitative and qualitative analysis is performed. From this analysis, credit limits are established and
a determination is made whether one or more credit support devices, such as obtaining some form of third-party guaranty or standby letter of
credit, or obtaining credit insurance for all or a portion of the account balance, is necessary.
Note 9: Interest and Other, Net
(In Millions)
2003 2002 2001
Interest income
$
248
$
298
$
615
Interest expense
(62
)
(84
)
(56
)
Loss on investment in Convera
—
—
(
196
)
Other, net
6
(20
)
30
Total
$
192
$
194
$
393
Effective as of the beginning of 2001, the company adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging
Activities,” as amended. The cumulative effect of the adoption of SFAS No. 133 was an increase in income before taxes of $45 million, which
was included in other, net for 2001.
During 2001, Intel recorded a loss of approximately $39 million as its proportionate share of the net loss of Convera Corporation,
accounted for as an equity-method investment, and recognized a combined net loss of $157 million on the impairment and subsequent sale of
the remaining investment in Convera.
Note 10: Comprehensive Income
The components of other comprehensive income and related tax effects were as follows:
The components of accumulated other comprehensive income, net of tax, were as follows:
(In Millions)
2003
2002
2001
Change in net unrealized holding gain on investments, net of tax of $(18), $24 and $187 in 2003,
2002 and 2001, respectively
$
33
$
(44
)
$
(347
)
Less: adjustment for net gain or loss on investments included in net income,
net of tax of $5, $(14) and $(99) in 2003, 2002 and 2001, respectively
(11
)
25
184
Change in net unrealized holding gain on derivatives, net of tax of $(15), $(23) and
$4 in 2003, 2002 and 2001, respectively
27
43
(7
)
Less: adjustment for amortization of net gain on derivatives included in net income, net of tax
(1
)
—
—
Minimum pension liability, net of tax of $(2) and $2 in 2003 and 2002, respectively
5
(6
)
—
$
53
$
18
$
(170
)
(In Millions) 2003 2002
Accumulated net unrealized holding gain on available
-
for
-
sale investments
$
35
$
13
Accumulated net unrealized holding gain on derivatives
62
36
Accumulated minimum pension liability
(1
)
(6
)
Total accumulated other comprehensive income
$
96
$
43