Intel 2003 Annual Report Download - page 88

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Table of Contents
Index to Financial Statements
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In June 2002, various plaintiffs filed a lawsuit in the Third Judicial Circuit Court, Madison County, Illinois, against Intel, Hewlett-
Packard Company, HPDirect, Inc. and Gateway Inc., alleging that the defendants’ advertisements and statements misled the public by
suppressing and concealing the alleged material fact that systems that use the Intel Pentium 4 processor are less powerful and slower than
systems using the Intel Pentium III processor and a competitor’s processors. The plaintiffs claim that their lawsuit should be treated as a
nationwide class action. The plaintiffs seek unspecified damages, and attorneys’ fees and costs. The company disputes the plaintiffs’
claims and
intends to defend the lawsuit vigorously.
The company is currently a party to various claims and legal proceedings, including those noted above. If management believes that a
loss arising from these matters is probable and can reasonably be estimated, the company records the amount of the loss, or the minimum
estimated liability when the loss is estimated using a range, and no point within the range is more probable than another. As additional
information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary. Based on
currently available information, management believes that the ultimate outcome of these matters, individually and in the aggregate, will not
have a material adverse effect on the company’s financial position or overall trends in results of operations. However, litigation is subject to
inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or an injunction
prohibiting Intel from selling one or more products. If an unfavorable ruling were to occur, there exists the possibility of a material adverse
impact on the results of operations of the period in which the ruling occurs, or future periods.
Intel has been named to the California and U.S. Superfund lists for three of its sites and has completed, along with two other companies, a
Remedial Investigation/Feasibility study with the U.S. Environmental Protection Agency (EPA) to evaluate the groundwater in areas adjacent
to one of its former sites. The EPA has issued a Record of Decision with respect to a groundwater cleanup plan at that site, including expected
costs to complete. Under the California and U.S. Superfund statutes, liability for cleanup of this site and the adjacent area is joint and several.
The company, however, has reached agreement with those same two companies which significantly limits the company’s liabilities under the
proposed cleanup plan. Also, the company has completed extensive studies at its other sites and is engaged in cleanup at several of these sites.
In the opinion of management, the potential losses to the company in excess of amounts already accrued arising out of these matters would not
have a material adverse effect on the company’s financial position or overall trends in results of operations, even if joint and several liability
were to be assessed.
The estimate of the potential impact on the company’s financial position or overall results of operations for the above legal and
environmental proceedings could change in the future.
Note 22: Operating Segment and Geographic Information
The company designs, develops, manufactures and markets computing and communications products at various levels of integration. The
company currently reports three product-line operating segments: the Intel Architecture business, which is composed of the Desktop Platforms
Group, the Mobile Platforms Group and the Enterprise Platforms Group; the Intel Communications Group (ICG); and the Wireless
Communications and Computing Group (WCCG). In December 2003, the company announced that it would be consolidating communications-
related businesses within ICG and WCCG. This reorganization was not effective until fiscal 2004. Because this reporting period is as of
December 27, 2003, the operating segment results for these communications-
related businesses are presented under the organizational structure
that existed as of December 27, 2003.
The company’s Executive Office consists of Chief Executive Officer (CEO) Craig R. Barrett and President and Chief Operating Officer
(COO) Paul S. Otellini. The CEO and COO have joint responsibility as the Chief Operating Decision Maker (CODM), as defined by SFAS No.
131, “Disclosures about Segments of an Enterprise and Related Information.” The CODM allocates resources to and assesses the performance
of each operating segment using information about their revenue and operating profit before interest and taxes.
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