Intel 2003 Annual Report Download - page 89

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Table of Contents
Index to Financial Statements
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Intel Architecture operating segment’s products include microprocessors and related chipsets and motherboards. Net revenue for the
Intel Architecture operating segment made up approximately 87% of the company’s consolidated net revenue in 2003 (83% in 2002 and 81%
in 2001). Revenue from sales of microprocessors within the Intel Architecture operating segment represented 73% of consolidated net revenue
in 2003 (70% in 2002 and 67% in 2001). ICG’s products include wired Ethernet and wireless connectivity products, network processing
components and embedded computing products. WCCG’s products include flash memory, application processors, and cellular baseband
chipsets for cellular handsets and handheld devices. The company’s products in all operating segments are sold directly to original equipment
manufacturers, and through retail and industrial distributors as well as reseller channels throughout the world.
In addition to these operating segments, the company has sales and marketing, manufacturing, finance and administration groups.
Expenses of these groups are allocated to the operating segments and are included in the operating results reported below.
The “all other” category includes acquisition-related costs, including amortization of acquisition-related intangibles and charges for
purchased in-process research and development. In 2003, acquisition-related costs also included a goodwill impairment charge of $611 million
taken in the fourth quarter for the remaining goodwill balance related to WCCG, and in 2002 included a $127 million impairment of
acquisition-related identified intangibles related to prior-year acquisitions. “All other” also includes the results of operations of seed businesses
that support the company’s initiatives, and the results for 2002 included a charge of $106 million related to the wind-down of the Intel Online
Services web hosting business. Finally, “all other” includes certain corporate-level operating expenses, including a portion of profit-dependent
bonus and other expenses not allocated to the operating segments. For 2001, “all other” also included goodwill amortization; however,
beginning in 2002, goodwill is no longer amortized.
The company does not identify or allocate assets by operating segment, and does not allocate depreciation as such to the operating
segments, nor does the CODM evaluate operating segments on these criteria. Operating segments do not record intersegment revenue, and,
accordingly, there is none to be reported. The company does not allocate interest and other income, interest expense or taxes to operating
segments. Except as discussed above, the accounting policies for segment reporting are the same as for the company as a whole.
Net revenue and operating income or loss for reportable segments for the three years ended December 27, 2003 were as follows:
In 2003, one customer accounted for approximately 19% of the company’s revenue (16% in 2002) while another customer accounted for
approximately 15% in both 2003 and 2002. These customers each accounted for approximately 14% of the company’s revenue in 2001. A
substantial majority of the sales to these customers were Intel Architecture business products.
Geographic revenue information for the three years ended December 27, 2003 is based on the location of the customer. Property, plant
and equipment information is based on the physical location of the assets at the end of each of the fiscal years.
82
(In Millions)
2003
2002
2001
Intel Architecture Business
Net revenue
$
26,102
$
22,316
$
21,446
Operating income
$
10,411
$
6,592
$
6,277
Intel Communications Group
Net revenue
$
2,147
$
2,080
$
2,580
Operating loss
$
(426
)
$
(622
)
$
(735
)
Wireless Communications and Computing Group
Net revenue
$
1,857
$
2,239
$
2,232
Operating loss
$
(432
)
$
(287
)
$
(249
)
All Other
Net revenue
$
35
$
129
$
281
Operating loss
$
(2,020
)
$
(1,301
)
$
(3,037
)
Total
Net revenue
$
30,141
$
26,764
$
26,539
Operating income
$
7,533
$
4,382
$
2,256