Intel 2006 Annual Report Download - page 52

Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
We have entered into certain agreements for the purchase of raw materials or other goods that specify minimum prices, and
quantities that are based on a percentage of the total available market or based on a percentage of our future purchasing
requirements. Due to the uncertainty of the future market and our future purchasing requirements, obligations under these
agreements are not included in the table above. We estimate our obligation under these agreements as of December 30, 2006
to be approximately as follows: less than one year—$175 million; one to three years—$600 million; three to five years—$400
million; more than five years—zero. Our purchase orders for other products are based on our current manufacturing needs and
are fulfilled by our vendors within short time horizons. In addition, some of our purchase orders represent authorizations to
purchase rather than binding agreements.
Contractual obligations that are contingent upon the achievement of certain milestones are not included in the table above.
These obligations include milestone-based co-marketing agreements, contingent funding obligations, and milestone-based
equity investment funding. These arrangements are not considered contractual obligations until the milestone is met by the
third party. As of December 30, 2006, assuming that all future milestones are met, additional required payments would be
approximately $254 million.
For the majority of restricted stock units granted, the number of shares issued on the date the restricted stock units vest is net
of the statutory withholding requirements that are paid by Intel on behalf of its employees. The obligation to pay the relative
taxing authority is not included in the table above, as the amount is contingent upon continued employment. In addition, the
amount of the obligation is unknown, as it is based in part on the market price of our common stock when the awards vest.
The expected timing of payments of the obligations above are estimates based on current information. Timing of payments and
actual amounts paid may be different, depending on the time of receipt of goods or services, or changes to
agreed-upon amounts for some obligations. Amounts disclosed as contingent or milestone-based obligations are dependent on
the achievement of the milestones or the occurrence of the contingent events and can vary significantly.
We currently have a contractual obligation to purchase the output of IMFT in proportion to our investment in IMFT, which is
currently 49%. See “Note 17: Venture” in Part II, Item 8 of this Form 10-K. Additionally, we have entered into various
contractual commitments in relation to our investment in IMFT. Some of these commitments are with Micron, and some are
directly with IMFT. The following are the significant contractual commitments:
Off-Balance-Sheet Arrangements
As of December 30, 2006, we did not have any significant off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of
SEC Regulation S-K.
Employee Equity Incentive Plans
Our equity incentive programs are broad-based, long-term retention programs that are intended to attract and retain talented
employees and align stockholder and employee interests. In May 2006, stockholders approved the 2006 Equity Incentive Plan
(the 2006 Plan). The 2006 Plan replaced the 2004 Equity Incentive Plan, which was terminated early. Under the 2006 Plan,
175 million shares of common stock were made available for issuance as equity awards to employees and non-employee
directors through June 2008, of which a maximum of 80 million shares can be awarded as restricted stock or restricted stock
units. Additionally, in May 2006, stockholders approved the 2006 Stock Purchase Plan. Under the 2006 Stock Purchase Plan,
240 million shares of common stock were made available for issuance through August 2011. The 1976 Stock Participation
Plan and all remaining shares available for issuance thereunder were cancelled as of the plan’s expiration in August 2006.
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•
Subject to certain conditions, Intel and Micron each agreed to contribute approximately an additional $1.4 billion in the
three years following the initial capital contributions, of which we have contributed $128 million as of December 30,
2006. Of the remaining obligation of $1.3 billion, we contributed $258 million in January 2007. This amount has been
included in the table above under
“
other purchase obligations and commitments.
”
• As part of our agreement with Micron related to IMFT, we may enter into agreements to make additional capital
contributions for new fabrication facilities, and in November 2006, we announced our intention to form a new venture
with Micron to add an additional NAND flash memory fabrication facility in Singapore.
• We also have several agreements with Micron related to intellectual property rights, and research and development
funding related to NAND flash manufacturing and IMFT.