Intel : Reports Record Full-Year Revenue of $59.4 Billion; Reports Record Quarterly Revenue of $16.4 Billion

Intel Corporation‌‌‌‌‌‌‌‌‌‌‌

2200 Mission College Blvd. Santa Clara, CA 95054-1549

News Release

Intel Reports Record Full-Year Revenue of $59.4 Billion; Reports Record Quarterly Revenue of $16.4 Billion News Summary:

• Revenue growth in 2016 driven by strength across the business including full-year revenue growth in Client Computing, Data Center, and Internet of Things

• Record annual cash flow from operations of $21.8 billion

• Solid earnings with GAAP net income of $10.3 billion; non-GAAP net income of $13.2 billion

  SANTA CLARA, Calif., January 26, 2017 -- Intel Corporation today reported full-year revenue of $59.4 billion, operating income of $12.9 billion, net income of $10.3 billion and EPS of $2.12. Intel reported non-GAAP revenue of

  $59.5 billion, operating income of $16.5 billion, net income of $13.2 billion, and EPS of $2.72. The company generated approximately $21.8 billion in cash from operations, paid dividends of $4.9 billion and used $2.6 billion to repurchase 81 million shares of stock.

  For the fourth quarter, Intel posted revenue of $16.4 billion, operating income of $4.5 billion, net income of

  $3.6 billion and EPS of 73 cents. Intel reported non-GAAP operating income of $4.9 billion, net income of $3.9 billion, and EPS of 79 cents. The company generated approximately $8.2 billion in cash from operations, paid dividends of $1.2 billion, and used $533 million to repurchase 15 million shares of stock.

  "The fourth quarter was a terrific finish to a record-setting and transformative year for Intel. In 2016, we took important steps to accelerate our strategy and refocus our resources while also launching exciting new products, successfully integrating Altera, and investing in growth opportunities," said Brian Krzanich, Intel CEO. "I'm pleased with our 2016 performance and confident in our future."

  Full-Year 2016 Business Unit Trends*

• Client Computing Group revenue of $32.9 billion, up 2 percent from 2015

• Data Center Group revenue of $17.2 billion, up 8 percent from 2015

• Internet of Things Group revenue of $2.6 billion, up 15 percent from 2015

• Non-Volatile Memory Solution Group revenue of $2.6 billion, down 1 percent from 2015

• Intel Security Group revenue of $2.2 billion, up 9 percent from 2015

• Programmable Solutions Group revenue of $1.7 billion

• The first quarter of 2016 had 14 weeks of business versus the typical 13 weeks, as the company realigned its fiscal year with the calendar year.

  Q4 Business Unit Trends

  • Client Computing Group revenue of $9.1 billion, up 4 percent year-over-year

  • Data Center Group revenue of $4.7 billion, up 8 percent year-over-year

  • Internet of Things Group revenue of $726 million, up 16 percent year-over-year

  • Non-Volatile Memory Solution Group revenue of $816 million, up 25 percent year-over-year

  • Intel Security Group revenue of $550 million, up 7 percent year-over-year

  • Programmable Solutions Group revenue $420 million

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GAAP Financial Comparison
Annual
2016	2015	vs. 2015
Revenue	$59.4 billion	$55.4 billion	up 7%
Gross Margin	60.9%	62.6%	down 1.7 points
R&D and MG&A	$21.1 billion	$20.1 billion	up 5%
Operating Income	$12.9 billion	$14.0 billion	down 8%
Tax Rate	20.3%	19.6%	up 0.7 points
Net Income	$10.3 billion	$11.4 billion	down 10%
Earnings Per Share	$2.12	$2.33	down 9%

Non-GAAP Financial Comparison
Annual
2016	2015	vs. 2015
Revenue	$59.5 billion	$55.4 billion ^	up 7%
Gross Margin	63.2%	63.3%	down 0.1 points
R&D and MG&A	$21.0 billion	$20.1 billion ^	up 5%
Operating Income	$16.5 billion	$15.0 billion	up 11%
Tax Rate	20.3% ^	19.6% ^	up 0.7 points
Net Income	$13.2 billion	$12.2 billion	up 9%
Earnings Per Share	$2.72	$2.49	up 9%

GAAP Financial Comparison
Quarterly Year-Over-Year
Q4 2016	Q4 2015	vs. Q4 2015
Revenue	$16.4 billion	$14.9 billion	up 10%
Gross Margin	61.7%	64.3%	down 2.6 points
R&D and MG&A	$5.4 billion	$5.2 billion	up 4%
Operating Income	$4.5 billion	$4.3 billion	up 5%
Tax Rate	19.8%	16.0%	up 3.8 points
Net Income	$3.6 billion	$3.6 billion	down 1%
Earnings Per Share	73 cents	74 cents	down 1%

Non-GAAP Financial Comparison
Quarterly Year-Over-Year
Q4 2016	Q4 2015	vs. Q4 2015
Revenue	$16.4 billion ^	$14.9 billion ^	up 10%
Gross Margin	63.1%	64.8%	down 1.7 points
R&D and MG&A	$5.4 billion ^	$5.2 billion ^	up 4%
Operating Income	$4.9 billion	$4.4 billion	up 11%
Net Income	$3.9 billion	$3.7 billion	up 4%
Earnings Per Share	79 cents	76 cents	up 4%

Business Outlook

Intel's Business Outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments and other significant transactions that may be completed after January 26, 2017, with the exception of our planned divestiture of the Intel Security Group, which we announced in the third quarter of 2016. Our guidance for 2017 assumes that such divestiture will close at the beginning of the second quarter.

Our guidance for the first quarter and full year of 2017 include both GAAP and non-GAAP estimates.

Reconciliations between these GAAP and non-GAAP financial measures are included below.

Full-Year 2017 GAAP Non-GAAP Range

Revenue Flat Flat n/a

Gross margin percentage 62% 63% +/- a couple pct. pts. R&D plus MG&A spending $20.5 billion $20.5 billion ^ +/- 400 million Restructuring and other charges $400 million $0 approximately Amortization of acquisition-related

intangibles included in operating expenses

$150 million $0 approximately

Depreciation $7.0 billion $7.0 billion ^ +/- 200 million

Operating income $15.7 billion $17.1 billion approximately Tax rate 26% 22% approximately

Earnings per share $2.53 $2.80 +/- 5% Full-year capital spending $12.0 billion $12.0 billion ^ +/- 500 million

Q1 2017 GAAP Non-GAAP Range

Revenue $14.8 billion $14.8 billion ^ +/- 500 million Gross margin percentage 62% 63% +/- a couple pct. pts. R&D plus MG&A spending $5.3 billion $5.3 billion ^ approximately Restructuring and other charges $300 million $0 approximately

Amortization of acquisition-related

intangibles included in operating expenses

Impact of equity investments and

$40 million $0 approximately

interest and other, net $(50) million $(50) million ^ approximately

Depreciation $1.6 billion $1.6 billion ^ approximately

Operating income $3.6 billion $4.1 billion approximately Tax rate 22% 22% ^ approximately

Earnings per share $0.56 $0.65 +/- 5 cents

Restructuring and Other Charges Forecast

Consistent with our prior outlook, total restructuring and other charges are expected to be $2.3 billion.

Approximately $1.9 billion was realized in 2016.

For additional information regarding Intel's results and Business Outlook, please see the "CFO Commentary" document posted on our Investor Relations website at www.intc.com/results.cfm.

Status of Business Outlook

Intel's Business Outlook is posted on intc.com and may be reiterated in public or private meetings with investors and others. The Business Outlook will be effective through the close of business on March 17, 2017 unless earlier updated; except that the Business Outlook for amortization of acquisition-related intangibles, impact of equity investments and interest and other, restructuring charges, and tax rate, will be effective only through the close of business on February 2, 2017. Intel's Quiet Period will start from the close of business on March 17, 2017 until publication of the company's first-quarter earnings release, scheduled for April 27, 2017. During the Quiet Period, all of the Business Outlook and other forward-looking statements disclosed in the company's news releases and filings with the SEC should be considered as historical, speaking as of prior to the Quiet Period only and not subject to an update by the company.