Intel Reports Fourth-Quarter 2017 Financial Results

INTEL CORPORATION
SUPPLEMENTAL RECONCILIATIONS OF GAAP ACTUALS TO NON-GAAP ACTUALS

Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measure disclosed by the company has limitations and should not be considered a substitute for, or superior to, the financial measure prepared in accordance with GAAP, and the reconciliations from GAAP to Non-GAAP actuals should be carefully evaluated. Please refer to "Explanation of Non-GAAP Measures" in this document for a detailed explanation of the adjustment made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.

	Three Months Ended						Twelve Months Ended
(In Millions, Except Per Share Amounts)	Dec 30, 2017			Dec 31, 2016			Dec 30, 2017			Dec 31, 2016

GAAP NET REVENUE	$	17,053		$	16,374		$	62,761		$	59,387
Deferred revenue write-down	—			—			—			99
NON-GAAP NET REVENUE	$	17,053		$	16,374		$	62,761		$	59,486

GAAP GROSS MARGIN	$	10,767		$	10,105		$	39,069		$	36,191
Deferred revenue write-down, net of cost of sales	—			—			—			64
Inventory valuation	28			—			55			387
Amortization of acquisition-related intangibles	262			232			912			937
NON-GAAP GROSS MARGIN	$	11,057		$	10,337		$	40,036		$	37,579

GAAP GROSS MARGIN PERCENTAGE	63.1		%	61.7		%	62.3		%	60.9		%
Deferred revenue write-down, net of cost of sales	—		%	—		%	—		%	—		%
Inventory valuation	0.2		%	—		%	0.1		%	0.7		%
Amortization of acquisition-related intangibles	1.5		%	1.4		%	1.4		%	1.6		%
NON-GAAP GROSS MARGIN PERCENTAGE	64.8		%	63.1		%	63.8		%	63.2		%

GAAP R&D PLUS MG&A SPENDING	$	5,124		$	5,438		$	20,572		$	21,137
Other acquisition-related charges	—			—			(113)			(100)
NON-GAAP R&D PLUS MG&A SPENDING	$	5,124		$	5,438		$	20,459		$	21,037

GAAP OPERATING INCOME	$	5,395		$	4,526		$	17,936		$	12,874
Deferred revenue write-down, net of cost of sales	—			—			—			64
Inventory valuation	28			—			55			387
Amortization of acquisition-related intangibles	315			273			1,089			1,231
Restructuring and other charges	195			100			384			1,886
Other acquisition-related charges	—			—			113			100
NON-GAAP OPERATING INCOME	$	5,933		$	4,899		$	19,577		$	16,542

GAAP TAX RATE	111.4		%	19.8		%	52.8		%	20.3		%
Divestiture of Intel Security	—		%	—		%	(3.6		)%	—		%
Income tax reform	(90.2		)%	—		%	(26.7		)%	—		%
NON-GAAP TAX RATE	21.2		%	19.8		%	22.5		%	20.3		%

GAAP NET INCOME (LOSS)	$	(687)		$	3,562		$	9,601		$	10,316
Deferred revenue write-down, net of cost of sales	—			—			—			64
Inventory valuation	28			—			55			387
Amortization of acquisition-related intangibles	315			273			1,089			1,231
Restructuring and other charges	195			100			384			1,886
Other acquisition-related charges	—			—			113			100
(Gains) Losses from divestiture	—			—			(387)			—
Income tax reform	5,444			—			5,444			—
Income tax effect	(114)			(70)			454			(745)
NON-GAAP NET INCOME	$	5,181		$	3,865		$	16,753		$	13,239

GAAP DILUTED EARNINGS PER COMMON SHARE	$	(0.15)		$	0.73		$	1.99		$	2.12
Deferred revenue write-down, net of cost of sales	—			—			—			0.01
Inventory valuation	0.01			—			0.01			0.08
Amortization of acquisition-related intangibles	0.06			0.06			0.22			0.25
Restructuring and other charges	0.04			0.02			0.08			0.39
Other acquisition-related charges	—			—			0.02			0.02
(Gains) Losses from divestiture	—			—			(0.08)			—
Income tax reform	1.14			—			1.13			—
Income tax effect	(0.02)			(0.02)			0.09			(0.15)
NON-GAAP DILUTED EARNINGS PER COMMON SHARE ¹	$	1.08		$	0.79		$	3.46		$	2.72

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