Intel Fourth-Quarter Revenue Of $8.74 Billion At Record Level

"We ended the year on a high note as ongoing strength in emerging markets coupled with improving demand in established markets drove revenue to record levels," said Craig R. Barrett, Intel chief executive officer. "Intel's substantial investments in capital and R&D over the past few years allowed us to ship record microprocessor units in 2003 and introduce exciting new products such as Intel(r) Centrino(tm) Mobile Technology.

"In 2004, our focus will be to drive double-digit growth through technology leadership and global market expansion, and by pursuing adjacent opportunities in communications and the digital home, while using our 90-nanometer and 300-millimeter factories to reduce costs and improve profitability."

The fourth quarter 2003 results included the impact of a $611-million goodwill write-down related to the Wireless Communications and Computing Group (WCCG). At the time of the fourth-quarter Business Update, the company also anticipated a tax benefit of approximately $200 million related to a divestiture. Due to an additional divestiture that closed during the quarter, the tax benefit increased by $420 million, or approximately $0.06 more than anticipated. Intel's third-quarter results included a tax benefit of $125 million related to a divesture, and last year's fourth-quarter results included a tax benefit of approximately $75 million related to divestitures.

Full-Year Results
Revenue for 2003 was $30.1 billion, up 13 percent from $26.8 billion in 2002. Net income was $5.6 billion, up 81 percent from $3.1 billion in 2002. Earnings per share were $0.85, up 85 percent from $0.46 in 2002.

For the year, the company paid cash dividends of $524 million, or $0.08 per share, and used $4.0 billion in cash to repurchase approximately 176 million shares of common stock.

BUSINESS OUTLOOK
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after Jan. 13, 2004.

• Revenue in the first quarter is expected to be between $7.9 billion and $8.5 billion.
• Gross margin percentage in the first quarter is expected to be approximately 60 percent, plus or minus a couple of points. Intel's gross margin percentage varies primarily with revenue levels, product mix and pricing, changes in unit costs and inventory valuation, capacity utilization, and the timing of factory ramps and associated costs.
• Gross margin percentage for 2004 is expected to be approximately 62 percent, plus or minus a few points, as compared to 57 percent in 2003.
• Expenses (R&D plus MG&A) in the first quarter are expected to be approximately $2.3 billion. Expenses, particularly certain marketing- and compensation-related expenses, vary depending on the level of revenue and profits.
• R&D spending is expected to be approximately $4.8 billion in 2004, as compared to $4.4 billion in 2003. The expected increase in R&D spending is primarily driven by development of the company's next-generation 65-nm process technology, scheduled for production in 2005 on 300-mm wafers.
• Capital spending for 2004 is expected to be between $3.6 billion and $4.0 billion, as compared to $3.7 billion in 2003. Intel's capital equipment spending is primarily targeted at 300-mm technology, which is providing the company with ongoing capital efficiency improvements.
• Gains from equity investments and interest and other in the first quarter are expected to be approximately $35 million.
• The tax rate for 2004 is expected to be approximately 32 percent. The tax rate expectation is based on current tax law and current expected income, and assumes Intel will continue to receive tax benefits for export sales. The tax rate may be affected by the closing of acquisitions or divestitures, the jurisdiction in which profits are determined to be earned and taxed, and the ability to realize deferred tax assets.
• Depreciation is expected to be between $1.1 billion and $1.2 billion in the first quarter and approximately $4.6 billion for the year.
• Amortization of acquisition-related intangibles and costs is expected to be approximately $60 million in the first quarter and approximately $170 million for the full year.

Status of Business Outlook and Mid-Quarter Business Update During the quarter, Intel's corporate representatives may reiterate the Business Outlook during private meetings with investors, investment analysts, the media and others. Intel intends to publish a Mid-Quarter Business Update on March 4. From the close of business on Feb. 27 until publication of the Update, Intel will observe a "Quiet Period" during which the Outlook and the company's filings with the SEC on Forms 10-K and 10-Q should be considered to be historical, speaking as of prior to the Quiet Period only and not subject to update by the company. For more information about the Outlook, Update and related Quiet Periods, please refer to the Outlook section of the Web site at www.intc.com.

Intel is 's werelds grootste chipfabrikant en een vooraanstaand producent van personal computer-, netwerk- en communicatieproducten.

Meer informatie over Intel is te vinden op:
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Voor meer informatie:

Intel Benelux, Kristof Sehmke, Communicatie Manager, telefoon +32 (0)3 450 08 11, e-mail: kristof.sehmke@intel.com

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Monogram Communication Strategies (MCS) BV, Marieke Leenhouts, telefoon
+31 (0)23 562 82 08, e-mail: mariekel@monogram.nl.

The statements in this document that refer to plans and expectations for the first quarter, the year and the future are forward-looking statements that involve a number of risks and uncertainties. A number of factors in addition to those discussed above could cause actual results to differ materially from expectations. Demand for Intel's products, which impacts revenue and the gross margin percentage, is affected by business and economic conditions, as well as computing and communications industry trends, and changes in customer order patterns.

Intel conducts much of its manufacturing, assembly and test, and sales activities outside the United States and is thus subject to a number of other factors, including currency controls and fluctuations, tariff and import regulations, and regulatory requirements which may limit our or our customers' ability to manufacture, assemble and test, or sell products in particular countries. If terrorist activity, armed conflict, civil o! r military unrest or political instability occurs in the United States, Israel or other locations, such events may disrupt manufacturing, assembly and test, logistics, security and communications, and could also result in reduced demand for Intel's products. The impacts of major health concerns, or of large-scale outages or interruptions of service from utility or other infrastructure providers, on Intel, its suppliers, customers or other third parties could also adversely affect our business and impact our customer order patterns. Revenue and the gross margin percentage are affected by competing chip architectures and manufacturing technologies, competing software-compatible microprocessors, pricing pressures and other competitive factors, as well as market acceptance of Intel's new products, availability of sufficient inventory to meet demand, availability of externally purchased components, and development and timing of compelling software applications and operating systems that take advantage of the features of our products. Future revenue is also dependent on continuing technological advancement, including developing and implementing new processes and strategic products, as well as the timing of new product introductions, sustaining and growing new businesses and integrating and operating any acquired businesses. The gross margin percentage could also be affected by the execution of the manufacturing ramp, excess manufacturing capacity, excess or obsolete inventory, variations in inventory valuation and impairment of manufacturing assets. The expectation regarding gains or losses from equity securities and interest and other assets no unanticipated events and varies depending on equity market levels and volatility, gains or losses realized on the sale or exchange of securities, impairment charges related to non-marketable and other investments, interest rates, cash balances, and changes in fair value of derivative instruments.

Expectations of impairment charges on investments are based on experience, and it is not possible to know which specific investments are likely to be impaired or the extent or timing of individual impairments. Results could also be affected by adverse effects associated with product defects and errata (deviations from published specifications), and by litigation, such as that described in Intel's SEC reports, as well as other risk factors listed in Intel's SEC reports, including the report on Form 10-Q for the quarter ended Sept. 27, 2003.