Intel Completes Sec Certification, Files Expanded 10Q, Reaffirms Its Stock Option Accounting Treatment

SANTA CLARA, Calif., Aug. 8, 2002 -- Intel Corporation said today that it had filed the certifications of its chief executive officer and chief financial officer required by the Securities and Exchange Commission (SEC) Order 4-460, which requires that by Aug. 14, CEOs and CFOs of large, publicly traded companies attest to the accuracy of their company's 2001 Form 10-K and subsequent filings with the SEC.

The company also filed its Form 10-Q quarterly report for the period ended June 29, 2002, which requires an additional certification of accuracy covered by Section 906 of the recently passed Sarbanes-Oxley Act of 2002. The filing also contains additional information about the company's stock option program.

Intel said it would continue to use the intrinsic value method to account for stock options in its financial statements, and include the pro-forma impact of using the fair value method in financial statement footnotes, as permitted by Financial Accounting Standard 123. "We prefer the intrinsic value method because we think it provides a more accurate reflection of company operations," said Andy Bryant, Intel chief financial and enterprise services officer. "There is no good valuation model to determine the fair value of unexercised employee stock options. Including an unreliable estimate of the fair value of options in the income statement would distort earnings.

"We believe the current debate over the use of stock options is misdirected. Rather than focusing on the accounting for broad-based employee stock options, the debate should center on excessive executive compensation. Many good ways to attack that problem exist, ranging from stockholder approval of option plans, to assuring outside directors have more power and independence."

As of June 2002, Intel's five most highly compensated officers held just 2 percent of outstanding options, reflecting the company's view that stock options are a powerful tool to motivate and retain employees at all levels.

The company said its goal is to keep dilution related to the option program to an average of less than 2 percent annually. The dilution percentage is calculated as the new option grants for the year, net of options forfeited by employees leaving the company, divided by the total outstanding shares at the beginning of the year.

The certifications with the Form 10-Q may be viewed through the SEC EDGAR electronic filing system, and the statements submitted under SEC Order 4-460 will be scanned and posted by the SEC on the http://www.sec.gov/ Web site. The public may also go to http://www.intc.com/ for details of Intel's stock option program and other information for investors.

Intel, the world's largest chip maker, is also a leading manufacturer of computer, networking and communications products. Additional information about Intel is available at http://www.intel.com/pressroom/.

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