Intel 2009 Annual Report Download - page 114

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
During 2009, we settled and effectively settled matters with the IRS and certain state tax authorities related to tax positions
taken during prior periods. The result of the settlements, effective settlements, and resulting remeasurements was a reduction
of $526 million in the balance of our gross unrecognized tax benefits, $366 million of which resulted in a tax benefit in 2009.
If the remaining balance of $220 million of unrecognized tax benefits as of December 26, 2009 ($744 million as of December
27, 2008) were realized in a future period, it would result in a tax benefit of $101 million and a reduction of the effective tax
rate ($590 million as of December 27, 2008).
During all years presented, we recognized interest and penalties related to unrecognized tax benefits within the provision for
taxes on the consolidated statements of operations. In 2009, we recognized a net benefit of $62 million, primarily due to the
reversal of accrued interest and penalties related to settled and effectively settled matters described above ($6 million of
expense in 2008 and a net benefit of $142 million in 2007). As of December 26, 2009, we had $55 million of accrued interest
and penalties related to unrecognized tax benefits ($153 million as of December 27, 2008).
Although the timing of the resolution and/or closure on audits is highly uncertain, it is reasonably possible that the balance of
gross unrecognized tax benefits could significantly change in the next 12 months. However, given the number of years
remaining subject to examination and the number of matters being examined, we are unable to estimate the full range of
possible adjustments to the balance of gross unrecognized tax benefits.
We had state tax credits of $219 million as of December 26, 2009 that will expire between 2010 and 2020. We file U.S.
federal, U.S. state, and non-U.S. tax returns. For U.S. state and non-U.S. tax returns, we are generally no longer subject to tax
examinations for years prior to 1996. For U.S. federal tax returns, we are no longer subject to tax examination for years prior
to 2003.
Note 28: Contingencies
Legal Proceedings
We are currently a party to various legal proceedings, including those noted in this section. While management presently
believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm the
company’s financial position, cash flows, or overall trends in results of operations, legal proceedings and related government
investigations are subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include
substantial money damages, and in matters for which injunctive relief or other conduct remedies are sought, an injunction or
other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business
practices, or requiring other remedies such as compulsory licensing of intellectual property. Were unfavorable final outcomes
to occur, there exists the possibility of a material adverse impact on our business, results of operations, financial position, and
overall trends. Except as may be otherwise indicated, the outcomes in these matters are not reasonably estimable.
A number of proceedings, described below, generally challenge certain of our competitive practices, contending generally that
we improperly condition price rebates and other discounts on our microprocessors on exclusive or near-exclusive dealing by
some of our customers. We believe that we compete lawfully and that our marketing practices benefit our customers and our
stockholders, and we will continue to vigorously defend ourselves. While we have settled some of these matters, the
distractions caused by challenges to our business practices from the remaining matters are undesirable, and the legal and other
costs associated with defending our position have been and continue to be significant. We assume that these challenges could
continue for a number of years and may require the investment of substantial additional management time and substantial
financial resources to explain and defend our position.
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