Intel 2012 Annual Report Download - page 36
Download and view the complete annual report
Please find page 36 of the 2012 Intel annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.30
represents the assignment of various assets and liabilities, excluding certain corporate assets and liabilities, such as cash,
investments, and debt.
For the annual impairment assessment in 2012, we determined that for each of our reporting units with significant
amounts of goodwill, it was more likely than not that the fair value of the reporting units exceeded the carrying value. As a
result, we concluded that performing the first step of the goodwill impairment test was not necessary for those reporting
units. During the fourth quarter of each of the prior three fiscal years, we completed our annual impairment assessments
and concluded that goodwill was not impaired in any of these years.
Identified Intangibles
We make judgments about the recoverability of purchased finite-lived intangible assets whenever events or changes in
circumstances indicate that an impairment may exist. Recoverability of finite-lived intangible assets is measured by
comparing the carrying amount of the asset to the future undiscounted cash flows that the asset is expected to generate.
We perform an annual impairment assessment in the fourth quarter of each year for indefinite-lived intangible assets, or
more frequently if indicators of potential impairment exist, to determine whether it is more likely than not that the carrying
value of the assets may not be recoverable. Recoverability of indefinite-lived intangible assets is measured by comparing
the carrying amount of the asset to the future discounted cash flows that the asset is expected to generate. If we
determine that an individual asset is impaired, the amount of any impairment is measured as the difference between the
carrying value and the fair value of the impaired asset.
The assumptions and estimates used to determine future values and remaining useful lives of our intangible and other
long-lived assets are complex and subjective. They can be affected by various factors, including external factors such as
industry and economic trends, and internal factors such as changes in our business strategy and our forecasts for specific
product lines. Based on our impairment reviews of our intangible assets, we recognized impairment charges of $21 million
in 2012, $10 million in 2011, and no impairment charges in 2010.
Income Taxes
We must make estimates and judgments in determining the provision for taxes for financial statement purposes. These
estimates and judgments occur in the calculation of tax credits, benefits, and deductions, and in the calculation of certain
tax assets and liabilities that arise from differences in the timing of recognition of revenue and expense for tax and
financial statement purposes, as well as the interest and penalties related to uncertain tax positions. Significant changes
in these estimates may result in an increase or decrease to our tax provision in a subsequent period.
We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must
increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will
not ultimately be recoverable. We believe that we will ultimately recover the deferred tax assets recorded on our
consolidated balance sheets. However, should a change occur in our ability to recover our deferred tax assets, our tax
provision would increase in the period in which we determined that the recovery was not likely. Recovery of a portion of
our deferred tax assets is impacted by management’s plans with respect to holding or disposing of certain investments;
therefore, changes in management’s plans with respect to holding or disposing of investments could affect our future
provision for taxes.
The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We
recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position
for recognition by determining whether the weight of available evidence indicates that it is more likely than not that the
position will be sustained on audit, including resolution of related appeals or litigation processes, if any. If we determine
that a tax position will more likely than not be sustained on audit, the second step requires us to estimate and measure
the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently
difficult and subjective to estimate such amounts, as we have to determine the probability of various possible outcomes.
We re-evaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors such as changes in
facts or circumstances, changes in tax law, new audit activity, and effectively settled issues. Determining whether an
uncertain tax position is effectively settled requires judgment. Such a change in recognition or measurement would result
in the recognition of a tax benefit or an additional charge to the tax provision.