Intel 2012 Annual Report Download - page 96

90
Long-term income taxes payable of $177 million as of December 29, 2012 ($165 million as of December 31, 2011), within
other long-term liabilities, includes uncertain tax positions, reduced by the associated federal deduction for state taxes and
non-U.S. tax credits, and may also include other long-term tax liabilities that are not uncertain but have not yet been paid.
Uncertain Tax Positions
The aggregate changes in the balance of gross unrecognized tax benefits were as follows:
(In Millions)
2012
2011
2010
Beginning gross unrecognized tax benefits................................................................
$ 212
$ 216
$ 220
Settlements and effective settlements with tax authorities and related
remeasurements ..........................................................................................................
(81)
(63)
(73)
Lapse of statute of limitations ...........................................................................................
(5)
(17)
—
Increases in balances related to tax positions taken during prior periods........................
56
91
28
Decreases in balances related to tax positions taken during prior periods ......................
(6)
(21)
(30)
Increases in balances related to tax positions taken during current period......................
13
6
71
Ending gross unrecognized tax benefits .....................................................................
$ 189
$ 212
$ 216
During 2012, we settled and effectively settled matters with the Internal Revenue Service, certain non-U.S., and state tax
authorities relating to tax positions taken during prior periods. The result of the settlements, effective settlements, and
resulting remeasurements was a reduction of $81 million in the balance of our gross unrecognized tax benefits ($63
million in 2011 and $73 million in 2010), $7 million of which resulted in a tax benefit for 2012 ($61 million for 2011 and $48
million for 2010).
If the remaining balance of $189 million of unrecognized tax benefits as of December 29, 2012 ($212 million as of
December 31, 2011) were realized in a future period, it would result in a tax benefit of $66 million and a reduction in the
effective tax rate ($92 million as of December 31, 2011).
Interest and penalties related to unrecognized tax benefits were insignificant in 2012 ($24 million in 2011 and insignificant
in 2010). As of December 29, 2012, we had $66 million of accrued interest and penalties related to unrecognized tax
benefits ($90 million as of December 31, 2011).
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 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 2001. For U.S. federal tax returns, we are no longer subject to tax
examination for years prior to 2008.
Note 27: Contingencies
Legal Proceedings
We are a party to various legal proceedings, including those noted in this section. Although management at present
believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our
financial position, results of operations, cash flows, or overall trends, legal proceedings and related government
investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable
resolutions could include substantial monetary damages. In addition, in matters for which injunctive relief or other conduct
remedies are sought, unfavorable resolutions could include 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. Were
unfavorable outcomes to occur, the possibility exists for a material adverse impact on our business, results of operations,
financial position, and overall trends. We might also conclude that settling one or more such matters is in the best
interests of our stockholders, employees, and customers, and any such settlement could include substantial payments.
However, we have not reached this conclusion with respect to any particular matter at this time.
A number of proceedings generally have challenged and continue to challenge certain of our competitive practices. The
allegations in these proceedings vary and are described in more detail in the following paragraphs. In general, they
contend that we improperly condition price rebates and other discounts on our microprocessors on exclusive or near-