Intel 2013 Annual Report Download - page 26

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Litigation or regulatory proceedings could harm our business.
We may face legal claims or regulatory matters involving stockholder, consumer, competition, and other issues on a
global basis. As described in “Note 26: Contingencies” in Part II, Item 8 of this Form 10-K, we are engaged in a
number of litigation and regulatory matters. Litigation and regulatory proceedings are inherently uncertain, and
adverse rulings could occur, including monetary damages, or an injunction stopping us from manufacturing or
selling products, engaging in business practices, or requiring other remedies, such as compulsory licensing of
patents.
We face risks related to sales through distributors and other third parties.
We sell a portion of our products through third parties such as distributors, value-added resellers, OEMs, Internet
service providers, and channel partners (collectively referred to as distributors). Using third parties for distribution
exposes us to many risks, including competitive pressure, concentration, credit risk, and compliance risks.
Distributors may sell products that compete with our products, and we may need to provide financial and other
incentives to focus distributors on the sale of our products. We may rely on one or more key distributors for a
product, and the loss of these distributors could reduce our revenue. Distributors may face financial difficulties,
including bankruptcy, which could harm our collection of accounts receivable and financial results. Violations of
FCPA or similar laws by distributors or other third-party intermediaries could have a material impact on our
business. Failing to manage risks related to our use of distributors may reduce sales, increase expenses, and
weaken our competitive position.
We face risks related to sales to government entities.
We derive a portion of our revenue from sales to government entities and their respective agencies. Government
demand and payment for our products may be affected by public sector budgetary cycles and funding
authorizations. Government contracts are subject to oversight, including special rules on accounting, expenses,
reviews, and security. Failing to comply with these rules could result in civil and criminal penalties and sanctions,
including termination of contracts, fines and suspensions, or debarment from future government business.
We invest in companies for strategic reasons and may not realize a return on our investments.
We make investments in companies around the world to further our strategic objectives and support key business
initiatives. These investments include equity or debt instruments of public or private companies, and many of these
instruments are non-marketable at the time of our initial investment. Companies range from early-stage companies
that are still defining their strategic direction to more mature companies with established revenue streams and
business models. The companies in which we invest may fail because they are unable to secure additional funding,
obtain favorable terms for future financings, or participate in liquidity events such as public offerings, mergers, and
private sales. If any of these companies fail, we could lose all or part of our investment. If we determine that an
other-than-temporary decline in the fair value exists for an investment, we write down the investment to its fair value
and recognize a loss, impacting gains (losses) on equity investments, net.
Our results of operations could vary as a result of the methods, estimates, and judgments that we use in
applying accounting policies.
The methods, estimates, and judgments that we use in applying accounting policies have a large impact on our
results of operations. For more information, see “Critical Accounting Estimates” in Part II, Item 7 of this Form 10-K.
These methods, estimates, and judgments are subject to large risks, uncertainties, and assumptions, and changes
could affect our results of operations.
Changes in our effective tax rate may harm our results of operations.
A number of factors may increase our effective tax rates, which could reduce our net income, including:
• the jurisdictions in which profits are determined to be earned and taxed;
• the resolution of issues arising from tax audits;
• changes in the valuation of our deferred tax assets and liabilities, and in deferred tax valuation allowances;
• adjustments to income taxes upon finalization of tax returns;
• increases in expenses not deductible for tax purposes, including write-offs of acquired in-process research and
development and impairments of goodwill;
• changes in available tax credits;
• changes in tax laws or their interpretation, including changes in the U.S. to the taxation of non-U.S income and
expenses;
• changes in U.S. generally accepted accounting principles; and
• our decision to repatriate non-U.S. earnings for which we have not previously provided for U.S. taxes.
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