SEC Comment Letter for INTEL CORP (INTC) (CIK 0000050863) (INTC) — May 19, 2008
INTEL CORP (INTC) (CIK 0000050863)
Date: May 19, 2008 · CIK: 0000050863 · Accession: 0000000000-08-025408
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-06217
Letter
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
DIVISION OF CORPORATION FINANCE
Mail Stop 6010 May 19, 2008
VIA U.S. MAIL AND FAX (408) 765-1845 Mr. Paul S. Otellini President and Chief Executive Officer Mr. Stacy J. Smith Vice President and Chief Financial Officer Intel Corporation 2200 Mission College Boulevard Santa Clara, California 95054-1549 Re: Intel Corporation Form 10-K for the year ended December 29, 2007 Filed February 20, 2008 Form 10-Q for the quarter ended March 29, 2008 File No. 000-06217 Dear Mr. Smith:
We have reviewed your filings and have th e following comments. Where indicated, we think you should revise your future filings in re sponse to these comments. If you disagree, we will consider your explanation as to why our comment is inapplicable or a revision is unnecessary. Please be as detailed as necessary in your explanati on. In some of our comments, we may ask you to provide us with informati on so we may better unders tand your disclosure. After reviewing this information, we may raise additional comments. Please understand that the purpose of our re view process is to assist you in your compliance with the applicable disclosure requir ements and to enhance the overall disclosure in your filing. We look forward to working with you in these respects. We welcome any questions you may have about our comments or any other aspect of our review. Feel fr ee to call us at the telephone numbers listed at th e end of this letter.
Mr. Paul S. Otellini Mr. Stacy J. Smith Intel Corporation May 19, 2008 Page 2 Form 10-K for the Fiscal Year Ended December 29, 2007
Financial Statements, page 46
Note 2. Accounting Policies, page 51
Revenue Recognition, page 58 1. We note that because of agreements granti ng distributors price protection rights and/or rights to return unsold products, you defer r ecognizing revenue on sa les made to these distributors until the distributor s sell the products to a third party. We note that when you defer recognizing revenue, you record a current liability on the balance sheet under “deferred income on shipme nts to distributors.”
⋅ Please tell us and revise the note in future filings to clarify how you treat the costs of sales made to distributors. If you defer co sts, tell us and revise future filings to disclose how the deferred costs ar e presented on your balance sheet. ⋅ Please tell us and disclose in future filings the methodology, if any, employed to evaluate that asset for impairment and th e authoritative literature in US GAAP on which you base that policy.
2. Please tell us and revise future filings to disclose the significan t terms of your sales arrangement with distributors , including the return and price protection rights you grant; the situations under which the distributors may exercise those rights; and whether returns or price protection credits are capped to a cert ain percentage of sales price or margins. Tell us whether any of your arrangements with distributors would allow or require you to grant price concessions below the cost of the product. 3. Please tell us the amounts of gross deferred revenues and gross deferred costs of sales presented in the ‘deferred income on shipme nts to distributors’ caption of your balance sheets as of December 29, 2007 and March 29, 2008. In addition, as we note that impairments of the deferred costs and credits for changes in selling prices may be reasonably likely to have a material impact on your results of operations, liquidity or capital resources, please revise MD&A in futu re filings to include similar disclosure accompanied by a discussion of the impact in each reported period. Your discussion could also include a roll-forwar d of your deferred distributor income liability account. Further, please discuss any trends noted over the reported periods. Refer to Item 303(a) of Regulation S-K.
Mr. Paul S. Otellini Mr. Stacy J. Smith Intel Corporation May 19, 2008 Page 3 Form 10-Q for the quarter ended March 29, 2008
Management’s Discussion and Analysis of Financ ial Condition and Results of Operations, page Critical Accounting Estimates, page 24
4. We note your disclosure regarding Level 2 marketable debt instruments that are priced using indicator prices which represent non-bi nding market consensu s prices. Please tell us more about these indicator prices, includ ing how you obtain these amounts, what they represent and how you are able to corroborate these prices. 5. Further, please also tell us about the indicator prices that you refer to with regards to the Level 3 assets and liabilities, including how these indicator prices are determined, how they differ from indicator prices related to Level 2 assets and liabilities, what they represent and how you determine they are appropriate. 6. We note your disclosure that Level 3 assets and liabilities include marketable debt instruments, non-marketable equity invest ments, derivative contracts, and company issued debt whose values are determined using inputs that are both unobservable and significant to the values of th e instruments being measured. Level 3 assets also include marketable debt instruments that are priced using indicator prices that you were unable to corroborate with observable market quotes. Pl ease tell us and revise future filings to disclose the valuation techniques used, incl uding the key assumpti ons considered in valuing the Level 3 assets.
As appropriate, please respond to these comm ents within 10 business days or tell us when you will provide us with a response. Please furnish a letter that keys your responses to our comments and provides any requested information. De tailed letters greatly f acilitate our review. Please understand that we may have additional co mments after reviewing your responses to our comments. We urge all persons who are responsible fo r the accuracy and adequ acy of the disclosure in the filing to be certain that the filing includes all information re quired under the Securities Exchange Act of 1934 and that they have provi ded all information investors require for an informed investment decision. Since the compa ny and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the acc uracy and adequacy of the disclosures they have made.
Mr. Paul S. Otellini Mr. Stacy J. Smith Intel Corporation May 19, 2008 Page 4 In connection with responding to our comme nts, please provide, in writing, a statement from the company acknowledging that: the company is responsible for the adequacy and accuracy of the disclo sure in the filing;
staff comments or changes to disclosure in re sponse to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all information you provide to the sta ff of the Division of Corporati on Finance in our review of your filing or in response to our comments on your filing. You may contact Julie Sherma n, Staff Accountant, at (202) 551-3640 or me at (202) 551- 3604 if you have any questions regarding these comments. In this regard, do not hesitate to contact Angela Crane, Accounting Branch Chief, at (202) 551-3554.
S i n c e r e l y , K a t e T i l l a n Assistant Chief Accountant
Show Raw Text
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
DIVISION OF
CORPORATION FINANCE
Mail Stop 6010
May 19, 2008
VIA U.S. MAIL AND FAX (408) 765-1845
Mr. Paul S. Otellini President and Chief Executive Officer Mr. Stacy J. Smith Vice President and Chief Financial Officer Intel Corporation 2200 Mission College Boulevard Santa Clara, California 95054-1549
Re: Intel Corporation
Form 10-K for the year ended December 29, 2007
Filed February 20, 2008 Form 10-Q for the quarter ended March 29, 2008 File No. 000-06217
Dear Mr. Smith:
We have reviewed your filings and have th e following comments. Where indicated, we
think you should revise your future filings in re sponse to these comments. If you disagree, we
will consider your explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your explanati on. In some of our comments,
we may ask you to provide us with informati on so we may better unders tand your disclosure.
After reviewing this information, we may raise additional comments. Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requir ements and to enhance the overall disclosure in
your filing. We look forward to working with you in these respects. We welcome any questions
you may have about our comments or any other aspect of our review. Feel fr ee to call us at the
telephone numbers listed at th e end of this letter.
Mr. Paul S. Otellini
Mr. Stacy J. Smith
Intel Corporation May 19, 2008 Page 2 Form 10-K for the Fiscal Year Ended December 29, 2007
Financial Statements, page 46
Note 2. Accounting Policies, page 51
Revenue Recognition, page 58
1. We note that because of agreements granti ng distributors price protection rights and/or
rights to return unsold products, you defer r ecognizing revenue on sa les made to these
distributors until the distributor s sell the products to a third party. We note that when you
defer recognizing revenue, you record a current liability on the balance sheet under
“deferred income on shipme nts to distributors.”
⋅ Please tell us and revise the note in future filings to clarify how you treat the costs of
sales made to distributors. If you defer co sts, tell us and revise future filings to
disclose how the deferred costs ar e presented on your balance sheet.
⋅ Please tell us and disclose in future filings the methodology, if any, employed to
evaluate that asset for impairment and th e authoritative literature in US GAAP on
which you base that policy.
2. Please tell us and revise future filings to disclose the significan t terms of your sales
arrangement with distributors , including the return and price protection rights you grant;
the situations under which the distributors may exercise those rights; and whether returns or price protection credits are capped to a cert ain percentage of sales price or margins.
Tell us whether any of your arrangements with distributors would allow or require you to
grant price concessions below the cost of the product.
3. Please tell us the amounts of gross deferred revenues and gross deferred costs of sales
presented in the ‘deferred income on shipme nts to distributors’ caption of your balance
sheets as of December 29, 2007 and March 29, 2008. In addition, as we note that impairments of the deferred costs and credits for changes in selling prices may be reasonably likely to have a material impact on your results of operations, liquidity or
capital resources, please revise MD&A in futu re filings to include similar disclosure
accompanied by a discussion of the impact in each reported period. Your discussion
could also include a roll-forwar d of your deferred distributor income liability account.
Further, please discuss any trends noted over the reported periods. Refer to Item 303(a) of Regulation S-K.
Mr. Paul S. Otellini
Mr. Stacy J. Smith
Intel Corporation May 19, 2008 Page 3 Form 10-Q for the quarter ended March 29, 2008
Management’s Discussion and Analysis of Financ ial Condition and Results of Operations, page
20
Critical Accounting Estimates, page 24
4. We note your disclosure regarding Level 2 marketable debt instruments that are priced
using indicator prices which represent non-bi nding market consensu s prices. Please tell
us more about these indicator prices, includ ing how you obtain these amounts, what they
represent and how you are able to corroborate these prices.
5. Further, please also tell us about the indicator prices that you refer to with regards to the
Level 3 assets and liabilities, including how these indicator prices are determined, how
they differ from indicator prices related to Level 2 assets and liabilities, what they
represent and how you determine they are appropriate.
6. We note your disclosure that Level 3 assets and liabilities include marketable debt
instruments, non-marketable equity invest ments, derivative contracts, and company
issued debt whose values are determined using inputs that are both unobservable and
significant to the values of th e instruments being measured. Level 3 assets also include
marketable debt instruments that are priced using indicator prices that you were unable to
corroborate with observable market quotes. Pl ease tell us and revise future filings to
disclose the valuation techniques used, incl uding the key assumpti ons considered in
valuing the Level 3 assets.
As appropriate, please respond to these comm ents within 10 business days or tell us
when you will provide us with a response. Please furnish a letter that keys your responses to our comments and provides any requested information. De tailed letters greatly f acilitate our review.
Please understand that we may have additional co mments after reviewing your responses to our
comments. We urge all persons who are responsible fo r the accuracy and adequ acy of the disclosure
in the filing to be certain that the filing includes all information re quired under the Securities
Exchange Act of 1934 and that they have provi ded all information investors require for an
informed investment decision. Since the compa ny and its management are in possession of all
facts relating to a company’s disclosure, they are responsible for the acc uracy and adequacy of
the disclosures they have made.
Mr. Paul S. Otellini
Mr. Stacy J. Smith Intel Corporation May 19, 2008 Page 4
In connection with responding to our comme nts, please provide, in writing, a statement
from the company acknowledging that: the company is responsible for the adequacy and accuracy of the disclo sure in the filing;
staff comments or changes to disclosure in re sponse to staff comments do not foreclose the
Commission from taking any action with respect to the filing; and
the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the sta ff of the Division of Corporati on Finance in our review of your
filing or in response to our comments on your filing.
You may contact Julie Sherma n, Staff Accountant, at (202) 551-3640 or me at (202) 551-
3604 if you have any questions regarding these comments. In this regard, do not hesitate to contact Angela Crane, Accounting Branch Chief, at (202) 551-3554.
S i n c e r e l y , K a t e T i l l a n Assistant Chief Accountant