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To: jeff_boyd___ who wrote (20941)	11/30/2000 1:12:53 PM
From: Goutam	Read Replies (2) \| Respond to of 275872

Jeff, re: <In answer to your questions, the fact that a stock acquisition is made with cash doesn't change the fact that goodwill is not deductible. If they acquired assets, however, the goodwill is deductible. Thanks for your response. Just to let you know, I'm not an accounting expert. My accounting knowledge is limited to one business accounting course that I took long time ago. "Don't know if Intel has done any acquisitions as pooling transactions; I don't think they have. Pooling avoids the goodwill questions as the assets aren't written up to FMV." Could you please elaborate on this. What is FMV? I did a lot of number crunching, and data compilation from the last six quarters of Intel financial reports. My intent is to post here about my findings - especially about the goodwill amortization by Intel. I came to a conclusion after analyzing all the data, that Intel's tax payments since Q4'99 include tax deduction for the goodwill & in-process research costs. Is there absolutely no way for Intel to take tax relief for the goodwill costs? Will it look absurd even to consider such a possibility (Intel deducting goodwill for tax purposes), and post my conclusions on this board with some supporting data? I believe, the recent tax relief reported by Intel in Q1'00 was to do with Goddwill amortization. Besides this, my conclusion that Intel is deducting goodwill for tax purposes was based on some more clues that I found in their previous five quarters' financial reports. My conclusion was also based on being able to come up with perfect correlation between the decrease in their effective tax rate on their operational earnings each quarter, and the increases in their goodwill amortization claim each quarter - intel.com o In Q3'99, they started showing a new asset in their balance sheet - "Goodwill and other acquisition-related intangibles", which as of Q3'00 stands at $6,613 Millions. They also started showing goodwill as a separate cost item from Q3'99 in their income statements. Prior to that they included the acquisition costs in the cost of sales (see below). o From Q3'99 earnings report: Acquisition-related costs in the third quarter consisted of $333 million in one-time charges for purchased in-process research and development and $121 million of amortization of goodwill and other acquisition-related intangibles. Effective with this earnings release, the amortization of goodwill and other acquisition-related intangibles is shown separately and prior periods’ amounts are reclassified to be consistent with the current basis of presentation. These costs were formerly included in cost of sales. The above blurb from the Q3'99 financial report is not related to the tax deduction issue, but I included it to show the new change they implemented since Q3'99. o In Q4'99, this note was included with the nonGAAP pro forma info: intel.com The following pro forma supplemental information excludes the effect of amortization of goodwill and other acquisition-related intangibles as well as in-process research and development. As these acquisition-related costs are substantially all non-deductible for income tax purposes, the only change to the tax provision in arriving at the pro forma net income is a small increase for the impact of deferred taxes related to the amortization of identifiable intangibles. This pro forma information is not prepared in accordance with generally accepted accounting principles. o And from Q1'00 the above note in the pro forma info section has been changed to: intel.com The following pro forma supplemental information excludes the effect of amortization of goodwill and other acquisition-related intangibles as well as in-process research and development. This pro forma information is not prepared in accordance with generally accepted accounting principles. Notice that they eliminated the wording "As these acquisition-related costs are substantially all non-deductible for income tax purposes, ..." in the note included with their Q1'00 pro forma info. o The effective tax rate Intel paid on their operational income in each quarter decreased in proportion to the increases in godwill amortization they claimed in each quarter. Any comments would be greatly appreciated. TIA goutama