Intel Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Cash and Investments

Cash and Investments

3 Months Ended

Apr. 02, 2016

Investments and Cash [Abstract]

Cash and Investments [Text Block]

Note 5: Cash and Investments

Cash and investments at the end of each period were as follows:



(In Millions)	Apr 2, 2016		Dec 26, 2015
Available-for-sale investments	$	14,169	$	22,007
Cash	875		1,466
Equity method investments	1,593		1,590
Loans receivable	1,038		794
Non-marketable cost method investments	2,933		2,933
Reverse repurchase agreements	768		3,368
Trading assets	9,103		7,323
Total cash and investments	$	30,479	$	39,481

Available-for-Sale Investments

Available-for-sale investments at the end of each period were as follows:



	April 2, 2016									December 26, 2015
(In Millions)	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Asset-backed securities	$	—	$	—	$	—		$	—	$	5	$	—	$	(1	)	$	4
Corporate debt	3,133		5		(9		)	3,129		4,164		3		(10		)	4,157
Financial institution instruments	4,196		3		(3		)	4,196		11,140		1		(2		)	11,139
Government debt	467		—		—			467		748		—		(1		)	747
Marketable equity securities	3,230		3,148		(1		)	6,377		3,254		2,706		—			5,960
Total available-for-sale investments	$	11,026	$	3,156	$	(13	)	$	14,169	$	19,311	$	2,710	$	(14	)	$	22,007

Government debt includes instruments such as non-U.S. government bonds and U.S. agency securities. Financial institution instruments include instruments issued or managed by financial institutions in various forms such as commercial paper, fixed and floating rate bonds, money market fund deposits, and time deposits. Substantially all time deposits were issued by institutions outside the U.S. as of April 2, 2016 and December 26, 2015.

For information on the unrealized holding gains (losses) on available-for-sale investments reclassified out of accumulated other comprehensive income (loss) into the consolidated condensed statements of income, see "Note 20: Other Comprehensive Income (Loss)."

During the first three months of 2016, we sold available-for-sale investments for proceeds of $2.9 billion, of which $127 million related to sales of cash and cash equivalents ($43 million in the first three months of 2015, none of which was related to sales of cash and cash equivalents). The gross realized gains on sales of available-for-sale investments were $86 million in the first three months of 2016 ($43 million in the first three months of 2015).

The amortized cost and fair value of available-for-sale debt investments, by contractual maturity, as of April 2, 2016, were as follows:



(In Millions)	Cost		Fair Value
Due in 1 year or less	$	4,230	$	4,229
Due in 1–2 years	1,835		1,834
Due in 2–5 years	1,266		1,264
Instruments not due at a single maturity date	465		465
Total	$	7,796	$	7,792

Equity Method Investments

IM Flash Technologies, LLC

Since the inception of IM Flash Technologies, LLC (IMFT) in 2006, Micron Technology, Inc. (Micron) and Intel have jointly developed NAND flash memory and, most recently, 3D XPoint™ technology products. Intel also purchases jointly developed products directly from Micron under certain supply agreements.

The IMFT operating agreement, most recently amended in January 2016, continues through 2024 unless earlier terminated under certain terms and conditions and provides for certain buy-sell rights of the joint venture. Intel has the right to cause Micron to buy our interest in IMFT. If we exercise this right, Micron would set the closing date of the transaction within two years following such election and could elect to receive financing from us for one to two years. Subsequent to our put right, and commencing in January 2019, Micron has the right to call our interest in IMFT with the closing date to be effective within one year.

As of April 2, 2016, we own a 49% interest in IMFT. The carrying value of our investment was $872 million as of April 2, 2016 ($872 million as of December 26, 2015) and is classified within other long-term assets.

IMFT is a variable interest entity and all costs of IMFT are passed on to Micron and Intel through sale of products or services in proportional share of ownership. Intel's portion of IMFT costs, primarily related to product purchases and production-related services, was approximately $100 million in the first three months of 2016 (approximately $95 million in the first three months of 2015). The amount due to IMFT for product purchases and services provided was approximately $50 million as of April 2, 2016 (approximately $20 million as of December 26, 2015).

IMFT depends on Micron and Intel for any additional cash needs. Our known maximum exposure to loss approximated the carrying value of our investment balance in IMFT, which was $872 million as of April 2, 2016. Except for the amount due to IMFT for product purchases and production-related services, we did not have any additional liabilities recognized on our consolidated condensed balance sheets in connection with our interests in this joint venture as of April 2, 2016. Our potential future losses could be higher than the carrying amount of our investment, as Intel and Micron are liable for other future operating costs or obligations of IMFT. Future cash calls could also increase our investment balance and the related exposure to loss. In addition, because we are currently committed to purchasing 49% of IMFT’s production output and production-related services, we may be required to purchase products at a cost in excess of realizable value.

We have determined that we do not have the characteristics of a consolidating investor in the variable interest entity and, therefore, we account for our interest in IMFT using the equity method of accounting.

Cloudera, Inc.

During 2014, we invested in Cloudera, Inc. (Cloudera). Our fully diluted ownership interest in Cloudera is 17% as of April 2, 2016. Our investment is accounted for under the equity and cost methods of accounting based on the rights associated with different instruments we own, and is classified within other long-term assets. The carrying value of our equity method investment was $250 million and of our cost method investment was $454 million as of April 2, 2016 ($256 million for our equity method investment and $454 million for our cost method investment as of December 26, 2015).

Intel-GE Care Innovations, LLC

During the first three months of 2016, we gained control of Care Innovations LLC (Care Innovations), our joint venture with General Electric Company. Care Innovations has been included in our consolidated condensed financial statements as of April 2, 2016.

Non-marketable Cost Method Investments

Investment in Beijing UniSpreadtrum Technology Ltd.

During 2014, we entered into a series of agreements with Tsinghua Unigroup Ltd. (Tsinghua Unigroup), an operating subsidiary of Tsinghua Holdings Co. Ltd., to, among other things, jointly develop Intel^® architecture- and communications-based solutions for phones. We agreed to invest up to 9.0 billion Chinese yuan (approximately $1.5 billion as of the date of the agreement) for a minority stake of approximately 20% of Beijing UniSpreadtrum Technology Ltd. (UniSpreadtrum), a holding company under Tsinghua Unigroup. During 2015, we invested $966 million to complete the first phase of the equity investment. We have determined we do not have significant influence over the company and, therefore, we account for our interest using the cost method of accounting. Subject to regulatory approvals and other closing conditions, the second phase of the investment will require additional funding of approximately $500 million.

Trading Assets

As of April 2, 2016 and December 26, 2015, substantially all of our trading assets were marketable debt instruments. Net gains related to trading assets still held at the reporting date were $243 million in the first three months of 2016 (net losses of $200 million in the first three months of 2015). Net losses on the related derivatives were $234 million in the first three months of 2016 (net gains of $194 million in the first three months of 2015).