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

Quarterly report pursuant to Section 13 or 15(d)

Fair Value

Fair Value

6 Months Ended

Jul. 01, 2017

Note 13: Fair Value

For information about our fair value policies, and methods and assumptions used in estimating the fair value of our financial assets and liabilities, see “Note 2: Accounting Policies" and "Note 15: Fair Value" in Part II, Item 8 of our 2016 Form 10-K.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis



	July 1, 2017								December 31, 2016
	Fair Value Measured and Recorded at Reporting Date Using								Fair Value Measured and Recorded at Reporting Date Using
(In Millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Corporate debt	$	—	$	2,645	$	—	$	2,645	$	—	$	498	$	—	$	498
Financial institution instruments ¹	3,020		2,139		—		5,159		1,920		811		—		2,731
Government debt ²	—		466		—		466		—		332		—		332
Reverse repurchase agreements	—		2,335		—		2,335		—		768		—		768
Short-term investments:
Corporate debt	—		1,654		6		1,660		—		1,332		6		1,338
Financial institution instruments ¹	—		1,221		—		1,221		—		1,603		—		1,603
Government debt ²	—		277		—		277		—		284		—		284
Trading assets:
Asset-backed securities	—		22		—		22		—		87		—		87
Corporate debt	—		2,461		—		2,461		—		2,847		—		2,847
Financial institution instruments ¹	92		1,544		—		1,636		36		1,608		—		1,644
Government debt ²	31		6,934		—		6,965		32		3,704		—		3,736
Other current assets:
Derivative assets	—		326		—		326		—		382		—		382
Loans receivable	—		86		—		86		—		326		—		326
Marketable equity securities	5,472		432		—		5,904		6,180		—		—		6,180
Other long-term investments:
Corporate debt	—		1,811		5		1,816		—		1,995		6		2,001
Financial institution instruments ¹	—		1,632		—		1,632		—		1,758		—		1,758
Government debt ²	—		1,033		—		1,033		—		957		—		957
Other long-term assets:
Derivative assets	—		64		9		73		—		31		9		40
Loans receivable	—		525		—		525		—		236		—		236
Total assets measured and recorded at fair value	8,615		27,607		20		36,242		8,168		19,559		21		27,748
Liabilities
Other accrued liabilities:
Derivative liabilities	—		444		—		444		—		371		—		371
Other long-term liabilities:
Derivative liabilities	—		125		12		137		—		179		33		212
Total liabilities measured and recorded at fair value	$	—	$	569	$	12	$	581	$	—	$	550	$	33	$	583


¹	Level 1 investments consist of money market funds. Level 2 investments consist primarily of commercial paper, certificates of deposit, time deposits, and notes and bonds issued by financial institutions.


²	Level 1 investments consist primarily of US Treasury securities. Level 2 investments consist primarily of US Agency notes and non-U.S. government debt.

In the second quarter of 2017, we began assigning fair value hierarchy levels based on the underlying instrument type for our fixed income portfolio. We have reclassified prior period amounts to conform to the current period presentation.

Fair Value Option for Loans Receivable

As of July 1, 2017 and December 31, 2016, the fair value of our loans receivable for which we elected the fair value option did not significantly differ from the contractual principal balance based on the contractual currency.

Assets Measured and Recorded at Fair Value on a Non-Recurring Basis

Our non-marketable equity investments, marketable equity method investments, and non-financial assets, such as intangible assets and property, plant and equipment, are recorded at fair value only if an impairment is recognized.

We classified non-marketable equity investments as Level 3. Impairments recognized on non-marketable equity investments held as of July 1, 2017 were $277 million during the second quarter of 2017 and $325 million during the first six months of 2017 ($57 million during the second quarter of 2016 and $84 million during the first six months of 2016 on non-marketable equity investments held as of July 2, 2016).

Financial Instruments Not Recorded at Fair Value on a Recurring Basis

The carrying amounts and fair values of financial instruments not recorded at fair value on a recurring basis at the end of each period were as follows:



	July 1, 2017
(In Millions)	Carrying Amount		Fair Value Measured Using						Fair Value
(In Millions)	Carrying Amount		Level 1		Level 2		Level 3		Fair Value
Grants receivable	$	440	$	—	$	440	$	—	$	440
Loans receivable¹	$	2,465	$	—	$	2,465	$	—	$	2,465
Non-marketable cost method investments	$	2,719	$	—	$	—	$	3,457	$	3,457
Reverse repurchase agreements	$	250	$	—	$	250	$	—	$	250
Short-term debt	$	4,117	$	—	$	4,697	$	—	$	4,697
Long-term debt	$	27,855	$	17,980	$	11,630	$	—	$	29,610


¹	Includes a loan receivable of $2.2 billion due from McAfee and TPG. The fair value of this loan receivable approximates its carrying value and we did not obtain or secure collateral against this obligation. For further information, see "Note 9: Acquisitions and Divestitures."



	December 31, 2016
(In Millions)	Carrying Amount		Fair Value Measured Using						Fair Value
(In Millions)	Carrying Amount		Level 1		Level 2		Level 3		Fair Value
Grants receivable	$	361	$	—	$	362	$	—	$	362
Loans receivable	$	265	$	—	$	265	$	—	$	265
Non-marketable cost method investments	$	3,098	$	—	$	—	$	3,890	$	3,890
Reverse repurchase agreements	$	250	$	—	$	250	$	—	$	250
Short-term debt	$	4,609	$	3,006	$	2,114	$	—	$	5,120
Long-term debt	$	20,649	$	12,171	$	9,786	$	—	$	21,957

The carrying amount and fair value of short-term debt exclude drafts payable.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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