Cash and Investments
|3 Months Ended|
Mar. 29, 2014
|Cash and Investments [Abstract]|
|Cash And Investments [Text Block]||
Note 3: Cash and Investments
Cash and investments at the end of each period were as follows:
Available-for-sale investments at the end of each period were as follows:
Government debt includes instruments such as non-U.S. government bonds, U.S. agency securities, and U.S. Treasury securities. Financial institution instruments include instruments such as bank deposits, commercial paper, floating and fixed rate bonds, and money market funds. Bank deposits were primarily issued by institutions outside the U.S. as of March 29, 2014 and December 28, 2013.
For information on the unrealized holding gains (losses) on available-for-sale investments reclassified out of accumulated other comprehensive income into the consolidated condensed statements of income, see "Note 18: Other Comprehensive Income (Loss)".
We sold available-for-sale investments for proceeds of $174 million in the first three months of 2014 ($304 million in the first three months of 2013). The gross realized gains on sales of available-for-sale investments were $67 million in the first three months of 2014.
The amortized cost and fair value of available-for-sale debt investments, by contractual maturity, as of March 29, 2014, were as follows:
Instruments not due at a single maturity date in the preceding table primarily include government debt and corporate debt.
Equity Method Investments
IM Flash Technologies, LLC
Micron Technology, Inc. (Micron) and Intel formed IM Flash Technologies, LLC (IMFT) in 2007 to manufacture NAND flash memory products for Micron and Intel. During 2012, we amended the operating agreement for IMFT and entered into agreements with Micron that modified our joint venture relationship. The amended operating agreement extended the term of IMFT to 2024, unless earlier terminated under certain terms and conditions, and provides that IMFT may manufacture certain emerging memory technologies in addition to NAND flash memory. Additionally, the amended agreement provides for certain rights that, beginning in 2015, will enable us to sell to Micron, or enable Micron to purchase from us, our interest in IMFT. If Intel exercises this right, Micron would set the closing date of the transaction within two years following such election and could elect to receive financing from Intel for one to two years. The agreements with Micron include a supply agreement for Micron to supply us with NAND flash memory products. The agreements also extend and expand our NAND joint development program with Micron to include emerging memory technologies.
As of March 29, 2014, we own a 49% interest in IMFT. The carrying value of our investment was $656 million as of March 29, 2014 ($646 million as of December 28, 2013) and is classified within other long-term assets.
IMFT is a variable interest entity. All costs of the IMFT joint venture will be passed on to Micron and Intel pursuant to our purchase agreements. Intel's portion of IMFT costs, primarily related to product purchases and production-related services, was approximately $105 million during the first three months of 2014 (approximately $100 million during the first three months of 2013). The amount due to IMFT for product purchases and services provided was approximately $100 million as of March 29, 2014 (approximately $75 million as of December 28, 2013).
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 $656 million as of March 29, 2014. Except for the amount due to IMFT for product purchases and 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 March 29, 2014. 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.
As of March 29, 2014 and December 28, 2013, all of our trading assets were marketable debt instruments. Net gains related to trading assets still held at the reporting date were $79 million in the first three months of 2014 (net losses of $163 million in the first three months of 2013). Net losses on the related derivatives were $82 million in the first three months of 2014 (net gains of $164 million in the first three months of 2013).