Annual report pursuant to Section 13 and 15(d)

Available-for-Sale Investments and Cash Equivalents

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Available-for-Sale Investments and Cash Equivalents
12 Months Ended
Dec. 29, 2012
Available-For-Sale Investments and Cash Equivalents [Abstract]  
Available-for-Sale Investments and Cash Equivalents [Text Block]

Note 6: Available-for-Sale Investments and Cash Equivalents

 

Available-for-sale investments and cash equivalents as of December 29, 2012 and December 31, 2011 were as follows:

  2012   2011
        Gross   Gross               Gross   Gross      
  Adjusted   Unrealized   Unrealized   Fair   Adjusted   Unrealized   Unrealized   Fair
(In Millions) Cost   Gains   Losses   Value   Cost   Gains   Losses   Value
Asset-backed securities $ 14   $   $ (3)   $ 11   $ 48   $   $ (12)   $ 36
Bank deposits   1,417     1         1,418     1,046     1     (1)     1,046
Commercial paper   4,184     1         4,185     3,820         (3)     3,817
Corporate bonds   635     8     (1)     642     892     14     (9)     897
Government bonds   2,235             2,235     3,631         (4)     3,627
Marketable equity securities   3,356     1,069     (1)     4,424     189     385     (12)     562
Money market fund deposits   1,086             1,086     546             546
Total available-for-sale                                              
investments $ 12,927   $ 1,079   $ (5)   $ 14,001   $ 10,172   $ 400   $ (41)   $ 10,531
Reverse repurchase agreements   2,800                 2,800     500                 500
Total available-for-sale                                              
investments and cash                                              
equivalents $ 15,727   $ 1,079   $ (5)   $ 16,801   $ 10,672   $ 400   $ (41)   $ 11,031

In the preceding table, government bonds include bonds issued or deemed to be guaranteed by government entities. Government bonds include instruments such as U.S. Treasury securities, non-U.S. government obligations, and U.S. agency securities as of December 29, 2012 and December 31, 2011. Bank deposits were primarily issued by institutions outside the U.S. as of December 29, 2012 and December 31, 2011.

 

During the third quarter of 2012, we entered into a series of agreements with ASML Holding N.V. intended to accelerate the development of 450-millimeter (mm) wafer technology and extreme ultra-violet (EUV) lithography. The agreements include our purchase of ASML equity securities totaling $3.2 billion completed in the third quarter of 2012. This equity interest has been accounted for as an available-for-sale investment and is included in marketable equity securities in the preceding table. Intel's ownership interest in ASML was 15% of ASML's issued shares as of December 29, 2012 and is subject to lock-up and voting restrictions. We also agreed to provide research and development (R&D) funding totaling €829 million (approximately $1.0 billion as of the date of the agreement) over five years and committed to advance purchase orders for a specified number of tools from ASML. The agreements set forth terms to determine pricing as well as milestones related to 450mm and EUV development and production tool deliveries. In exchange for making this early commitment, we will receive credits to be applied to future tool purchases from ASML.

 

The amortized cost and fair value of available-for-sale debt investments as of December 29, 2012, by contractual maturity, were as follows:

(In Millions) Cost   Fair Value
Due in 1 year or less $ 7,995   $ 7,999
Due in 1–2 years   409     413
Due in 2–5 years   67     68
Instruments not due at a single maturity date   1,100     1,097
Total $ 9,571   $ 9,577

Instruments not due at a single maturity date in the preceding table include asset-backed securities and money market fund deposits.

 

We sold available-for-sale investments for proceeds of $2.3 billion in 2012 ($9.1 billion in 2011 and $475 million in 2010). Substantially all of the proceeds in 2011 were from debt investments primarily used to fund our acquisition of McAfee. The gross realized gains on sales of available-for-sale investments were $166 million in 2012 ($268 million in 2011 and $160 million in 2010) and were primarily related to our sales of marketable equity securities. We determine the cost of an investment sold on an average cost basis at the individual security level. Impairment charges recognized on available-for-sale investments were $36 million in 2012 ($73 million in 2011 and insignificant in 2010)