Intel Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Cash and Investments

Cash and Investments

12 Months Ended

Dec. 26, 2015

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)	Dec 26, 2015		Dec 27, 2014
Available-for-sale investments	$	22,007	$	13,038
Cash	1,466		805
Equity method investments	1,590		1,446
Loans receivable	794		971
Non-marketable cost method investments	2,933		1,769
Reverse repurchase agreements	3,368		718
Trading assets	7,323		9,063
Total cash and investments	$	39,481	$	27,810

Available-for-Sale Investments

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



	December 26, 2015									December 27, 2014
(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	$	8	$	—	$	(2	)	$	6
Corporate debt	4,164		3		(10		)	4,157		2,040		13		(5		)	2,048
Financial institution instruments	11,140		1		(2		)	11,139		3,146		2		(1		)	3,147
Government debt	748		—		(1		)	747		741		—		(1		)	740
Marketable equity securities	3,254		2,706		—			5,960		3,318		3,779		—			7,097
Total available-for-sale investments	$	19,311	$	2,710	$	(14	)	$	22,007	$	9,253	$	3,794	$	(9	)	$	13,038

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 December 26, 2015 and December 27, 2014.

For information on the unrealized holding gains (losses) on available-for-sale investments reclassified out of accumulated other comprehensive income (loss) into the consolidated statements of income, see "Note 24: Other Comprehensive Income (Loss)."

During 2015, we sold available-for-sale investments for proceeds of $2.2 billion, of which $144 million related to sales of cash and cash equivalents ($1.7 billion in 2014, of which $509 million related to sales of cash and cash equivalents; and $1.3 billion in 2013, of which $339 million related to sales of cash and cash equivalents). The gross realized gains on sales of available-for-sale investments were $133 million in 2015 ($136 million in 2014 and $146 million in 2013). We determine the cost of an investment sold on an average cost basis at the individual security level. Impairments recognized on available-for-sale investments were insignificant for all periods presented.

The amortized cost and fair value of available-for-sale debt investments, by contractual maturity, as of December 26, 2015 were as follows:



(In Millions)	Cost		Fair Value
Due in 1 year or less	$	5,896	$	5,893
Due in 1–2 years	1,271		1,268
Due in 2–5 years	623		620
Instruments not due at a single maturity date	8,267		8,266
Total	$	16,057	$	16,047

Equity Method Investments

Equity method investments, classified within other long-term assets, at the end of each period were as follows:



	December 26, 2015				December 27, 2014
(Dollars In Millions)	Carrying Value		Ownership Percentage		Carrying Value		Ownership Percentage
IM Flash Technologies, LLC	$	872	49	%	$	713	49	%
Cloudera, Inc.	256		17	%	280		17	%
Intel-GE Care Innovations, LLC	64		50	%	108		50	%
Other equity method investments	398				345
Total	$	1,590			$	1,446

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. 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 $400 million in 2015 (approximately $400 million in 2014 and approximately $380 million in 2013). The amount due to IMFT for product purchases and services provided was approximately $20 million as of December 26, 2015 (approximately $60 million as of December 27, 2014). IMFT returned $6 million to Intel in 2014, which is reflected within investing activities on the consolidated statements of cash flows ($45 million in 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 $872 million as of December 26, 2015. 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 balance sheets in connection with our interests in this joint venture as of December 26, 2015. 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 December 26, 2015. 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 $256 million and of our cost method investment was $454 million as of December 26, 2015 ($280 million for our equity method investment and $454 million for our cost method investment as of December 27, 2014).

Intel-GE Care Innovations, LLC

During 2011, Intel and General Electric Company (GE) formed Intel-GE Care Innovations, LLC (Care Innovations), an equally owned joint venture in the healthcare industry that focuses on independent living and delivery of health-related services by means of telecommunications. The company was formed by combining assets of GE Healthcare’s Home Health division and Intel’s Digital Health Group.

Care Innovations is a variable interest entity and depends on Intel and GE for any additional cash needs. Our known maximum exposure to loss approximated the carrying value of our investment balance in Care Innovations, which was $64 million as of December 26, 2015.

Intel and GE equally share the power to direct all of Care Innovations' activities that most significantly impact its economic performance. 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 Care Innovations using the equity method of accounting.

Clearwire Communications, LLC

During 2013, we sold our interest in Clearwire Communications, LLC (Clearwire LLC), which we originally acquired in 2008, for proceeds of $328 million. These proceeds are included in other investing within investing activities on the consolidated statements of cash flows. We recognized a gain on the sale of our interest in Clearwire LLC of $328 million.

For proceeds received and gains recognized for each investment, see "Note 20: Gains (Losses) on Equity Investments, Net."

Non-marketable cost method investments

The carrying value of our non-marketable cost method investments was $2.9 billion as of December 26, 2015 ($1.8 billion as of December 27, 2014), of which $454 million and $966 million related to our cost method investments in Cloudera and Beijing UniSpreadtrum Technology Ltd. (UniSpreadtrum), respectively. In 2015, we recognized impairments of $164 million on non-marketable cost method investments, which is included within gains (losses) on equity investments, net on the consolidated statements of income ($130 million in 2014 and $103 million in 2013).

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 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 will 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 December 26, 2015, and December 27, 2014, substantially all of our trading assets were marketable debt instruments. Net losses related to trading assets still held at the reporting date were $152 million in 2015 (net losses of $530 million in 2014 and net losses of $70 million in 2013). Net gains on the related derivatives were $137 million in 2015 (net gains of $525 million in 2014 and $86 million in 2013).