Intel 1994 Annual Report Download - page 25

European currencies. The Company enters into currency forward and option contracts to hedge foreign exchange risk. The Company also
periodically enters into currency option contracts to hedge certain anticipated revenue and purchases for which it does not have a firm
commitment. The maturities on most of these foreign currency instruments are less than 12 months. Any gains or losses on these instruments
are recognized in accordance with SFAS Nos. 52 and 80. Deferred gains or losses attributable to foreign currency instruments are not material.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The estimated fair values of financial instruments at fiscal year-ends are as follows:
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of investments and trade
receivables. Intel places its investments with high-credit-quality counterparties and, by policy, limits the amount of credit exposure to any one
counterparty. A majority of the Company's trade receivables are derived from sales to manufacturers of microcomputer systems, with the
remainder spread across various other industries. The Company keeps pace with the evolving computer industry and has adopted credit policies
and standards to accommodate the industry's growth and inherent risk. Management believes that any risk of accounting loss is significantly
reduced due to the diversity of its products, end customers and geographic sales areas. Intel performs ongoing credit evaluations of its
customers' financial condition and requires collateral, such as letters of credit and bank guarantees, whenever deemed necessary.
INTEREST INCOME AND OTHER
Other income for 1994 included non-recurring gains from the settlement of various insurance claims. Other income for 1993 included non-
recurring gains from the sale of certain foreign benefits related to the Company's Irish expansion and dividend income earned on equity
investments. Other loss for 1992 included a provision to cover the Company's liability for damages payable under an arbitration decision,
partially offset by income from incentive credits.
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PROVISION FOR TAXES
Income before taxes and the provision for taxes consisted of the following:
1994 1993
---------------------- ----------------------
Carrying Estimated Carrying Estimated
(In millions) amount fair value amount fair value
- ------------------------------------------------------------------------------
Cash and cash equivalents $ 1,180 $ 1,180 $ 1,659 $ 1,659
Short-term investments 1,230 1,230 1,477 1,477
Long-term investments 2,058 2,058 1,416 1,412
Swaps hedging investments in
debt securities 8 8 -- --
Swaps hedging investments in
equity securities 60 60 -- --
Short-term debt (517) (517) (399) (399)
Long-term debt (392) (384) (426) (436)
Swaps hedging debt -- (12) -- --
Currency forward contracts 1 5 -- 9
Currency options -- -- -- --
------- ------- ------- -------
Total $3,628 $3,628 $3,727 $3,722
======= ======= ======= =======
(In millions) 1994 1993 1992
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Interest income $235 $155 $141
Foreign currency gains (losses) 15 -- (1)
Other income (loss) 23 33 (7)
----- ----- -----
Total $273 $188 $133
===== ===== =====
(In millions) 1994 1993 1992
- ------------------------------------------------------------------
Income before taxes:
U.S. $2,460 $2,587 $ 924
Foreign 1,143 943 645
------ ------ ------
Total income before taxes: $3,603 $3,530 $1,569
====== ====== ======
Provision for taxes:
Federal:
Current $1,169 $ 946 $ 339
Deferred (178) 35 6