Intel 2006 Annual Report Download - page 64

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Basis of Presentation
Intel Corporation has a 52- or 53-week fiscal year that ends on the last Saturday in December. Fiscal year 2006, a
52-week year, ended on December 30, 2006. Fiscal year 2005, a 53-week
year, ended on December 31, 2005. Fiscal year 2004
was a 52-week year that ended on December 25, 2004. The next 53-week year will end on December 31, 2011.
The consolidated financial statements include the accounts of Intel and its wholly owned subsidiaries. Intercompany accounts
and transactions have been eliminated. The company uses the equity method to account for equity investments in instances in
which the company owns common stock or similar interests (as described by the Emerging Issues Task Force (EITF) Issue
No. 02
-14, “Whether an Investor Should Apply the Equity Method of Accounting to Investments Other Than Common
Stock”) and has the ability to exercise significant influence, but not control, over the investee.
The U.S. dollar is the functional currency for Intel and its significant subsidiaries; therefore, there is no translation adjustment
recorded through accumulated other comprehensive income (loss). Monetary accounts denominated in non-U.S. currencies,
such as cash or payables to vendors, have been remeasured to the U.S. dollar.
Note 2: Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management
to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. The
accounting estimates that require management’s most significant, difficult, and subjective judgments include the valuation of
non-marketable equity securities; the recognition and measurement of current and deferred income tax assets and liabilities;
the assessment of recoverability of long-lived assets; the valuation of inventory; and the valuation and recognition of share-
based compensation. The actual results experienced by the company may differ from management’s estimates. Certain
amounts reported in previous periods have been reclassified to conform to the current presentation.
Cash and Cash Equivalents
The company considers all highly liquid debt securities with insignificant interest rate risk and with original maturities from
the date of purchase of approximately three months or less as cash and cash equivalents.
Trading Assets
Investments designated as trading assets are reported at fair value, with gains or losses resulting from changes in fair value
recognized currently in earnings. The company’s trading asset investments include:
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•
Marketable debt securities
when the interest rate or foreign exchange rate risk is hedged at inception by a related
derivative. The gains or losses of these investments arising from changes in fair value due to interest rate and currency
market fluctuations, offset by losses or gains on the related derivative instruments, are included in interest and other,
net.
•
Equity securities offsetting deferred compensation
when the investments seek to offset changes in liabilities related to
equity and other market risks of certain deferred compensation arrangements. The gains or losses from changes in fair
value of these equity securities are offset by losses or gains on the related liabilities and are included in interest and
other, net.
•
Marketable equity securities
when the company deems the investments not to be strategic in nature at the time of
original classification, and has the ability and intent to mitigate equity market risk through the sale or the use of
derivative instruments. For these marketable equity securities, gains or losses from changes in fair value, primarily
offset by losses or gains on related derivative instruments, are included in gains (losses) on equity securities, net.