Intel 2008 Annual Report Download - page 56

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Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
Our marketable debt instruments that are measured at fair value on a recurring basis and classified as Level 3 were classified
as such due to the lack of observable market data to corroborate either the non-binding market consensus prices or the non-
binding broker quotes. When observable market data is not available, we corroborate the non-binding market consensus prices
and non-binding broker quotes using unobservable data, if available. Marketable debt instruments in this category generally
include asset-backed securities and certain of our floating-rate notes and corporate bonds. All of our investments in asset-
backed securities were classified as Level 3, and substantially all of them were valued using non-binding market consensus
prices that we were not able to corroborate with observable market data due to the lack of transparency in the market for asset-
backed securities.
Money Market Fund Deposits
As of December 27, 2008, our marketable debt instruments included $422 million of money market fund deposits. Of these
money market fund deposits, $373 million was classified as Level 1 and $49 million was classified as Level 2.
Equity Securities
As of December 27, 2008, our portfolio of assets measured at fair value on a recurring basis included $352 million of
marketable equity securities. Of these securities, $308 million was classified as Level 1 because the valuations were based on
quoted prices for identical securities in active markets. Our assessment of an active market for our marketable equity securities
generally takes into consideration activity during each week of the one-month period prior to the valuation date for each
individual security, including the number of days each individual equity security trades and the average weekly trading
volume in relation to the total outstanding shares of that security. The fair values of our investments in the new Clearwire
Corporation ($148 million) and VMware, Inc. ($137 million) constituted most of the fair values of the marketable equity
securities that we classified as Level 1. Our investment in VMware was reclassified from Level 2 to Level 1 during 2008, due
to the expiration of our transfer restriction on VMware stock.
The remaining marketable equity securities ($44 million) were classified as Level 2 because their valuations were either based
on quoted prices for identical securities in less active markets or adjusted for security-specific restrictions. The fair value of
our investment in Micron ($42 million) constituted substantially all of the fair values of the marketable equity securities that
we classified as Level 2. In measuring the fair value of our investment in Micron, our valuation reflected a discount from the
quoted market price of Micron’s stock, due to our investment being in a form of rights exchangeable into unregistered Micron
stock.
As of December 27, 2008, our portfolio of assets measured at fair value on a recurring basis included $299 million of equity
securities offsetting deferred compensation. All of these securities were classified as Level 1, because their valuations were
based on quoted prices for identical securities in active markets.
49