Intel 2013 Annual Report Download - page 36

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For non-marketable equity investments, the measurement of fair value requires significant judgment and includes
quantitative and qualitative analysis of identified events or circumstances that impact the fair value of the
investment, such as:
• the investee’s revenue and earnings trends relative to pre-defined milestones and overall business prospects;
• the technological feasibility of the investee’s products and technologies;
• the general market conditions in the investee’s industry or geographic area, including adverse regulatory and
economic changes;
• factors related to the investee’s ability to remain in business, such as the investee’s liquidity, debt ratios, and the
rate at which the investee is using its cash; and
• the investee’s receipt of additional funding at a lower valuation.
If the fair value of an investment is below our carrying value, we determine whether the investment is other-than-
temporarily impaired based on our quantitative and qualitative analysis, which includes assessing the severity and
duration of the impairment and the likelihood of recovery before disposal. If the investment is considered to be
other-than-temporarily impaired, we write down the investment to its fair value. Impairments of non-marketable
equity investments were $112 million in 2013 ($104 million in 2012 and $63 million in 2011).
Long-Lived Assets
Property, Plant and Equipment
We assess property, plant and equipment for impairment when events or changes in circumstances indicate that the
carrying value of the assets or the asset grouping may not be recoverable. Factors that we consider in deciding
when to perform an impairment review include significant under-performance of a business or product line in
relation to expectations, significant negative industry or economic trends, and significant changes or planned
changes in our use of the assets. We measure the recoverability of assets that we will continue to use in our
operations by comparing the carrying value of the asset grouping to our estimate of the related total future
undiscounted net cash flows. If an asset grouping’s carrying value is not recoverable through the related
undiscounted cash flows, the asset grouping is considered to be impaired. We measure the impairment by
comparing the difference between the asset grouping’s carrying value and its fair value. Property, plant and
equipment is considered a non-financial asset and is recorded at fair value only if an impairment charge is
recognized.
Impairments are determined for groups of assets related to the lowest level of identifiable independent cash flows.
Due to our asset usage model and the interchangeable nature of our semiconductor manufacturing capacity, we
must make subjective judgments in determining the independent cash flows that can be related to specific asset
groupings. In addition, as we make manufacturing process conversions and other factory planning decisions, we
must make subjective judgments regarding the remaining useful lives of assets, primarily process-specific
semiconductor manufacturing tools and building improvements. When we determine that the useful lives of assets
are shorter than we had originally estimated, we accelerate the rate of depreciation over the assets’ new, shorter
useful lives. Based on our analysis, impairments and accelerated depreciation of our property, plant, and equipment
was $172 million in 2013 ($73 million in 2012 and $100 million in 2011).
Goodwill
Goodwill is recorded when the purchase price for an acquisition exceeds the estimated fair value of the net tangible
and identified intangible assets acquired. Goodwill is allocated to our reporting units based on relative fair value of
the future benefit of the purchased operations to our existing business units as well as the acquired business unit.
Reporting units may be operating segments as a whole or an operation one level below an operating segment,
referred to as a component. Our reporting units are consistent with the operating segments identified in “Note 27:
Operating Segments and Geographic Information” in Part II, Item 8 of this Form 10-K.
We perform an annual impairment assessment in the fourth quarter of each year, or more frequently if indicators of
potential impairment exist, to determine whether it is more likely than not that the fair value of a reporting unit in
which goodwill resides is less than its carrying value. For reporting units in which this assessment concludes that it
is more likely than not that the fair value is more than its carrying value, goodwill is not considered impaired and we
are not required to perform the two-step goodwill impairment test. Qualitative factors considered in this assessment
include industry and market considerations, overall financial performance, and other relevant events and factors
affecting the reporting unit.
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)