Intel 2013 Annual Report Download - page 70

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Financial Instruments Not Recorded at Fair Value on a Recurring Basis
On a quarterly basis, we measure the fair value of our non-marketable cost method investments, indebtedness
carried at amortized cost, cost method loans receivable, grants receivable, and reverse repurchase agreements
with original maturities greater than approximately three months; however, the assets are recorded at fair value only
when an impairment charge is recognized. The carrying amounts and fair values of certain financial instruments not
recorded at fair value on a recurring basis at the end of each period were as follows:
December 28, 2013
Carrying
Amount
Fair Value Measured Using
Fair Value
(In Millions) Level 1 Level 2 Level 3
Non-marketable cost method investments $ 1,270 $ — $ — $ 2,105 $ 2,105
Loans receivable $ 267 $ — $ 250 $ 17 $ 267
Reverse repurchase agreements $ 400 $ — $ 400 $ — $ 400
Grants receivable $ 416 $ — $ 481 $ — $ 481
Long-term debt $13,165 $ 10,937 $ 2,601 $ — $ 13,538
Short-term debt $ 24 $ — $ 24 $ — $ 24
NVIDIA Corporation cross-license agreement
liability $ 587 $ — $ 597 $ — $ 597
December 29, 2012
Carrying
Amount
Fair Value Measured Using
Fair Value
(In Millions) Level 1 Level 2 Level 3
Non-marketable cost method investments $ 1,202 $ — $ — $ 1,766 $ 1,766
Loans receivable $ 199 $ — $ 150 $ 48 $ 198
Reverse repurchase agreements $ 50 $ — $ 50 $ — $ 50
Grants receivable $ 198 $ — $ 205 $ — $ 205
Long-term debt $ 13,136 $ 11,442 $ 2,926 $ — $ 14,368
Short-term debt $ 48 $ — $ 48 $ — $ 48
NVIDIA Corporation cross-license agreement
liability $ 875 $ — $ 890 $ — $ 890
As of December 28, 2013, and December 29, 2012, the unrealized loss position of our non-marketable cost method
investments was insignificant.
Our non-marketable cost method investments are valued using the market and income approaches. The market
approach includes the use of financial metrics and ratios of comparable public companies. The selection of
comparable companies requires management judgment and is based on a number of factors, including comparable
companies’ sizes, growth rates, industries, and development stages. The income approach includes the use of a
discounted cash flow model, which requires significant estimates regarding the investees’ revenue, costs, and
discount rates based on the risk profile of comparable companies. Estimates of revenue and costs are developed
using available market, historical, and forecast data. The valuation of these non-marketable cost method
investments also takes into account variables such as conditions reflected in the capital markets, recent financing
activities by the investees, the investees’ capital structure, the terms of the investees’ issued interests, and the lack
of marketability of the investments.
The carrying amount and fair value of loans receivable exclude loans measured and recorded at a fair value of $805
million as of December 28, 2013 ($780 million as of December 29, 2012). The carrying amount and fair value of
short-term debt exclude drafts payable.
The fair value of our loans receivable and reverse repurchase agreements, including those held at fair value, is
determined using a discounted cash flow model, with all significant inputs derived from or corroborated with
observable market data, such as LIBOR-based yield curves, currency spot and forward rates, and credit ratings.
The credit quality of these assets remains high, with credit ratings of A+/A1 or better for a substantial majority of our
loans receivable and reverse repurchase agreements as of December 28, 2013.
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INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)