Intel 2006 Annual Report Download - page 80

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The company sold available-for sale securities for proceeds of approximately $1.7 billion in 2005 and $1.1 billion in 2004.
The gross realized gains on these sales totaled $96 million in 2005 and $52 million in 2004. The company recognized
impairment losses on available-for-sale investments of $105 million in 2005 and $2 million in 2004. The impairment in 2005
represented an impairment charge of $105 million on the company’s investment in Micron reflecting the difference between
the cost basis of the investment and the price of Micron’s stock at the end of the second quarter of 2005. The gross realized
losses on sales, and gains on third-party merger transactions, were insignificant during 2005 and 2004.
The amortized cost and estimated fair value of available-for-sale and loan participation investments in debt securities at
December 30, 2006, by contractual maturity, were as follows:
Securities not due at a single maturity date include asset-backed securities and money market fund deposits.
Non
-Marketable Equity Securities
Non
-marketable equity securities consist of both equity method and cost basis investments. At December 30, 2006, the
carrying values of equity method and cost basis investments were $2.0 billion and $733 million, respectively. During 2006, the
company’s non-marketable investments primarily consisted of its investments in IM Flash Technologies, LLC (IMFT) and
Clearwire Corporation, which were both accounted for under the equity method. At December 31, 2005, the carrying values of
equity method and cost basis investments were $59 million and $502 million, respectively. The company recognized
impairment losses on non-marketable equity securities of $79 million in 2006 ($103 million in 2005 and $115 million in
2004).
During 2006, Intel and Micron formed IMFT, a NAND flash memory manufacturing company, and invested $1.3 billion. See
“Note 17: Venture” for further information.
During 2006, Intel paid $600 million in cash for an investment in Clearwire. Clearwire builds and operates next-generation
wireless broadband networks. Intel’s total investment in Clearwire is $613 million as of December 30, 2006, which includes a
previous investment. This investment is part of Intel’s strategy to support the development and deployment of WiMAX
networks. Intel’s investment in Clearwire is classified within other long-term assets on the consolidated balance sheet. Intel
accounts for its investment in Clearwire, which represents an ownership interest of approximately 27%, using the equity
method of accounting; and its proportionate share of loss will continue to be recorded on a one-quarter lag within interest and
other, net on the consolidated statements of income. At the date of acquisition, the carrying value of Intel’s investment in
Clearwire exceeded its share of the book value of Clearwire’s assets by $261 million (split between equity method goodwill
and the excess of fair value over book value), of which $52 million is being amortized with a weighted average remaining life
of approximately 19 years. The remaining basis difference represents equity method goodwill and our share of the excess of
fair value over book value of Clearwire’s assets having indefinite useful lives. In accordance with SFAS No. 142, “Goodwill
and Other Intangible Assets,” and APB Opinion No. 18, “The Equity Method of Accounting for Investments in Common
Stock” (APB No. 18), this equity method goodwill is not being amortized. Intel regularly reviews the carrying value of the
investment for impairment in accordance with APB No. 18. During 2006, there were no impairment charges related to the
company’s investment in Clearwire.
69
Estimated
(In Millions)
Cost
Fair Value
Due in 1 year or less
$
8,134
$
8,149
Due in 1
–
2 years
1,744
1,756
Due in 2
–
5 years
900
926
Due after 5 years
96
107
Securities not due at a single maturity date
1,790
1,793
Total
$
12,664
$
12,731