Intel 2013 Annual Report Download - page 74

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69
Intel-GE Care Innovations, LLC
In the first quarter of 2011, Intel and General Electric Company (GE) formed Intel-GE Care Innovations, LLC (Care
Innovations), an equally owned joint venture in the healthcare industry, that focuses on independent living and
delivery of health-related services by means of telecommunications. The company was formed by combining assets
of GE Healthcare’s Home Health division and Intel’s Digital Health Group. As a result of forming Care Innovations,
we recognized a gain of $164 million in the first quarter of 2011, which is included in interest and other, net on the
consolidated statements of income.
Care Innovations is a variable interest entity and depends on Intel and GE for any additional cash needs. Our
known maximum exposure to loss approximated the carrying value of our investment balance in Care Innovations,
which was $117 million as of December 28, 2013.
Intel and GE equally share the power to direct all of Care Innovations' activities that most significantly impact its
economic performance. We have determined that we do not have the characteristics of a consolidating investor in
the variable interest entity and, therefore, we account for our interest in Care Innovations using the equity method of
accounting.
Clearwire Communications, LLC
In 2008, we invested in Clearwire LLC. We recognized our proportionate share of losses to the extent that our
investment had a positive carrying value. We recognized equity method losses of $145 million in 2011. In the third
quarter of 2013, we sold our interest in Clearwire LLC for proceeds of $328 million, which is included in other
investing within investing activities on the consolidated statements of cash flows. We recognized a gain on the sale
of our interest in Clearwire LLC of $328 million.
Non-marketable cost method investments
The carrying value of our non-marketable cost method investments was $1.3 billion as of December 28, 2013 ($1.2
billion as of December 29, 2012). In 2013, we recognized impairment charges of $103 million on non-marketable
cost method investments, which is included within gains (losses) on equity investments, net on the consolidated
statements of income ($104 million in 2012 and $56 million in 2011).
Trading Assets
As of December 28, 2013, and December 29, 2012, all of our trading assets were marketable debt instruments. Net
losses related to trading assets still held at the reporting date were $70 million in 2013 (net gains of $16 million in
2012 and net losses of $71 million in 2011). Net gains on the related derivatives were $86 million in 2013 (net gains
of $11 million in 2012 and $58 million in 2011).
Note 6: Derivative Financial Instruments
Our primary objective for holding derivative financial instruments is to manage currency exchange rate risk and
interest rate risk, and, to a lesser extent, equity market risk and commodity price risk. We also enter into master
netting arrangements with counterparties when possible to mitigate credit risk in derivative transactions. A master
netting arrangement may allow counterparties to net settle amounts owed to each other as a result of multiple,
separate derivative transactions. For presentation on our consolidated balance sheets, we do not offset fair value
amounts recognized for derivative instruments under master netting arrangements.
Currency Exchange Rate Risk
We are exposed to currency exchange rate risk and generally hedge our exposures with currency forward contracts,
currency interest rate swaps, or currency options. Substantially all of our revenue is transacted in U.S. dollars.
However, a significant amount of our operating expenditures and capital purchases is incurred in or exposed to
other currencies, primarily the euro, the Japanese yen, and the Israeli shekel. We have established balance sheet
and forecasted transaction currency risk management programs to protect against fluctuations in fair value and the
volatility of the functional currency equivalent of future cash flows caused by changes in exchange rates. Our non-
U.S.-dollar-denominated investments in debt instruments and loans receivable are generally hedged with offsetting
currency forward contracts or currency interest rate swaps. We may also hedge foreign currency risk arising from
funding foreign currency denominated forecasted investments. These programs reduce, but do not eliminate, the
impact of currency exchange movements.
Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)