Intel 2014 Annual Report Download - page 47

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity
Cash generated by operations is our primary source of liquidity. We maintain a diverse investment portfolio that we continually
analyze based on issuer, industry, and country. As of December 27, 2014, cash and cash equivalents, short-term investments,
and trading assets totaled $14.1 billion ($20.1 billion as of December 28, 2013). In addition to the $14.1 billion, we have
$2.0 billion of other long-term investments, $1.3 billion of loans receivable and other, and $450 million of reverse repurchase
agreements with original maturities greater than approximately three months that we include when assessing our sources of
liquidity. Most of our investments in debt instruments are in A/A2 or better rated issuances, and the majority of the issuances are
rated AA-/Aa3 or better.
Another potential source of liquidity is an ongoing authorization from our Board of Directors to borrow up to $3.0 billion. This
ongoing authorization includes borrowings under our commercial paper program. Maximum borrowings under our commercial
paper program were $2.4 billion during 2014, and $500 million of commercial paper remained outstanding as of December 27,
2014. Our commercial paper was rated A-1+ by Standard & Poor’s and P-1 by Moody’s as of December 27, 2014. We also have
an automatic shelf registration statement on file with the SEC, pursuant to which we may offer an unspecified amount of debt,
equity, and other securities. In 2012, we utilized this shelf registration statement and issued $6.2 billion aggregate principal
amount of senior unsecured notes. The proceeds from the sale of these notes were used for general corporate purposes and to
repurchase common stock pursuant to our authorized common stock repurchase program. For further information on the terms of
the notes, see “Note 15: Borrowings” in Part II, Item 8 of this Form 10-K.
As of December 27, 2014, $12.0 billion of our cash and cash equivalents, short-term investments, and trading assets was held by
our non-U.S. subsidiaries. Of the $12.0 billion held by our non-U.S. subsidiaries, approximately $2.3 billion was available for use
in the U.S. without incurring additional U.S. income taxes in excess of the amounts already accrued in our financial statements as
of December 27, 2014. The remaining amount of non-U.S. cash and cash equivalents, short-term investments, and trading assets
has been indefinitely reinvested and, therefore, no U.S. current or deferred taxes have been accrued and this amount is
earmarked for near-term investment in our operations outside the U.S. and future acquisitions of non-U.S. entities. We believe our
U.S. sources of cash and liquidity are sufficient to meet our business needs in the U.S., and do not expect that we will need to
repatriate the funds we have designated as indefinitely reinvested outside the U.S. Under current tax laws, should our plans
change and we were to choose to repatriate some or all of the funds we have designated as indefinitely reinvested outside the
U.S., such amounts would be subject to U.S. income taxes and applicable non-U.S. income and withholding taxes.
We believe we have sufficient financial resources to meet our business requirements in the next 12 months, including capital
expenditures for worldwide manufacturing and assembly and test, working capital requirements, dividends, common stock
repurchases, acquisitions, and strategic investments.
Fair Value of Financial Instruments
When determining fair value, we consider the principal or most advantageous market in which we would transact, and we
consider assumptions, such as an obligor’s credit risk, that market participants would use when pricing the asset or liability. For
further information, see “Fair Value” in “Note 2: Accounting Policies” and “Note 4: Fair Value” in Part II, Item 8 of this Form 10-K.
Marketable Debt Instruments
As of December 27, 2014, our assets measured and recorded at fair value on a recurring basis included $15.0 billion of marketable
debt instruments. Of these instruments, $6.9 billion was classified as Level 1, $8.0 billion as Level 2, and $106 million as Level 3.
Our marketable debt instruments that are measured and recorded at fair value on a recurring basis and classified as Level 1 were
classified as such due to the use of observable market prices for identical securities that are traded in active markets. We
evaluate security-specific market data when determining whether the market for a debt security is active.
Of the $8.0 billion of marketable debt instruments measured and recorded at fair value on a recurring basis and classified as
Level 2, approximately 40% was classified as Level 2 due to the use of a discounted cash flow model performed by us and
approximately 60% was classified as such due to the use of non-binding market consensus prices that were corroborated with
observable market data.
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