401K Document 12.31.2012
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2012
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-06217
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
INTEL 401(k) SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of its principal
executive office:
INTEL CORPORATION
2200 MISSION COLLEGE BOULEVARD
SANTA CLARA, CALIFORNIA, 95054-1549
Intel 401(k) Savings Plan
Financial Statements and
Supplemental Schedule
As of December 31, 2012 and 2011, and
for the Year Ended December 31, 2012
Contents
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| 1 |
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Audited Financial Statements | |
| 2 |
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| 3 |
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| 4 |
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Supplemental Schedule | |
| 42 |
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| 43 |
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| 44 |
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Report of Independent Registered Public Accounting Firm
The Retirement Plans Administrative Committee
Intel 401(k) Savings Plan
We have audited the accompanying statements of net assets available for benefits of Intel 401(k) Savings Plan as of December 31, 2012 and 2011, and the related statement of changes in net assets available for benefits for the year ended December 31, 2012. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Intel 401(k) Savings Plan at December 31, 2012 and 2011, and the changes in its net assets available for benefits for the year ended December 31, 2012, in conformity with U.S. generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2012, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. Such information has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
San Jose, California
June 14, 2013
Intel 401(k) Savings Plan
Statements of Net Assets Available for Benefits
|
| | | | | | | | |
| | December 31 |
| | 2012 | | 2011 |
Assets | | | | |
Value of interest in master trust investment accounts | | $ | 3,810,259,874 |
| | $ | 3,365,735,538 |
|
Investments | | 2,040,175,492 |
| | 1,631,019,494 |
|
| |
|
| | |
Receivables: | | | | |
Notes receivable from participants | | 79,894,430 |
| | 71,528,717 |
|
Interest and dividends receivable | | 57 |
| | 51 |
|
Receivable from brokers for securities sold | | 593,465 |
| | 398,688 |
|
Employee contributions receivable | | 352,690 |
| | 118,017 |
|
Employer discretionary contributions receivable | | 15,991,107 |
| | 2,725,556 |
|
Total receivables | | 96,831,749 |
| | 74,771,029 |
|
Total assets | | 5,947,267,115 |
| | 5,071,526,061 |
|
| | | | |
Liabilities | | | | |
Due to brokers for securities purchased | | 2,145,824 |
| | 819,765 |
|
Total liabilities | | 2,145,824 |
| | 819,765 |
|
Net assets reflecting investments at fair value | | 5,945,121,291 |
| | 5,070,706,296 |
|
Adjustment from fair value to contract value for fully benefit-responsive investment contracts held by the Stable Value Fund master trust investment account | | (13,882,163 | ) | | (7,961,502 | ) |
Net assets available for benefits | | $ | 5,931,239,128 |
| | $ | 5,062,744,794 |
|
See accompanying notes.
Intel 401(k) Savings Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended December 31, 2012
|
| | | |
Additions to (deductions from) net assets attributed to: | |
Employee contributions | $ | 516,406,638 |
|
Employer discretionary contributions | 15,991,107 |
|
Interest and dividend income | 69,836,677 |
|
Net investment income from participation in master trust investment accounts | 345,561,090 |
|
Net realized and unrealized appreciation in fair value of investments | 94,774,897 |
|
Benefits paid to participants and participant withdrawals | (173,322,541 | ) |
Administrative fees | (345,091 | ) |
Transfers to other plan | (408,443 | ) |
Net increase | 868,494,334 |
|
| |
Net assets available for benefits: | |
Beginning of year | 5,062,744,794 |
|
End of year | $ | 5,931,239,128 |
|
See accompanying notes.
Intel 401(k) Savings Plan
Notes to Financial Statements
December 31, 2012
1. Description of the Plan
The following description of the Intel 401(k) Savings Plan (the Plan) provides only general information. Participants should refer to the summary plan description for a more complete description of the Plan’s provisions. The plan document contains the definitive legal provisions governing the Plan.
General
The Plan is a defined contribution plan covering all eligible U.S. employees of Intel Corporation (the Company). Eligible employees may participate in the Plan at any time on or after their date of hire. All employees who become eligible to participate are automatically enrolled in the Plan unless they make an affirmative election not to participate. Employees hired on or after January 1, 2011 but prior to January 1, 2013 were automatically enrolled at a pretax contribution rate of 3% of regular pay with this amount increasing by 1% each April 1 of each successive plan year to a maximum of 10% of regular pay. Employees hired on or after January 1, 2013 are automatically enrolled at a pretax contribution rate of 6% of regular pay with this amount increasing by 2% each April 1 of each successive plan year to a maximum of 16% of regular pay. Contributions for participants who are automatically enrolled are deposited in the appropriate Target Date Fund, which invests in varying percentages of master trust investment accounts based on the participants' ages. Employee contributions are subject to the limitations as set forth in the plan document.
As of January 1, 2011 (the effective date), the Company closed the Intel Minimum Pension Plan (the Intel Pension Plan) and the Intel Retirement Contribution Plan (the Intel Contribution Plan) to employees hired on or after the effective date. Employees hired on or after the effective date will receive an annual contribution, the Discretionary Intel Contribution, in their Discretionary Intel Contribution Account.
The Plan is intended to be qualified under Section 401(a) of the U.S. Internal Revenue Code of 1986 (the Code), as amended, and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA), as amended.
Trustee
State Street Bank and Trust Company (State Street) is the trustee for the Plan and the Intel Corporation Retirement Plans Master Trust (the Master Trust) and held all investments of the Plan and the Master Trust directly or through a sub-trust for which Fidelity Management Trust Company is the sub-trustee.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
Administration of the Plan
The Company’s Finance Committee appoints the members of the Retirement Plans Administrative Committee (RPAC) and the Investment Policy Committee (IPC). The RPAC is the fiduciary responsible for the general operation and administration of the Plan. The IPC is the fiduciary responsible for the management and control of Plan assets. The Company is the plan sponsor, as defined by ERISA. Fidelity Workspace Services LLC is the Plan’s record keeper.
Contributions and Participant Accounts
Participant Contributions
Participants may make pretax contributions, after-tax Roth 401(k) contributions, or a combination of both, up to 50% of their annual eligible compensation, provided the amounts do not exceed the annual Internal Revenue Service (IRS) limits. Such contributions are withheld by the Company from each participant’s compensation and deposited in the appropriate investment option in accordance with the participant’s directives. Participants who are 50 years of age or older by the end of a particular plan year are eligible to contribute an additional portion of their annual compensation as catch-up contributions, up to the annual IRS limit. Participants can elect to invest in any combination of the available investment options offered under the Plan, in addition to mutual funds and exchange-traded funds available through a self-directed brokerage account. However, participants may not elect to invest more than 20% of their account in the Intel Stock Fund. Participants may change their investment elections daily.
Company Contributions
For eligible participants, the Plan provides for the Company, at its discretion, to make an annual contribution to their Discretionary Intel Contribution Account, subject to certain limitations of the Code. Amounts to be contributed are determined by the Chief Executive Officer of the Company under delegation from the Board of Directors, pursuant to the terms of the Plan.
Generally, only eligible participants employed by the Company on the last day of the plan year and who have completed one year of service as defined by the plan document are eligible to receive the Company contribution, except in the event of death, job elimination, divestiture, total and permanent disability, or attainment of the normal or early retirement date occurring during the plan year. Participants have authority over the investment allocation of Company contributions.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
Participant Accounts
Separate accounts are maintained for each participant. The account balances are generally adjusted as follows:
| |
• | Biweekly or semimonthly for participant contributions. |
| |
• | Daily for a pro rata share of investment income or losses on the Plan’s investments based on the ratio that each participant’s account bears to the total of all such accounts. |
| |
• | Annual discretionary employer contributions to the Discretionary Intel Contribution Account are allocated at the end of each calendar year in the ratio that each participant’s adjusted compensation for the plan year bears to the total adjusted compensation of all participants eligible for a contribution for that plan year. The adjusted compensation of a participant equals the participant’s current year eligible compensation, as defined in the plan document. |
Employee Stock Ownership Plan (ESOP)
Under the terms of the Plan, the Intel Stock Fund is an ESOP in accordance with Code Section 4975(e)(7). As such, participants will have the option to receive dividends on their shares of stock held in the Intel Stock Fund distributed in cash or reinvested within the Intel Stock Fund.
Vesting
Participants are immediately 100% vested with respect to employee contributions and related earnings.
Participants vest in the discretionary employer contributions to their Discretionary Intel Contribution Account and related earnings according to the following schedule:
|
| | |
Years of Service | Vesting |
| |
Fewer than 2 | 0 | % |
2 but less than 3 | 20 |
|
3 but less than 4 | 40 |
|
4 but less than 5 | 60 |
|
5 but less than 6 | 80 |
|
6 or more | 100 |
|
The value of each participant’s account becomes 100% vested when the participant reaches age 60, upon death, or upon total and permanent disability. In addition, the value of each participant’s account may also become 100% vested upon job elimination or upon termination of employment
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
due to a divestiture. For participants who withdrew from the Plan during 2012, unvested account balances of approximately $48,000 were forfeited during the year ended December 31, 2012. The Company took these forfeited amounts into account in determining its contribution for 2012.
Payment of Benefits
Participants are eligible for a distribution of plan benefits upon termination of service, whether by disability, retirement, death or leaving the Company. In the event of financial hardship (as defined by the Plan), participants may withdraw money from the employee contribution portion of their plan accounts while they are still employed. Upon termination of service, a participant or applicable beneficiary may elect to have benefits paid in a single lump-sum distribution, monthly annuity payments, partial distribution (not available to beneficiaries), or may request that the Plan make a direct transfer to another eligible retirement plan.
Participants who elect monthly annuity payments will have the balance of their accounts transferred to the Intel Pension Plan. An annuity is paid to those participants based on the value of their plan accounts in accordance with the terms of the two plans. There were transfers under this option of $408,443 for the year ended December 31, 2012.
Notes Receivable From Participants
Active participants are permitted to obtain loans of up to 50% of their vested account balances in the Plan up to a maximum of $50,000 when combined with all other loans from this Plan and the Intel Contribution Plan. No more than two loans may be outstanding at any time. Participants’ account balances secure their loans. The interest rate on these loans is based on the prime rate plus 1% as reported by Reuters on the last business day of each month. Loan provisions are established by the RPAC and administered by the record keeper.
Participants may choose to obtain loans from either this Plan or the Intel Contribution Plan. Repayments of loans are transferred to the participants’ Plan and Intel Contribution Plan accounts in the ratio in which their accounts provided funding for the loan. Participant loans are classified as notes receivable from participants on the statements of net assets available for benefits and are valued at their unpaid principal balance, plus accrued but unpaid interest. The interest earned on these loans is included with interest and dividend income on the statement of changes in net assets available for benefits.
Administrative Expenses
A portion of the expenses for administration of the Plan is paid from asset-based credits received from certain mutual funds. Any remaining administrative expenses are paid by the Company.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
A portion of the investments of the Plan is held in the Master Trust, which consists of the assets of the Plan, the Intel Contribution Plan, and the Intel Pension Plan. The Master Trust includes multiple master trust investment accounts, in which different combinations of the above-mentioned plans invest. Each participating plan shares in the assets and earnings of the master trust investment accounts based on its respective interest in each master trust investment account. In 2012 and 2011, the Plan participated in all nine master trust accounts. See Note 3, "Master Trust Investment Accounts," for the details of the investments held and investment income of the master trust investment accounts. The investments and activities of each master trust investment account are specified; however, not all of the master trust investment accounts will engage in all of the investments or activities described.
The Plan, either directly or through investments in master trust investment accounts, holds investments in registered mutual funds, common collective trust funds, equity securities, exchange-traded funds, fixed-income debt instruments, derivative financial instruments, marketable limited partnerships or corporations, securities lending collateral, and non-marketable limited partnerships, all of which are stated at fair value as of the last day of the plan year. The fair value for securities traded on a national securities exchange or over-the-counter market is determined using the last reported sales price as of the valuation date. Registered mutual funds are valued at quoted market prices that represent the net asset values of shares held at year-end. Participation units in common collective trust funds are stated at their unit price based on the fair values of the underlying assets in the common collective trust funds on the last business day of the plan year. Marketable limited partnerships and corporations are valued at their unit price based on the fair value of the underlying assets in the partnership or corporation. Non-marketable limited partnerships are valued at their unit price, or equivalent, based on the fair value of the underlying assets in the partnership.
The Global Bond Fund may engage in repurchase agreement transactions. Under the terms of a repurchase agreement, the Global Bond Fund takes possession of an underlying fixed-income debt instrument (collateral) subject to an obligation of the seller to repurchase, and the Global Bond Fund to resell, the fixed-income debt instrument at an agreed-upon price and date in the future. Fixed-income debt instruments purchased under repurchase agreements are reflected as assets and the obligations to resell as liabilities. The market value of the collateral must be equal to or exceed the total amount of the repurchase obligations, including interest. Generally, in the event of counterparty default, the Global Bond Fund has the right to use the collateral to offset losses incurred.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The Global Bond Fund may purchase or sell securities on a delayed-delivery or when-issued basis. These transactions involve a commitment by the Global Bond Fund to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When purchasing a security, the Global Bond Fund assumes the rights and risks of ownership of the security, including the risk of price and yield fluctuations. The Global Bond Fund may dispose of, or renegotiate delivery of, the security after entering into the transaction and may sell the security before it is delivered, which may result in a realized gain or loss. When the Global Bond Fund has sold a security on a delayed-delivery basis, the Global Bond Fund does not participate in future gains and losses with respect to the security.
The Global Bond Fund may enter into short-sale transactions. A short sale is a transaction in which the Global Bond Fund sells securities it borrows in anticipation of a decline in the market price of the securities and subsequently repurchases the securities. Securities sold in short-sale transactions are reflected as a liability. The Global Bond Fund is obligated to deliver securities at the market price at the date the short position is closed. Possible losses from short sales may be unlimited, whereas losses from purchases cannot exceed the total amount invested.
Within the Stable Value Fund, traditional guaranteed investment contracts (GICs) and variable synthetic (VS) GICs are stated at fair value, computed using discounted cash flows. Fixed-maturity synthetic (FMS) GICs, constant-duration synthetic (CDS) GICs and pooled separate account (PSA) GICs held in the Stable Value Fund are also stated at fair value. For FMS GICs and CDS GICs, this includes a value for the underlying assets held plus a value for the wrap contracts related to the investment. The fair value of the underlying assets held is determined by either security market prices or the net asset value, as in the case of the PSA GICs. The wrap contract valuations are stated at fair value based on a replacement cost determined by BNY Mellon Cash Investment Strategies, a division of The Dreyfus Corporation (BNY Mellon) and the Stable Value Fund’s investment manager. The Stable Value Fund is allocated to the Plan and the Intel Contribution Plan based on each plans’ proportionate share of the underlying assets.
Investment contracts held by a defined contribution plan are reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. Contract value represents the cost plus contributions made under the contracts plus interest at the contract rates, less withdrawals and administrative expenses. The statements of net assets available for benefits present the fair value of the investment in the Stable Value Fund, as well as the adjustment from fair value to contract value, for the Plan’s proportionate share of fully benefit-responsive investment contracts within the Stable Value Fund. The statement of changes in net assets available for benefits is prepared on a contract-value basis.
Income Recognition
Net investment income includes the gain (loss) realized on the sale of securities and unrealized appreciation (depreciation) in the fair value of investments. Unrealized appreciation (depreciation)
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
is calculated as the difference between the fair value of investments at the beginning and the end of the year for investments held the entire year, and the difference between the purchase price and the fair value of investments at the end of the year for investments acquired during the year.
Investment transactions are recognized as of their trade dates. Interest is accrued daily; dividends are accrued on the ex-dividend date.
Benefit Payments
Benefits are recorded when paid.
Contributions
Participant contributions are accrued when the participants’ salary deferrals are withheld. Company contributions are accrued in the period in which they become obligations of the Company, pursuant to the terms of the plan document.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from management’s estimates.
Accounting Changes
2012
In 2012, the Plan adopted a new standard that required additional fair value disclosures. For assets and liabilities categorized as Level 3 and recognized at fair value, the standard required additional disclosures around the unobservable inputs as well as the valuation processes used by the entity. The adoption of this standard did not have a significant impact on the Plan’s financial statements.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
3. Master Trust Investment Accounts
Most of the Plan’s investments are held in master trust investment accounts.
The value of the Plan’s interest in the master trust investment accounts included in the statements of net assets available for benefits represents the following percentages of the net assets available for benefits of the asset class master trust investment accounts:
|
| | | | |
| December 31 |
| 2012 | 2011 |
| | |
U.S. Large Cap Stock Fund | 44.5 | % | 45.1 | % |
International Stock Fund | 49.0 |
| 48.1 |
|
Global Bond Fund | 18.9 |
| 17.3 |
|
U.S. Small Cap Stock Fund | 58.9 |
| 54.2 |
|
Stable Value Fund | 78.8 |
| 79.7 |
|
Alternative Investments Fund | 0.4 |
| 0.4 |
|
Emerging Markets Fund | 41.8 |
| 43.2 |
|
Hedge Fund | 35.1 |
| 36.6 |
|
Commodities Fund | 41.0 |
| 36.9 |
|
| | |
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The following table presents the net assets available for benefits of the nine master trust investment accounts as of December 31, 2012: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Large Cap | International | Global | U.S. Small Cap | Stable | Alternative Investments | Hedge | Commodities | Emerging Markets | |
Assets | Stock Fund | Stock Fund | Bond Fund | Stock Fund | Value Fund | Fund | Fund | Fund | Fund | Total |
Cash | $ | — |
| $ | 18,138 |
| $ | 22,446,112 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 121 |
| $ | 22,464,371 |
|
Interest-bearing cash | — |
| — |
| — |
| — |
| 40,486,783 |
| — |
| — |
| — |
| — |
| 40,486,783 |
|
Common collective trust funds | 1,116,601,598 |
| 501,163,572 |
| 53,320,931 |
| 16,659,606 |
| 462,574,312 |
| 5,576,021 |
| 476,945 |
| 150,803,164 |
| 1,111,754,859 |
| 3,418,931,008 |
|
U.S. corporate bonds | — |
| 14,752,445 |
| 551,909,171 |
| — |
| 3,787,848 |
| — |
| — |
| — |
| — |
| 570,449,464 |
|
International corporate bonds | — |
| 26,860,827 |
| 170,269,194 |
| — |
| — |
| — |
| — |
| — |
| — |
| 197,130,021 |
|
U.S. government bonds | — |
| — |
| 553,383,599 |
| — |
| 117,210 |
| — |
| — |
| — |
| — |
| 553,500,809 |
|
International government bonds | — |
| 25,955,006 |
| 318,888,863 |
| — |
| — |
| — |
| — |
| — |
| — |
| 344,843,869 |
|
Municipal bonds | — |
| — |
| 35,055,935 |
| — |
| — |
| — |
| — |
| — |
| — |
| 35,055,935 |
|
Mortgage-backed securities | — |
| — |
| 66,531,993 |
| — |
| 4,355,426 |
| — |
| — |
| — |
| — |
| 70,887,419 |
|
Collateralized debt obligations | — |
| — |
| 221,914,019 |
| — |
| 2,594,828 |
| — |
| — |
| — |
| — |
| 224,508,847 |
|
Mutual funds | 617,595,727 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 617,595,727 |
|
Exchange-traded fund | — |
| — |
| — |
| 150,978,544 |
| — |
| — |
| — |
| — |
| — |
| 150,978,544 |
|
U.S. corporate stocks | — |
| 254,739,273 |
| — |
| 98,826,334 |
| — |
| — |
| — |
| — |
| — |
| 353,565,607 |
|
International corporate stocks | — |
| 453,810,909 |
| — |
| 4,442,265 |
| — |
| — |
| — |
| — |
| — |
| 458,253,174 |
|
Preferred stocks | — |
| 6,324,993 |
| 4,221,002 |
| — |
| — |
| — |
| — |
| — |
| — |
| 10,545,995 |
|
Traditional guaranteed investment contracts | — |
| — |
| — |
| — |
| 22,997,032 |
| — |
| — |
| — |
| — |
| 22,997,032 |
|
Pooled separate accounts | — |
| — |
| — |
| — |
| 92,191,129 |
| — |
| — |
| — |
| — |
| 92,191,129 |
|
Other receivables | 50 |
| 2,354,791 |
| 16,803,379 |
| 47,073 |
| 30,092 |
| 527 |
| 320 |
| 17 |
| 25 |
| 19,236,274 |
|
Receivable from brokers for securities sold | 627,254 |
| 671,754 |
| — |
| — |
| — |
| — |
| 20,537,569 |
| — |
| 345,784 |
| 22,182,361 |
|
Receivable for investments sold on a delayed-delivery basis | — |
| — |
| 375,817,689 |
| — |
| — |
| — |
| — |
| — |
| — |
| 375,817,689 |
|
Wrap contracts | — |
| — |
| — |
| — |
| 100,164 |
| — |
| — |
| — |
| — |
| 100,164 |
|
Derivative assets | — |
| 1,040,488 |
| 4,583,940 |
| — |
| — |
| — |
| — |
| — |
| — |
| 5,624,428 |
|
Marketable limited partnerships and corporations | — |
| — |
| — |
| — |
| — |
| — |
| 2,131,667,642 |
| 229,422,567 |
| — |
| 2,361,090,209 |
|
Non-marketable limited partnerships | — |
| — |
| — |
| — |
| — |
| 478,878,481 |
| — |
| — |
| — |
| 478,878,481 |
|
Investments of securities lending collateral 1 | — |
| 30,813,413 |
| 103,693,246 |
| 197,096,964 |
| — |
| — |
| — |
| — |
| — |
| 331,603,623 |
|
Total assets, fair value | $ | 1,734,824,629 |
| $ | 1,318,505,609 |
| $ | 2,498,839,073 |
| $ | 468,050,786 |
| $ | 629,234,824 |
| $ | 484,455,029 |
| $ | 2,152,682,476 |
| $ | 380,225,748 |
| $ | 1,112,100,789 |
| $ | 10,778,918,963 |
|
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Large Cap | International | Global | U.S. Small Cap | Stable | Alternative Investments | Hedge | Commodities | Emerging Markets | |
Stock Fund | Stock Fund | Bond Fund | Stock Fund | Value Fund | Fund | Fund | Fund | Fund | Total |
Liabilities | | | | | | | | | | |
Accrued administrative fees | $ | 94,739 |
| $ | 1,867,327 |
| $ | 9,806,390 |
| $ | 609,633 |
| $ | 270,571 |
| $ | 74,748 |
| $ | 27,267 |
| $ | 412,683 |
| $ | 935,071 |
| $ | 14,098,429 |
|
Payable to brokers for securities purchased | 3,469 |
| 603,456 |
| — |
| 165,844 |
| — |
| — |
| — |
| — |
| 8,238 |
| 781,007 |
|
Other payables | — |
| — |
| 1,508,535 |
| — |
| — |
| — |
| — |
| — |
| — |
| 1,508,535 |
|
Payable for investments sold on a delayed-delivery basis | — |
| — |
| 359,258,746 |
| — |
| — |
| — |
| — |
| — |
| — |
| 359,258,746 |
|
Payable to brokers for collateral on deposit | — |
| — |
| 4,061,000 |
| — |
| — |
| — |
| — |
| — |
| — |
| 4,061,000 |
|
Derivative liabilities | — |
| 4,173,479 |
| 14,933,077 |
| — |
| — |
| — |
| — |
| — |
| — |
| 19,106,556 |
|
Payable for securities lending collateral | — |
| 31,490,847 |
| 105,972,944 |
| 198,111,057 |
| — |
| — |
| — |
| — |
| — |
| 335,574,848 |
|
Total liabilities, at fair value | 98,208 |
| 38,135,109 |
| 495,540,692 |
| 198,886,534 |
| 270,571 |
| 74,748 |
| 27,267 |
| 412,683 |
| 943,309 |
| 734,389,121 |
|
Net assets available for benefits, at fair value | 1,734,726,421 |
| 1,280,370,500 |
| 2,003,298,381 |
| 269,164,252 |
| 628,964,253 |
| 484,380,281 |
| 2,152,655,209 |
| 379,813,065 |
| 1,111,157,480 |
| 10,044,529,842 |
|
Adjustment from fair value to contract value for fully benefit-responsive investment contracts held | — |
| — |
| — |
| — |
| (17,616,958 | ) | — |
| — |
| — |
| — |
| (17,616,958 | ) |
Net assets available for benefits | $ | 1,734,726,421 |
| $ | 1,280,370,500 |
| $ | 2,003,298,381 |
| $ | 269,164,252 |
| $ | 611,347,295 |
| $ | 484,380,281 |
| $ | 2,152,655,209 |
| $ | 379,813,065 |
| $ | 1,111,157,480 |
| $ | 10,026,912,884 |
|
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The following table presents the net assets available for benefits of the nine master trust investment accounts as of December 31, 2011. As a result of further analysis of the master trust financial instruments, approximately $20.6 million of collateralized debt obligations that were previously reported as U.S. corporate bond investments at December 31, 2011 have been reclassified. This revision in the disclosed classification had no effect on the reported fair values of these instruments or on the Plan's financial statements.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Assets | U.S. Large Cap Stock Fund | International Stock Fund | Global Bond Fund | U.S. Small Cap Stock Fund | Stable Value Fund | Alternative Investments Fund | Hedge Fund | Commodities Fund | Emerging Markets Fund | Total |
Cash | $ | 69,300 |
| $ | 3,494,889 |
| $ | 23,740,072 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 20,000,121 |
| $ | 47,304,382 |
|
Common collective trust funds | 929,350,192 |
| 446,978,958 |
| 178,872,790 |
| 22,809,839 |
| 504,958,497 |
| 3,263,537 |
| 11,117,287 |
| 157,957,264 |
| 943,324,999 |
| 3,198,633,363 |
|
U.S. corporate bonds | — |
| 15,076,105 |
| 360,272,460 |
| — |
| 3,943,530 |
| — |
| — |
| — |
| — |
| 379,292,095 |
|
International corporate bonds | — |
| 18,394,583 |
| 129,545,896 |
| — |
| — |
| — |
| — |
| — |
| — |
| 147,940,479 |
|
U.S. government bonds | — |
| — |
| 709,663,293 |
| — |
| 9,578,447 |
| — |
| — |
| — |
| — |
| 719,241,740 |
|
International government bonds | — |
| 26,633,269 |
| 372,257,257 |
| — |
| — |
| — |
| — |
| — |
| — |
| 398,890,526 |
|
Municipal bonds | — |
| — |
| 25,054,988 |
| — |
| — |
| — |
| — |
| — |
| — |
| 25,054,988 |
|
Mortgage-backed securities | — |
| — |
| 73,513,689 |
| — |
| 6,790,739 |
| — |
| — |
| — |
| — |
| 80,304,428 |
|
Collateralized debt obligations | — |
| — |
| 221,279,722 |
| — |
| 5,869,523 |
| — |
| — |
| — |
| — |
| 227,149,245 |
|
Other fixed-income debt instruments | — |
| — |
| — |
| 2,876,525 |
| — |
| — |
| — |
| — |
| — |
| 2,876,525 |
|
Mutual funds | 482,444,234 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 482,444,234 |
|
Exchange-traded fund | — |
| — |
| — |
| 72,338,486 |
| — |
| — |
| — |
| — |
| — |
| 72,338,486 |
|
U.S. corporate stocks | 13,296 |
| 191,193,978 |
| — |
| 118,949,407 |
| — |
| — |
| — |
| — |
| — |
| 310,156,681 |
|
International corporate stocks | — |
| 422,069,552 |
| — |
| 43,286,018 |
| — |
| — |
| — |
| — |
| — |
| 465,355,570 |
|
Preferred stocks | — |
| 6,227,455 |
| 3,072,335 |
| — |
| — |
| — |
| — |
| — |
| — |
| 9,299,790 |
|
Traditional guaranteed investment contracts | — |
| — |
| — |
| — |
| 4,873,301 |
| — |
| — |
| — |
| — |
| 4,873,301 |
|
Pooled separate accounts | — |
| — |
| — |
| — |
| 60,258,127 |
| — |
| — |
| — |
| — |
| 60,258,127 |
|
Other receivables | 27 |
| 2,238,734 |
| 15,374,059 |
| 189,653 |
| 112,644 |
| 387 |
| 562 |
| 22 |
| 31 |
| 17,916,119 |
|
Receivable from brokers for securities sold | 947,653 |
| 2,442,071 |
| — |
| 77,747 |
| — |
| — |
| 11,041,676 |
| 178,294 |
| 336,501 |
| 15,023,942 |
|
Receivable for investments sold on a delayed-delivery basis | — |
| — |
| 165,128,283 |
| — |
| — |
| — |
| — |
| — |
| — |
| 165,128,283 |
|
Wrap contracts | — |
| — |
| — |
| — |
| 54,788 |
| — |
| — |
| — |
| — |
| 54,788 |
|
Derivative assets | — |
| 2,789,435 |
| 18,239,748 |
| — |
| — |
| — |
| — |
| — |
| — |
| 21,029,183 |
|
Marketable limited partnerships and corporations | — |
| — |
| — |
| — |
| — |
| — |
| 1,848,898,080 |
| 227,543,836 |
| — |
| 2,076,441,916 |
|
Non-marketable limited partnerships | — |
| — |
| — |
| — |
| — |
| 345,136,833 |
| — |
| — |
| — |
| 345,136,833 |
|
Investments of securities lending collateral 1 | — |
| 87,080,668 |
| 108,565,798 |
| 108,630,421 |
| — |
| — |
| — |
| — |
| — |
| 304,276,887 |
|
Total assets, fair value | $ | 1,412,824,702 |
| $ | 1,224,619,697 |
| $ | 2,404,580,390 |
| $ | 369,158,096 |
| $ | 596,439,596 |
| $ | 348,400,757 |
| $ | 1,871,057,605 |
| $ | 385,679,416 |
| $ | 963,661,652 |
| $ | 9,576,421,911 |
|
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Large Cap | International | Global | U.S. Small Cap | Stable | Alternative Investments | Hedge | Commodities | Emerging Markets | |
Stock Fund | Stock Fund | Bond Fund | Stock Fund | Value Fund | Fund | Fund | Fund | Fund | Total |
Liabilities | | | | | | | | | | |
Accrued administrative fees | $ | 74,324 |
| $ | 1,510,040 |
| $ | 5,710,639 |
| $ | 384,779 |
| $ | 318,534 |
| $ | 434,818 |
| $ | 28,961 |
| $ | 216,208 |
| $ | 740,101 |
| $ | 9,418,404 |
|
Other payables | — |
| — |
| 831,255 |
| — |
| — |
| — |
| — |
| — |
| — |
| 831,255 |
|
Payable to brokers for securities purchased | — |
| 72,440 |
| — |
| 1,586,247 |
| — |
| — |
| — |
| — |
| 20,000,000 |
| 21,658,687 |
|
Payable for investments sold on a delayed-delivery basis | — |
| — |
| 228,516,431 |
| — |
| — |
| — |
| — |
| — |
| — |
| 228,516,431 |
|
Payable to brokers for collateral on deposit | — |
| — |
| 6,067,557 |
| — |
| — |
| — |
| — |
| — |
| — |
| 6,067,557 |
|
Derivative liabilities | — |
| 885,534 |
| 23,991,083 |
| — |
| — |
| — |
| — |
| — |
| — |
| 24,876,617 |
|
Securities sold, not yet purchased | — |
| — |
| 105,637,108 |
| — |
| — |
| — |
| — |
| — |
| — |
| 105,637,108 |
|
Payable for securities lending collateral | — |
| 89,116,208 |
| 111,103,560 |
| 109,461,576 |
| — |
| — |
| — |
| — |
| — |
| 309,681,344 |
|
Total liabilities, at fair value | 74,324 |
| 91,584,222 |
| 481,857,633 |
| 111,432,602 |
| 318,534 |
| 434,818 |
| 28,961 |
| 216,208 |
| 20,740,101 |
| 706,687,403 |
|
Net assets available for benefits, at fair value | 1,412,750,378 |
| 1,133,035,475 |
| 1,922,722,757 |
| 257,725,494 |
| 596,121,062 |
| 347,965,939 |
| 1,871,028,644 |
| 385,463,208 |
| 942,921,551 |
| 8,869,734,508 |
|
Adjustment from fair value to contract value for fully benefit-responsive investment contracts held | — |
| — |
| — |
| — |
| (9,989,337 | ) | — |
| — |
| — |
| — |
| (9,989,337 | ) |
Net assets available for benefits | $ | 1,412,750,378 |
| $ | 1,133,035,475 |
| $ | 1,922,722,757 |
| $ | 257,725,494 |
| $ | 586,131,725 |
| $ | 347,965,939 |
| $ | 1,871,028,644 |
| $ | 385,463,208 |
| $ | 942,921,551 |
| $ | 8,859,745,171 |
|
1 The balances at December 31, 2012 and December 31, 2011 were related to cash collateral received in connection with the securities lending program, the majority of which was invested in money market funds. See Note 9, "Securities Lending," for further discussion on this program.
The following is a summary of the net investment income (loss) in the master trust investment accounts for the year ended December 31, 2012: |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Large Cap Stock Fund | International Stock Fund | Global Bond Fund | U.S. Small Cap Stock Fund | Stable Value Fund | Alternative Investments Fund | Hedge Fund | Commodities Fund | Emerging Markets Fund | Total |
| | | | | | | | | | |
Net realized and unrealized appreciation (depreciation) in fair value of investments | $ | 152,266,708 |
| $ | 152,205,667 |
| $ | 84,525,454 |
| $ | 18,403,865 |
| $ | 11,801,522 |
| $ | 54,200,409 |
| $ | 142,966,597 |
| $ | (59,644 | ) | $ | 183,851,328 |
| $ | 800,161,906 |
|
Interest and dividends | 59,876,936 |
| 21,294,004 |
| 69,463,606 |
| 5,517,313 |
| 1,482,293 |
| 6,031 |
| 5,318 |
| 234 |
| 898 |
| 157,646,633 |
|
Administrative fees | (290,653 | ) | (7,752,965 | ) | (12,083,433 | ) | (1,685,438 | ) | (1,121,267 | ) | (2,464,812 | ) | (530,598 | ) | (304,809 | ) | (1,282,200 | ) | (27,516,175 | ) |
Net investment income (loss) | $ | 211,852,991 |
| $ | 165,746,706 |
| $ | 141,905,627 |
| $ | 22,235,740 |
| $ | 12,162,548 |
| $ | 51,741,628 |
| $ | 142,441,317 |
| $ | (364,219 | ) | $ | 182,570,026 |
| $ | 930,292,364 |
|
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The following is a summary of the net realized and unrealized appreciation (depreciation) in fair value of investments by major investment type in the master trust investment accounts for the year ended December 31, 2012:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Large Cap Stock Fund | International Stock Fund | Global Bond Fund | U.S. Small Cap Stock Fund | Stable Value Fund | Alternative Investments Fund | Hedge Fund | Commodities Fund | Emerging Markets | Total |
Common collective trust funds | $ | 146,991,570 |
| $ | 64,927,408 |
| $ | — |
| $ | — |
| $ | 11,921,294 |
| $ | — |
| $ | — |
| $ | — |
| $ | 183,851,328 |
| $ | 407,691,600 |
|
Corporate bonds | — |
| 15,175,528 |
| 49,387,561 |
| — |
| — |
| — |
| — |
| — |
| — |
| 64,563,089 |
|
Government bonds | — |
| — |
| 24,134,526 |
| — |
| — |
| — |
| — |
| — |
| — |
| 24,134,526 |
|
Asset-backed securities | — |
| — |
| 34,536,377 |
| — |
| (119,772 | ) | — |
| — |
| — |
| — |
| 34,416,605 |
|
Registered mutual funds | 5,275,138 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| 5,275,138 |
|
Exchange-traded fund | — |
| — |
| — |
| 18,244,264 |
| — |
| — |
| — |
| — |
| — |
| 18,244,264 |
|
Corporate stocks | — |
| 87,844,600 |
| — |
| 159,601 |
| — |
| — |
| — |
| — |
| — |
| 88,004,201 |
|
Derivatives | — |
| (15,741,869 | ) | (23,533,010 | ) | — |
| — |
| — |
| — |
| — |
| — |
| (39,274,879 | ) |
Marketable limited partnerships and corporations | — |
| — |
| — |
| — |
| — |
| — |
| 142,966,597 |
| (59,644 | ) | — |
| 142,906,953 |
|
Non-marketable limited partnerships | — |
| — |
| — |
| — |
| — |
| 54,200,409 |
| — |
| — |
| — |
| 54,200,409 |
|
Total net realized and unrealized appreciation (depreciation) in fair value of investments | $ | 152,266,708 |
| $ | 152,205,667 |
| $ | 84,525,454 |
| $ | 18,403,865 |
| $ | 11,801,522 |
| $ | 54,200,409 |
| $ | 142,966,597 |
| $ | (59,644 | ) | $ | 183,851,328 |
| $ | 800,161,906 |
|
For further fair value information on the assets held in the master trust investment accounts, see the master trust investment accounts fair value disclosure below.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
4. Fair Value
The Plan’s and the master trust investment accounts' financial instruments are stated at fair value. Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining fair value, the Plan and master trust investment accounts consider the principal or most advantageous market in which the Plan and master trust investment accounts would transact, and the Plan and master trust investment accounts also consider assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, redemption restrictions, and risk of nonperformance.
The Plan’s financial instruments stated at fair value are detailed below, and the fair value of the master trust investment accounts within the Master Trust that the Plan participates in is separately disclosed below the Plan-related disclosures.
Fair Value Hierarchy
The three levels of inputs that may be used to measure fair value are as follows:
| |
• | Level 1. Quoted prices in active markets for identical assets or liabilities. |
Level 1 assets and liabilities may include certain of the Plan’s and master trust investment accounts’ marketable fixed-income debt and equity instruments, registered mutual funds, exchange-traded derivative financial instruments, bonds held in the FMS GICs, and exchange-traded funds that are traded in an active market with sufficient volume and frequency of transactions.
| |
• | Level 2. Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets with insufficient volume or infrequent transactions (less active markets), or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data for substantially the full term of the assets or liabilities. |
Level 2 assets and liabilities may include certain of the Plan’s and master trust investment accounts’ marketable fixed-income debt instruments with quoted market prices that are traded in less active markets or priced using a quoted market price for similar instruments. Level 2 assets also include marketable fixed-income debt instruments priced using non-binding market consensus prices that can be corroborated with observable market data, quoted prices that were adjusted for security-specific restrictions and fixed-income debt instruments, and derivative financial instruments priced using inputs that are observable in the market or can be derived principally from or corroborated with observable market data. Privately negotiated derivatives, also referred to as over the counter (OTC), including currency forward contracts and swap agreements, are valued using observable inputs such as quotations received from the counterparty, dealers, or brokers whenever available and considered reliable. In instances where models are used, the value of the OTC derivative depends upon the contractual terms of, and specific risks inherent in, the instrument, as well
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
as the availability and reliability of observable inputs. Such inputs may include prepayment rates, rates of estimated credit losses, interest rates, or discount rates and volatilities, and can generally be corroborated by market data and therefore are classified within Level 2 of the fair value hierarchy. Other marketable instruments in this category generally include certain of the Plan’s or master trust investment accounts’ common collective trust funds, registered mutual funds, certain marketable limited partnerships or corporations that are redeemable in the near term, GICs, CDS GICs, VS GICs, and PSA GICs. The non-binding market consensus prices obtained from pricing providers or brokers are based on proprietary valuation models that incorporate a number of inputs, including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and other reference data. Common collective trust funds, registered mutual funds, certain marketable limited partnerships or corporations, and PSA GICs, are valued using the net asset value per share for the investment.
| |
• | Level 3. Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. Level 3 inputs also include non-binding market consensus prices or non-binding broker quotes that were unable to be corroborated with observable market data. |
Level 3 assets and liabilities may include certain of the Plan’s and master trust investment accounts’ marketable limited partnerships or corporations that are not redeemable in the near-term, non-marketable limited partnership investments that are not redeemable in the near-term, wrap contracts for the FMS GICs, CDS GICs, and PSA GICs; common collective trust funds with significant redemption restrictions; and fixed-income debt instruments for which values are determined using inputs that are both unobservable and significant to the values of the instruments being measured. The quantitative unobservable inputs for these investments are not readily available and fair value measurements are based on either the net asset value per share for the investment or third-party pricing information without adjustment. As the Company does not have quantitative information about the significant unobservable inputs, the Company is unable to reasonably assess the sensitivity of the fair value measurements to changes of such inputs, or the impacts of any interrelationships between those inputs and other unobservable inputs used in the related fair value measurements. On an annual basis, the Company obtains and reviews pricing policy statements from third-party pricing providers. Based on this review, the Company has concluded that these fair value measurements are developed in accordance with GAAP.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
Assets Measured at Fair Value on a Recurring Basis
The Plan’s assets measured at fair value on a recurring basis, excluding accrued interest and dividends, cash, and administrative fees, consisted of the following types of instruments as of December 31, 2012:
|
| | | | | | | | | | | | |
| Fair Value Measurements at Reporting Date Using Inputs Classified as | |
| Level 1 | Level 2 | Level 3 | Total |
Assets | | | | |
Common collective trust funds: | | | | |
Fixed-income funds | $ | — |
| $ | 37,754,212 |
| $ | — |
| $ | 37,754,212 |
|
International equity funds | — |
| 108,892,795 |
| — |
| 108,892,795 |
|
Company common stock | 318,222,297 |
| — |
| — |
| 318,222,297 |
|
Registered mutual funds: | | | | |
Fixed-income funds | 360,374,119 |
| — |
| — |
| 360,374,119 |
|
U.S. large cap equity funds | 517,726,917 |
| — |
| — |
| 517,726,917 |
|
U.S. small cap equity funds | 208,800,340 |
| — |
| — |
| 208,800,340 |
|
International equity funds | 119,798,546 |
| — |
| — |
| 119,798,546 |
|
Equity precious metal funds | 34,367,126 |
| — |
| — |
| 34,367,126 |
|
Large cap growth funds | 82,517,077 |
| — |
| — |
| 82,517,077 |
|
Other mutual funds | 202,520,556 |
| — |
| — |
| 202,520,556 |
|
Exchange-traded funds | 49,201,507 |
| — |
| — |
| 49,201,507 |
|
Total assets measured at fair value1 | $ | 1,893,528,485 |
| $ | 146,647,007 |
| $ | — |
| $ | 2,040,175,492 |
|
1 For further fair value information on the assets held in the master trust investment accounts, see master trust investment accounts fair value disclosure below.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The Plan’s assets measured at fair value on a recurring basis, excluding accrued interest and dividends, cash, and administrative fees, consisted of the following types of instruments as of December 31, 2011. Certain amounts in the prior year have been reclassified to conform to the current year presentation.
|
| | | | | | | | | | | | |
| Fair Value Measurements at Reporting Date Using Inputs Classified as | |
| Level 1 | Level 2 | Level 3 | Total |
Assets | | | | |
Common collective trust funds: | | | | |
Fixed-income funds | $ | — |
| $ | 430,162 |
| $ | — |
| $ | 430,162 |
|
International equity funds | — |
| 75,343,562 |
| — |
| 75,343,562 |
|
Company common stock | 368,676,269 |
| — |
| — |
| 368,676,269 |
|
Registered mutual funds: | | | | |
Fixed-income funds | 270,313,527 |
| — |
| — |
| 270,313,527 |
|
U.S. large cap equity funds | 362,658,769 |
| — |
| — |
| 362,658,769 |
|
U.S. small cap equity funds | 160,795,365 |
| — |
| — |
| 160,795,365 |
|
International equity funds | 97,083,628 |
| — |
| — |
| 97,083,628 |
|
Equity precious metal funds | 39,659,903 |
| — |
| — |
| 39,659,903 |
|
Large cap growth funds | 72,831,724 |
| — |
| — |
| 72,831,724 |
|
Other mutual funds | 159,878,682 |
| — |
| — |
| 159,878,682 |
|
Exchange-traded funds | 23,347,903 |
| — |
| — |
| 23,347,903 |
|
Total assets measured at fair value1 | $ | 1,555,245,770 |
| $ | 75,773,724 |
| $ | — |
| $ | 1,631,019,494 |
|
1 For further fair value information on the assets held in the master trust investment accounts, see master trust investment accounts fair value disclosure below.
The Plan did not have any financial liabilities measured at fair value on a recurring basis and did not have any assets or liabilities that are measured at fair value on a nonrecurring basis as of December 31, 2012 and 2011.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The master trust investment accounts’ assets and liabilities measured at fair value on a recurring basis, excluding accrued interest and dividends, cash, and administrative fees, consisted of the following types of instruments as of December 31, 2012, for the nine asset class master trust investment accounts:
|
| | | | | | | | | | | | |
| Fair Value Measurements at Reporting Date Using Inputs Classified as |
|
| Level 1 | Level 2 | Level 3 | Total |
Assets |
|
|
|
|
|
|
|
|
Interest-bearing cash | $ | — |
| 40,486,783 |
| $ | — |
| $ | 40,486,783 |
|
Common collective trust funds: |
|
|
|
|
|
|
|
|
Emerging markets fund | — |
| 1,111,754,859 |
| — |
| 1,111,754,859 |
|
Fixed-income funds | — |
| 638,114,684 |
| — |
| 638,114,684 |
|
U.S. large cap equity funds | — |
| 1,116,601,598 |
| — |
| 1,116,601,598 |
|
U.S. small cap equity funds | — |
| 8,324,737 |
| — |
| 8,324,737 |
|
International equity funds | — |
| 393,331,966 |
| — |
| 393,331,966 |
|
Specialty funds | — |
| 150,803,164 |
| — |
| 150,803,164 |
|
U.S. corporate bonds | 137,787,753 |
| 432,661,711 |
| — |
| 570,449,464 |
|
International corporate bonds | 115,525,332 |
| 81,604,689 |
| — |
| 197,130,021 |
|
U.S. government bonds | 379,749,914 |
| 173,750,895 |
| — |
| 553,500,809 |
|
International government bonds | 283,179,858 |
| 61,664,011 |
| — |
| 344,843,869 |
|
Municipal bonds | — |
| 35,055,935 |
| — |
| 35,055,935 |
|
Mortgage-backed securities | — |
| — |
| 70,887,419 |
| 70,887,419 |
|
Collateralized debt obligations | — |
| — |
| 224,508,847 |
| 224,508,847 |
|
U.S. large cap equity mutual funds | 617,595,727 |
| — |
| — |
| 617,595,727 |
|
Exchange-traded fund | 150,978,544 |
| — |
| — |
| 150,978,544 |
|
U.S. corporate stocks | 353,565,607 |
| — |
| — |
| 353,565,607 |
|
International corporate stocks | 458,253,174 |
| — |
| — |
| 458,253,174 |
|
Preferred stocks | 10,545,995 |
| — |
| — |
| 10,545,995 |
|
Traditional guaranteed investment contracts | — |
| 22,997,032 |
| — |
| 22,997,032 |
|
Pooled separate accounts | — |
| 92,191,129 |
| — |
| 92,191,129 |
|
Receivable from brokers for securities sold | 22,182,361 |
| — |
| — |
| 22,182,361 |
|
Receivable for investments sold on a delayed-delivery basis | 375,817,689 |
| — |
| — |
| 375,817,689 |
|
Wrap contracts | — |
| — |
| 100,164 |
| 100,164 |
|
Derivative assets | 771,380 |
| 4,853,048 |
| — |
| 5,624,428 |
|
Marketable limited partnerships or corporations | — |
| 2,360,092,977 |
| 997,232 |
| 2,361,090,209 |
|
Non-marketable limited partnerships | — |
| — |
| 478,878,481 |
| 478,878,481 |
|
Investments of securities lending collateral 1 | — |
| 331,603,623 |
| — |
| 331,603,623 |
|
Total assets measured at fair value | $ | 2,905,953,334 |
| $ | 7,055,892,841 |
| $ | 775,372,143 |
| $ | 10,737,218,318 |
|
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
|
| | | | | | | | | | | | |
| Fair Value Measurements at Reporting Date Using Inputs Classified as | |
| Level 1 | Level 2 | Level 3 | Total |
Liabilities | | | | |
Payable to brokers for securities purchased | $ | 781,007 |
| $ | — |
| $ | — |
| $ | 781,007 |
|
Payable for investments purchased on a delayed-delivery basis | 359,258,746 |
| — |
| — |
| 359,258,746 |
|
Payable to brokers for collateral on deposit | 4,061,000 |
| — |
| — |
| 4,061,000 |
|
Derivative liabilities | 1,473,035 |
| 17,633,521 |
| — |
| 19,106,556 |
|
Payable for securities lending collateral | 335,574,848 |
| — |
| — |
| 335,574,848 |
|
Total liabilities measured at fair value | $ | 701,148,636 |
| $ | 17,633,521 |
| $ | — |
| $ | 718,782,157 |
|
During 2012, the Company transferred approximately $292 million of government bonds and corporate bonds from Level 2 to Level 1, primarily based on the increased market activity for the underlying securities. The Plan's policy is to reflect transfers between levels at the beginning of the year in which a change in circumstances resulted in the transfer.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The master trust investment accounts’ assets and liabilities measured at fair value on a recurring basis, excluding accrued interest and dividends, cash, and administrative fees, consisted of the following types of instruments as of December 31, 2011, for the nine asset class master trust investment accounts. As a result of further analysis of the master trust financial instruments, approximately $20.6 million of collateralized debt obligations that were previously reported as Level 2 U.S. corporate bond investments at December 31, 2011 have been reclassified to Level 3 investments. This revision in the disclosed classification had no effect on the reported fair values of these instruments or on the Plan's financial statements.
|
| | | | | | | | | | | | | | |
| Fair Value Measurements at Reporting Date Using Inputs Classified as | | |
| Level 1 | Level 2 | Level 3 | Total | |
Assets | | | | | |
Common collective trust funds: | | | | | |
Emerging markets fund | $ | — |
| $ | 943,033,053 |
| $ | — |
| $ | 943,033,053 |
| |
Fixed-income funds | — |
| 762,595,439 |
| — |
| 762,595,439 |
| |
U.S. large cap equity funds | — |
| 929,069,553 |
| — |
| 929,069,553 |
| |
U.S. small cap equity funds | — |
| 9,916,400 |
| — |
| 9,916,400 |
| |
International equity funds | — |
| 396,248,149 |
| — |
| 396,248,149 |
| |
Specialty funds | — |
| 157,770,769 |
| — |
| 157,770,769 |
| |
U.S. corporate bonds | — |
| 379,292,095 |
| — |
| 379,292,095 | |
International corporate bonds | — |
| 147,940,479 |
| — |
| 147,940,479 | |
U.S. government bonds | 329,560,042 |
| 389,681,698 |
| — |
| 719,241,740 | |
International government bonds | — |
| 398,890,526 |
| — |
| 398,890,526 | |
Municipal bonds | — |
| 25,054,988 |
| — |
| 25,054,988 | |
Mortgage-backed securities | — |
| — |
| 80,304,428 |
| 80,304,428 | |
Collateralized debt obligations | — |
| — |
| 227,149,245 |
| 227,149,245 | |
Other fixed-income debt instruments | — |
| 2,876,525 |
| — |
| 2,876,525 | |
U.S. large cap equity mutual funds | 482,444,234 |
| — |
| — |
| 482,444,234 | |
Exchange-traded fund | 72,338,486 |
| — |
| — |
| 72,338,486 | |
U.S. corporate stocks | 310,156,681 |
| — |
| — |
| 310,156,681 | |
International corporate stocks | 465,355,570 |
| — |
| — |
| 465,355,570 | |
Preferred stocks | 9,299,790 |
| — |
| — |
| 9,299,790 | |
Traditional guaranteed investment contracts | — |
| 4,873,301 |
| — |
| 4,873,301 | |
Pooled separate accounts | — |
| 60,258,127 |
| — |
| 60,258,127 | |
Receivable from brokers for securities sold | 15,023,942 |
| — |
| — |
| 15,023,942 | |
Receivable for investments sold on a delayed-delivery basis | 165,128,283 |
| — |
| — |
| 165,128,283 | |
Wrap contracts | — |
| — |
| 54,788 |
| 54,788 | |
Derivative assets | 1,651,529 |
| 19,377,654 |
| — |
| 21,029,183 | |
Marketable limited partnerships or corporations | — |
| 2,075,152,357 |
| 1,289,559 |
| 2,076,441,916 | |
Non-marketable limited partnerships | — |
| — |
| 345,136,833 |
| 345,136,833 | |
Investments of securities lending collateral 1 | — |
| 304,276,887 |
| — |
| 304,276,887 | |
Total assets measured at fair value | $ | 1,850,958,557 |
| $ | 7,006,308,000 |
| $ | 653,934,853 |
| $ | 9,511,201,410 | |
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
|
| | | | | | | | | | | | |
| Fair Value Measurements at Reporting Date Using Inputs Classified as | |
| Level 1 | Level 2 | Level 3 | Total |
Liabilities | | | | |
Payable to brokers for securities purchased | $ | 21,658,687 |
| $ | — |
| $ | — |
| $ | 21,658,687 |
|
Payable for investments purchased on a delayed-delivery basis | 228,516,431 |
| — |
| — |
| 228,516,431 |
|
Payable to brokers for collateral on deposit | 6,067,557 |
| — |
| — |
| 6,067,557 |
|
Derivative liabilities | 3,253,382 |
| 21,623,235 |
| — |
| 24,876,617 |
|
Securities sold, not yet purchased | 105,637,108 |
| — |
| — |
| 105,637,108 |
|
Payable for securities lending collateral | 309,681,344 |
| — |
| — |
| 309,681,344 |
|
Total liabilities measured at fair value | $ | 674,814,509 |
| $ | 21,623,235 |
| $ | — |
| $ | 696,437,744 |
|
1 The balances at December 31, 2012 and December 31, 2011 were related to cash collateral received in connection with the securities lending program, the majority of which was invested in money market funds. See Note 9, "Securities Lending", for further discussion on this program.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The table below provides a summary of each of the master trust investment accounts by the fair value inputs, excluding accrued interest and dividends, cash, and administrative fees, used in the measurement as of December 31, 2012.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Large Cap Stock Fund | International Stock Fund | Global Bond Fund | U.S. Small Cap Stock Fund | Stable Value Fund | Alternative Investments Fund | Hedge Fund | Commodities Fund | Emerging Markets Fund | Total |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 1 | $ | 618,222,981 |
| $ | 764,205,776 |
| $ | 1,248,394,081 |
| $ | 254,247,143 |
| $ | — |
| $ | — |
| $ | 20,537,569 |
| $ | — |
| $ | 345,784 |
| $ | 2,905,953,334 |
|
Level 2 | 1,116,601,598 |
| 551,926,904 |
| 922,749,489 |
| 213,756,570 |
| 622,154,314 |
| 5,576,021 |
| 2,131,147,355 |
| 380,225,731 |
| 1,111,754,859 |
| 7,055,892,841 |
|
Level 3 | — |
| — |
| 288,446,012 |
| — |
| 7,050,418 |
| 478,878,481 |
| 997,232 |
| — |
| — |
| 775,372,143 |
|
Total assets measured at fair value | $ | 1,734,824,579 |
| $ | 1,316,132,680 |
| $ | 2,459,589,582 |
| $ | 468,003,713 |
| $ | 629,204,732 |
| $ | 484,454,502 |
| $ | 2,152,682,156 |
| $ | 380,225,731 |
| $ | 1,112,100,643 |
| $ | 10,737,218,318 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities | | | | | | | | | |
|
|
Level 1 | $ | 3,469 |
| $ | 32,094,303 |
| $ | 470,765,725 |
| $ | 198,276,901 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 8,238 |
| $ | 701,148,636 |
|
Level 2 | — |
| 4,173,479 |
| 13,460,042 |
| — |
| — |
| — |
| — |
| — |
| — |
| 17,633,521 |
|
Total liabilities measured at fair value | $ | 3,469 |
| $ | 36,267,782 |
| $ | 484,225,767 |
| $ | 198,276,901 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 8,238 |
| $ | 718,782,157 |
|
The table below provides a summary of each of the master trust investment accounts by the fair value inputs, excluding accrued interest and dividends, cash, and administrative fees, used in the measurement as of December 31, 2011. As a result of further analysis of the master trust financial instruments, approximately $20.6 million of collateralized debt obligations that were previously reported as Level 2 U.S. corporate bond investments at December 31, 2011 have been reclassified to Level 3 investments. This revision in the disclosed classification had no effect on the reported fair values of these instruments or on the Plan's financial statements.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Large Cap Stock Fund | International Stock Fund | Global Bond Fund | U.S. Small Cap Stock Fund | Stable Value Fund | Alternative Investments Fund | Hedge Fund | Commodities Fund | Emerging Markets Fund | Total |
Assets | | | | | | | | | | |
Level 1 | $ | 483,405,183 |
| $ | 621,933,056 |
| $ | 499,412,189 |
| $ | 234,651,658 |
| $ | — |
| $ | — |
| $ | 11,041,676 |
| $ | 178,294 |
| $ | 336,501 |
| $ | 1,850,958,557 |
|
Level 2 | 929,350,192 |
| 596,953,018 |
| 1,571,260,659 |
| 134,316,785 |
| 583,611,902 |
| 3,263,537 |
| 1,858,725,808 |
| 385,501,100 |
| 943,324,999 |
| 7,006,308,000 |
|
Level 3 | — |
| — |
| 294,793,411 |
| — |
| 12,715,050 |
| 345,136,833 |
| 1,289,559 |
| — |
| — |
| 653,934,853 |
|
Total assets measured at fair value | $ | 1,412,755,375 |
| $ | 1,218,886,074 |
| $ | 2,365,466,259 |
| $ | 368,968,443 |
| $ | 596,326,952 |
| $ | 348,400,370 |
| $ | 1,871,057,043 |
| $ | 385,679,394 |
| $ | 943,661,500 |
| $ | 9,511,201,410 |
|
| | | | | | | | | | |
Liabilities | | | | | | | | | | |
Level 1 | $ | — |
| $ | 89,695,840 |
| $ | 454,070,846 |
| $ | 111,047,823 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 20,000,000 |
| $ | 674,814,509 |
|
Level 2 | — |
| 378,342 |
| 21,244,893 |
| — |
| — |
| — |
| — |
| — |
| — |
| 21,623,235 |
|
Total liabilities measured at fair value | $ | — |
| $ | 90,074,182 |
| $ | 475,315,739 |
| $ | 111,047,823 |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | 20,000,000 |
| $ | 696,437,744 |
|
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The table below presents a reconciliation for the master trust investment accounts’ assets and liabilities measured at fair value on a recurring basis, excluding accrued interest and dividends, cash, and administrative fees, using significant unobservable inputs (Level 3) for 2012:
|
| | | | | | | | | | | | | | | | | | |
| Fair Value Measurements Using Level 3 |
|
| Mortgage-Backed Securities | Collateralized Debt Obligations | Wrap Contracts | Marketable Limited Partnerships or Corporation | Non-Marketable Limited Partnership | Total Net Gains |
Balance as of December 31, 2011 | $ | 80,304,428 |
| $ | 227,149,245 |
| $ | 54,788 |
| $ | 1,289,559 |
| $ | 345,136,833 |
|
|
Total gains (losses) (realized and unrealized)
| 12,228,943 |
| 22,187,661 |
| 45,376 |
| (292,327 | ) | 41,634,967 |
| $ | 75,804,620 |
|
Purchases | 40,237,186 |
| 70,434,516 |
| — |
| — |
| 132,107,230 |
|
|
Sales | (61,883,138 | ) | (95,262,575 | ) | — |
| — |
| (40,000,549 | ) |
|
Balance as of December 31, 2012 | $ | 70,887,419 |
| $ | 224,508,847 |
| $ | 100,164 |
| $ | 997,232 |
| $ | 478,878,481 |
|
|
The amount of total gains (losses) for the period included in changes in net assets attributable to the changes in unrealized gains (losses) related to assets and liabilities still held as of December 31, 2012 | $ | 5,022,515 |
| $ | 14,172,080 |
| $ | 45,376 |
| $ | (292,327 | ) | $ | 41,634,967 |
| $ | 60,582,611 |
|
Changes in net assets are included in the master trust investment accounts' net investment income for the year ended December 31, 2012.
The master trust investment accounts did not have any assets or liabilities that are measured at fair value on a nonrecurring basis as of December 31, 2012 and 2011.
Fair Value Estimated Using Net Asset Value Per Share
The Plan and master trust investment accounts invest in funds that calculate net asset value per share and primarily consist of investments in funds where they co-invest with third-party investors. The investments consist of common collective trust funds, marketable limited partnerships or corporations, non-marketable limited partnership investments, and pooled separate accounts. The alternative investment funds are primarily closed-end funds, which are not eligible for redemption until a date in the future that currently cannot be determined. The liquidation of these investments is likely to occur at different times over the next 10 years.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The following table presents the Plan’s and the master trust investment accounts’ fair values, future investment commitments, and redemption conditions for investments that calculate net asset value per share as the practical expedient as of December 31, 2012:
|
| | | | | | | | |
Type | Fair Value | Future Commitments | Redemption Frequency | Redemption Notice Period |
Hedge funds (a), (b) | $ | 2,131,667,642 |
| NA | Monthly to annual | 5 to 90 days |
Commodities funds (c) | 229,422,567 |
| NA | Monthly | 30 to 35 days |
Alternative investment funds (d), (e), (f) | 478,878,481 |
| $ | 437,747,477 |
| NA | None |
Fixed-income common collective trust funds (g) | 675,868,896 |
| NA | Daily | 1 to 5 days |
U.S. large cap equity common collective trust funds (h) | 1,116,601,598 |
| NA | Daily | 1 to 3 days |
U.S. small cap equity common collective trust funds (i) | 8,324,737 |
| NA | Daily | 1 to 3 days |
International equity common collective trust funds (j) | 502,224,761 |
| NA | Daily | 1 to 5 days |
Commodities common collective trust funds (k) | 150,803,164 |
| NA | Weekly | 1 to 3 days |
Emerging markets common collective trust funds (l) | 1,111,754,859 |
| NA | Daily | 1 to 5 days |
Pooled separate accounts (m) | 92,191,129 |
| NA | Daily | 3 to 5 days |
Total | $ | 6,497,737,834 |
| $ | 437,747,477 |
|
|
|
The following table presents the Plan’s and the master trust investment accounts’ fair values, future investment commitments, and redemption conditions for funds that calculate net asset value per share as the practical expedient as of December 31, 2011. Certain amounts in the prior year have been reclassified to conform to the current year presentation.
|
| | | | | | | | |
Type | Fair Value | Future Commitments | Redemption Frequency | Redemption Notice Period |
Hedge funds (a), (b) | $ | 1,848,898,080 |
| NA | Monthly to annual | 5 to 90 days |
Commodities funds (c) | 227,543,836 |
| NA | Monthly | 30 to 35 days |
Alternative investment funds (d), (e), (f) | 345,136,833 |
| $ | 315,000,000 |
| NA | None |
Fixed-income common collective trust funds (g) | 763,025,601 |
| NA | Daily | 1 to 5 days |
U.S. large cap equity common collective trust funds (h) | 929,069,553 |
| NA | Daily | 1 to 3 days |
U.S. small cap equity common collective trust funds (i) | 9,916,400 |
| NA | Daily | 1 to 3 days |
International equity common collective trust funds (j) | 471,591,711 | NA | Daily | 1 to 5 days |
Commodities common collective trust funds (k) | 157,770,769 |
| NA | Weekly | 1 to 3 days |
Emerging markets common collective trust funds (l) | 943,033,053 | NA | Daily | 1 to 5 days |
Pooled separate accounts (m) | 60,258,127 |
| NA | Daily | 3 to 5 days |
Total | $ | 5,756,243,963 |
| $ | 315,000,000 |
| | |
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
|
| | |
(a) | | Includes absolute return hedge funds that typically take positions in primarily publicly traded securities and derivatives. The funds generally attempt to utilize trading strategies such as relative value, event driven, and directional. The relative value strategy seeks return by capitalizing on perceived mispricing of related securities or financial instruments, and generally avoids taking a directional bias with regard to price movement of securities and markets overall. Event-driven strategy focuses on identifying and analyzing securities that can benefit from the occurrence of an extraordinary transaction or event (e.g., restructurings, takeovers, mergers, spin-offs, bankruptcy). Directional strategy takes a bias based on the price movement of securities and markets. These funds typically will include global exposure, which includes emerging markets. |
(b) | | Includes long/short equity hedge funds that typically take both long and short positions in primarily publicly traded securities. Portfolios are built based on positive and negative views on equities. These funds typically will include global exposure, which includes emerging markets. |
(c) | | The commodities funds category seeks to match the Dow Jones-UBS Commodity Index, and the Standard & Poor's Goldman Sachs Commodity Index, which are composed of futures contracts on physical commodities. |
(d) | | Includes private real estate funds that seek out value added and opportunistic real estate investments in nonpublicly traded securities. These funds typically will include global exposure, which includes emerging markets. |
(e) | | Includes private energy and natural resource funds that seek out private investments in nonpublicly traded securities that focus on areas such as hydrocarbon reserves, infrastructure, timber, mining or minerals. These funds typically will include global exposure, which includes emerging markets. |
(f) | | Includes private equity and venture capital funds that seek out private investments in nonpublicly traded securities that include venture capital funding of exceptional growth potential enterprises, and special situations such as distressed, opportunistic, or secondary market positions. These funds typically will include global exposure, which includes emerging markets. |
(g) | | The fixed-income funds invest in short-term and long-term, high-quality government, mortgage, and corporate bonds. Some of the funds seek to replicate the performance of the Barclays Capital 1–3 Year Treasury Bond Index and Barclays Capital 1–3 Year Agency Bond Index over the long term. |
(h) | | The funds seek to match or exceed the performance of the Russell 1000 Index. The Russell 1000 Index focuses on the large- and mid-capitalization segment of the market, with approximately 90% coverage of U.S. stocks. |
(i) | | The funds seek to match or exceed the performance of the Russell 2000 Index, a free float-adjusted market capitalization index representing 2,000 small company stocks of U.S.- domiciled companies. |
(j) | | The funds seek to provide exposure to developed stocks outside the U.S., as represented by the MSCI All Country World Index, excluding the U.S. |
(k) | | The fund seeks to match the Dow Jones-USB Commodity Index, which is composed of futures contracts on physical commodities. |
(l) | | The funds seek to provide exposure to emerging market stocks outside the U.S., as represented by the MSCI EM Index, Lazard Emerging Markets Collective Trust Fund, and State Street Global Advisors EAFE Fund. |
(m) | | Pooled separate accounts include SA GICs. The initial crediting rate for SA GICs is set based on the market interest rates at the time that the initial asset is purchased and is guaranteed to have an interest crediting rate not less than 0%. |
5. Investments
The Company's common stock is the only investment that represents 5% or more of the fair value of the Plan’s net assets available for benefits at December 31, 2012 and 2011. See Note 7, "Party-in-Interest Transactions."
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
During the year ended December 31, 2012, the Plan’s investments (including investments purchased, sold, and held during the year) appreciated (depreciated) in fair value as follows:
|
| | | |
Net realized and unrealized appreciation (depreciation) in fair value of investments: |
|
|
Registered mutual funds | $ | 130,771,474 |
|
Common collective trust funds | 19,253,354 |
|
Company common stock | (55,249,931 | ) |
Net realized and unrealized appreciation in fair value of investments | $ | 94,774,897 |
|
6. Investment Contracts
The Stable Value Fund holds investment contracts with insurance companies and banks to provide participants with a stable return on investment and protection of principal from changes in market interest rates. BNY Mellon has discretionary authority for the purchase and sale of investments in the Stable Value Fund, subject to the general investment policies of the IPC.
The traditional GICs crediting rate is based on the rate that is agreed to when the insurance company writes the contract and is generally fixed for the life of the contract. The initial crediting rate for the CDS GICs, the FMS GICs, and the PSA GICs is set based on the market interest rates at the time that the initial asset is purchased, and is guaranteed to have an interest crediting rate not less than 0%. The crediting rates for the CDS GICs, the FMS GICs, and the PSA GICs reset every quarter based on the book value of the contract, the market value of the underlying assets, and the average duration of the underlying assets. The crediting rate for the CDS GICs, the FMS GICs, and the PSA GICs aim at converging the book value of the contract and the market value of the underlying assets and, therefore, will be affected by interest rate and market changes.
Certain events may limit the ability of the Stable Value Fund to transact at the contract value with the issuers. Such events include the following:
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• | Default of wrap provider |
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• | Default of an underlying bond issuer with material impact on the fund |
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• | Employer-initiated events that are within the control of the plan sponsor that would have a material and adverse impact on the fund |
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• | Employer communications designed to induce participants to transfer from the fund |
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• | Competing fund transfer or violation of equity wash or equivalent rules in place |
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• | Changes in qualification status of the employer or the plans participating in the fund |
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
If any such event occurs, market value would likely be used in determining the payouts to the participants.
In general, issuers may terminate the contract and settle at other-than-contract value if there is a change in the qualification status of the employer or the Plan, if there is a breach of material obligations under the contract and misrepresentations by the contract holder, if the market and book values diverge dramatically, or if there is a failure of the underlying portfolio to conform to the pre-established investment guidelines.
The FMS GICs, CDS GICs, VS GICs, and PSA GICs use wrap contracts to manage market risks and to alter the return characteristics of the underlying portfolio of securities owned by the Stable Value Fund to match certain fixed-income fund objectives. Wrap contracts generally change the investment characteristics of underlying securities (such as corporate debt or U.S. government securities) to those of traditional GICs. The wrap contracts provide that benefit-responsive distributions for specific underlying securities may be withdrawn at the contract value. Benefit-responsive distributions are generally defined as a withdrawal on account of a participant’s retirement, disability, or death, or participant-directed transfers in accordance with the terms of the Plan.
The investment contracts owned by the Stable Value Fund earned the following average yields:
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| | | | | |
| Year Ended December 31 | |
| 2012 |
| | 2011 |
|
| | | |
Earned by the Plan | 1.96 | % | | 2.37 | % |
Credited to participants | 1.87 |
| | 2.28 |
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7. Party-In-Interest Transactions
Approximately 5% of the Plan’s net assets available for benefits are shares of the Company’s common stock (with fair values of $318,222,297 and $368,676,269 as of December 31, 2012 and 2011, respectively). Transactions in shares of the Company’s common stock qualify as party-in-interest transactions under the provisions of ERISA. During 2012, the Plan made purchases of the Company’s common stock of $22,046,369 and sales and distributions totaling $17,250,410.
8. Derivative Financial Instruments
The Plan, either directly or through the master trust investment accounts, invests in common collective trust funds, mutual funds, marketable limited partnerships or corporations, and non-marketable limited partnerships, which can purchase derivatives consistent with their offering documents and prospectuses. The Plan does not directly hold any derivatives that are designated as hedging instruments. For 2012 and 2011, the Plan purchased derivatives through its investment in the Global Bond Fund and the International Stock Fund.
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
The Global Bond Fund and the International Stock Fund consist of separately managed accounts. The investment managers of these accounts may use derivatives, consistent with the objective of the account, to hedge a portion of the investments to limit or minimize exposure to certain risks and to gain access to markets more efficiently. The investment managers do not employ leverage in the use of derivatives. The investment managers may 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 settle at net value amounts owed to each other as a result of multiple, separate derivative transactions. For presentation in the net assets available for benefits of the master trust investment accounts, fair value amounts recognized for derivative instruments are not offset under master-netting arrangements. Collateral is secured against derivative instruments whenever deemed necessary. Cash collateral received is recorded as cash with a corresponding liability on the statement of net assets available for benefits of the applicable master trust investment account, and cash collateral paid is included with other receivables. Collateral received in the form of securities is not recorded as an asset or liability as the collateral cannot be repledged. Securities pledged as collateral continue to be recorded as assets on the statement of net assets available for benefits of the applicable master trust investment account. The Global Bond Fund had securities pledged as collateral for futures contracts and swap agreements totaling $5,822,074 and $5,281,500 as of December 31, 2012 and 2011, respectively. Following is a summary of the significant accounting policies associated with the use of derivatives by the Global Bond Fund and International Stock Fund.
Currency Forward Contracts
The Global Bond Fund and the International Stock Fund have investments that are denominated in foreign currencies and utilize currency forward contracts to hedge a portion of the currency exposure for these investments. Currency forward contracts are generally marked-to-market at the prevailing forward exchange rate of the underlying currencies, with the difference between contract value and market value recorded as unrealized appreciation (depreciation). When the currency forward contract is closed, the Global Bond Fund and the International Stock Fund transfer the unrealized appreciation (depreciation) to a realized gain (loss) equal to the change in the value of the currency forward contract from when it was opened to the value at the time it was closed. Sales and purchases of currency forward contracts having the same settlement date and broker are offset, and any gain (loss) is realized on that date. At the end of the year, open currency forward contracts are recorded as a derivative asset if the market value of the contract has appreciated or as a derivative liability if depreciated.
Certain risks may arise upon entering into a currency forward contract from the potential inability of counterparties to meet the terms of their contracts. The Global Bond Fund and the International Stock Fund seek to control this risk by evaluating the creditworthiness of potential counterparties and establishing credit limits. Additionally, when utilizing currency forward contracts, the Global Bond Fund and the International Stock Fund give up the opportunity to profit from favorable exchange rate movements during the term of the contract.
Futures Contracts
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
A futures contract is a contractual agreement to deliver or receive a commodity or financial instrument at a specific date in the future at an agreed-upon price. The Global Bond Fund uses fixed-income futures contracts to manage exposure to the market. Buying futures typically increases the exposure to the underlying instrument. Selling futures typically decreases the exposure to the underlying instrument held, or hedges the fair value of the other investments.
Futures contracts are valued at the last settlement price at the end of each day on the exchange upon which they are traded. Upon entering into a futures contract, a deposit either in cash or securities in an amount (initial margin) equal to a certain percentage of the nominal value of the contract is required. Pursuant to the futures contract, there is an agreement to receive from, or to pay to, the broker an amount of cash equal to the daily fluctuation in the value of the futures contract. Such receipts or payments, known as “variation margin,” are generally settled daily and are included in the unrealized appreciation (depreciation) on futures contracts. Each separately managed account maintains its own variation margin accounts, and there is a separate variation margin account for each exchange used in the separately managed account. At the end of the year, the net amount of the variation margin accounts is recorded as a derivative asset if it has a positive balance or as a derivative liability if it has a negative balance.
Futures contracts involve, to varying degrees, credit and market risks. The futures contracts entered into are exchange-traded futures contracts where the broker acts as the clearinghouse for, and counterparty to, the transactions. Thus, credit risk on such transactions is mitigated by having an exchange that regulates margin requirements for futures contracts and capital requirements for clearinghouses, and by the ability of clearinghouses to net customer trades. The daily settlement process on the futures contracts serves to greatly reduce credit risk. Losses in value may arise from changes in the value of the underlying instruments, or if there is an illiquid secondary market for the contracts. In addition, there is the risk that there may not be an exact correlation between a futures contract and the underlying index, commodity, or security.
Swap Agreements
The Global Bond Fund enters into swap agreements to exchange or swap investment cash flows, assets, or market-linked returns at specified future intervals with counterparties. The Global Bond Fund has entered into interest rate and credit default swap agreements to manage its exposure to interest rates and credit risk. In connection with these agreements, securities may be identified as collateral in accordance with the terms of the respective swap agreements.
Swaps are marked-to-market daily based on quotations supplied by an exchange, a pricing service, or a major market maker (or dealer), and the change in value, if any, is recorded as unrealized appreciation (depreciation). Realized gain (loss) is recorded upon termination or maturity of the swap. At the end of the year, outstanding swaps with a positive fair value are recorded as a derivative asset, and those with a negative fair value are recorded as a derivative liability.
Entering into these agreements involves, to varying degrees, elements of credit and market risk in excess of the amounts recognized in the statements of net assets available for benefits of the Global
Intel 401(k) Savings Plan
Notes to Financial Statements (continued)
Bond Fund. Such risks involve the possibility that there will be no liquid market for these agreements, that the counterparty to the agreements may default on its obligation to perform or disagree as to the meaning of contractual terms in the agreements, and that there may be unfavorable changes in interest rates.
The Global Bond Fund has entered into various derivative transactions that are considered credit derivatives. The Global Bond Fund writes and purchases credit default swaps primarily through credit default swap indices, but may also do so on a single name or basket basis. The use of credit default swaps provides the Global Bond Fund with flexibility in adjusting the yield curve and credit characteristics of the portfolio. Credit default swaps can provide access to exposure that may not be available in the financial markets.
The following table contains the notional value of the Global Bond Fund’s written credit derivatives as of December 31, 2012 and 2011:
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| | | | | | |
| Notional Value of Credit Default Swaps1 |
Maturity | 2012 | 2011 |
| | |
0–5 years | $ | 13,314,653 |
| $ | 13,332,627 |
|
5–10 years | 2,100,000 |
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