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Derivative Financial Instruments | 12 Months Ended
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Dec. 27, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Financial Instruments [Text Block] | Note 6: Derivative Financial Instruments Our primary objective for holding derivative financial instruments is to manage currency exchange rate risk and interest rate risk, and, to a lesser extent, equity market risk, commodity price risk, and credit risk. Currency Exchange Rate Risk We are exposed to currency exchange rate risk, and generally hedge our exposures with currency forward contracts, currency interest rate swaps, or currency options. Substantially all of our revenue is transacted in U.S. dollars. However, a significant amount of our operating expenditures and capital purchases is incurred in or exposed to other currencies, primarily the euro, the Japanese yen, the Chinese yuan, and the Israeli shekel. We have established balance sheet and forecasted transaction currency risk management programs to protect against fluctuations in the fair value and the volatility of the functional currency equivalent of future cash flows caused by changes in exchange rates. Our non-U.S.-dollar-denominated investments in debt instruments and loans receivable are generally hedged with offsetting currency forward contracts or currency interest rate swaps. We may also hedge currency risk arising from funding foreign currency denominated forecasted investments. These programs reduce, but do not eliminate, the impact of currency exchange movements. Our currency risk management programs include:
• | Currency derivatives with cash flow hedge accounting designation that utilize currency forward contracts and currency options to hedge exposures to the variability in the U.S.-dollar equivalent of anticipated non-U.S.-dollar-denominated cash flows. These instruments generally mature within 12 months. For these derivatives, we report the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive income (loss), and we reclassify it into earnings in the same period or periods in which the hedged transaction affects earnings, and in the same line item on the consolidated statements of income as the impact of the hedged transaction.
• | Currency derivatives without hedge accounting designation that utilize currency forward contracts or currency interest rate swaps to economically hedge the functional currency equivalent cash flows of recognized monetary assets and liabilities, non-U.S.-dollar-denominated debt instruments classified as trading assets, and hedges of non-U.S.-dollar-denominated loans receivable recognized at fair value. The majority of these instruments mature within 12 months. Changes in the functional currency equivalent cash flows of the underlying assets and liabilities are approximately offset by the changes in fair value of the related derivatives. We record net gains or losses in the line item on the consolidated statements of income most closely associated with the related exposures, primarily in interest and other, net, except for equity-related gains or losses, which we primarily record in gains (losses) on equity investments, net.
Interest Rate Risk Our primary objective for holding investments in debt instruments is to preserve principal while maximizing yields. We generally swap the returns on our investments in fixed-rate debt instruments with remaining maturities longer than six months into U.S. dollar three-month LIBOR-based returns, unless management specifically approves otherwise. These swaps are settled at various interest payment times involving cash payments at each interest and principal payment date, with the majority of the contracts having quarterly payments. Our interest rate risk management programs include:
• | Interest rate derivatives with cash flow hedge accounting designation that utilize interest rate swap agreements to modify the interest characteristics of debt instruments. For these derivatives, we report the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive income (loss), and we reclassify it into earnings in the same period or periods in which the hedged transaction affects earnings, and in the same line item on the consolidated statements of income as the impact of the hedged transaction.
• | Interest rate derivatives without hedge accounting designation that utilize interest rate swaps and currency interest rate swaps in economic hedging transactions, including hedges of non-U.S.-dollar-denominated debt instruments classified as trading assets and hedges of non-U.S.-dollar-denominated loans receivable recognized at fair value. Floating interest rates on the swaps generally reset on a quarterly basis. Changes in the fair value of the debt instruments classified as trading assets and loans receivable recognized at fair value are generally offset by changes in fair value of the related derivatives, both of which are recorded in interest and other, net.
Equity Market Risk Our investments include marketable equity securities and equity derivative instruments. We typically do not attempt to reduce or eliminate our equity market exposure through hedging activities at the inception of our investments. Before we enter into hedge arrangements, we evaluate legal, market, and economic factors, as well as the expected timing of disposal, to determine whether hedging is appropriate. Our equity market risk management program may include equity derivatives with or without hedge accounting designation that utilize warrants, equity options, or other equity derivatives. We recognize changes in the fair value of such derivatives in gains (losses) on equity investments, net. We also utilize total return swaps to offset changes in liabilities related to the equity market risks of certain deferred compensation arrangements. Gains and losses from changes in the fair value of these total return swaps are generally offset by the losses and gains on the related liabilities, both of which are recorded in either cost of sales or operating expenses. Deferred compensation liabilities were $1.2 billion as of December 27, 2014 ($1.1 billion as of December 28, 2013), and are included in other accrued liabilities. Commodity Price Risk We operate facilities that consume commodities and have established forecasted transaction risk management programs to protect against fluctuations in the fair value and the volatility of future cash flows caused by changes in commodity prices, such as those for natural gas. These programs reduce, but do not always eliminate, the impact of commodity price movements. Our commodity price risk management program includes commodity derivatives with cash flow hedge accounting designation that utilize commodity swap contracts to hedge future cash flow exposures to the variability in commodity prices. These instruments generally mature within 12 months. For these derivatives, we report the after-tax gain (loss) from the effective portion of the hedge as a component of accumulated other comprehensive income (loss) and reclassify it into earnings in the same period or periods in which the hedged transaction affects earnings, and in the same line item on the consolidated statements of income as the impact of the hedged transaction. Volume of Derivative Activity Total gross notional amounts for outstanding derivatives recorded at fair value at the end of each period were as follows:
(In Millions) |  | Dec 27, 2014 |  | Dec 28, 2013 |  | Dec 29, 2012
Currency forwards |  | $ | 15,578 |  |  | $ | 13,404 |  |  | $ | 13,117 |
Currency interest rate swaps |  | 5,446 |  |  | 4,377 |  |  | 2,711 |
Embedded debt derivatives |  | 3,600 |  |  | 3,600 |  |  | 3,600 |
Interest rate swaps |  | 1,347 |  |  | 1,377 |  |  | 1,101 |
Total return swaps |  | 1,056 |  |  | 914 |  |  | 807 |
Other |  | 49 |  |  | 67 |  |  | 127 |
Total |  | $ | 27,076 |  |  | $ | 23,739 |  |  | $ | 21,463 |
The gross notional amounts for currency forwards and currency interest rate swaps, by currency, at the end of each period were as follows:
(In Millions) |  | Dec 27, 2014 |  | Dec 28, 2013 |  | Dec 29, 2012
British pound sterling |  | $ | 410 |  |  | $ | 549 |  |  | $ | 308 |
Chinese yuan |  | 3,097 |  |  | 1,116 |  |  | 647 |
Euro |  | 7,486 |  |  | 6,874 |  |  | 5,994 |
Indian rupee |  | 418 |  |  | 303 |  |  | 309 |
Israeli shekel |  | 2,489 |  |  | 2,244 |  |  | 2,256 |
Japanese yen |  | 3,779 |  |  | 4,116 |  |  | 4,389 |
Malaysian ringgit |  | 902 |  |  | 506 |  |  | 442 |
Swiss franc |  | 1,289 |  |  | 1,189 |  |  | 657 |
Other |  | 1,154 |  |  | 884 |  |  | 826 |
Total |  | $ | 21,024 |  |  | $ | 17,781 |  |  | $ | 15,828 |
During 2014, we entered into a series of agreements with Tsinghua Unigroup Ltd. (Tsinghua Unigroup), an operating subsidiary of Tsinghua Holdings Co. Ltd., to, among other things, jointly develop Intel architecture- and communications-based solutions for smartphones. Subject to regulatory approvals and other closing conditions, we have also agreed to invest up to RMB 9.0 billion (approximately $1.5 billion as of the date of the agreement) for a minority stake of approximately 20% of the holding company under Tsinghua Unigroup. During the fourth quarter of 2014, we entered into $1.5 billion of forward contracts to hedge our anticipated equity funding of the Tsinghua Unigroup investment. The hedges were designated as cash flow hedges and the related gains and losses attributable to changes in the spot rates will be recognized in accumulated other comprehensive income (loss) until the Tsinghua Unigroup shares are either disposed of or impaired. As the shares are either disposed of or impaired, we will reclassify the gains or losses from accumulated other comprehensive income (loss) to gains (losses) on equity investments, net as an offset to the gain or loss recognized for the share disposal or impairment. Hedge gains and losses attributable to changes in the forward rates will be recognized in interest and other, net. Fair Value of Derivative Instruments in the Consolidated Balance Sheets The fair value of our derivative instruments at the end of each period were as follows:
|  | December 27, 2014 |  | December 28, 2013
(In Millions) |  | Other Current Assets |  | Other Long-Term Assets |  | Other Accrued Liabilities |  | Other Long-Term Liabilities |  | Other Current Assets |  | Other Long-Term Assets |  | Other Accrued Liabilities |  | Other Long-Term Liabilities
Derivatives designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency forwards |  | $ | 6 |  |  | $ | 1 |  |  | $ | 497 |  |  | $ | 9 |  |  | $ | 114 |  |  | $ | 1 |  |  | $ | 118 |  |  | $ | 2 |
Total derivatives designated as hedging instruments |  | 6 |  |  | 1 |  |  | 497 |  |  | 9 |  |  | 114 |  |  | 1 |  |  | 118 |  |  | 2 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency forwards |  | 207 |  |  | — |  |  | 44 |  |  | — |  |  | 66 |  |  | — |  |  | 63 |  |  | — |
Currency interest rate swaps |  | 344 |  |  | 34 |  |  | 7 |  |  | — |  |  | 124 |  |  | 6 |  |  | 163 |  |  | 29 |
Embedded debt derivatives |  | — |  |  | — |  |  | 4 |  |  | 8 |  |  | — |  |  | — |  |  | — |  |  | 19 |
Interest rate swaps |  | 3 |  |  | — |  |  | 11 |  |  | — |  |  | 5 |  |  | — |  |  | 28 |  |  | — |
Total return swaps |  | — |  |  | — |  |  | — |  |  | — |  |  | 48 |  |  | — |  |  | — |  |  | — |
Other |  | 1 |  |  | 22 |  |  | — |  |  | — |  |  | — |  |  | 29 |  |  | — |  |  | — |
Total derivatives not designated as hedging instruments |  | 555 |  |  | 56 |  |  | 66 |  |  | 8 |  |  | 243 |  |  | 35 |  |  | 254 |  |  | 48 |
Total derivatives |  | $ | 561 |  |  | $ | 57 |  |  | $ | 563 |  |  | $ | 17 |  |  | $ | 357 |  |  | $ | 36 |  |  | $ | 372 |  |  | $ | 50 |
Amounts Offset in the Consolidated Balance Sheets The gross amounts of our derivative instruments and reverse repurchase agreements subject to master netting arrangements with various counterparties, and cash and non-cash collateral posted under such agreements at the end of each period were as follows:
|  | December 27, 2014
|  |  |  |  |  |  |  | Gross Amounts Not Offset in the Balance Sheet |  |
(In Millions) |  | Gross Amounts Recognized |  | Gross Amounts Offset in the Balance Sheet |  | Net Amounts Presented in the Balance Sheet |  | Financial Instruments |  | Cash and Non-Cash Collateral Received or Pledged |  | Net Amount
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Derivative assets subject to master netting arrangements |  | $ | 559 |  |  | $ | — |  |  | $ | 559 |  |  | $ | (365 | ) |  | $ | (78 | ) |  | $ | 116 |
Reverse repurchase agreements |  | 718 |  |  | — |  |  | 718 |  |  | — |  |  | (718 | ) |  | — |
Total assets |  | 1,277 |  |  | — |  |  | 1,277 |  |  | (365 | ) |  | (796 | ) |  | 116 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Derivative liabilities subject to master netting arrangements |  | 559 |  |  | — |  |  | 559 |  |  | (365 | ) |  | (80 | ) |  | 114 |
Total liabilities |  | $ | 559 |  |  | $ | — |  |  | $ | 559 |  |  | $ | (365 | ) |  | $ | (80 | ) |  | $ | 114 |
|  | December 28, 2013
|  |  |  |  |  |  |  | Gross Amounts Not Offset in the Balance Sheet |  |
(In Millions) |  | Gross Amounts Recognized |  | Gross Amounts Offset in the Balance Sheet |  | Net Amounts Presented in the Balance Sheet |  | Financial Instruments |  | Cash and Non-Cash Collateral Received or Pledged |  | Net Amount
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Derivative assets subject to master netting arrangements |  | $ | 325 |  |  | $ | — |  |  | $ | 325 |  |  | $ | (158 | ) |  | $ | (3 | ) |  | $ | 164 |
Reverse repurchase agreements |  | 800 |  |  | — |  |  | 800 |  |  | — |  |  | (800 | ) |  | — |
Total assets |  | 1,125 |  |  | — |  |  | 1,125 |  |  | (158 | ) |  | (803 | ) |  | 164 |
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Derivative liabilities subject to master netting arrangements |  | 401 |  |  | — |  |  | 401 |  |  | (158 | ) |  | (32 | ) |  | 211 |
Total liabilities |  | $ | 401 |  |  | $ | — |  |  | $ | 401 |  |  | $ | (158 | ) |  | $ | (32 | ) |  | $ | 211 |
Derivatives in Cash Flow Hedging Relationships The before-tax gains (losses) attributed to the effective portion of cash flow hedges that were recognized in other comprehensive income (loss) for each period were as follows:
|  | Gains (Losses) Recognized in OCI on Derivatives (Effective Portion)
(In Millions) |  | 2014 |  | 2013 |  | 2012
Currency forwards |  | $ | (587 | ) |  | $ | (167 | ) |  | $ | 4 |
Other |  | (2 | ) |  | 1 |  |  | 9 |
Total |  | $ | (589 | ) |  | $ | (166 | ) |  | $ | 13 |
Gains and losses on derivative instruments in cash flow hedging relationships related to hedge ineffectiveness and amounts excluded from effectiveness testing were insignificant during all periods presented in the preceding tables. Additionally, for all periods presented, there was an insignificant impact on results of operations from discontinued cash flow hedges, which arises when forecasted transactions are probable of not occurring. For information on the unrealized holding gains (losses) on derivatives reclassified out of accumulated other comprehensive income into the consolidated statements of income, see "Note 24: Other Comprehensive Income (Loss)." Derivatives Not Designated as Hedging Instruments The effects of derivative instruments not designated as hedging instruments on the consolidated statements of income for each period were as follows:
(In Millions) |  | Location of Gains (Losses) Recognized in Income on Derivatives |  | 2014 |  | 2013 |  | 2012
Currency forwards |  | Interest and other, net |  | $ | 144 |  |  | $ | 44 |  |  | $ | 3 |
Currency interest rate swaps |  | Interest and other, net |  | 456 |  |  | 29 |  |  | (71 | )
Equity options |  | Gains (losses) on equity investments, net |  | — |  |  | 1 |  |  | (1 | )
Interest rate swaps |  | Interest and other, net |  | (3 | ) |  | — |  |  | 31 |
Total return swaps |  | Various |  | 68 |  |  | 140 |  |  | 77 |
Other |  | Gains (losses) on equity investments, net |  | (6 | ) |  | 5 |  |  | (7 | )
Other |  | Interest and other, net |  | — |  |  | — |  |  | 3 |
Total |  | $ | 659 |  |  | $ | 219 |  |  | $ | 35 |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80748-113994 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4A -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5618551-113959 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4K -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5708775-113959 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 25 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6886632&loc=d3e76258-113986 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4E -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624181-113959 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 45 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6441202&loc=d3e80720-113993 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4H -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624258-113959 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4B -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624163-113959 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(n)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4J -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5708773-113959 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35736893&loc=d3e80784-113994 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4D -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624177-113959 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41620-113959 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1A -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5579245-113959 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1B -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5580258-113959 Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5579240-113959 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41641-113959 Reference 18: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35706170&loc=d3e41638-113959 Reference 19: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 10 -Section 50 -Paragraph 4C -URI http://asc.fasb.org/extlink&oid=35706170&loc=SL5624171-113959 + Details
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