AMD 1996 Annual Report Download - page 230

NOTE 4. FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
As part of the Company's asset and liability management, the Company enters into
various types of transactions that involve financial instruments with off-
balance-sheet risk. These instruments are entered into in order to manage
financial market risk, including interest rate and foreign exchange risk. The
notional values, carrying amounts and fair values are tabled below.
Foreign exchange forward contracts
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The Company enters into foreign exchange forward contracts to buy and sell
currencies as economic hedges of its net monetary asset positions in its foreign
subsidiaries and liabilities for products purchased from FASL. The hedging
transactions in 1996 were denominated in lira, yen, French franc, deutsche mark
and pound sterling. The maturities of these contracts are generally less than
six months.
Interest rate swaps
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Approximately $150 million of interest rate swaps matured in 1996 when the
Company repaid its $150 million four-year term loan. Additionally, during 1996
the Company engaged in interest rate swaps primarily to reduce its interest rate
exposure on a building lease obligation by changing a portion of the Company's
interest rate obligation from a floating rate to a fixed rate basis without
exchanges of the underlying notional amounts. The fixed interest rates are based
on one to five year swap rates, and the floating interest rates are based on
three or six months LIBOR. These remaining interest rate swaps with a notional
amount of $40 million will mature in 1997.
FAIR VALUE OF FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The estimates of fair value were obtained using prevailing financial market
information as of December 29, 1996. In certain instances where judgment is
required in estimating fair value, price quotes were obtained from certain of
the Company's counterparty financial institutions.
(Thousands) 1996 1995
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Notional Carrying Fair Notional Carrying Fair
amount amount value amount amount value
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Interest rate instruments:
Swaps $40,000 $(1,011) $(437) $190,000 $(1,186) $(1,694)
Foreign exchange instruments:
Foreign exchange forward contracts 25,340 138 121 36,670 (192) (102)
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AVAILABLE-FOR-SALE SECURITIES
The following is a summary of available-for-sale securities included in cash and
cash equivalents and short-term investments as of December 29, 1996 and December
31, 1995:
(Thousands) 1996 1995
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Certificates of deposit $ -- $ 15,002
Treasury notes 2,017 10,437
Federal agency notes 32,698 14,065
Security repurchase agreements 12,000 53,370
Commercial paper 42,551 14,914
Other debt securities 458 434
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Total cash equivalents $ 89,724 $108,222
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Certificates of deposit $ 48,112 $ 70,551
Municipal notes and bonds -- 52,256
Corporate notes 18,954 37,898
Treasury notes 52,744 60,989
Commercial paper 95,194 46,656
Money market auction preferred stocks 5,000 114,999
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Total short-term investments $220,004 $383,349
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On November 15, 1995, the FASB staff issued a Special Report, "A Guide to
Implementation of Statement 115 on Accounting for Certain Investments in Debt
Source: ADVANCED MICRO DEVIC, 10-K, March 20, 1997