AMD 1997 Annual Report Download - page 77

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ADVANCED MICRO DEVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
As of December 28, 1997, the Company did not own any securities classified
as trading.
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 included in the table
below. The estimates of fair value were obtained using prevailing financial
market information as of December 28, 1997. In certain instances where
judgment is required in estimating fair value, price quotes were obtained from
certain of the Company's counterparty financial institutions.
1997 1996
----------------------- ------------------------
NOTIONAL CARRYING FAIR NOTIONAL CARRYING FAIR
AMOUNT AMOUNT VALUE AMOUNT AMOUNT VALUE
-------- -------- ----- -------- -------- -----
(THOUSANDS)
Interest rate instruments:
Swaps.................... $ -- $-- $-- $40,000 $(1,011) $(437)
Foreign exchange
instruments:
Foreign currency option
contracts............... 150,000 893 369 -- -- --
Foreign exchange forward
contracts............... 48,500 53 309 25,340 138 121
Foreign Exchange Forward Contracts
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 1997 were denominated in lira, yen, French franc,
deutsche mark, pound sterling and Dutch guilder. The maturities of these
contracts are generally less than six months.
Foreign Currency Option Contracts
In 1997, the Company entered into foreign currency option contracts as a
hedge of firm commitments to make investments in, or subordinated loans to,
Dresden Fab 30. These contracts expire at various dates through 1999.
FAIR VALUE OF OTHER FINANCIAL INSTRUMENTS
The fair value of debt was estimated using discounted cash flow analysis
based on estimated interest rates for similar types of borrowing arrangements.
The carrying amounts and estimated fair values of the Company's other
financial instruments are as follows:
1997 1996
----------------- -----------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
(THOUSANDS)
Short-term debt:
Notes payable......................... $ 6,601 $ 6,601 $ 14,692 $ 14,692
Current portion of long-term debt..... 37,176 34,344 3,802 3,802
Long-term debt (excluding capital
leases)................................ 622,880 627,758 410,068 447,491
F-12
Source: ADVANCED MICRO DEVIC, 10-K405, March 03, 1998