AMD 2009 Annual Report Download - page 109

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The Company recorded income of $10 million during 2009 and a loss of $11 million during 2008 recorded
in other income (expense), to reflect the change in fair value of ARS that are classified as trading securities. The
Company also recorded a loss of $9 million in other income (expense) during 2009 and a gain of $11 million in
other income (expense) during 2008 to reflect the changes in fair value of the UBS put option. The Company
expects that while it holds both ARS purchased from UBS and the related put option, any changes in fair value of
the ARS will be substantially offset by changes in the fair value of the put option. As of December 26, 2009, the
Company classified its investments in ARS purchased from UBS as current assets as it has the right to exercise
its put option and receive the proceeds from these ARS within the next 12 months.
The Company classified its remaining ARS as available-for-sale securities and as of December 26, 2009 the
Company has recorded an unrealized gain of $8 million in other comprehensive income (loss), a component of
the Company’s stockholders’ equity. These ARS had a fair value of $92 million at December 26, 2009. As of
December 26, 2009, the Company classified its municipal and corporate ARS holdings as current assets as there
have been significant redemptions related to the municipal and corporate ARS holdings since the failures began.
These ARS had a fair value of $34 million at December 26, 2009. As of December 26, 2009, the Company
classified its student loan ARS holdings as non-current assets as there have been limited redemptions since the
failures began. These ARS had a fair value of $58 million at December 26, 2009.
With respect to the Company’s ARS holdings purchased from UBS, which has a par value of $69 million
and an estimated fair value of $67 million as of December 26, 2009, prior to June 30, 2010, UBS, at its sole
discretion, may sell, or otherwise dispose of, and/or enter orders in the auctions process with respect to these
securities on the Company’s behalf so long as the Company receives par value for the ARS sold. UBS has also
agreed to use its best efforts to facilitate issuer redemptions and/or to resolve the liquidity concerns of holders of
their ARS through restructurings and other means.
As of December 26, 2009 the par value of all the Company’s ARS holdings was $165 million with an
estimated fair value of $159 million.
The roll-forward of the financial assets measured at fair value on a recurring basis using significant
unobservable inputs (Level 3) is as follows:
Year Ended
December 26, 2009
Year Ended
December 27, 2008
Auction
Rate Securities
UBS
Put Option
Auction
Rate Securities
UBS
Put Option
(In millions)
Beginning balance .............................. $160 $ 11 $— $—
Transfers of ARS into Level 3 ..................... — — 210 —
Redemption at par .............................. (19) — (26) —
Change in fair value included in net income (loss) ..... 10 (9) (24) 11
Change in fair value included in other comprehensive
income (loss) ................................ 8 — — —
Ending balance ................................. $159 $ 2 $160 $ 11
Fair Value of Other Financial Instruments. The fair value of the Company’s long-term debt, except for the
convertible notes issued by GF, is estimated based on the quoted market prices for the same or similar issues or
on the current rates offered to the Company for debt of the same remaining maturities. The fair value of the
convertible notes issued by GF is estimated based on a valuation model that incorporates relevant market inputs.
The carrying amounts and estimated fair values of the Company’s debt instruments are as follows:
December 26, 2009 December 27, 2008
Carrying
amount
Estimated
Fair Value
Carrying
amount
Estimated
Fair Value
(In millions)
Long-term debt (excluding capital leases) .................... $4,303 $4,046 $4,551 $2,071
101