AMD 2014 Annual Report Download - page 87

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(3) The Company’s Level 2 short-term investments are valued using broker reports that utilize quoted market
prices for identical or comparable instruments. Brokers gather observable inputs for all of the Company’s
fixed income securities from a variety of industry data providers and other third-party sources. The
Company’s Level 2 long-term investments were valued using broker reports that utilize a third-party
professional pricing service that gathers information from multiple market sources and integrates relevant
credit information, observed market movements and sector news into their pricing evaluation. The Company
validated, on a sample basis, the derived prices provided by the brokers by comparing their assessment of
the fair values of the Level 2 long-term investments against the fair values of the portfolio balances of
another third-party professional’s pricing service, other than that utilized by the brokers, that use a similar
technique as the brokers to derive pricing as described above.
Available-for-sale securities held by the Company as of December 27, 2014 and December 28, 2013
consisted of money market funds, commercial paper, time deposits, corporate bonds and mutual funds. The
amortized cost of available-for-sale securities approximates the fair value for all periods presented.
In addition to those amounts presented above, at December 27, 2014 and December 28, 2013, the Company
had approximately $10 million and $18 million of available-for-sale investments in money market funds, used as
collateral for leased buildings and letters of credit deposits, which were included in Other Assets on the
Company’s consolidated balance sheets. These money market funds are classified within Level 1 because they
are valued using quoted prices for identical instruments in active markets. Their amortized costs are the same as
the fair value for all periods presented. The Company is restricted from accessing these deposits.
Also in addition to those amounts presented above, at December 27, 2014 and December 28, 2013, the
Company had approximately $16 million and $14 million of available-for-sale investments in mutual funds held
in a Rabbi trust established for the Company’s deferred compensation plan, which were included in Other Assets
on the Company’s consolidated balance sheets. These mutual funds are classified within Level 1 because they are
valued using quoted prices for identical instruments in active markets. Their amortized cost approximates the fair
value for all periods presented. The Company is restricted from accessing these investments.
There were no sales of available-for-sale securities during 2014. During 2013 the Company realized a loss
of $2 million on sales of available-for-sale securities of $28 million. The cost of securities sold is determined
based on the specific identification method.
During 2014, the Company reclassified $45 million of its marketable securities that were previously
classified as long-term to short-term as those were intended to be used for operations in the next twelve months.
At December 27, 2014, the Company had no investments that were classified as long-term marketable
securities. At December 28, 2013, $90 million of investments were classified as long-term marketable securities.
All contractual maturities of the Company’s available-for-sale marketable debt securities as of
December 27, 2014 were within one year. Actual maturities may differ from contractual maturities because
issuers may have the right to call or prepay obligations without call or prepayment penalties.
Financial Instruments Not Recorded at Fair Value on a Recurring Basis. The Company carries its
financial instruments at fair value with the exception of its debt. Financial instruments that are not recorded at
fair value are measured at fair value on a quarterly basis for disclosure purposes. The carrying amounts and
estimated fair values of financial instruments not recorded at fair value are as follows:
December 27, 2014 December 28, 2013
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
(In millions)
Short-term debt (excluding capital leases) .................... $ 172 $ 173 $ 55 $ 55
Long-term debt (excluding capital leases) .................... $ 2,025 $ 1,858 $ 1,986 $ 2,132
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