AMD 2014 Annual Report Download - page 88

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The Company’s short-term and long-term debt are classified within Level 2. The fair value of the debt was
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 Company’s accounts receivable, accounts
payable and other short-term obligations approximate their carrying value based on existing payment terms.
Hedging Transactions and Derivative Financial Instruments
Cash Flow Hedges
The following table shows the amount of gain (loss) included in accumulated other comprehensive income
(loss), the amount of gain (loss) reclassified from accumulated other comprehensive income (loss) and included
in earnings related to the foreign currency forward contracts designated as cash flow hedges and the amount of
gain (loss) included in other income (expense), net, related to contracts not designated as hedging instruments,
which was allocated in the consolidated statements of operations:
2014 2013
(In millions)
Foreign Currency Forward Contracts
Contracts designated as cash flow hedging instruments ..................
Other comprehensive income (loss) .............................. $(3) $(3)
Research and development ..................................... (3) (2)
Marketing, general and administrative ............................ (3) (1)
Contracts not designated as hedging instruments
Other income (expense), net .................................... $(3) $(2)
The Company’s foreign currency derivative contracts are classified within Level 2 because the valuation
inputs are based on quoted prices and market observable data of similar instruments in active markets, such as
currency spot and forward rates.
The following table shows the fair value amounts included in prepaid expenses and other current assets
should the foreign currency forward contracts be in a gain position or included in accrued and other current
liabilities should these contracts be in a loss position. These amounts were recorded in the Company’s
consolidated balance sheets as follows:
December 27,
2014
December 28,
2013
(In millions)
Foreign Currency Forward Contracts
Contracts designated as cash flow hedging instruments ...... $(6) $(3)
Contracts not designated as hedging instruments ........... $(1) $(1)
For the foreign currency contracts designated as cash flow hedges, the ineffective portions of the hedging
relationship and the amounts excluded from the assessment of hedge effectiveness were immaterial.
As of December 27, 2014 and December 28, 2013, the notional values of the Company’s outstanding
foreign currency forward contracts were $298 million and $124 million, respectively. All the contracts mature
within 12 months, and, upon maturity, the amounts recorded in accumulated other comprehensive income (loss)
are expected to be reclassified into earnings. The Company hedges its exposure to the variability in future cash
flows for forecasted transactions over a maximum of 12 months. As of December 27, 2014, the Company’s
outstanding contracts were in a net loss position of $7 million.
Fair Value Hedges
In the third quarter of 2014, the Company entered into fixed-to-floating interest rate swaps on a notional
amount of $250 million to hedge a portion of the Company’s 6.75% Senior Notes due 2019 (6.75% Notes). The
purpose of these swaps is to manage a portion of the Company’s exposure to interest rate risk by converting fixed
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