Motorola 2010 Annual Report Download - page 75

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67
contracts should generally offset losses and gains on the underlying assets, liabilities and transactions, except for the
ineffective portion of the instruments, which are charged to Other within Other income (expense) in the Company’s
consolidated statements of operations.
The following table shows the five largest net notional amounts of the positions to buy or sell foreign currency
as of December 31, 2010 and the corresponding positions as of December 31, 2009:
Notional Amount
Net Buy (Sell) by Currency
December 31,
2010
December 31,
2009
Brazilian Real $(429) $(342)
Chinese Renminbi (409) (297)
Euro (249) (377)
Malaysian Ringgit 64 16
British Pound 185 143
Foreign exchange financial instruments that are subject to the effects of currency fluctuations, which may affect
reported earnings, include derivative financial instruments and other monetary assets and liabilities denominated in
a currency other than the functional currency of the legal entity holding the instrument. Derivative financial
instruments consist primarily of forward contracts and currency options. Other monetary assets and liabilities
denominated in a currency other than the functional currency of the legal entity consist primarily of cash, cash
equivalents, Sigma Fund investments and short-term investments, as well as accounts payable and receivable.
Accounts payable and receivable are reflected at fair value in the financial statements. Assuming the amounts of the
outstanding foreign exchange contracts represent the Company’s underlying foreign exchange risk related to
monetary assets and liabilities, a hypothetical unfavorable 10% movement in the foreign exchange rates, from
current levels, would reduce the value of those monetary assets and liabilities by approximately $140 million. The
Company’s market risk calculation represents an estimate of reasonably possible net losses that would be recognized
assuming hypothetical 10% movements in future currency market pricing and is not necessarily indicative of actual
results, which may or may not occur. It does not represent the maximum possible loss or any expected loss that may
occur, since actual future gains and losses will differ from those estimated, based upon, among other things, actual
fluctuation in market rates, operating exposures, and the timing thereof. We believe, however, that any such loss
incurred would be offset by the effects of market rate movements on the respective underlying derivative financial
instruments transactions. The foreign exchange financial instruments are held for purposes other than trading.
At December 31, 2010, the maximum term of derivative instruments that hedge forecasted transactions was
12 months. The weighted average duration of the Company’s derivative instruments that hedge forecasted
transactions was six months.
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