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58
At December 31, 2011, we had outstanding foreign exchange contracts totaling $524 million, compared to
$1.5 billion outstanding (of which $520 million related to discontinued operations) at December 31, 2010.
Management believes that these financial instruments should not subject us to undue risk due to foreign exchange
movements because gains and losses on these 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 our 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, 2011 and the corresponding positions as of December 31, 2010:
Notional Amount
Net Buy (Sell) by Currency December 31,
2011
December 31,
2010
Chinese Renminbi $(283) $(423)
British Pound 55 187
Japanese Yen 46 40
Malaysian Ringgit 37 64
Brazilian Real (34) (43)
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 our 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 $50 million. Our 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, 2011, the maximum term of derivative instruments that hedge forecasted transactions was
12 months. The weighted average duration of our derivative instruments that hedge forecasted transactions was five
months.
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