AMD 1999 Annual Report Download - page 155

The Company realized a net gain on the sales of available-for-sale securities of
$4.3 million for 1999. The Company did not sell any available-for-sale
securities in 1998.
Financial Instruments With Off-balance-sheet Risk
As part of the Company's asset and liability management strategy, AMD uses
financial instruments with off-balance-sheet risk to manage financial market
risk, including interest rate and foreign exchange risk. The notional amounts,
carrying amounts and fair values of these instruments as of December 26, 1999
and December 27, 1998 are included in the table below:
Notional Carrying Fair
(Thousands) amount amount value
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1999
Foreign exchange instruments:
Foreign currency forward contracts $ 58,690 $ (102) $ (533)
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1998
Foreign exchange instruments:
Purchased foreign currency
call option contracts 75,000 289 45
Purchased foreign currency
put option contracts 220,000 -- 1,547
Written foreign currency
call option contracts 220,000 (3,416) (13,469)
Foreign currency forward contracts 13,112 (32) (25)
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The Company used prevailing financial market information and price quotes from
certain of its counterparty financial institutions as of the respective dates to
obtain the estimates of fair value.
Foreign Exchange Forward Contracts
The Company uses foreign exchange forward contracts to hedge the exposure to
currency fluctuations on its foreign currency exposures in its foreign sales
subsidiaries, liabilities for products purchased from FASL and fixed asset
purchase commitments. The hedging transactions in 1999 were denominated in
Italian lira, Japanese yen, French franc, German mark, British pound, Dutch
guilder, Thailand baht, Singapore dollar, Swiss franc and European Union euro.
The maturities of these contracts were generally less than twelve months.
Foreign Currency Option Contracts
In 1998, the Company entered into an intercompany no-cost collar arrangement to
hedge Dresden Fab 30 project costs denominated in U.S. dollars. The no-cost
collars included purchased put option contracts and written call option
contracts, the contract rates of which were structured so as to avoid payment of
any option premium at the time of purchase. In March 1999, the Company entered
into various option positions with several third party banks to neutralize the
exposure of the outstanding put and call option contracts. As a result, all the
options were offset and canceled. As of December 26, 1999, there were no
outstanding foreign currency option contracts.
In 1999, the $75 million foreign currency call option contracts remaining from
the $150 million call option contracts purchased in 1997 to hedge our
obligations to provide loans to or invest equity in, AMD Saxony also expired.
Fair Value of Other Financial Instruments
The fair value of debt was estimated using discounted cash flow analysis based
on estimated interest rates for similar types of borrowing arrangements.
The carrying amounts and estimated fair values of the Company's other
financial instruments are as follows:
1999 1998
Carrying Fair Carrying Fair
(Thousands) amount value amount value
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Short-term debt:
Notes payable -- -- $ 6,017 $ 6,017
Current portion of long-term debt (excluding capital leases) $ 5,127 $ 4,974 125,283 148,178
Long-term debt (excluding capital leases) 1,189,110 1,123,945 1,312,303 1,336,768
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Source: ADVANCED MICRO DEVIC, 10-K405, March 21, 2000