AMD 2001 Annual Report Download - page 215

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Foreign Exchange Risk. We use foreign currency forward and option contracts to
reduce our exposure to currency fluctuations on our foreign currency exposures
in our foreign sales subsidiaries, on liabilities for products purchased from
FASL and AMD Saxony, and for foreign currency denominated fixed asset purchase
commitments. The objective of these contracts is to minimize the impact of
foreign currency exchange rate movements on our operating results and on the
cost of capital asset acquisition. Our accounting policy for these instruments
is based on our designation of such instruments as hedges of underlying exposure
to variability in cash flows. We do not use derivative financial instruments for
speculative or trading purposes.
We had an aggregate of $507 million (notional amount) of short-term foreign
currency forward contracts and option contracts denominated in Japanese yen,
European Union euro and Singapore dollar outstanding as of December 30, 2001.
Gains and losses related to the foreign currency forward and option contracts
for the year ended December 30, 2001 were not material. We do not anticipate any
material adverse effect on our consolidated financial position, results of
operations or cash flows resulting from the use of these instruments in the
future. We cannot give any assurance that these strategies will be effective or
that transaction losses can be minimized or forecasted accurately.
The table below provides information about our foreign currency forward and
option contracts as of December 30, 2001 and December 31, 2000. All of our
foreign currency forward contracts and option contracts mature within the next
12 months.
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2001 2000
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(Thousands except contract rates)
Notional Average Estimated Notional Average Estimated
amount contract rate fair value Amount contract rate fair value
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Foreign currency forward contracts:
Japanese yen $105,895 122.76 $ (4,066) $ 54,915 110.22 $ (781)
British pound - - - 5,103 1.45 (16)
European Union euro 195,907 0.89 1,778 134,867 0.88 (1,602)
Singapore dollar 19,854 1.81 171 5,573 1.70 7
Thai baht - - - 6,712 39.52 (619)
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Foreign currency option
contracts:
Japanese yen 86,400 125.00 (1,375) - - -
European Union euro 99,076 0.92 93 - - -
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$507,132 $ (3,399) $207,170 $(3,011)
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Source: ADVANCED MICRO DEVIC, 10-K, March 07, 2002