AMD 2010 Annual Report Download - page 132

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NOTE 20: Hedging Transactions and Derivative Financial Instruments
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 statement of operations as follows:
2010 2009
(In millions)
Foreign Currency Forward Contracts
Contracts designated as cash flow hedging instruments
Other comprehensive loss .................................... $— $ (2)
Cost of sales ............................................... — (17)
Research and development ................................... 3 (9)
Marketing, general and administrative .......................... 2 (4)
Contracts not designated as hedging instruments
Other expense, net .......................................... $(13) $(37)
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 liabilities should these
contracts be in a loss position. These amounts were recorded in the consolidated balance sheet as follows:
December 25,
2010
December 26,
2009
(In millions)
Foreign Currency Forward Contracts
Contracts designated as cash flow hedging instruments ...... $ 1 $ (6)
Contracts not designated as hedging instruments ........... $(4) $ —
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 25, 2010 and December 26, 2009, the notional value of the Company’s outstanding foreign
currency forward contracts was $302 million and $384 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. As of December 25, 2010, the Company’s outstanding contracts were in
a $3 million net loss position. The Company is required to post collateral should the derivative contracts be in a
net loss position exceeding certain thresholds. As of December 25, 2010, the Company was not required to post
any collateral.
NOTE 21: Subsequent Events
Cost method of accounting for investment in GLOBALFOUNDRIES
On December 27, 2010, pursuant to the Contribution Agreement, ATIC II, contributed all of the outstanding
Ordinary Shares of GFS to GF in exchange for 2,808,981 newly issued shares of GF Class A Preferred Shares. In
connection with this contribution, the Company amended and restated the Shareholders’ Agreement and the
Funding Agreement. The issuance of Class A Preferred Shares to ATIC International diluted the Company’s
ownership interest in GF from 23% to 14% on a fully diluted basis and from 34% to 18% on a voting basis.
Moreover, as a result of the contribution, the Company expects to realize a non-cash gain as a result of the
dilution of its equity interest in GF. The resulting gain will be reflected in the Company’s investment in GF
balance during the first quarter of 2011, and cannot be estimated at this time.
124