AMD 2010 Annual Report Download - page 79

approximately $57 million of investments in ARS. See “Part II, Item 7—Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in this report for further information. The following table
presents the cost basis, fair value and related weighted-average interest rates by year of maturity for our
investment portfolio and debt obligations as of December 25, 2010:
2011 2012 2013 2014 2015 Thereafter Total
2010
Fair Value
(In millions, except for percentages)
Investment Portfolio
Cash equivalents:
Fixed rate amounts ............ $ 51 $— $— $— $— $— $ 51 $ 51
Weighted-average rate ..... 0.48% — — — — — 0.48%
Variable rate amounts ......... $ 405 $— $— $— $— $— $ 405 $ 405
Weighted-average rate ..... 0.21% — — — — — 0.21%
Marketable securities
Equity investments $ 8 $ — $— $— $— $— $ 8 $ 8
Fixed rate amounts ............ $1,118 $ — $— $— $— $— $1,118 $1,118
Weighted-average rate ..... 0.69% — — — — — 0.69%
Variable rate amounts ......... $ — $— $— $— $— $ 66 $ 66 $ 57
Weighted-average rate ..... — — — — — 1.84% 1.84%
Long-term investments:
Equity Investments $ 1 $ — $— $— $— $— $ 1 $ 1
Variable rate amounts ......... $ 29 $— $— $— $— $— $ 29 $ 29
Weighted-average rate ..... 0.20% — — — — — 0.20%
Total Investment Portfolio ........ $1,612 $ — $— $— $— $ 66 $1,678 $1,669
Debt Obligations
Fixed rate amounts ............ $ — $485 $— $— $723 $954 $2,162 $2,326
Weighted-average rate ..... — 5.75% — — 8% 8.82% 7.86% 7.3%
Foreign Exchange Risk. As a result of our foreign operations, we incur costs and we carry assets and
liabilities that are denominated in foreign currencies, primarily the Canadian dollar, while sales of products are
primarily denominated in U.S. dollars. Prior to the deconsolidation of GF in 2009, we also incurred cost and
carried assets and liabilities that were denominated primarily in the euro.
We maintain a foreign currency hedging strategy, which uses derivative financial instruments to mitigate the
risks associated with changes in foreign currency exchange rates. This strategy takes into consideration all of our
exposures. We do not use derivative financial instruments for trading or speculative purposes.
In applying our strategy in 2010, we used foreign currency forward contracts to hedge certain forecasted
expenses denominated in foreign currencies, primarily the euro and Canadian dollar. We designated these
contracts as cash flow hedges of forecasted expenses, to the extent eligible under the accounting rules (refer to
the discussion below related to euro currency forward contracts), and evaluate hedge effectiveness prospectively
and retrospectively. As such, the effective portion of the gain or loss on these contracts is reported as a
component of accumulated other comprehensive income (loss) and reclassified to earnings in the same line item
as the associated forecasted transaction and in the same period during which the hedged transaction affects
earnings. Any ineffective portion is immediately recorded in earnings.
Upon deconsolidation of GF in the first quarter of 2010, our outstanding euro currency forward contracts no
longer qualified for cash flow hedge accounting treatment because we no longer had direct exposure to the euro
denominated forecasted spending incurred by GF that those contracts were intended to hedge. However,
subsequent to the deconsolidation of GF, GF invoiced us in U.S. dollars under the Wafer Supply Agreement and
these invoices reflected fluctuations in the euro because some of GF’s wafer costs are based on euro denominated
costs. Therefore, our operating results and cash flows in 2010 were indirectly exposed to fluctuations in the euro
even after deconsolidation. We may continue to economically hedge any material indirect euro exposure by
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