Crucial 2011 Annual Report Download - page 43

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOLSURES ABOUT MARKET RISK
Interest Rate Risk
As of September 1, 2011 , $ 1,950 million of our $ 2,001 million
of debt was at fixed interest rates. As a result, the fair value fluctuates based
on changes in market interest rates. The estimated fair value of our debt was $ 2,281 million as of September 1, 2011 and $ 2,565 million as of
September 2, 2010 . We estimate that, as of September 1, 2011 , a 1% decrease in market interest rates would change the fair value of our fixed-
rate debt instruments by approximately $ 59 million . As of September 1, 2011 , $ 51 million of the debt had variable interest rates and a 1%
increase in the rates would increase annual interest expense by approximately $ 1 million .
Foreign Currency Exchange Rate Risk
The information in this section should be read in conjunction with the information related to changes in the exchange rates of foreign currency
in "Item 1A. Risk Factors." Changes in foreign currency exchange rates could materially adversely affect our results of operations or financial
condition.
The functional currency for substantially all of our operations is the U.S. dollar. We held cash and other assets in foreign currencies valued at
an aggregate of U.S. $ 512 million as of September 1, 2011 and U.S. $ 504 million as of September 2, 2010 . We also had foreign currency
liabilities valued at an aggregate of U.S. $ 944 million as of September 1, 2011 , and U.S. $ 901 million as of September 2, 2010 . Because the
substantial majority of our sales are denominated in U.S. dollar, we do not have significant natural hedges to offset our expenditures denominated
in other currencies. Significant components of assets and liabilities denominated in currencies other than the U.S. dollar (our reporting currency)
were as follows (in U.S. dollar equivalents):
We estimate that, based on the assets and liabilities denominated in currencies other than the U.S. dollar as of September 1, 2011 , a 1%
change in the exchange rate versus the U.S. dollar, resulting in currency gains or losses of approximately U.S. $ 2 million for the euro and $ 1
million for the yen and Singapore dollar . During 2010, we began using derivative instruments to hedge our foreign currency exchange rate
risk. (See "Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Derivative Financial
Instruments" note.)
42
2011 2010
Singapore
Dollars Yen Euro Other
Singapore
Dollars Yen Euro Other
(amounts in millions)
Cash and cash
equivalents
$
22
$
4
$
33
$
21
$
27
$
27
$
53
$
19
Receivables
92
25
72
18
52
15
77
23
Deferred tax assets —
39
7
1
—
115
6
1
Other assets
12
16
88
62
9
13
66
1
Accounts payable and
accrued expenses
(124
)
(194
)
(240
)
(44
)
(158
)
(186
)
(168
)
(45
)
Debt
(81
)
— (
3
)
(3
)
(78
)
(9
)
(61
)
—
Other liabilities
(15
)
(8
)
(128
)
(104
)
(14
)
(75
)
(100
)
(7
)
Net assets (liabilities)
$
(94
)
$
(118
)
$
(171
)
$
(49
)
$
(162
)
$
(100
)
$
(127
)
$
(8
)