Seagate 2005 Annual Report Download - page 58

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Table of Contents
forward contracts. These forward foreign exchange contracts, carried at fair value, may have maturities between one and twelve months. The
maximum original duration of forward foreign exchange contracts is twelve months.
We evaluate hedging effectiveness prospectively and retrospectively and record any ineffective portion of the hedging instruments in
other income (expense) on the statement of operations. We did not have any net gains (losses) recognized in other income (expense) for cash
flow hedges due to hedge ineffectiveness in fiscal years 2006, 2005 and 2004.
As of June 30, 2006, our notional amount of foreign exchange forward contracts totaled $59 million. We do not believe that these
derivatives present significant credit risks, because the counterparties to the derivatives consist of major financial institutions, and we manage
the notional amount of contracts entered into with any one counterparty. We maintain settlement and revaluation limits as well as maximum
tenure of contracts based on the credit rating of the financial institutions. We do not enter derivative financial instruments for speculative or
trading purposes. The table below provides information as of June 30, 2006 about our derivative financial instruments, comprised of foreign
currency forward exchange contracts. The table is provided in U.S. dollar equivalent amounts and presents the notional amounts (at the contract
exchange rates) and the weighted average contractual foreign currency exchange rates.
56
(In millions, except average contract rate)
Notional
Amount
Average
Contract
Rate
Estimated
Fair
Value
Foreign currency forward exchange contracts:
Thai baht
$
18
38.50
$
—
Singapore dollar
29
1.58
—
British pounds
12
1.81
—
$
59
$
—