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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
7. Derivative Financial Instruments (Continued)
The following tables show the effect of the Company's derivative instruments on Other comprehensive income (loss) (OCI) and the
Consolidated Statement of Operations for the fiscal year ended July 3, 2009:
(a)
(Dollars in millions)
Derivatives Designated as Cash Flow
Hedges under FAS133
Amount of
Gain or
(Loss)
Recognized
in OCI on
Derivative
(Effective
Portion)
Location of Gain
or (Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion)
Amount of
Gain or (Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion)
Location of Gain
or (Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion and
Amount Excluded
from
Effectiveness
Testing)
Amount of Gain
or (Loss)
Recognized in
Income
(Ineffective
Portion and
Amount
Excluded from
Effectiveness
Testing)
(a)
Foreign currency forward exchange contracts
$
(24
)
Cost of revenue
$
(36
)
Cost of revenue
$
(1
)
Derivatives Not Designated as Hedging Instruments under
Statement 133
Location of Gain or
(Loss) Recognized in
Income on Derivative
Amount of Gain or
(Loss) Recognized in
Income on Derivative
Foreign currency forward exchange contracts
Other, net
$
(18
)
Total return swap
Operating expenses
$
(1
)
$
(19
)
The amount of gain or (loss) recognized in income represents $0 related to the ineffective portion of the hedging relationships and $(1) million related to the amount excluded from
the assessment of hedge effectiveness, for the fiscal year ended July 3, 2009, respectively.
As of June 27, 2008, the notional value of the Company's outstanding foreign currency forward exchange contracts was approximately
$25 million in British pounds, $27 million in Euros, $115 million in Singapore dollars, $510 million in Thai baht, $20 million in Chinese yuan,
$2 million in Malaysian ringgit, $15 million in Japanese yen, and $15 million in Czech koruna. The fair value of the Company's outstanding
foreign currency forward exchange contracts at June 27, 2008 was a liability of $24 million. Net foreign currency transaction losses included in
the determination of consolidated net income were $1 million and $3 million for fiscal years 2008 and 2007, respectively.
8. Fair Value
On June 28, 2008, the Company adopted the provisions of SFAS No. 157 for all financial assets and financial liabilities. SFAS No. 157
defines fair value, establishes a framework for measuring fair value, and enhances disclosures about fair value measurements. SFAS No. 157
does not require any new fair value measurements, but applies to other accounting pronouncements that require or permit fair value
measurements. The adoption of SFAS No. 157 did not have a material impact on the Company's consolidated financial statements.
In February 2008, the FASB issued FASB Staff Position (FSP) 157-2, Effective Date of FASB Statement No. 157 , which delays the
effective date of SFAS No.157 for all non-financial assets and non-
financial liabilities, except for items recognized or disclosed at fair value on a
recurring basis. Accordingly, the Company will not apply the provisions of SFAS No. 157 to non-financial assets and non-financial liabilities
until the first quarter of fiscal year 2010.
107