Seagate 2009 Annual Report Download - page 102

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Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
the TRS required the Company to pledge initial collateral of $18 million to the counterparty for the term of the contract. Additional collateral
may be posted contingent on the counterparty's exposure to the market value of the TRS. The cash pledged is recorded as restricted cash. The
Company did not designate the TRS as a hedge. Rather, the Company records all changes in the fair value of the TRS to earnings to offset the
market value changes of the SDCP liabilities.
The following table shows the Company's derivative instruments measured at gross fair value as reflected in the Consolidated Balance
Sheet as of July 2, 2010:
Fair Values of Derivative Instruments
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 2, 2010:
Asset Derivatives Liability Derivatives
(Dollars in millions)
Balance
Sheet
Location
Fair
Value
Balance
Sheet
Location
Fair
Value
Derivatives designated as hedging
instruments under ASC 815:
Foreign currency forward
exchange contracts
Other current assets
$
5
Accrued expenses
$
—
Derivatives not designated as
hedging instruments under
ASC 815:
Foreign currency forward
exchange contracts
Other current assets
$
2
Accrued expenses
$
—
Total return swap
Other current assets
—
Accrued expenses
(1
)
Total derivatives
$
7
$
(1
)
(Dollars in millions)
Derivatives Designated as Cash Flow
Hedges under ASC 815
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
$
14
Cost of
revenue
$
10
Cost of
$
1
Derivatives Not Designated as Hedging Instruments under
Statement ASC 815
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
$
14
Total return swap
Operating expenses
9
$
23
(a) 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 2, 2010, respectively.