Seagate 2015 Annual Report Download - page 64

TableofContents
FiscalYearsEnded
ForeignCurrencyExchangeRisk.Wemayenterintoforeigncurrencyforwardexchangecontractstomanageexposurerelatedtocertainforeigncurrency
commitmentsandanticipatedforeigncurrencydenominatedexpenditures.Ourpolicyprohibitsusfromenteringintoderivativefinancialinstrumentsfor
speculativeortradingpurposes.
Wealsohedgeaportionofourforeigncurrencydenominatedbalancesheetpositionswithforeigncurrencyforwardexchangecontractstoreducetheriskthat
ourearningswillbeadverselyaffectedbychangesincurrencyexchangerates.Thechangesinfairvalueofthesehedgesarerecognizedinearningsinthesame
periodasthegainsandlossesfromtheremeasurementoftheassetsandliabilities.Theseforeigncurrencyforwardexchangecontractsarenotdesignatedas
hedginginstrumentsunderASC815,DerivativesandHedging.Alltheseforeigncurrencyforwardcontractsmaturewithin12months.
WeevaluatehedgingeffectivenessprospectivelyandretrospectivelyandrecordanyineffectiveportionofthehedginginstrumentsinCostofrevenueonthe
ConsolidatedStatementsofOperations.Wedidnothaveanymaterialnetgains(losses)recognizedinCostofrevenueforcashflowhedgesduetohedge
ineffectivenessordiscontinuedcashflowhedgesduringthefiscalyears2016and2015.
ThetablebelowprovidesinformationasofJuly1,2016aboutour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.
OtherMarketRisks.Wehaveexposuretocounterpartycreditdowngradesintheformofcreditriskrelatedtoourforeigncurrencyforwardexchange
contractsandourfixedincomeportfolio.Wemonitorandlimitourcreditexposureforourforeigncurrencyforwardexchangecontractsbyperformingongoing
creditevaluations.Wealsomanagethenotionalamountofcontractsenteredintowithanyonecounterparty,andwemaintainlimitsonmaximumtenorofcontracts
basedonthecreditratingofthefinancialinstitution.Additionally,theinvestmentportfolioisdiversifiedandstructuredtominimizecredit
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(Dollarsinmillions,exceptpercentages)  2017 2018 2019 2020 2021 Thereafter Total 
FairValue
at
July1,2016 
Assets                 
Cashequivalents:                 
Fixedrate  $ 762 $ — $ — $ — $ — $ — $ 762 $ 762
Averageinterestrate   0.35%            0.35%  
Short-terminvestments:                 
Fixedrate  $ 5 $ — $ — $ — $ 1 $ — $ 6 $ 6
Averageinterestrate   10.69%        3.08%    9.36%  
Totalfixedincome  $ 767 $ — $ — $ — $ 1 $ — $ 768 $ 768
Averageinterestrate   0.42%        3.08%  0.45%  0.42%  
Debt                 
Fixedrate  $ — $ — $ 800 $ — $ — $ 3,333 $ 4,133 $ 3,491
Averageinterestrate       3.75%      5.03%  4.78%  
(Dollarsinmillions,exceptaveragecontractrate) 
Notional
Amount 
Average
ContractRate 
Estimated
Fair
Value(1) 
Foreigncurrencyforwardexchangecontracts:       
BritishPoundSterling  $ 57  1.42 $ (3)
Total  $ 57   $ (3)
(1) Equivalenttotheunrealizednetgain(loss)onexistingcontracts.