Tesla 2016 Annual Report Download - page 45
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Please find page 45 of the 2016 Tesla annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.InNovember2015,weimplementedaprogramtohedgetheforeigncurrencyexposureriskrelatedtocertainforecastedinventorypurchasesdenominatedin
Japaneseyen.Thederivativeinstrumentsweuseareforeigncurrencyforwardcontractsandaredesignatedascashflowhedgeswithmaturitydatesof12monthsor
less.Wedonotenterintoderivativecontractsfortradingorspeculativepurposes.Wedocumenteachhedgerelationshipandassessitsinitialeffectivenessatthe
inceptionofthehedgecontractandwemeasureitsongoingeffectivenessonaquarterlybasisusingregressionanalysis.Duringthetermofaneffectivehedge
contract,werecordgainsandlosseswithinaccumulatedothercomprehensiveloss.Wereclassifythesegainsorlossestocostsofautomotivesalesintheperiodthe
relatedfinishedgoodsinventoryissoldoroverthedepreciationperiodforthosesalesaccountedforasleases.Althoughourcontractsareconsideredeffective
hedges,wemayexperiencesmallamountsofineffectivenessduetotimingdifferencesbetweenouractualinventorypurchasesandthesettlementdateofthe
relatedforeigncurrencyforwardcontracts.Wehaverecordedzeroamountofineffectivenesswithinotherincome(expense),netinourConsolidatedStatementsof
Operations,asofDecember31,2015.AsofDecember31,2015wehadrecordedagainof$7.3milliontoAOCIrelatedtoourforeigncurrencycashflowhedges.
IftheU.S.dollarhadstrengthenedby10%asofDecember31,2015,theamountrecordedinaccumulatedAOCIrelatedtoourforeignexchangecontractsbefore
taxeffectwouldhavebeenalossofapproximately$21.1million.
Interest Rate Risk
Wehadcashandcashequivalentstotaling$1.20billionasofDecember31,2015.Asignificantportionofourcashandcashequivalentswereinvestedin
moneymarketfunds.Cashandcashequivalentsareheldforworkingcapitalpurposes.Wedonotenterintoinvestmentsfortradingorspeculativepurposes.We
believethatwedonothaveanymaterialexposuretochangesinthefairvalueasaresultofchangesininterestratesduetotheshorttermnatureofourcash
equivalents.
AsofDecember31,2015,wehad$2.96billionaggregateprincipalamountofconvertibleseniornotesoutstanding,whicharefixedrateinstruments.
Therefore,ourresultsofoperationsarenotsubjecttofluctuationsininterestrates.However,thefairvalueofourdebtwillfluctuatewithmovementsofinterest
rates,increasinginperiodsofdecliningratesofinterestanddeclininginperiodsofincreasingratesofinterest.BaseduponquotedmarketpricesandLevel2inputs,
thefairvalueofourtotaldebtwas$3.4billionasofDecember31,2015.
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