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FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Tables)

12 Months Ended

Dec. 31, 2012

Notional Amounts of Outstanding Derivative Instruments

As at December 31, 2012, the Company had the following outstanding derivative instruments that were entered into to hedge Euro-denominated, Swedish-krona and Singapore dollar-denominated forecasted transactions:


In millions of Euros	Notional amount for hedge on forecasted R&D and other operating expenses	Notional amount for hedge on forecasted manufacturing costs
Forward contracts	191	263
Currency options	179	338

In millions of Swedish-krona	Notional amount for hedge on forecasted R&D and other operating expenses	Notional amount for hedge on forecasted manufacturing costs
Forward contracts	821	—

In millions of Singapore dollars	Notional amount for hedge on forecasted R&D and other operating expenses	Notional amount for hedge on forecasted manufacturing costs
Forward contracts	—	178

Fair Value of Derivative Instruments

Information on fair value of derivative instruments and their location in the consolidated balance sheets as at December 31, 2012 and December 31, 2011 is presented in the table below:

In millions of U.S. dollars

As at December 31, 2012

As at December 31, 2011

Asset Derivatives

Balance sheet

location

Fair value

Balance sheet

location

Fair value

Derivatives designated as a hedge:

Foreign exchange forward contracts

Other receivables and assets

—

Currency collars

Other receivables and assets

Total derivatives designated as a hedge

Derivatives not designated as a hedge:

Foreign exchange forward contracts

Other receivables and assets

Total derivatives not designated as a hedge:

Total Derivatives


In millions of U.S. dollars	As at December 31, 2012				As at December 31, 2011
Liability Derivatives	Balance sheet location	Fair value			Balance sheet location	Fair value
Derivatives designated as a hedge:
Foreign exchange forward contracts	Other payables and accrued liabilities		—		Other payables and accrued liabilities		(39	)
Currency collars	Other payables and accrued liabilities		—		Other payables and accrued liabilities		(29	)

Total derivatives designated as a hedge			—				(68	)

Derivatives not designated as a hedge:
Foreign exchange forward contracts	Other payables and accrued liabilities		(1	)	Other payables and accrued liabilities		(7	)

Total derivatives not designated as a hedge:			(1	)			(7	)

Total Derivatives			(1	)			(75	)

Effect on Consolidated Statements of Income of Derivative Instruments

The effect on the consolidated statements of income for the year ended December 31, 2012 and December 31, 2011 and on the “Accumulated Other comprehensive income (loss)” (“AOCI”) as reported in the statements of equity as at December 31, 2012 and December 31, 2011 of derivative instruments designated as cash flow hedge is presented in the table below:


In millions of U.S. dollars	Gain (loss) deferred in OCI on derivative					Location of gain (loss) reclassified from OCI into earnings	Gain (loss) reclassified from OCI into earnings
	December 31, 2012		December 31, 2011				December 31, 2012			December 31, 2011
Foreign exchange forward contracts		11		(16	)	Cost of sales		(25	)		67
Foreign exchange forward contracts		1		(2	)	Selling, general and administrative		(2	)		8
Foreign exchange forward contracts		9		(20	)	Research and development		(18	)		45
Currency options		—		(2	)	Cost of sales		(1	)		(3	)
Currency options		—		(1	)	Research and development		(1	)		(1	)
Currency collars		5		(19	)	Cost of sales		(13	)		1
Currency collars		1		(3	)	Selling, general and administrative		(3	)		—
Currency collars		2		(8	)	Research and development		(8	)		—
Contingent zero-cost collars		—		—		Gain (loss) on financial instruments, net		—			6
Total		29		(71	)			(71	)		123

Derivative Instruments Designated as Cash Flow Hedge

The effect on the consolidated statements of income for the year ended December 31, 2012 and December 31, 2011 of derivative instruments not designated as a hedge is presented in the table below:


In millions of U.S. dollars	Location of gain recognized in earnings	Gain recognized in earnings
		December 31, 2012		December 31, 2011
Foreign exchange forward contracts	Other income and expenses, net		20		31
Total			20		31

Derivative Instruments Not Designated as Hedge

The table below details financial assets (liabilities) measured at fair value on a recurring basis as at December 31, 2012:


			Fair Value Measurements using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Description	December 31, 2012
In millions of U.S. dollars
Debt securities issued by the U.S. Treasury		150		150		—		—
Euro-denominated Senior debt Floating Rate Notes issued by financial institutions		59		59		—		—
U.S.-denominated Senior debt Floating Rate Notes issued by financial institutions		29		29		—		—
Equity securities classified as available-for-sale		10		10		—		—
Equity securities classified as held-for-trading		8		8		—		—
Derivative instruments designated as cash flow hedge		29		—		29		—
Derivative instruments not designated as a hedge		6		—		6		—
Total		291		256		35		—

The table below details financial assets (liabilities) measured at fair value on a recurring basis as at December 31, 2011:


			Fair Value Measurements using
			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Description	December 31, 2011
In millions of U.S. dollars
Debt securities issued by the U.S. Treasury	100			100		—			—
Debt securities issued by foreign governments	81			81		—			—
Euro-denominated Senior debt Floating Rate Notes issued by Lehman Brothers	5			—		5			—
Euro-denominated Senior debt Floating Rate Notes issued by other financial institutions	93			93		—			—
Euro-denominated Fixed rate debt securities issued by financial institutions	27			27		—			—
U.S.-denominated Senior debt Floating Rate Notes issued by other financial institutions	107			107		—			—
Equity securities classified as available-for-sale	9			9		—			—
Equity securities held-for-trading	7			7		—			—
Derivative instruments designated as cash flow hedge	(67	)		—		(67	)		—
Derivative instruments not designated as a hedge	(6	)		—		(6	)		—
Total	356			424		(68	)		—

Financial Assets (Liabilities) Measured at Fair Value on Recurring Basis

For assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3), the reconciliation between January 1, 2011 and December 31, 2011 is presented as follows:


In millions of U.S. dollars	Fair Value Measurements using Significant Unobservable Inputs (Level 3)
January 1, 2011		82
Other-than-temporary impairment charge on Senior debt Floating Rate Notes issued by Lehman Brothers included in earnings on the line “Other-than temporary impairment charge on financial assets”		(5	)
Transfer of Senior debt Floating Rate Notes issued by Lehman Brothers to Level 2 fair value hierarchy		(5	)
Settlement on Auction Rate Securities		(72	)

December 31, 2011		—

Amount of total losses for the period included in earnings attributable to assets still held at the reporting date		(5	)

Financial and Non Financial Assets (Liabilities) Measured at Fair Value on Nonrecurring Basis

The table below details financial and nonfinancial assets (liabilities) measured at fair value on a non recurring basis as at December 31, 2011:

Fair Value Measurements using

Quoted Prices in
Active Markets for
Identical Assets
(Level 1)

Significant Other
Observable
Inputs

(Level 2)

Significant
Unobservable
Inputs

(Level 3)

Description

December 31,
2011

In millions of U.S. dollars

Assets held for sale

—

Fair Value Information on Other Financial Assets and Liabilities Recorded at Amortized Cost

The following table includes additional fair value information on financial assets and liabilities as at December 31, 2012 and 2011:


			2012				2011
Description	Level		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
In millions of U.S. dollars
Cash and cash equivalents		1		2,250		2,250		1,912		1,912
Long-term debt				1,301		1,301		1,159		1,155
– Bank loans (including current portion)		2		839		839		485		485
– Senior Bonds		2		462		462		453		452
– Convertible debt		2		—		—		221		218

Details of Securities that Currently are in Unrealized Loss Position

The table below details securities that currently are in an unrealized loss position. The securities are segregated by investment type and the length of time that the individual securities have been in a continuous unrealized loss position as of December 31, 2012.


	December 31, 2012
	Less than 12 months				More than 12 months					Total
Description	Fair Values		Unrealized Losses		Fair Values		Unrealized Losses			Fair Values		Unrealized Losses
Senior debt floating rate notes		—		—		88		(1	)		88		(1	)

Total		—		—		88		(1	)		88		(1	)


	December 31, 2011
	Less than 12 months				More than 12 months					Total
Description	Fair Values		Unrealized Losses		Fair Values		Unrealized Losses			Fair Values		Unrealized Losses
Senior debt floating rate notes		79		—		147		(6	)		226		(6	)

Total		79		—		147		(6	)		226		(6	)

- Definition

Tabular disclosure of assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a nonrecurring basis in periods after initial recognition (for example, impaired assets). Disclosures may include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3).

+ References+ Details

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

-Subparagraph a

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

-Paragraph 18

-Subparagraph c(2), d, e, f

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 15

-Subparagraph b-d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-Subparagraph a, b, c(1), d(1)

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 10

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

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+ Details

- Definition

Tabular disclosure of the location and amount of gains and losses reported in the statement of financial performance, or when applicable, the statement of financial position. For example, (a) gains and losses recognized in the income statement on derivative instruments designated and qualifying as hedging instruments in fair value hedges and related hedged items designated and qualifying in fair value hedges and (b) gains and losses initially recognized in other comprehensive income on derivative instruments designated and qualifying as cash flow hedges.

+ References+ Details

- Definition

Tabular disclosure of gains and losses on derivative instruments included in an entity's trading activities.

+ References+ Details

- Definition

Tabular disclosure of the location and fair value amounts of derivative instruments (and nonderivative instruments that are designated and qualify as hedging instruments) reported in the statement of financial position.

+ References+ Details