AMD 2009 Annual Report Download - page 82

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substantially all of our debt will be at a fixed interest rate. Consequently, our exposure to market risk for changes
in interest rates on reported interest expense and corresponding cash flows is limited.
We will continue to monitor our exposure to interest rate risk.
Default Risk. We mitigate default risk in our investment portfolio by investing in only the highest credit
quality securities and by constantly positioning our portfolio to respond appropriately to a significant reduction in
a credit rating of any investment issuer or guarantor. Our portfolio includes investments in debt and marketable
equity securities with active secondary or resale markets to ensure portfolio liquidity. We are averse to principal
loss and strive to preserve our invested funds by limiting default risk and market risk.
There was significant deterioration and instability in the financial markets during 2008. While financial
markets stabilized in 2009, the value and liquidity of the securities in which we invest could deteriorate rapidly
and the issuers of such securities could be subject to credit rating downgrades. We actively monitor market
conditions and developments specific to the securities and security classes in which we invest. We believe that
we take a conservative approach to investing our funds in that we invest only in highly-rated debt securities with
relatively short maturities and do not invest in securities we believe involve a higher degree of risk. As of
December 26, 2009, substantially all of our investments in debt securities were AAA rated by at least one of the
rating agencies. While we believe we take prudent measures to mitigate investment related risks, such risks
cannot be fully eliminated as there are circumstances outside of our control. We believe the current credit market
difficulties do not have a material impact on our financial position. However, a future degradation in credit
market conditions could have a material adverse effect on our financial position.
During 2008, the market conditions for ARS deteriorated due to the uncertainties in the credit markets. As a
result, we were not able to sell our ARS as scheduled in the auction market. As of December 26, 2009, we had
approximately $159 million investments in ARS. See “Part II, Item 7—Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in this report for further information. The following table
presents the cost basis, fair value and related weighted-average interest rates by year of maturity for our
investment portfolio and debt obligations, including GF, as of December 26, 2009:
Fiscal
2010
Fiscal
2011
Fiscal
2012
Fiscal
2013
Fiscal
2014 Thereafter Total
Fiscal 2009
Fair Value
(In millions except for percentages)
Investment Portfolio
Cash equivalents:
Fixed rate amounts ............... $ 379 $— $— $— $— $ — $ 379 $ 379
Weighted-average rate ........ 0.24% — — — — — 0.24%
Variable rate amounts ............ $1,081 $ — $ — $— $— $ — $1,081 $1,081
Weighted-average rate ........ 0.16% — — — — — 0.16%
Marketable securities
Fixed rate amounts ............... $ 888 $— $— $— $— $ — $ 888 $ 888
Weighted-average rate ........ 0.81% — — — — — 0.81%
Variable rate amounts ............ $ 106 $— $— $— $— $ — $ 106 $ 102
Weighted-average rate ........ 2.02% — — — — — 2.02%
Long-term investments:
Fixed rate amounts ............... $ 1 $— $— $— $— $ — $ 1 $ 1
Weighted-average rate ........ 0.56% — — — — — 0.56%
Variable rate amounts ............ $ 44 $— $— $— $— $ 59 $ 103 $ 102
Weighted-average rate ........ 0.27% — — — — 1.90% 1.19%
Total Investment Portfolio ......... $2,499 $ — $ — $— $— $ 59 $2,558 $2,553
Debt Obligations
Fixed rate amounts ............... $ — $— $485 $— $— $3,358 $3,843 $3,586
Weighted-average rate ........ — — 5.75% — — 8.87% 8.48%
Variable rate amounts ............ $ 461 $170 $— $— $— $ — $ 631 $ 631
Weighted-average rate ........ 2.00% 2.74% — — — — 2.20%
Total Debt Obligations ............ $ 461 $170 $485 $— $— $3,358 $4,474 $4,217
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