Comcast 2007 Annual Report Download - page 36

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Item 7A: Quantitative and Qualitative
Disclosures About Market Risk
Interest Rate Risk Management
We maintain a mix of fixed-rate and variable-rate debt. Approx-
imately 95% of our total debt of $31.3 billion is at fixed rates with
the remaining debt at variable rates. We are exposed to the market
risk of adverse changes in interest rates. In order to manage the
cost and volatility relating to the interest cost of our outstanding
debt, we enter into various interest rate risk management deriva-
tive transactions in accordance with our policies.
We monitor our interest rate risk exposures using techniques that
include market value and sensitivity analyses. We do not engage in
any speculative derivative transactions, and we are not a party to
any leveraged derivative instruments.
We manage the credit risks associated with our derivative financial
instruments through the evaluation and monitoring of the credit-
worthiness of the counterparties. Although we may be exposed to
losses in the event of nonperformance by the counterparties, we
do not expect such losses, if any, to be significant.
Our interest rate derivative financial instruments, which can include
swaps, rate locks, caps and collars, represent an integral part of
our interest rate risk management program. Our interest rate
derivative financial instruments reduced the portion of our total
debt at fixed rates from 95% to 85% as of December 31, 2007.
The effect of our interest rate derivative financial instruments in-
creased our interest expense by approximately $43 million and
$39 million in 2007 and 2006, respectively, and decreased our
interest expense by approximately $16 million in 2005. Interest rate
risk management instruments may have a significant effect on our
interest expense in the future.
The table below summarizes the fair values and contract terms of financial instruments subject to interest rate risk maintained by us as of
December 31, 2007:
(in millions) 2008 2009 2010 2011 2012 Thereafter Total
Fair Value
12/31/07
Debt
Fixed Rate $ 1,484 $ 1,022 $ 1,163 $ 1,759 $ 843 $ 23,431 $ 29,702 $ 30,949
Average Interest Rate 7.2% 7.3% 5.7% 6.3% 9.2% 7.1% 7.0%
Variable Rate $ 11 $ 1,258 $ 310 $ 13 $ 29 $ — $ 1,621 $ 1,616
Average Interest Rate 5.0% 3.8% 5.0% 5.4% 5.6% —% 4.1%
Interest Rate Instruments
Fixed to Variable Swaps $ 600 $ 750 $ 200 $ 750 $ — $ 900 $ 3,200 $ 17
Average Pay Rate 7.4% 6.7% 4.8% 5.7% —% 4.8% 5.9%
Average Receive Rate 6.2% 6.9% 5.9% 5.5% —% 5.3% 5.9%
Comcast 2007 Annual Report on Form 10-K 34