AMD 1997 Annual Report Download - page 35

The Company anticipates completing the Year 2000 project by the first
quarter of 1999, which is prior to any anticipated impact on its operating
systems. This date is contingent upon the timeliness and accuracy of software
upgrades from vendors, adequacy and quality of resources available to work on
completion of the project and any other factors. The total expense of the Year
2000 project is estimated at $10 million, which is not material to the
Company's business operations or financial condition. The expenses of the Year
2000 project are being funded through operating cash flows.
The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources, third-party modification
plans and other factors. There can be no assurance that these estimates will
be achieved and actual results could differ materially from those anticipated.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
INTEREST RATE RISK
The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's investment portfolio and long-term debt
obligations. The Company does not use derivative financial instruments in its
investment portfolio. The Company places its investments with high credit
quality issuers and, by policy, limits the amount of credit exposure to any
one issuer. As stated in its policy, the Company is averse to principal loss
and ensures the safety and preservation of its invested funds by limiting
default risk, market risk, and reinvestment risk.
The Company mitigates default risk by investing in only the highest credit
quality securities and by constantly positioning its portfolio to respond
appropriately to a significant reduction in a credit rating of any investment
issuer or guarantor. The portfolio includes only marketable securities with
active secondary or resale markets to ensure portfolio liquidity.
The Company has no cash flow exposure due to rate changes for its $400
million Senior Secured Notes. It does have cash flow exposure on its $250
million bank term loan due to its variable LIBOR pricing. The Company
primarily enters into debt obligations to support general corporate purposes
including capital expenditures and working capital needs.
From time to time, the Company enters into interest rate swaps primarily to
reduce its interest rate exposure by changing a portion of the Company's
interest rate exposure from floating to fixed rate. There were no interest
rate swaps outstanding at the end of fiscal 1997.
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Source: ADVANCED MICRO DEVIC, 10-K405, March 03, 1998