AMD 2004 Annual Report Download - page 72

Table of Contents
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 as of December 26, 2004 and comparable fair values as of December 28, 2003:
2005 2006 2007 2008 2009 Thereafter Total
2004
Fair value
2003
Fair value
(Dollars in Thousands)
Investment Portfolio
Cash equivalents:
Fixed rate amounts $ 511,566 $ — $ — $ — $ — $ — $ 511,566 $ 511,566 $ 256,515
Weighted-average rate 2.19% — — — — — 2.19% 2.19%
Variable rate amounts $ 281,000 — — — — — $ 281,000 $ 281,000 $ 576,204
Weighted-average rate 2.21% — — — — — 2.21% 2.21%
Short-term investments:
Fixed rate amounts $ 2,879 $ $ $ $ $ $ 2,879 $ 2,557 $ 26,703
Weighted-average rate 2.50% — — — — — 2.50% 2.50%
Variable rate amounts $ 274,625 — $ — $ — $ — $ — $ 274,625 $ 274,625 $ 100,860
Weighted-average rate 2.35% — — — — — 2.35% 2.35%
Long-term investments:
Equity investments $ — $ — $ — $ — $ — $ 3,492 $ 3,492 $ 6,653 $ 16,845
Fixed rate amounts $ 13,676 $ — $ — $ — $ — $ — $ 13,676 $ 13,676 $ 12,163
Weighted-average rate 2.26% — — — — — 2.26% 2.26%
Total Investment Portfolio $ 1,083,746 $ — $ — $ — $ — $ 3,492 $ 1,087,238 $ 1,090,077 $ 989,290
Debt Obligations
Debt—fixed rate amounts $ 17,760 $ 27,940 $ 229,440 $ 27,940 $ 26,676 $ 1,100,000 $ 1,429,756 $ 1,927,626 $ 902,500
Weighted-average rate 6.15% 6.19% 6.19% 6.49% 6.49% 6.39% 6.51% 6.51% 4.64%
Debt—variable rate amounts $ 116,322 $ 93,423 $ 34,742 $ — $ — $ — $ 244,487 $ 244,487 $ 944,482
Weighted-average rate 3.96% 3.96% 1.11% — — — 3.55% 3.55% 4.60%
Capital leases $ 96,746 $ 83,079 $ 4,816 $ 212 $ — $ — $ 184,853 $ 183,406 $ 244,641
Weighted-average rate 4.76% 3.82% 7.43% 0.64% — — 4.40% 4.40% 5.50%
Total Debt Obligations $ 230,828 $ 204,442 $ 268,998 $ 28,152 $ 26,676 $ 1,100,000 $ 1,859,096 $ 2,355,519 $ 2,091,623
Foreign Exchange Risk. As a result of our foreign operations, we have sales, costs, assets and liabilities that are denominated in foreign currencies,
primarily the European Union euro and the Japanese yen. For example:
• a significant portion of our manufacturing costs for our microprocessor products is denominated in euro while sales of those products are denominated
primarily in U.S. dollars;
• certain manufacturing costs for our Spansion Flash memory products are denominated in yen;
• some fixed asset purchases are denominated in euro and yen;
• sales of our Flash memory products in Japan are denominated in yen; and
• certain costs of our Fab 36 project are denominated in euro.
As a consequence, movements in exchange rates could cause our U.S. dollar-denominated expenses to increase as a percentage of net sales, affecting our
profitability and cash flows. We use foreign currency forward and option contracts to reduce our exposure to currency fluctuations on our foreign currency
exposures. The objective of these contracts is to minimize the impact of foreign currency exchange rate movements on our operating results and on the cost of
capital asset acquisitions. Our accounting policy for these instruments is based on our designation of such instruments as hedges of underlying exposure to
variability in cash flows. We do not use these contracts for speculative or trading purposes.
As of December 26, 2004, we had an aggregate of $483 million (notional amount) of short-term foreign currency forward contracts and purchased call
option contracts denominated in Japanese yen and European Union euro outstanding.
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Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2005