AMD 2007 Annual Report Download - page 91

Table of Contents
converted prior to the maturity date. We used all of the net proceeds, together with available cash, to repay in full the outstanding balance of the October 2006
Term Loan.
With the full repayment of the October 2006 Term Loan, we replaced a substantial amount of our floating interest rate debt with fixed interest rate debt.
Accordingly, our exposure to market risk for changes in interest rates on reported interest expense and corresponding cash flows has decreased.
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. The portfolio includes marketable
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. At this point in time, 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.
With the exception of the October 2006 Term Loan, which was used to fund a portion of the ATI acquisition, we generally use proceeds from borrowings
primarily for general corporate purposes, including capital expenditures and working capital needs.
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 29, 2007:
Fiscal
2008
Fiscal
2009
Fiscal
2010
Fiscal
2011
Fiscal
2011 Thereafter Total
Fiscal 2007
Fair Value
(In millions except for percentages)
Investment Portfolio
Cash equivalents:
Fixed rate amounts $ 986 $ — $ — $ — $ — $ — $ 986 $ 986
Weighted-average rate 5.03% — — — — — 5.03% 5.03%
Variable rate amounts $ 312 $ — $ — $ — $ — $ — $ 312 $ 312
Weighted-average rate 4.83% — — — — — 4.83% 4.83%
Marketable securities
Fixed rate amounts $ 132 $ — $ — $ — $ — $ — $ 132 $ 132
Weighted-average rate 5.11% — — — — — 5.11% 5.11%
Variable rate amounts $ 269 $ — $ — $ — $ — $ — $ 269 $ 269
Weighted-average rate 6.44% — — — — — 6.44% 6.44%
Long-term investments:
Fixed rate amounts $ 12 $ — $ — $ — $ — $ — $ 12 $ 12
Weighted-average rate 4.77% — — — — — 4.77% 4.77%
Total Investment Portfolio $ 1,711 $ — $ — $ — $ — $ — $ 1,711 $ 1,711
Debt Obligations
Fixed rate amounts $ 49 $ 49 $ 2 $ 2 $ 1,891 $ 2,203 $ 4,196 $ 3,240
Weighted-average rate 12.83% 12.82% 6.86% 6.86% 6.16% 6.00% 6.23% 6.30%
Variable rate amounts $ 179 $ 268 $ 303 $ 89 $ — $ — $ 839 $ 839
Weighted-average rate 7.10% 7.10% 7.11% 7.11% — — 7.10% 7.10%
Total Debt Obligations $ 228 $ 317 $ 305 $ 91 $ 1,891 $ 2,203 $ 5,035 $ 4,079
86
Source: ADVANCED MICRO DEVIC, 10-K, February 26, 2008