AMD 2012 Annual Report Download - page 73

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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, 2012:
2013 2014 2015 2016 2017
2018 and
thereafter Total
2012
Fair Value
(In millions, except for percentages)
Investment Portfolio
Cash equivalents:
Fixed rate amounts .......... $ 75 $— $— $— $ — $ — $ 75 $ 75
Weighted-average rate . . . 0.30% — — — — — 0.30%
Variable rate amounts ........ $ 402 $— $— $— $ — $ — $ 402 $ 402
Weighted-average rate . . . 0.15% — — — — — 0.15%
Marketable securities
Fixed rate amounts .......... $ 424 $— $— $— $ — $ — $ 424 $ 424
Weighted-average rate . . . 0.53% — — — — — 0.53%
Variable rate amounts ........ $ — $— $— $— $ — $ 37 $ 37 $ 28
Weighted-average rate . . .———— — 1.71% 1.71%
Long-term investments:
Fixed rate amounts .......... $ 144 $ 24 $— $— $ — $ — $ 168 $ 168
Weighted-average rate . . . 1.03% 0.47% — — — — 0.95%
Variable rate amounts ........ $ 23 $— $— $— $ — $ — $ 23 $ 23
Weighted-average rate . . . 0.12% — — — — — 0.12%
Total Investment Portfolio ....... $1,068 $ 24 $ — $— $ — $ 37 $1,129 $1,120
Debt Obligations
Fixed rate amounts .......... $ — $— $555 $— $ 464 $1,000 $2,019 $1,837
Weighted-average
effective interest rate . . . — — 8.00% — 10.00% 7.63% 8.27% 9.09%
Total Debt Obligations .......... $ — $ — $ 555 $— $ 464 $1,000 $2,019 $1,837
Foreign Exchange Risk. As a result of our foreign operations, we incur costs and we carry assets and
liabilities that are denominated in foreign currencies, primarily the Canadian dollar, while sales of products are
primarily denominated in U.S. dollars.
We maintain a foreign currency hedging strategy, which uses derivative financial instruments to mitigate the
risks associated with changes in foreign currency exchange rates. This strategy takes into consideration all of our
exposures. We do not use derivative financial instruments for trading or speculative purposes.
In applying our strategy, from time to time, we use foreign currency forward contracts to hedge certain
forecasted expenses denominated in foreign currencies, primarily the Canadian dollar. We designate these
contracts as cash flow hedges of forecasted expenses, to the extent eligible under the accounting rules, and
evaluate hedge effectiveness prospectively and retrospectively. As such, the effective portion of the gain or loss
on these contracts is reported as a component of accumulated other comprehensive income (loss) and reclassified
to earnings in the same line item as the associated forecasted transaction and in the same period during which the
hedged transaction affects earnings. Any ineffective portion is immediately recorded in earnings.
During the first quarter of 2011, we reassessed our hedging needs related to our Euro foreign exchange
contracts and liquidated our Euro currency forward contracts. As a result, during 2011, we recorded a gain of
$6 million in other income (expense), net, in our consolidated statement of operations. We may economically
hedge any material Euro exposure by entering into Euro currency forward contracts we identify in the future.
We also use, from time to time, foreign currency forward contracts to economically hedge recognized
foreign currency exposures on the balance sheets of various subsidiaries, primarily those denominated in
Canadian dollars. We do not designate these forward contracts as hedging instruments. Accordingly, the gain or
loss associated with these contracts is immediately recorded in earnings.
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