AMD 2013 Annual Report Download - page 70

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Interest Rate Risk. Our exposure to market risk for changes in interest rates relates primarily to our
investment portfolio and long-term debt. We usually invest our cash in investments with short maturities or with
frequent interest reset terms. Accordingly, our interest income fluctuates with short-term market conditions. As
of December 28, 2013, our investment portfolio consisted primarily of time deposits, commercial paper and
corporate bonds. These investments were highly liquid. Due to the relatively short, weighted-average maturity of
our investment portfolio and the current low interest rate environment, our exposure to interest rate risk is
minimal.
As of December 28, 2013, all of our outstanding debt had fixed interest rates. Consequently, our exposure to
market risk for changes in interest rates on reported interest expense and corresponding cash flows is minimal.
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 high credit quality
securities and by constantly positioning our portfolio to respond to a significant reduction in a credit rating of any
investment issuer or guarantor. Our portfolio includes investments in debt and marketable equity 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.
We actively monitor market conditions and developments specific to the securities and security classes in
which we invest. We believe that we take a conservative approach to investing our funds in that we invest only in
highly-rated debt securities with relatively short maturities and do not invest in securities we believe involve a
higher degree of risk. As of December 28, 2013, substantially all of our investments in debt securities were A
rated by at least one of the rating agencies. While we believe we take prudent measures to mitigate investment
related risks, such risks cannot be fully eliminated as there are circumstances outside of our control.
During 2013, we realized a loss of $2 million on sales of approximately $28 million of ARS. We no longer
hold any ARS investments as of December 28, 2013.
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 28, 2013:
2014 2015 2016 2017 2018
2019 and
thereafter Total
2013
Fair Value
(In millions, except for percentages)
Investment Portfolio
Cash equivalents:
Fixed rate amounts ............ $421 $— $— $— $— $ — $ 421 $ 421
Weighted-average rate ..... 0.14% — — — — — 0.14%
Variable rate amounts ......... $ 19 $— $— $— $— $ — $ 19 $ 19
Weighted-average rate ..... 5.46% — — — — — 5.46%
Marketable securities
Fixed rate amounts ............ $228 $— $— $— $— $ — $ 228 $ 228
Weighted-average rate ..... 0.34% — — — — — 0.34%
Long-term investments:
Fixed rate amounts ............ $ 60 $ 28 $— $— $— $ — $ 88 $ 88
Weighted-average rate ..... 0.44% 0.61% — — — — 0.49%
Variable rate amounts ......... $ 20 $— $— $— $— $ — $ 20 $ 20
Weighted-average rate ..... 0.03% — — — — — 0.03%
Total Investment Portfolio ........ $748 $ 28 $— $— $— $ — $ 776 $ 776
Debt Obligations
Fixed rate amounts ............ $ 55 $517 $— $470 $— $1,000 $2,042 $2,132
Weighted-average
effective interest rate .... 2.75% 8.00% — % 10.00% — % 7.63% 8.08% 7.74%
Total Debt Obligations ........... $ 55 $ 517 $— $470 $— $1,000 $2,042 $2,132
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