AMD 2015 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 26, 2015, our investment portfolio consisted primarily of commercial paper. 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 26, 2015, the majority 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 26, 2015, 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.
There were no sales of available-for-sale securities during 2015.
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, 2015:
2016 2017 2018 2019 2020
2021 and
thereafter Total
2015
Fair Value
(In millions, except for percentages)
Investment Portfolio
Cash equivalents:
Fixed rate amounts ............$376 $— $— $— $— $— $ 376 $ 376
Weighted-average rate ...... 0.27% — — — — — 0.27% 0.27%
Total Investment Portfolio .........$ 376 $— $— $— $— $— $ 376 $ 376
Debt Obligations
Fixed rate amounts ............$— $— $— $600 $450 $975 $2,025 $1,372
Weighted-average effective
interest rate ............ —% — % — %6.75% 7.75% 7.24% 6.88% 10.64%
Variable rate amounts ..........$230 $— $— $— $— $— $ 230 $ 230
Weighted-average effective
interest rate ............ 4.00% — % — % —% —% —% —% 4.00%
Total Debt Obligations ............$ 230 $— $— $600 $450 $975 $2,255 $1,602
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