Seagate 2007 Annual Report Download - page 69
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Table of Contents
ITEM 7A. QUALITATIVE
AND QUANTITATIVE DISCLOSURES 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 currently do not use derivative financial instruments in either our investment portfolio or to hedge debt.
As stated in our investment policy, we are averse to principal loss and ensure the safety and preservation of our invested funds by limiting
default risk and market risk. We mitigate default risk by maintaining portfolio investments in diversified, high-quality investment grade
securities with limited time to maturity. We constantly monitor our investment portfolio and position our portfolio to respond appropriately to a
reduction in credit rating of any investment issuer, guarantor or depository. We maintain a highly liquid portfolio by investing only in marketable
securities with active secondary or resale markets. At June 27, 2008, our exposure to sub-prime mortgage securities was not significant. As of
the date of this filing, we are not aware of any downgrades, losses or other significant deterioration in the fair value of our cash equivalents or
short-term investments since June 27, 2008.
We have both fixed and variable rate debt obligations. We enter into debt obligations to support general corporate purposes including
capital expenditures and working capital needs. We currently do not use interest rate derivatives to hedge our interest rate exposure.
At June 27, 2008, we had no marketable securities that had been in a continuous unrealized loss position for a period greater than 12
months and determined no investments were other-than-temporarily impaired.
Investment Securities . As of June 27, 2008, we held auction rate securities in the amount of $31 million, all of which are collateralized
by pools of student loans guaranteed by the Federal Family Education Loan Program. During the fiscal 2008 year, these securities failed to settle
at auction and as a result we recorded an unrealized loss of $3 million and reclassified the securities to long-term investments.
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