Seagate 2007 Annual Report Download - page 70

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Table of Contents
The table below presents principal amounts and related weighted average interest rates by year of maturity for our investment portfolio and
debt obligations as of June 27, 2008. All investments, other than our auction rate securities, mature in three years or less. Included in long term
debt for fiscal year 2009, is the principal amount of $326 million related to our 2.375% Notes which is payable upon the conversion of the
2.375% Notes, which are currently convertible, as our share price was in excess of 110% of the conversion price for at least 20 consecutive
trading days during the last 30 trading days of the fourth quarter of fiscal year 2008. Unless earlier converted, the 2.375% Notes must be
redeemed in August 2012.
Fiscal Years Ended
Foreign Currency Exchange Risk. We recognize all of our derivative financial instruments, principally foreign currency forward
contracts, on the balance sheet as either assets or liabilities and these derivative financial instruments are carried at fair value.
We may enter into foreign currency forward contracts to manage exposure related to certain foreign currency commitments, certain foreign
currency denominated balance sheet positions and anticipated foreign currency denominated expenditures. Our policy prohibits us from entering
into derivative financial instruments for speculative or trading purposes. During fiscal years 2008, 2007 and 2006, we did not enter into any
hedges of net investments in foreign operations.
We transact business in various foreign countries and our primary foreign currency cash flows are in countries where we have a
manufacturing presence. We have established a foreign currency hedging program to protect against the change in value of foreign currency cash
flows resulting from operating and capital expenditures over the next year. We hedge portions of our forecasted expenditures denominated in
foreign currencies with foreign currency forward contracts designated as cash flow hedges. When the U.S. dollar weakens significantly against
the foreign currencies, the increase in value of the future foreign currency expenditure is offset by gains in the value of the foreign currency
forward contracts designated as hedges. Conversely, as the U.S. dollar strengthens, the decrease in value of the future foreign currency cash
flows is offset by losses in the value of the foreign currency forward contracts. These foreign currency forward contracts, carried at fair value,
may have maturities of up to twelve months.
69
2009
2010
2011
2012
2013
Thereafter
Total
Fair Value
June 27,
2008
(in millions, except percentages)
Assets
Cash equivalents:
Fixed rate
$
911
$
—
$
—
$
—
$
—
$
—
$
911
$
911
Average interest rate
2.41
%
2.41
%
Short
-
term investments:
Fixed rate
$
90
$
35
$
25
$
—
$
—
$
—
$
150
$
151
Average interest rate
4.21
%
5.38
%
4.33
%
4.51
%
Long
-
term investments:
Variable rate
$
—
$
—
$
—
$
—
$
—
$
31
$
31
$
28
Average interest rate
2.64
%
2.64
%
Total investment securities
$
1,001
$
35
$
25
$
—
$
—
$
31
$
1,092
$
1,090
Average interest rate
2.57
%
5.38
%
4.33
%
2.64
%
2.71
%
Long
-
Term Debt
Fixed rate
$
331
$
141
$
5
$
630
$
—
$
600
$
1,707
$
1,743
Average interest rate
2.43
%
6.76
%
5.75
%
6.35
%
6.80
%
5.78
%
Variable rate
$
30
$
300
$
330
$
323
Average interest rate
3.41
%
3.64
%
3.62
%