Seagate 2014 Annual Report Download - page 63

TableofContents
ITEM7A.QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK
Wehaveexposuretomarketrisksduetothevolatilityofinterestrates,foreigncurrencyexchangerates,equityandbondmarkets.Aportionoftheserisksare
hedged,butfluctuationscouldimpactourresultsofoperations,financialpositionandcashflows.Additionally,wehaveexposuretodowngradesinthecredit
ratingsofourcounterpartiesaswellasexposurerelatedtoourcreditratingchanges.
InterestRateRisk.Ourexposuretomarketriskforchangesininterestratesrelatesprimarilytoourinvestmentportfolio.AsofJuly3,2015,theCompany
hadnomaterialavailable-for-salesecuritiesthathadbeeninacontinuousunrealizedlosspositionforaperiodgreaterthan12months.TheCompanydeterminedno
materialavailable-for-salesecuritieswereother-than-temporarilyimpairedasofJuly3,2015.Wecurrentlydonotusederivativefinancialinstrumentsinour
investmentportfolio.
Wehavefixedratedebtobligations.Weenterintodebtobligationsforgeneralcorporatepurposesincludingcapitalexpendituresandworkingcapitalneeds.
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July3,2015.
FiscalYearsEnded
ForeignCurrencyExchangeRisk.Wemayenterintoforeigncurrencyforwardexchangecontractstomanageexposurerelatedtocertainforeigncurrency
commitmentsandanticipatedforeigncurrencydenominatedexpenditures.Ourpolicyprohibitsusfromenteringintoderivativefinancialinstrumentsfor
speculativeortradingpurposes.
Wealsohedgeaportionofourforeigncurrencydenominatedbalancesheetpositionswithforeigncurrencyforwardexchangecontractstoreducetheriskthat
ourearningswillbeadverselyaffectedbychangesincurrencyexchangerates.Thechangesinfairvalueofthesehedgesarerecognizedinearningsinthesame
periodasthegainsandlossesfromtheremeasurementoftheassetsandliabilities.Theseforeigncurrencyforwardexchangecontractsarenotdesignatedas
hedginginstrumentsunderASC815,DerivativesandHedging.Alltheseforeigncurrencyforwardcontractsmaturewithin12months.
WeevaluatehedgingeffectivenessprospectivelyandretrospectivelyandrecordanyineffectiveportionofthehedginginstrumentsinCostofrevenueonthe
ConsolidatedStatementsofOperations.Wedidnothaveanymaterialnetgains(losses)recognizedinCostofrevenueforcashflowhedgesduetohedge
ineffectivenessordiscontinuedcashflowhedgesduringthefiscalyears2015and2014.
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(Dollarsinmillions,exceptpercentages)  2016 2017 2018 2019 2020 Thereafter Total 
FairValue
at
July3,2015 
Assets                 
Cashequivalents:                 
Fixedrate  $ 2,063 $ — $ — $ — $ — $ — $ 2,063 $ 2,063
Averageinterestrate   0.17%            0.17% 
Short-terminvestments:                 
Fixedrate  $ — $ — $ 5 $ — $ — $ 1 $ 6 $ 6
Averageinterestrate       9.30%      4.30% 8.47% 
Totalfixedincome  $ 2,063 $ — $ 5 $ — $ — $ 1 $ 2,069 $ 2,069
Averageinterestrate   0.17%    9.30%      4.30% 0.19% 
Debt                 
Fixedrate  $ — $ — $ — $ 800 $ — $ 3,358 $ 4,158 $ 4,175
Averageinterestrate         3.75%    5.03% 4.78% 