Texas Instruments 2007 Annual Report Download - page 24

22 TEXAS INSTRUMENTS 2007 ANNUAL REPORT
6. Debt and Lines of Credit
On April 2, 2007, we retired $43 million of 8.75% notes at maturity. As of December 31, 2007, we have no outstanding long-term debt.
In November 2005, in connection with the repatriation of non-U.S. earnings under provisions of the American Jobs Creation Act of 2004
(AJCA), our Japan subsidiary entered into a five-year syndicated credit agreement with a consortium of banks to borrow $275 million at
a LIBOR-based variable rate. During the second quarter of 2006, the $275 million was prepaid. The agreement continues to provide a
revolving credit facility for an additional $175 million that would carry a variable rate of interest, if drawn.
We also maintain lines of credit to support commercial paper borrowings and to provide additional liquidity through short-term bank
loans. At December 31, 2007, we had a revolving credit facility under which a group of banks has committed $1 billion through August
2011, and $920 million thereafter through August 2012. This facility would carry a variable rate of interest, if drawn.
At December 31, 2007 and 2006, both revolving credit facilities were undrawn and no commercial paper was outstanding.
Interest incurred on loans in 2007, 2006 and 2005 was $1 million, $12 million and $14 million. Of these amounts, $5 million in both
2006 and 2005 were capitalized as a component of capital asset construction costs.
7. Financial Instruments and Risk Concentration
Financial Instruments: We have derivative financial instruments, such as forward foreign currency exchange contracts, forward purchase
contracts and investment warrants, the fair values of which were not significant as of December 31, 2007 or 2006. Our forward foreign
currency exchange contracts outstanding at December 31, 2007, had a notional value of $487 million to hedge our non-U.S. dollar net
balance sheet exposures (including $122 million to sell euros, $57 million to sell British pounds and $182 million to sell Japanese yen).
Our forward foreign currency exchange contracts outstanding at December 31, 2006, had a notional value of $268 million to hedge our
non-U.S. dollar net balance sheet exposures (including $85 million to sell euros, $82 million to sell British pounds and $48 million to sell
Japanese yen).
Also at December 31, 2007, we had a series of forward purchase contracts denominated in Philippine pesos to hedge specified
forecasted transactions associated with the construction of a new assembly and test facility in the Philippines. These contracts are
primarily intended to protect against exchange rate fluctuations between the U.S. dollar and Philippine peso during the estimated
construction period. These contracts, which settle at various dates through January 2009, had an aggregate notional value of
$65 million to buy a total of 2.67 billion pesos.
Short-term investments are carried at fair value. The carrying values for other current financial assets and liabilities, such as accounts
receivable and accounts payable, approximate fair value due to the short maturity of such instruments.
Risk Concentration: Financial instruments that potentially subject us to concentrations of credit risk are primarily cash investments and
accounts receivable. In order to manage our exposure to credit risk, we place cash investments in investment-grade debt securities
and limit the amount of credit exposure to any one issuer. We also limit counterparties on forward foreign currency exchange contracts
to investment-grade-rated financial institutions.