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These excerpts taken from the DVN 10-K filed Feb 27, 2009. Auction
Rate Securities
At December 31, 2007, Devon held $372 million of
auction rate securities. Such securities are rated
AAA — the highest rating — by one or more
rating agencies and are collateralized by student loans that are
substantially guaranteed by the United States government.
Although Devon’s auction rate securities generally have
contractual maturities of more than 20 years, the
underlying interest rates on such securities are scheduled to
reset every seven to 28 days. Therefore, these auction rate
securities were generally priced and subsequently traded as
short-term investments because of the interest rate reset
feature. As a result, Devon classified its auction rate
securities as short-term investments in the accompanying
December 31, 2007 consolidated balance sheet and in prior
periods. At December 31, 2008, Devon’s auction rate
securities totaled $122 million.
Since February 8, 2008, Devon has experienced difficulty
selling its securities due to the failure of the auction
mechanism, which provided liquidity to these securities. An
auction failure means that the parties wishing to sell
securities could not do so. The securities for which auctions
have failed will continue to accrue interest and be auctioned
every seven to 28 days until the auction succeeds, the
issuer calls the securities or the securities mature.
From February 2008, when auctions began failing, to
December 31, 2008, issuers have redeemed $30 million
of Devon’s auction rate securities holdings at par.
However, based on continued auction failures and the current
market for Devon’s auction rate securities, Devon has
classified its securities as long-term investments as of
December 31, 2008. These securities are included in other
long-term assets in the
Table of Contents
DEVON
ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
accompanying consolidated balance sheet. Devon has the ability
to hold the securities until maturity. At this time, Devon does
not believe the values of its long-term securities are impaired.
Auction
Rate Securities
At December 31, 2007, Devon held $372 million of
auction rate securities. Such securities are rated
AAA — the highest rating — by one or more
rating agencies and are collateralized by student loans that are
substantially guaranteed by the United States government.
Although Devon’s auction rate securities generally have
contractual maturities of more than 20 years, the
underlying interest rates on such securities are scheduled to
reset every seven to 28 days. Therefore, these auction rate
securities were generally priced and subsequently traded as
short-term investments because of the interest rate reset
feature. As a result, Devon classified its auction rate
securities as short-term investments in the accompanying
December 31, 2007 consolidated balance sheet and in prior
periods. At December 31, 2008, Devon’s auction rate
securities totaled $122 million.
Since February 8, 2008, Devon has experienced difficulty
selling its securities due to the failure of the auction
mechanism, which provided liquidity to these securities. An
auction failure means that the parties wishing to sell
securities could not do so. The securities for which auctions
have failed will continue to accrue interest and be auctioned
every seven to 28 days until the auction succeeds, the
issuer calls the securities or the securities mature.
From February 2008, when auctions began failing, to
December 31, 2008, issuers have redeemed $30 million
of Devon’s auction rate securities holdings at par.
However, based on continued auction failures and the current
market for Devon’s auction rate securities, Devon has
classified its securities as long-term investments as of
December 31, 2008. These securities are included in other
long-term assets in the
Table of Contents
DEVON
ENERGY CORPORATION AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS —
(Continued)
accompanying consolidated balance sheet. Devon has the ability
to hold the securities until maturity. At this time, Devon does
not believe the values of its long-term securities are impaired.
Auction Rate Securities At December 31, 2007, Devon held $372 million of auction rate securities. Such securities are rated AAA — the highest rating — by one or more rating agencies and are collateralized by student loans that are substantially guaranteed by the United States government. Although Devon’s auction rate securities generally have contractual maturities of more than 20 years, the underlying interest rates on such securities are scheduled to reset every seven to 28 days. Therefore, these auction rate securities were generally priced and subsequently traded as short-term investments because of the interest rate reset feature. As a result, Devon classified its auction rate securities as short-term investments in the accompanying December 31, 2007 consolidated balance sheet and in prior periods. At December 31, 2008, Devon’s auction rate securities totaled $122 million. Since February 8, 2008, Devon has experienced difficulty selling its securities due to the failure of the auction mechanism, which provided liquidity to these securities. An auction failure means that the parties wishing to sell securities could not do so. The securities for which auctions have failed will continue to accrue interest and be auctioned every seven to 28 days until the auction succeeds, the issuer calls the securities or the securities mature. From February 2008, when auctions began failing, to December 31, 2008, issuers have redeemed $30 million of Devon’s auction rate securities holdings at par. However, based on continued auction failures and the current market for Devon’s auction rate securities, Devon has classified its securities as long-term investments as of December 31, 2008. These securities are included in other long-term assets in the
Table of ContentsDEVON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) accompanying consolidated balance sheet. Devon has the ability to hold the securities until maturity. At this time, Devon does not believe the values of its long-term securities are impaired. Auction Rate Securities At December 31, 2007, Devon held $372 million of auction rate securities. Such securities are rated AAA — the highest rating — by one or more rating agencies and are collateralized by student loans that are substantially guaranteed by the United States government. Although Devon’s auction rate securities generally have contractual maturities of more than 20 years, the underlying interest rates on such securities are scheduled to reset every seven to 28 days. Therefore, these auction rate securities were generally priced and subsequently traded as short-term investments because of the interest rate reset feature. As a result, Devon classified its auction rate securities as short-term investments in the accompanying December 31, 2007 consolidated balance sheet and in prior periods. At December 31, 2008, Devon’s auction rate securities totaled $122 million. Since February 8, 2008, Devon has experienced difficulty selling its securities due to the failure of the auction mechanism, which provided liquidity to these securities. An auction failure means that the parties wishing to sell securities could not do so. The securities for which auctions have failed will continue to accrue interest and be auctioned every seven to 28 days until the auction succeeds, the issuer calls the securities or the securities mature. From February 2008, when auctions began failing, to December 31, 2008, issuers have redeemed $30 million of Devon’s auction rate securities holdings at par. However, based on continued auction failures and the current market for Devon’s auction rate securities, Devon has classified its securities as long-term investments as of December 31, 2008. These securities are included in other long-term assets in the
Table of ContentsDEVON ENERGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) accompanying consolidated balance sheet. Devon has the ability to hold the securities until maturity. At this time, Devon does not believe the values of its long-term securities are impaired. | EXCERPTS ON THIS PAGE:
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