Electronic Arts 2000 Annual Report Download - page 35

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FOREIGN CURRENCY EXCHANGE RATE RISK We utilize foreign exchange contracts to hedge foreign currency exposures of
underlying assets and liabilities, primarily certain intercompany receivables that are denominated in foreign currencies, there-
by, limiting our risk. Gains and losses on foreign exchange contracts are reflected in the income statement. At March 31, 2000,
we had foreign exchange contracts, all with maturities of less than nine months to purchase and sell approximately
$242,143,000 in foreign currencies, primarily British Pounds, European Currency Units (“Euro”), Canadian Dollars, Japanese
Yen and other currencies.
Fair value represents the difference in value of the contracts at the spot rate and the forward rate. The counterparties to
these contracts are substantial and creditworthy multinational commercial banks. The risks of counterparty nonperformance
associated with these contracts are not considered to be material. Notwithstanding our efforts to manage foreign exchange
risks, there can be no assurances that our hedging activities will adequately protect us against the risks associated with foreign
currency fluctuations.
The table below provides information about our foreign currency forward exchange contracts at March 31, 2000. The infor-
mation is provided in U.S. dollar equivalents and presents the notional amount (forward amount), the weighted average
contractual foreign currency exchange rates and fair value.
Weighted-
Contract Average
Amount Contract Rate Fair Value
(In thousands) (In thousands)
Foreign currency to be sold under contract:
British Pound $ 111,138 1.5877 $ (469)
Euro 59,378 0.9734 (273)
Japanese Yen 15,476 104.0300 410
Canadian Dollar 13,615 1.4689 (63)
Australian Dollar 6,058 0.6058 (27)
South African Rand 4,686 6.4023 56
Swedish Krona 2,326 8.5993 (19)
Norwegian Krone 1,312 8.3871 (15)
Danish Krone 1,304 7.6716 (6)
Brazilian Real 1,259 1.7480 (11)
Swiss Franc 899 1.6681 (25)
New Zealand Dollar 488 0.4876 (2)
Total $ 217,939 $ (444)
Foreign currency to be purchased under contract:
British Pound $ 24,204 1.5944 $ (75)
Total $ 24,204 $ (75)
Grand total $ 242,143 $ (519)
EA 2000 AR
33
MD&A