Electronic Arts 2004 Annual Report Download - page 68

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Interest Rate Risk
Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. We
do not use derivative Ñnancial instruments in our investment portfolio. We manage our interest rate risk by
maintaining an investment portfolio primarily consisting of debt instruments of high credit quality and
relatively short average maturities. Though we maintain suÇcient cash and cash equivalent balances such that
we are typically able to hold our investments to maturity, currently, the majority of our investments are
callable by the issuer. As there can be no assurance as to how long these investments will be held, we classify
these securities as short-term investments based on call date.
As of March 31, 2004, our cash equivalents and short-term investments included $2.3 billion of debt
securities, consisting primarily of U.S. agency bonds, money market funds and municipal securities.
Notwithstanding our eÅorts to manage interest rate risks, there can be no assurances that we will be
adequately protected against the risks associated with interest rate Öuctuations.
The table below presents the amounts (in thousands) and related weighted-average interest rates of our
investment portfolio as of March 31, 2004:
Weighted-
Average
Interest Rate Cost Fair Value
Cash equivalents(1)
Fixed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.59% $ 698,479 $ 699,076
Variable rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.41% 1,292,186 1,292,204
Short-term investments(1)(2)
Fixed rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.69% 214,972 214,483
Variable rate ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 1.42% 50,000 49,978
$2,255,637 $2,255,741
(1) See deÑnition in Note 1 of the Notes to Consolidated Financial Statements, included in Item 8 hereof.
(2) Maturity dates for short-term investments range from 10 months to 28 months with call dates ranging
from 3 months to 5 months.
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