Electronic Arts 2007 Annual Report Download - page 134

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stockholders’ equity. Our portfolio of short-term investments consisted of the following investment categories,
summarized by fair value as of March 31, 2007 and 2006 (in millions):
2007 2006
As of March 31,
Commercial paper . ...................................................... $ 574 $ 25
U.S. agency securities .................................................... 264 575
Corporate bonds ........................................................ 226 178
Asset-backed securities ................................................... 108 40
U.S. Treasury securities ................................................... 92 212
Total short-term investments ............................................. $1,264 $1,030
Notwithstanding our efforts to manage interest rate risks, there can be no assurance that we will be adequately
protected against risks associated with interest rate fluctuations. At any time, a sharp change in interest rates
could have a significant impact on the fair value of our investment portfolio. The following table presents the
hypothetical changes in fair value in our short-term investment portfolio as of March 31, 2007, arising from
potential changes in interest rates. The modeling technique estimates the change in fair value from immediate
hypothetical parallel shifts in the yield curve of plus or minus 50 basis points (“BPS”), 100 BPS, and 150
BPS.
(150 BPS) (100 BPS) (50 BPS)
Fair Value
as of
March 31,
2007 50 BPS 100 BPS 150 BPS
(In millions)
Valuation of Securities
Given an Interest Rate
Decrease of X Basis Points
Valuation of Securities
Given an Interest Rate
Increase of X Basis Points
Commercial paper ........... $ 575 $ 575 $ 574 $ 574 $ 573 $ 573 $ 572
U.S. agency securities ........ 271 269 267 264 262 259 257
Corporate bonds ............ 231 230 228 226 225 223 222
Asset-backed securities . . . .... 110 109 108 108 107 106 105
U.S. Treasury securities . . . .... 95 94 94 92 92 91 90
Total short-term
investments ............ $1,282 $1,277 $1,271 $1,264 $1,259 $1,252 $1,246
The following table presents the hypothetical changes in fair value in our short-term investment portfolio as of
March 31, 2006, arising from selected potential changes in interest rates.
(150 BPS) (100 BPS) (50 BPS)
Fair Value
as of
March 31,
2006 50 BPS 100 BPS 150 BPS
(In millions)
Valuation of Securities
Given an Interest Rate
Decrease of X Basis Points
Valuation of Securities
Given an Interest Rate
Increase of X Basis Points
U.S. agency securities ........ $ 581 $ 579 $ 577 $ 575 $ 573 $ 571 $ 570
U.S. Treasury securities . . . .... 218 216 214 212 210 208 205
Corporate bonds ............ 182 181 179 178 176 175 173
Asset-backed and other debt
securities................ 66 66 66 65 65 65 65
Total short-term
investments ............ $1,047 $1,042 $1,036 $1,030 $1,024 $1,019 $1,013
Market Price Risk
The value of our equity investments in publicly traded companies are subject to market price volatility. As of
March 31, 2007 and 2006, our marketable equity securities were classified as available-for-sale and,
consequently, were recorded in our Consolidated Balance Sheets at fair market value with unrealized gains or
losses reported as a separate component of accumulated other comprehensive income, net of any tax effects, in
60