eBay 2006 Annual Report Download - page 96

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The following table summarizes the fair value and gross unrealized losses of our short-term and long-term
investments, aggregated by type of investment instrument and length of time that individual securities have been in
a continuous unrealized loss position, at December 31, 2006 (in thousands):
Fair Value
Gross
Unrealized
Losses Fair Value
Gross
Unrealized
Losses Fair Value
Gross
Unrealized
Losses
Less than 12 Months 12 Months or Greater Total
Corporate debt
securities ........... $52,887 $(15) $142,546 $(612) $195,433 $(627)
Government and agency
securities ........... — — 91,886 (151) 91,886 (151)
$52,887 $(15) $234,432 $(763) $287,319 $(778)
Our investment portfolio consists of both corporate and government securities that have a maximum maturity
of three years. The longer the duration of these securities, the more susceptible they are to changes in market interest
rates and bond yields. As yields increase, those securities purchased with a lower yield-at-cost show a
mark-to-market unrealized loss. All unrealized losses are due to changes in interest rates and bond yields. We
expect to realize the full value of all these investments upon maturity or sale. As of December 31, 2006, the losses on
these securities have an average remaining duration of approximately two months. Restricted cash is held primarily
in money market funds and interest bearing accounts for letters of credit related primarily to various lease
arrangements.
The estimated fair value of short and long-term investments classified by date of contractual maturity at
December 31, 2006 are as follows (in thousands):
December 31,
2006
One year or less (including restricted cash of $12,738)......................... $554,841
One year through two years ............................................ 176,794
Two years through three years ........................................... 33,523
Restricted cash and investments of $2,045 in 10 years and thereafter .............. 2,045
$767,203
Equity and cost method investments
We have certain investments accounted for using the equity and cost method of accounting totaling
$51.9 million in 2005 and $65.5 million in 2006. The total of these investments, including identifiable intangible
assets, deferred tax liabilities and goodwill, are classified on our balance sheet as long-term investments. Our
consolidated results of operations include, as a component of other income, our share of the net income or loss of the
equity method investments together with amortization expense relating to acquired intangible assets. Our share of
the results of investees’ results of operations is not significant for any period presented.
Note 6 — Derivative Instruments:
Transaction Exposure
As of December 31, 2006, we had outstanding forward foreign exchange hedge contracts with notional values
equivalent to approximately $188.4 million with maturity dates within 31 days. The hedge contracts are used to
offset changes in non-US dollar denominated functional currency value of assets and liabilities as a result of foreign
exchange rate fluctuations. Transaction gains and losses on the contracts and the assets and liabilities are recognized
each period in interest and other income, net.
92
eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)