Adobe 2015 Annual Report Download - page 57

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gains and losses on these contracts are intended to offset gains and losses on the assets and liabilities being hedged. At November 27,
2015, the outstanding balance sheet hedging derivatives had maturities of 180 days or less.
See Note 5 of our Notes to Consolidated Financial Statements for information regarding our hedging activities.
Interest Rate Risk
Short-Term Investments and Fixed Income Securities
At November 27, 2015, we had debt securities classified as short-term investments of $3.1 billion. Changes in interest rates
could adversely affect the market value of these investments. The following table separates these investments, based on stated
maturities, to show the approximate exposure to interest rates (in millions):
Due within one year $ 853.0
Due within two years 1,202.6
Due within three years 771.3
Due after three years 284.6
Total $ 3,111.5
A sensitivity analysis was performed on our investment portfolio as of November 27, 2015. The analysis is based on an
estimate of the hypothetical changes in market value of the portfolio that would result from an immediate parallel shift in the yield
curve of various magnitudes.
The following tables present the hypothetical fair values of our debt securities classified as short-term investments assuming
immediate parallel shifts in the yield curve of 50 basis points (“BPS”), 100 BPS and 150 BPS. The analysis is shown as of
November 27, 2015 and November 28, 2014 (dollars in millions):
-150 BPS -100 BPS -50 BPS Fair Value
11/27/15 +50 BPS +100 BPS +150 BPS
$ 3,172.3 $ 3,156.6 $ 3,135.2 $ 3,111.5 $ 3,087.7 $ 3,063.9 $ 3,040.1
-150 BPS -100 BPS -50 BPS Fair Value
11/28/14 +50 BPS +100 BPS +150 BPS
$ 2,663.3 $ 2,656.3 $ 2,641.9 $ 2,621.6 $ 2,599.8 $ 2,578.0 $ 2,556.2
Senior Notes
As of November 27, 2015, the amount outstanding under our senior notes was $1.9 billion. In June 2014, we entered into
interest rate swaps that effectively converted the fixed interest rate on our 2020 Notes to a floating interest rate based on the LIBOR
plus a fixed number of basis points through February 1, 2020. Accordingly, our exposure to fluctuations in market interest rates
is on the hedged fixed-rate debt of $900 million. An immediate hypothetical 50 basis points increase or decrease in market interest
rates would not have a significant impact on our results of operations.
As of November 27, 2015, the total carrying amount of the Notes was $1.91 billion and the related fair value based on
inactive market prices was $1.97 billion.
Other Market Risk
Privately Held Long-Term Investments
The privately held companies in which we invest can still be considered in the start-up or development stages which are
inherently risky. The technologies or products these companies have under development are typically in the early stages and may
never materialize, which could result in a loss of a substantial part of our initial investment in these companies. The evaluation of
privately held companies is based on information that we request from these companies, which is not subject to the same disclosure
regulations as U.S. publicly traded companies, and as such, the basis for these evaluations is subject to the timing and accuracy
of the data received from these companies. We have minimal exposure on our long-term investments in privately held companies
as these investments were insignificant as of November 27, 2015 and November 28, 2014.