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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2021-03-29 compared with 2020-03-16 · 53 added, 38 removed, 1 unchanged (99% of the section changed)

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

The primary objective of our trading securities

activities is to preserve principal while concurrently maximizing the income we receive from our trading securities without significantly

increasing risk.

Some of the securities that we invest in may be subject to interest rate risk and/or market risk.

This means that

a change in prevailing interest rates, with respect to interest rate risk, or a change in the value of the United States equity

markets, with respect to market risk, may cause the principal amount or market value of the trading securities to fluctuate.

example, if we hold a security that was issued with a fixed interest rate at the then-prevailing rate and the prevailing interest

rate later rises, the current value of the principal amount of our investment may decline.

To minimize these risks in the future,

we intend to maintain our portfolio of cash equivalents and trading securities in a variety of securities, including commercial

paper, money market funds, high-grade corporate bonds, government and non-government debt securities and certificates of deposit.

At December 31, 2019 and December 31, 2018,

our trading securities were comprised of AAA rated money market funds that invest in first-tier only securities, which primarily

include domestic commercial paper, securities issued or guaranteed by the U.S.

government or its agencies, U.S.

bank obligations,

and fully collateralized repurchase agreements (included in cash and cash equivalents in the accompanying consolidated balance

sheets), and direct investments in short term, highly liquid, investment grade, U.S.

government and corporate securities (included

in trading securities in the accompanying consolidated balance sheets).

In general, money market funds are not

subject to market risk because the interest paid on such funds fluctuates with the prevailing interest rate.

Accordingly, a 100

basis point increase in interest rates or a 10% decline in the value of the United States equity markets would not be expected

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

objective of our short-term investment activities is to preserve principal while concurrently maximizing the income we receive

from our trading securities without significantly increasing risk.

Some of the securities that we invest in may be subject to

interest rate risk and/or market risk.

This means that a change in prevailing interest rates, with respect to interest rate risk,

or a change in the value of the United States equity markets, with respect to market risk, may cause the principal amount or market

value of the trading securities to fluctuate.

To minimize these risks in the future, we intend to maintain our portfolio of cash

equivalents and trading securities in a variety of securities, including commercial paper, money market funds, high-grade corporate

bonds, government and non-government debt securities, certificates of deposit and equity securities.

In general, money market

funds are not subject to market risk because the interest paid on such funds fluctuates with the prevailing interest rate.

a 100-basis point increase in interest rates or a 10% decline in the value of the United States equity markets would not be expected

to have a material impact on the value of such money market funds.

Investments in U.S.

government fixed income securities are

subject to interest rate risk and will decline in value if interest rates increase.

However, due to the relatively short duration

of our trading securities portfolio, an immediate 10% change in interest rates would have no material impact on our financial

condition, results of operations or cash flows.

Declines in interest rates over time will, however, reduce our interest income.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and related financial

information required to be filed hereunder are indexed under Item 15 of this report and are incorporated herein by reference.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE

Declines in interest rates over time will, however, reduce

our interest income.

quarter ended June 30, 2020, we sold all of our investment in debt trading securities.

They were comprised of AAA rated money

market funds that invest in first-tier only securities, which primarily include domestic commercial paper, securities issued

or guaranteed by the U.S.

government or its agencies, U.S.

bank obligations, and fully collateralized repurchase agreements

(included in cash and cash equivalents in the accompanying consolidated balance sheets), and direct investments in

short term, highly liquid, investment grade, U.S.

government and corporate securities (included in “Trading securities

in the accompanying consolidated balance sheets).

Investment Risk

We are exposed

to investment risks related to changes in the underlying financial condition of certain of our equity investments in these technology

The fair value of these investments can be significantly impacted by the risk of adverse changes in securities markets

generally, as well as risks related to the performance of the companies whose securities we have invested in, risks associated

with specific industries, and other factors.

These investments are subject to significant fluctuations in fair value due to the

volatility of the securities markets and of the underlying businesses.

As of December 31, 2020 and December 31,

2019, the carrying value of our common stock and warrants in public and private companies was $285.8 million and $18.6 million,

respectively.

We record our

common stock and warrant investments in publicly traded companies at fair value, which are subject to market price volatility.

As of December 31, 2020, a hypothetical 10% adverse change in the market price of our investments in publicly traded common stock

would have resulted in a decrease of approximately $0.4 million in the fair value of our equity warrant investments in Veritone

and a decrease of approximately $10.9 million in our other equity investments.

We evaluate our equity and equity warrant investments

in private companies for impairment when events and circumstances indicate that the decline in fair value of such assets below

the carrying value is other-than temporary.

FINANCIAL STATEMENTS

AND SUPPLEMENTARY DATA

The financial

statements and related financial information required to be filed hereunder are indexed under Item 15 of this report and are incorporated

herein by reference.

CHANGES IN AND DISAGREEMENTS

WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk