RED HAT INC | 2013 | FY | 3


NOTE 10—Derivative Instruments

The Company transacts business in various foreign countries and is, therefore, subject to risk of foreign currency exchange rate fluctuations. The Company from time to time enters into forward contracts to economically hedge transactional exposure associated with commitments arising from trade accounts receivable, trade accounts payable and fixed purchase obligations denominated in a currency other than the functional currency of the respective operating entity. All derivative instruments are recorded on the Consolidated Balance Sheets at their respective fair market values. The Company has elected not to prepare and maintain the documentation required to qualify its forward contracts for hedge accounting treatment and, therefore, changes in fair value are recorded in the Consolidated Statements of Operations.

 

The effects of derivative instruments on the Company’s Consolidated Financial Statements are as follows as of February 28, 2013 and for the year then ended (in thousands):

 

                       Year Ended February 28, 2013  
     As of February 28, 2013      Location of  Gain
(Loss) Recognized
in Income  on
Derivative
  Amount of  Gain
(Loss) Recognized
in Income on
Derivative
 
     Balance Sheet Location    Fair
Value
    Notional
Value
      

Assets—foreign currency forward contracts not designated as hedges

   Other current assets    $ 280      $ 36,214       Other income
(expense), net
  $ 1,309   

Liabilities—foreign currency forward contracts not designated as hedges

   Accounts payable
and accrued
expenses
     (219     29,328       Other income
(expense), net
    (1,695
     

 

 

   

 

 

      

 

 

 

TOTAL

      $ 61      $ 65,542         $ (386
     

 

 

   

 

 

      

 

 

 

The effects of derivative instruments on the Company’s Consolidated Financial Statements are as follows as of February 29, 2012 and for the year then ended (in thousands):

 

                       Year Ended February 29, 2012  
     As of February 29, 2012      Location of  Gain
(Loss) Recognized
in Income  on
Derivative
  Amount of  Gain
(Loss) Recognized
in Income on
Derivative
 
     Balance Sheet Location    Fair
Value
    Notional
Value
      

Assets—foreign currency forward contracts not designated as hedges

   Other current assets    $ 147      $ 24,450       Other income
(expense), net
  $ 1,518   

Liabilities—foreign currency forward contracts not designated as hedges

   Accounts payable
and accrued
expenses
     (473     35,263       Other income
(expense), net
    (2,785
     

 

 

   

 

 

      

 

 

 

TOTAL

      $ (326   $ 59,713         $ (1,267
     

 

 

   

 

 

      

 

 

 

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