LinkedIn 2012 Annual Report Download - page 67

contractual obligations and the effect such obligations are expected to have on our liquidity and cash flow
in future periods:
Payments Due by Period
Less Than More Than
Total 1 Year 1 - 3 Years 3 - 5 Years 5 Years
(in thousands)
Operating lease obligations(1) .............. $618,858 $37,675 $102,442 $118,950 $359,791
Purchase obligations ..................... $ 70,125 $36,988 $ 32,056 $ 1,081 $ —
(1) Subsequent to December 31, 2012, we entered into a lease with a provider of data center space. The
lease expires in 2023 with aggregate future minimum lease payments of approximately $109.1 million.
The contractual commitment amounts in the table above are associated with agreements that are
enforceable and legally binding. Obligations under contracts that we can cancel without a significant
penalty are not included in the table above.
Contingent obligations arising from unrecognized tax benefits are not included in the contractual
obligations because it is expected that the unrecognized benefits would only result in an insignificant
amount of cash payments.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk
We have operations both within the United States and internationally, and we are exposed to market
risks in the ordinary course of our business. These risks include primarily interest rate, foreign exchange
risks and inflation.
Interest Rate Fluctuation Risk
We had cash, cash equivalents, and short-term investments of $749.5 million and $577.5 million as of
December 31, 2012 and 2011, respectively. This amount was invested primarily in money market funds
and highly liquid investment grade fixed income securities. The cash, cash equivalents and short-term
marketable securities are held for working capital purposes. Our investment policy and strategy is focused
on the preservation of capital and supporting our liquidity requirements. We do not enter into investments
for trading or speculative purposes. At December 31, 2012, the weighted-average duration of our
investment portfolio was less than one year.
Our fixed-income portfolio is subject to fluctuations in interest rates, which could affect our results of
operations. Based on our investment portfolio balance as of December 31, 2012, a hypothetical increase in
interest rates of 1% (100 basis points) would have resulted in a decrease in the fair value of our portfolio
of approximately $4.8 million, and a hypothetical increase of 0.5% (50 basis points) would have resulted in
a decrease in the fair value of our portfolio of approximately $2.4 million.
Foreign Currency Exchange Risks
We have foreign currency risks related to our revenue and operating expenses denominated in
currencies other than the U.S. dollar, principally the British Pound Sterling, the Euro, the Australian
dollar, the Canadian dollar, the Indian rupee and the Singapore dollar. The volatility of exchange rates
depends on many factors that we cannot forecast with reliable accuracy. We have experienced and will
continue to experience fluctuations in our net income as a result of gains (losses) related to remeasuring
certain monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. In
the event our foreign currency denominated assets, liabilities, sales or expenses increase, our operating
results may be more greatly affected by fluctuations in the exchange rates of the currencies in which we
do business.
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