LinkedIn 2012 Annual Report Download - page 68

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We enter into foreign currency forward contracts to hedge against assets and liabilities for which we
have foreign currency exposure to minimize the risk that our earnings will be adversely affected by
exchange rate fluctuations. Our foreign currency forward contracts are not designated as hedging
instruments. These derivative instruments are carried at fair value with changes in the fair value recorded
to other income (expense), net in our consolidated statements of operations. These contracts do not
subject us to material balance sheet risk due to exchange rate movements because gains and losses on
these derivatives are intended to offset gains and losses on the hedged foreign currency denominated
assets and liabilities.
As of December 31, 2012, we had outstanding foreign currency forward contracts with a total
notional amount of $83.5 million. If overall foreign currency exchange rates appreciated (depreciated)
uniformly by 5% against the U.S. Dollar, our foreign currency forward contracts outstanding as of
December 31, 2012 would experience a loss (gain) of approximately $3.9 million.
Inflation Risk
We do not believe that inflation has had a material effect on our business, financial condition or
results of operations. If our costs were to become subject to significant inflationary pressures, we may not
be able to fully offset such higher costs through price increases. Our inability or failure to do so could
harm our business, financial condition and results of operations.
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