LinkedIn 2014 Annual Report Download - page 80
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Please find page 80 of the 2014 LinkedIn annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
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As of December 31, 2014, we had outstanding foreign currency derivative contracts with a total
notional amount of $190.1 million. If overall foreign currency exchange rates appreciated (depreciated)
uniformly by 5% against the U.S. dollar, our foreign currency derivative contracts outstanding as of
December 31, 2014 would experience a loss (gain) of approximately $8.0 million.
Market Risk and Market Interest Risk
On November 12, 2014, we issued $1,322.5 million aggregate principal amount of 0.50%
convertible senior notes (the ‘‘Notes’’). Holders may convert their notes prior to maturity under certain
circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our
Class A common stock, or a combination of cash and shares of our Class A common stock, at our
election. We intend to settle the principal and interest due on the Notes in cash. Concurrent with the
issuance of the Notes, we purchased options (‘‘Note Hedges’’) and sold warrants, in order to reduce
the potential economic dilution upon conversion of the Notes.
We do not have economic interest rate exposure related to the Notes, as they have a fixed annual
interest rate of 0.50%. We do, however, have interest rate risk because the fair value of our Notes will
generally increase when interest rates fall and decrease when interest rates rise. Additionally, the fair
value of our Notes may be impacted by price of our Class A common stock. As of December 31, 2014,
the estimated fair value of our Notes was $1,405.2 million based on the closing trading price of the
Notes as of the last day of trading for the period. See Note 8, Convertible Senior Notes, under Item 8
for additional information on the Notes, including the carrying value of the Notes.
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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