Netgear 2013 Annual Report Download - page 81

Download and view the complete annual report

Please find page 81 of the 2013 Netgear 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.

Page out of 121

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121

Table of Contents NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The following tables set forth the offsetting of derivative liabilities as of December 31, 2013 and December 31, 2012 (in thousands):
Cash flow hedges
To help manage the exposure of operating margins to fluctuations in foreign currency exchange rates, the Company hedges a portion of its
anticipated foreign currency revenue, costs of revenue and certain operating expenses. These hedges are designated at the inception of the hedge
relationship as cash flow hedges under the authoritative guidance for derivatives and hedging. Effectiveness is tested at least quarterly both
prospectively and retrospectively using regression analysis to ensure that the hedge relationship has been effective and is likely to remain effective in the
future. The Company typically hedges portions of its anticipated foreign currency exposure for three to five months. The Company enters into about
five
forward contracts per quarter with an average size of about $7 million USD equivalent related to its cash flow hedging program.
The Company expects to reclassify to earnings all of the amounts recorded in other comprehensive income ("OCI") associated with its cash flow
hedges over the next 12
months. OCI associated with cash flow hedges of foreign currency revenue is recognized as a component of net revenue in the
same period as the related revenue is recognized. OCI associated with cash flow hedges of foreign currency costs of revenue and operating expenses are
recognized as a component of cost of revenue and operating expense in the same period as the related costs of revenue and operating expenses are
recognized.
Derivative instruments designated as cash flow hedges must be de-
designated as hedges when it is probable the forecasted hedged transaction will
not occur within the designated hedge period or if not recognized within 60 days following the end of the
78
As of December 31, 2012
Gross Amounts Not Offset in the Condensed
Consolidated Balance Sheets
Gross Amounts of
Recognized Assets
Gross Amounts Offset in
the Condensed
Consolidated Balance
Sheets
Net Amounts Of Assets
Presented in the
Condensed Consolidated
Balance Sheets
Financial Instruments
Cash Collateral Pledged
Net Amount
Barclays
$
1,107
$
—
$
1,107
$
(1,107
)
$
—
$
—
Wells Fargo Bank
37
—
37
(37
)
—
—
Total
$
1,144
$
—
$
1,144
$
(1,144
)
$
—
$
—
As of December 31, 2013
Gross Amounts Not Offset in the Condensed
Consolidated Balance Sheets
Gross Amounts of
Recognized Liabilities
Gross Amounts Offset in
the Condensed
Consolidated Balance
Sheets
Net Amounts Of Liabilities
Presented in the
Condensed Consolidated
Balance Sheets
Financial Instruments
Cash Collateral Pledged
Net Amount
Barclays
$
287
$
—
$
287
$
(287
)
$
—
$
—
Wells Fargo Bank
94
—
94
—
—
94
Total
$
381
$
—
$
381
$
(287
)
$
—
$
94
As of December 31, 2012
Gross Amounts Not Offset in the Condensed
Consolidated Balance Sheets
Gross Amounts of
Recognized Liabilities
Gross Amounts Offset in
the Condensed
Consolidated Balance
Sheets
Net Amounts Of Liabilities
Presented in the
Condensed Consolidated
Balance Sheets
Financial Instruments
Cash Collateral Pledged
Net Amount
Barclays
$
1,401
$
—
$
1,401
$
(1,107
)
$
—
$
294
Wells Fargo Bank
218
—
218
(37
)
—
181
Total
$
1,619
$
—
$
1,619
$
(1,144
)
$
—
$
475