Adobe 2012 Annual Report Download - page 97

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97
intended to offset gains and losses on the assets and liabilities being hedged. As of November 30, 2012, total notional amounts of
outstanding contracts were $422.9 million which included the notional equivalent of $209.8 million in Euro, $44.2 million in Yen
and $168.9 million in other foreign currencies. As of December 2, 2011, total notional amounts of outstanding contracts were
$560.1 million which included the notional equivalent of $307.8 million in Euro, $49.3 million in Yen and $203.0 million in other
foreign currencies. At November 30, 2012 and December 2, 2011, the outstanding balance sheet hedging derivatives had maturities
of 180 days or less.
The fair value of derivative instruments on our Consolidated Balance Sheets as of November 30, 2012 and December 2,
2011 was as follows (in thousands):
2012 2011
Fair Value
Asset
Derivatives(1)
Fair Value
Liability
Derivatives(2)
Fair Value
Asset
Derivatives(1)
Fair Value
Liability
Derivatives(2)
Derivatives designated as hedging instruments:
Foreign exchange option contracts(3) ....................... $ 10,897 $ — $ 19,296 $ —
Derivatives not designated as hedging instruments:
Foreign exchange forward contracts........................ 2,616 998 6,066 3,881
Total derivatives.......................................................... $ 13,513 $ 998 $ 25,362 $ 3,881
_________________________________________
(1) Included in prepaid expenses and other current assets on our Consolidated Balance Sheets.
(2) Included in accrued expenses on our Consolidated Balance Sheets.
(3) Hedging effectiveness expected to be recognized to income within the next twelve months.
The effect of derivative instruments designated as cash flow hedges and of derivative instruments not designated as hedges
in our Consolidated Statements of Income for fiscal 2012, 2011 and 2010 were as follows (in thousands):
2012 2011 2010
Foreign
Exchange
Option
Contracts
Foreign
Exchange
Forward
Contracts
Foreign
Exchange
Option
Contracts
Foreign
Exchange
Forward
Contracts
Foreign
Exchange
Option
Contracts
Foreign
Exchange
Forward
Contracts
Derivatives in cash flow hedging relationships:
Net gain (loss) recognized in OCI, net of tax(1) ........ $ 23,922 $ — $ 16,952 $ — $ 20,325 $ —
Net gain (loss) reclassified from accumulated
OCI into income, net of tax(2)................................ $ 30,672 $ — $ 3,749 $ — $ 20,169 $ —
Net gain (loss) recognized in income(3) .................... $(29,554) $ — $ (28,796) $ — $ (23,285) $ —
Derivatives not designated as hedging relationships:
Net gain (loss) recognized in income(4) .................... $ — $ 8,742 $ — $ (3,973) $ — $ 34,168
_________________________________________
(1) Net change in the fair value of the effective portion classified in other comprehensive income (“OCI”).
(2) Effective portion classified as revenue.
(3) Ineffective portion and amount excluded from effectiveness testing classified in interest and other income (expense), net.
(4) Classified in interest and other income (expense), net.
Table of Contents
ADOBE SYSTEMS INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)