Incredimail 2009 Annual Report Download - page 106

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INCREDIMAIL LTD .
AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In order to reduce the impact of changes in foreign currency exchange rates on its results, the Company enters into foreign
currency exchange forward contracts and options contracts to purchase and sell foreign currencies to hedge a portion of its
foreign currency net exposure resulting from payroll expenses denominated in NIS.
The foreign currency exchange forward contracts and options contracts are not designated as hedging instruments under hedge
accounting. These instruments are generally short term in nature, with typical maturities of less than one year, and are subject to
fluctuations in foreign exchange rates. Gains or losses on these derivatives, which partially offset the foreign currency impact
from the underlying exposures were classified into financial income (expenses), net and amounted to $34,000 for the year ended
December 31, 2009.
The Company’s derivatives expose it to credit risks from possible non-performance by counterparties. The maximum amount of
loss due to credit risk that the Company would incur if counterparties to the derivative financial instruments failed completely to
perform according to the terms of the contracts, based on the gross fair value of the Company’s derivative contracts that are
favorable to the Company, was approximately $36,000, presented as part of other receivables and prepaid expenses, as of
December 31, 2009. The Company has limited its credit risk by entering into derivative transactions exclusively with investment-
grade rated financial institutions and monitors the creditworthiness of these financial institutions on an ongoing basis.
The notional amounts of the Company’s derivative instruments as of December 31, 2009 amounted to $3,250,000. Notional
values are U.S. dollar translated and calculated based on forward rates as of December 31, 2009 for forward contracts and based
on spot rates as of December 31, 2009 for options. Gross notional amounts do not quantify risk or represent assets or liabilities of
the Company, but are used in the calculation of settlements under the contracts.
Total revenues from external customers divided on the basis of the Company's product lines are as follows:
F-25
NOTE 12:
-
DERIVTATIVE FINANCIAL INSTRUMENTS
NOTE
13
:
-
PRODUCT LINES
Year ended December 31,
2007
2008
2009
U.S. dollars in thousands
Search
$
7,855
$
11,745
$
20,011
Software license
3,128
3,609
2,451
Content database
2,526
1,745
1,282
Advertising and collaborations
1,714
924
418
Anti
-
Spam
3,424
3,804
2,984
Bizchord
-
clearing house services
28
79
49
$
18,675
$
21,906
$
27,195