Juno 2012 Annual Report Download - page 129

Table of Contents
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accrued liabilities in the consolidated balance sheets at fair value. The Company records changes in the fair value (i.e., gains or losses) of derivatives as
interest expense, other income, net, or technology and development expenses in the consolidated statements of operations or in accumulated other
comprehensive loss in the consolidated balance sheets. Neither the interest rate caps nor the forward foreign currency exchange contracts contain any
credit risk-related contingent features. The Company's hedging program is not designed for trading or speculative purposes.
Net Investment Hedges—For derivative instruments that are designated and qualify as a hedge of a net investment, the gain or loss is reported in
accumulated other comprehensive loss in the consolidated balance sheets to the extent the hedge is effective, with the related amounts due to or from
counterparties included in accrued liabilities or other current assets, respectively. The Company utilizes the forward-rate method of assessing hedge
effectiveness. Gains or losses related to any ineffective portions of net investment hedges are recognized in other income, net in the consolidated
statements of operations. The Company presents the cash flows of net investment hedges in investing activities in the consolidated statements of cash
flows.
Cash Flow Hedges—The Company's interest rate cap instruments are designated as cash flow hedges to hedge against expected future cash flows
attributable to future interest payments on a portion of the outstanding borrowings under the Credit Agreement. In addition, the Company enters into
forward foreign currency exchange contracts designated as cash flow hedges to hedge certain forecasted expense transactions occurring up to
12 months in the future and denominated in currencies other than the U.S. Dollar. The Company initially reports the gains or losses related to the
effective portion of the hedges as a component of accumulated other comprehensive loss in the consolidated balance sheets and subsequently reclassifies
the forward foreign currency exchange contracts' gains or losses to technology and development expenses and the interest rate caps' gains or losses to
interest expense when the hedged expenses are recorded. The Company includes the change in the time value of the interest rate caps in its assessment
of their hedge effectiveness and excludes the change in the time value of the forward foreign currency exchange contracts from its assessment of their
hedge effectiveness. Gains or losses related to the change in time value of the forward foreign currency exchange contracts are immediately recognized
in other income, net, along with any additional ineffectiveness. The Company presents the cash flows from cash flow hedges in the same category in the
consolidated statements of cash flows as the category for the cash flows from the hedged items.
Other Derivatives—Other derivatives not designated as hedging instruments consist of forward foreign currency exchange contracts that the
Company uses to hedge intercompany transactions and partially offset the economic effect of fluctuations in foreign currency exchange rates. The
Company recognizes realized and unrealized gains and losses on these contracts in other income, net. The Company presents the cash flows of other
derivatives in investing activities in the consolidated statements of cash flows.
For additional information related to derivative instruments, see Note 7—"Derivative Instruments".
—ASC 820, , establishes a three-tiered hierarchy that draws a
distinction between market participant assumptions based on (i) quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1);
(ii) inputs
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