Vistaprint 2014 Annual Report Download - page 68

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64
the notional amount of our outstanding contracts is in excess of the variable-rate debt being hedged as of the balance
sheet date.
Interest rate swap contracts outstanding: Notional Amounts
Contracts accruing interest as of June 30, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 240,000
Contracts with a future start date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 345,000
Hedges of Currency Risk
We execute currency forward contracts in order to mitigate our exposure to fluctuations in various
currencies against our reporting currency, the U.S. dollar. We use currency derivatives, specifically currency forward
contracts, to manage this exposure. During the year ended June 30, 2014, we had both currency forward contract
activity for which we elected hedge accounting and activity for which we did not elect hedge accounting. In
evaluating our currency hedging program and ability to achieve hedge accounting in light of certain changes in our
legal entity cash flows, we considered the benefits of hedge accounting relative to the additional economic cost of
trade execution and administrative burden. Based on this analysis, we decided to not seek hedge accounting for
our currency forward contracts outstanding as of June 30, 2014, but we may elect to apply hedge accounting in
future scenarios. As a result, during the year ended June 30, 2014, we have experienced increased volatility within
other income (expense), net in our consolidated statements of operations from unrealized gains and losses on the
mark-to-market of outstanding currency forward contracts. We expect this volatility to continue in future periods for
contracts for which we do not apply hedge accounting.
The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow
hedges is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into
earnings in the period in which the hedged forecasted transaction affects earnings. The ineffective portion of the
change in fair value of the derivatives is recognized directly in earnings as a component of other income (expense),
net. As of June 30, 2014, we have no outstanding currency forward contracts that qualify for hedge accounting and,
as such, there are no current balances to be reclassified into earnings over the next twelve months.
As of June 30, 2014, we had the following outstanding currency forward contracts that were not designated
for hedge accounting and were used to hedge fluctuations in the U.S. Dollar value of forecasted transactions
denominated in Canadian Dollar, Danish Krone, The Euro, Great British Pound, Indian Rupee, New Zealand Dollar,
Norwegian Krone, Swedish Krona, and Swiss Franc:
Notional Amount Effective Date Maturity Date Number of Instruments Index
$127,514
December 2013
through June 2014
Various dates through
June 2015 215 Various