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Annual Report
We transact business in various foreign currencies and have significant international sales and expenses
denominated in foreign currencies, subjecting us to foreign currency risk. We purchase foreign currency forward
contracts, generally with maturities of 15 months or less, to reduce the volatility of cash flows primarily related
to forecasted revenue and expenses denominated in certain foreign currencies. Our cash flow risks are primarily
related to fluctuations in the Euro, British pound sterling, Canadian dollar, and Swedish krona. In addition, we
utilize foreign currency forward contracts to mitigate foreign exchange rate risk associated with foreign-
currency-denominated monetary assets and liabilities, primarily intercompany receivables and payables. The
foreign currency forward contracts not designated as hedging instruments generally have a contractual term of
approximately 3 months or less and are transacted near month-end. We do not use foreign currency forward
contracts for speculative trading purposes.
Cash Flow Hedging Activities
Certain of our forward contracts are designated and qualify as cash flow hedges. The effectiveness of the cash
flow hedge contracts, including time value, is assessed monthly using regression analysis, as well as other timing
and probability criteria. To qualify for hedge accounting treatment, all hedging relationships are formally
documented at the inception of the hedges and must be highly effective in offsetting changes to future cash flows
on hedged transactions. The derivative assets or liabilities associated with our hedging activities are recorded at
fair value in other current assets or accrued and other current liabilities on our Consolidated Balance Sheets. The
effective portion of gains or losses resulting from changes in the fair value of these hedges is initially reported,
net of tax, as a component of accumulated other comprehensive income in stockholders’ equity. The gross
amount of the effective portion of gains or losses resulting from changes in the fair value of these hedges is
subsequently reclassified into net revenue or research and development expenses, as appropriate, in the period
when the forecasted transaction is recognized in our Consolidated Statements of Operations. In the event that the
gains or losses in accumulated other comprehensive income are deemed to be ineffective, the ineffective portion
of gains or losses resulting from changes in fair value, if any, is reclassified to interest and other income
(expense), net, in our Consolidated Statements of Operations. In the event that the underlying forecasted
transactions do not occur, or it becomes remote that they will occur, within the defined hedge period, the gains or
losses on the related cash flow hedges are reclassified from accumulated other comprehensive income to interest
and other income (expense), net, in our Consolidated Statements of Operations.
Total gross notional amounts and fair values for currency derivatives with cash flow hedge accounting
designation are as follows:
As of March 31, 2015 As of March 31, 2014
Notional
Amount
Fair Value Notional
Amount
Fair Value
Asset Liability Asset Liability
Forward contracts to purchase ........................ $108 $— $8 $179 $— $3
Forward contracts to sell ............................ $508 $18 $1 $363 $— $2
The net impact of the effective portion of gains and losses from our cash flow hedging activities in our
Consolidated Statements of Operations for the fiscal years ended March 31, 2015, 2014 and 2013 was a loss of
$11 million, $9 million, and $4 million, respectively.
During the fiscal years ended March 31, 2015, 2014 and 2013, we reclassified an immaterial amount of the
ineffective portion of gains or losses resulting from changes in fair value into interest and other income
(expense), net.
Balance Sheet Hedging Activities
Our foreign currency forward contracts that are not designated as hedging instruments are accounted for as
derivatives whereby the fair value of the contracts are reported as other current assets or accrued and other
current liabilities on our Consolidated Balance Sheets, and gains and losses resulting from changes in the fair
value are reported in interest and other income (expense), net, in our Consolidated Statements of Operations. The
gains and losses on these foreign currency forward contracts generally offset the gains and losses in the
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