eBay 2012 Annual Report Download - page 117

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eBay Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Note 8 – Derivative Instruments
The notional amounts associated with our foreign currency contracts at December 31, 2012 and 2011 were $6.6 billion and $4.2 billion ,
respectively, of which $2.3 billion and $2.0 billion , respectively, were designated as cash flow hedges. Derivative transactions are measured in
terms of the notional amount, but this amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of
the risk profile of the instruments. The notional amount is generally not exchanged, but is used only as the basis on which the value of foreign
exchange payments under these contracts are determined .
During each of the fiscal years presented, the amounts recognized in earnings on derivative instruments designated as cash flow hedges
related to the ineffective portion were not material, and we did not exclude any component of the changes in fair value of the derivative
instruments from the assessment of hedge effectiveness. As of December 31, 2012 , we estimate that $45 million of net derivative losses related
to our cash flow hedges included in accumulated other comprehensive income will be reclassified into earnings within the next 12 months.
Fair Value of Derivative Contracts
The fair value of our outstanding derivative instruments was as follows:
Effect of Derivative Contracts on Accumulated Other Comprehensive Income
The following table summarizes the activity of derivative contracts that qualify for hedge accounting as of December 31, 2012 and 2011 ,
and the impact of designated derivative contracts on accumulated other comprehensive income for the years ended December 31, 2012 and
2011 :
F-24
Derivative Assets Reported in Other
Current Assets
Derivative Liabilities Reported in
Other Current Liabilities
December 31,
2012
December 31,
2011
December 31,
2012
December 31,
2011
(In millions)
Foreign exchange contracts designated as cash flow hedges
$
1
$
75
$
56
$
3
Foreign exchange contracts not designated as hedging
instruments
43
29
30
57
Other contracts not designated as hedging instruments
11
8
—
—
Total fair value of derivative instruments
$
55
$
112
$
86
$
60
December 31, 2011
Amount of gain (loss)
recognized in other
comprehensive income
(effective portion)
Amount of gain (loss)
reclassified from
accumulated other
comprehensive income
to net revenue and operating
expense
(effective portion)
December 31, 2012
(In millions)
Foreign exchange contracts
designated as cash flow hedges
$
72
(54
)
73
$
(55
)
December 31, 2010
Amount of gain (loss)
recognized in other
comprehensive income
(effective portion)
Amount of gain (loss)
reclassified from
accumulated other
comprehensive income
to net revenue and operating
expense
(effective portion)
December 31, 2011
(In millions)
Foreign exchange contracts
designated as cash flow hedges
$
14
72
14
$
72