POLYCOM INC - 10-Q filing on 2015-04-30

Foreign Currency Derivatives (Tables)

3 Months Ended

Mar. 31, 2015

Derivative Instruments Measured at Gross Fair Value as Reflected in Condensed Consolidated Balance Sheets

The following table shows the Company’s derivative instruments measured at gross fair value as reflected in the condensed consolidated balance sheets(in thousands):

	Fair Value of Derivatives Designated as Hedge Instruments				Fair Value of Derivatives Not Designated as Hedge Instruments
	March 31, 2015		December 31, 2014		March 31, 2015		December 31, 2014
Derivative assets (a):
Foreign exchange contracts	$	11,012	$	5,501	$	11,796	$	8,841
Derivative liabilities (b):
Foreign exchange contracts	$	5,856	$	4,041	$	6,795	$	4,134

(a)	All derivative assets are recorded in “Prepaid and other current assets” in the condensed consolidated balance sheets.

(b)	All derivative liabilities are recorded in “Other accrued liabilities” in the condensed consolidated balance sheets.

Offsetting of Derivative Assets

The following table sets forth the offsetting of derivative assets (in thousands):

							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts Of Assets Presented In the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
As of March 31, 2015:
Foreign exchange contracts	$	22,808	$	—	$	22,808	$	(12,445	)	$	—	$	10,363
As of December 31, 2014:
Foreign exchange contracts	$	14,342	$	—	$	14,342	$	(8,175	)	$	—	$	6,167

Offsetting of Derivative Liabilities

The following table sets forth the offsetting of derivative liabilities (in thousands):

							Gross Amounts Not Offset in the Condensed Consolidated Balance Sheets
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Condensed Consolidated Balance Sheets		Net Amounts Of Liabilities Presented In the Condensed Consolidated Balance Sheets		Financial Instruments			Cash Collateral Pledged		Net Amount
As of March 15, 2015:
Foreign exchange contracts	$	12,651	$	—	$	12,651	$	(12,445	)	$	—	$	206
As of December 31, 2014:
Foreign exchange contracts	$	8,175	$	—	$	8,175	$	(8,175	)	$	—	$	—

Cash Flow Hedging

Schedule of Notional Amount of Foreign Currency

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding cash flow hedges at March 31, 2015 (in thousands):

	Original Maturities of 360 Days or Less					Original Maturities of Greater than 360 Days
	Foreign Currency		USD Equivalent		Positions	Foreign Currency		USD Equivalent		Positions
Chinese Yuan		34,885	$	5,525	Buy		109,600	$	17,065	Buy
Euro		8,465	$	10,788	Buy		20,100	$	23,711	Buy
Euro		14,373	$	18,319	Sell		60,800	$	71,897	Sell
British Pound		4,006	$	6,489	Buy		20,900	$	32,041	Buy
British Pound		3,653	$	5,918	Sell		31,300	$	47,929	Sell
Israeli Shekel		21,060	$	5,756	Buy		76,000	$	19,476	Buy

Effect of Derivative Instruments in Condensed Consolidated Statements of Operations

The following tables show the effect of the Company’s derivative instruments designated as cash flow hedges in the condensed consolidated statements of operations for the following periods (in thousands):

	Gain or (Loss) Recognized in OCI-Effective Portion			Location of Gain or (Loss) Reclassified from OCI into Income-Effective Portion	Gain or (Loss) Reclassified from OCI into Income-Effective Portion			Location of Gain or (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing	Gain or (Loss) Recognized-Ineffective Portion and Amount Excluded from Effectiveness Testing (a)
	Three Months Ended March 31, 2015
Foreign exchange contracts	$	6,298		Product revenues	$	6,636		Interest and other income (expense), net	$	(31	)
				Cost of revenues		(801	)
				Sales and marketing		(1,787	)
				Research and development		(715	)
				General and administrative		(775	)
	$	6,298			$	2,558			$	(31	)


	Three Months Ended March 31, 2014
Foreign exchange contracts	$	(421	)	Product revenues	$	(2,865	)	Interest and other income (expense), net	$	75
				Cost of revenues		532
				Sales and marketing		1,080
				Research and development		415
				General and administrative		172
	$	(421	)		$	(666	)		$	75

(a)	There were no gains or losses recognized in income due to ineffectiveness in the periods presented.

Not Designated as Hedging Instrument

Schedule of Notional Amount of Foreign Currency

The following table summarizes the Company’s notional position by currency, and approximate U.S. dollar equivalent of the outstanding non-designated hedges at March 31, 2015 (in thousands):

	Original Maturities of 360 Days or Less					Original Maturities of Greater than 360 Days
	Foreign Currency		USD Equivalent		Positions	Foreign Currency		USD Equivalent		Positions
Brazilian Real		13,050	$	4,068	Buy		—	$	—	—
Brazilian Real		27,428	$	8,959	Sell		—	$	—	—
Chinese Yuan		68,815	$	10,915	Buy		—	$	—	—
Chinese Yuan		65,927	$	10,441	Sell		—	$	—	—
Euro		28,104	$	32,969	Buy		—	$	—	—
Euro		66,276	$	79,431	Sell		—	$	—	—
British Pound		21,461	$	34,132	Buy		—	$	—	—
British Pound		23,672	$	38,084	Sell		—	$	—	—
Israeli Shekel		74,381	$	20,230	Buy		—	$	—	—
Israeli Shekel		71,637	$	17,993	Sell		—	$	—	—
Japanese Yen		444,549	$	3,706	Buy		—	$	—	—
Japanese Yen		842,258	$	7,031	Sell		—	$	—	—
Mexican Peso		15,361	$	1,005	Buy		—	$	—	—
Mexican Peso		31,382	$	2,071	Sell		—	$	—	—

Effect of Derivative Instruments in Condensed Consolidated Statements of Operations

The following table shows the effect of the Company’s non-designated hedges in the condensed consolidated statements of operations (in thousands):

Derivatives Not Designated as Hedging Instruments	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
		Three Months Ended
		March 31, 2015		March 31, 2014
Foreign exchange contracts	Interest and other income (expense), net	$	4,673	$	334