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ATVI » Topics » Foreign Currency Forward Contracts Not Designated as Hedges

This excerpt taken from the ATVI 10-Q filed May 8, 2009.

Foreign Currency Forward Contracts Not Designated as Hedges

 

We transact business in various currencies other than the U.S. dollar and have significant international sales and expenses denominated in currencies other than the U.S. dollar, subjecting us to currency exchange rate risks. To mitigate our risk from foreign currency fluctuations we periodically enter into currency derivative contracts, principally swaps and forward contracts with maturities of twelve months or less with Vivendi as our principal counterparty. We do not hold or purchase any foreign currency contracts for trading or speculative purposes and we do not designate these forward contracts or swaps as hedging instruments pursuant to FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.”  Accordingly, we report the fair value of these contracts in our Condensed Consolidated Balance Sheet with changes in fair value recorded in our Condensed Consolidated Statement of Operations.

 

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Table of Contents

 

The effects of derivative instruments on our Condensed Consolidated Financial Statements were as follows (amounts in millions):

 

Fair Value of Derivative Instruments in Condensed
Consolidated Balance Sheet

 

Fair Value
At March 31, 2009

 

Balance Sheet Location

 

Foreign currency swaps and forward contracts not designated as hedges

 

$

1

 

Accrued expenses and other liabilities

 

 

Effect of Derivative Instruments on Condensed Consolidated
Statement of Operations

 

Amount of Net Realized and
Unrealized Gain (Loss)
Recognized in Income on
Derivatives for the Three
Months Ended March 31, 2009

 

Income Statement Location

 

Foreign currency swaps and forward contracts not designed as hedges

 

$

2

 

Investment income, net

 

 

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