Derivative Financial Instruments

6 Months Ended

Jun. 30, 2014

Derivative Financial Instruments

Derivative Financial Instruments

Note 9—Derivative Financial Instruments

The Company periodically enters into foreign currency forward contracts with financial institutions to reduce the risk that the Company’s cash flows and earnings will be adversely affected by foreign currency exchange rate fluctuations. These forward contracts are not designated for trading or speculative purposes and are not designated as hedging instruments. The Company uses foreign currency forward contracts to hedge a portion of its receivable balances denominated in Euro, Swedish Krona, British Pounds, South African Rand and Norwegian Kroner. The Company recognizes gains and losses on these contracts, as well as related costs, in “Interest and other income (expense), net” in the condensed consolidated statement of operations along with the gains and losses of the related hedged items. The Company records the fair value of derivative instruments as either “Prepaid expenses and other” or “Accrued liabilities” in the condensed consolidated balance sheet based on current market rates.

As of June 30, 2014, Advent had no outstanding foreign currency forward contracts and there was no impact to the accompanying condensed consolidated statements of operations for the six months ended June 30, 2014. At June 30, 2013, net derivative assets of approximately $9,000 were included in “Prepaid expenses and other” or “Accrued liabilities” in the accompanying condensed consolidated balance sheet. The effect of the derivative financial instruments on the accompanying condensed consolidated statement of operations for the six months ended June 30, 2013 was to increase foreign exchange gains by approximately $36,000, which reflects net realized and unrealized gains related to our derivative financial instruments.