XML 31 R18.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Hedging Activities | 3 Months Ended
--- | ---
Jun. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Hedging Activities | Hedging Activities In the normal course of business, we are exposed to interest rate and foreign currency exchange rate fluctuations. At times, we limit these risks through the use of derivatives such as interest rate swaps, cross-currency swaps and foreign currency forward contracts. In accordance with our policy, derivatives are only used for hedging purposes. We do not use derivatives for trading or speculative purposes. Foreign currency exchange risk We conduct our business worldwide in U.S. dollars and the functional currencies of our foreign subsidiaries, including Euro, British pound sterling and Canadian dollars. Changes in foreign currency exchange rates could have a material adverse impact on our financial results which are reported in U.S. dollars. We are also exposed to foreign currency exchange rate risk related to our foreign subsidiaries, including intercompany loans denominated in non-functional currencies. We have certain foreign currency exchange rate risk programs that use foreign currency forward contracts and cross-currency swaps. These forward contracts and cross-currency swaps are generally used to offset the potential effects on the statements of operations from intercompany loans denominated in non-functional currencies. These programs reduce but do not entirely eliminate foreign currency exchange rate risk. At June 30, 2018, we had €1.95 billion Euro-denominated notes and £450 million British pound sterling-denominated notes designated as non-derivative net investment hedges which hedge portions of our net investments in non-U.S. subsidiaries against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. For all notes that are designated as net investment hedges and meet highly effectiveness requirements, the changes in carrying value of the notes attributable to the change in spot rates are recorded in foreign currency translation adjustments within Accumulated Other Comprehensive Income in the statements of stockholders’ equity where they offset foreign currency translation gains and losses recorded on our net investments. To the extent foreign currency denominated notes designated as net investment hedges are not highly effective, changes in carrying value attributable to the change in spot rates are recorded in earnings. Gains or losses from net investment hedges recorded in other comprehensive income were gains of $161 million and losses of $114 million during the first quarters of 2019 and 2018. There was no ineffectiveness in our net investment hedges during the first quarters of 2019 and 2018. Derivatives Designated as Hedges In March 2018, we entered into cross-currency swap contracts with total gross notional amounts of £432 million, which are designated as net investment hedges. Under the terms of the cross-currency swap contracts, we agree with third parties to exchange fixed interest payments in one currency for fixed interest payments in another currency at specified intervals and to exchange principal in one currency for principal in another currency, calculated by reference to agreed-upon notional amounts. These swaps are utilized to hedge portions of our net investments denominated in British pound sterling against the effect of exchange rate fluctuations on the translation of foreign currency balances to the U.S. dollar. The changes in the fair value of these derivatives attributable to the changes in spot currency exchange rates and differences between spot and forward interest rates are recorded in Accumulated Other Comprehensive Income in the statement of stockholders’ equity where they offset foreign currency translation gains and losses recorded on our net investments denominated in British pound sterling. Gains from these net investment hedges recorded in other comprehensive income were $34 million for first quarter of 2019. These cross-currency swaps will mature between February 2022 and February 2024. At June 30, 2018 and March 31, 2018, we had forward contracts to hedge the U.S. dollar against cash flows denominated in Canadian dollars with total gross notional values of $162 million, which were designated as cash flow hedges. These contracts will mature between March 2019 and March 2020. From time to time, we enter into cross-currency swaps to hedge intercompany loans denominated in non-functional currencies. These cross-currency swaps are designed to reduce the effects on the statements of operations arising from fluctuations in foreign exchange rates and have been designated as cash flow hedges. At June 30, 2018 and March 31, 2018, we had cross-currency swaps with total gross notional amounts of approximately $3,412 million, which are designated as cash flow hedges. These swaps will mature between July 2018 and January 2024. For forward contracts and cross-currency swaps that are designated as cash flow hedges and are highly effective, the changes in the fair value of the hedges is recorded in Accumulated Other Comprehensive Income and reclassified into earnings in the same period in which the hedged transaction affects earnings. Changes in fair values representing hedge ineffectiveness are recognized in current earnings. Losses from cash flow hedges were not material in the first quarter of 2019 and $14 million in the first quarter of 2018 and were recorded in other comprehensive income. Gains or losses reclassified from Accumulated Other Comprehensive Income and recorded in operating expenses in the condensed consolidated statements of operations were not material in the first quarters of 2019 and 2018. There was no ineffectiveness in our cash flow hedges for the first quarters of 2019 and 2018. Derivatives Not Designated as Hedges Derivative instruments not designated as hedges are marked-to-market at the end of each accounting period with changes in values included in earnings. We have a number of forward contracts to hedge the Euro against cash flows denominated primarily in British pound sterling and other European currencies. At June 30, 2018 and March 31, 2018, the total gross notional amounts of these contracts were $39 million and $29 million. These contracts will mature through December 2018 and none of these contracts were designated for hedge accounting. Changes in the fair values for contracts not designated as hedges are recorded directly into earnings and were not material for the first quarters of 2019 and 2018. Gains or losses from these contracts are largely offset by changes in the value of the underlying intercompany foreign currency loans. Information regarding the fair value of derivatives on a gross basis is as follows:
| Balance Sheet Caption | June 30, 2018 |  | March 31, 2018
| Fair Value of Derivative | U.S. Dollar Notional |  | Fair Value of Derivative | U.S. Dollar Notional
(In millions) | Asset | Liability |  | Asset | Liability
Derivatives designated for hedge accounting |  |  |  |  |  |  |  |
Foreign exchange contracts (current) | Prepaid expenses and other | $ | 16 |  | $ | — |  | $ | 81 |  |  | $ | 15 |  | $ | — |  | $ | 81 |
Foreign exchange contracts (noncurrent) | Other Noncurrent Assets | 16 |  | — |  | 81 |  |  | 14 |  | — |  | 81 |
Cross currency swaps (current) | Prepaid expenses and other/Other accrued liabilities | 26 |  | 10 |  | 504 |  |  | — |  | 7 |  | 504 |
Cross currency swaps (noncurrent) | Other Noncurrent Assets/Liabilities | 45 |  | 115 |  | 3,508 |  |  | — |  | 222 |  | 3,508 |
Total |  | $ | 103 |  | $ | 125 |  |  |  | $ | 29 |  | $ | 229 |  |
Derivatives not designated for hedge accounting |  |  |  |  |  |  |  |
Foreign exchange contracts (current) | Prepaid expenses and other | $ | — |  | $ | — |  | $ | 32 |  |  | $ | — |  | $ | — |  | $ | 13 |
Foreign exchange contracts (current) | Other accrued liabilities | — |  | — |  | 7 |  |  | — |  | — |  | 16 |
Total |  | $ | — |  | $ | — |  |  |  | $ | — |  | $ | — |  |
Refer to Financial Note 13, "Fair Value Measurements," for more information on these recurring fair value measurements.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration