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Derivatives and Hedging Activity | 3 Months Ended
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Mar. 31, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging Activity |
12. | Derivatives and Hedging Activity
We are exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, we enter into various derivative instruments that reduce these risks by creating offsetting exposures. We generally do not enter into derivative transactions for trading or speculative purposes. Foreign Exchange Risk Management We are exposed to foreign exchange risk when we earn revenues, pay expenses, or enter into monetary intercompany transfers denominated in a currency that differs from our functional currency, or other transactions that are denominated in a currency other than our functional currency. We use foreign exchange derivatives, typically forward contracts and options, to reduce our overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than two years. Interest Rate Risk Management We enter into various long term debt agreements. We use interest rate derivatives, typically swaps, to reduce our exposure to the effects of interest rate fluctuations on the forecasted interest rates for up to two years into the future. We have not received or pledged any collateral related to derivative arrangements at March 31, 2017. The notional and fair values of derivative instruments are as follows at March 31, 2017 and December 31, 2016 (in millions):
|  | Notional Amount |  |  | Derivatives Assets (1) |  |  | Derivative Liabilities (2) |
|  | March 31, 2017 |  |  | Dec 31, 2016 |  |  | March 31, 2017 |  |  | Dec 31, 2016 |  |  | March 31, 2017 |  |  | Dec 31, 2016 |
Derivatives accounted for as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | 250.0 |  |  | $ | 200.0 |  |  | $ | 12.2 |  |  | $ | 11.4 |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts (3) |  |  | 6.2 |  |  |  | 4.1 |  |  |  | 5.2 |  |  |  | 2.1 |  |  |  | 12.8 |  |  |  | 17.5 |
Total |  | $ | 256.2 |  |  | $ | 204.1 |  |  | $ | 17.4 |  |  | $ | 13.5 |  |  | $ | 12.8 |  |  | $ | 17.5 |
(1) | Included within other current assets, $15.0 million and $12.5 million at March 31, 2017 and December 31, 2016, respectively, and other non-current assets, $2.4 million and $1.0 million at March 31, 2017 and December 31, 2016, respectively.
(2) | Included within other current liabilities, $8.9 million and $11.8 million at March 31, 2017 and December 31, 2016, respectively, and other non-current liabilities, $3.9 million and $5.7 million at March 31, 2017 and December 31, 2016, respectively.
(3) | Included within foreign exchange contracts at March 31, 2017 were $95.5 million of call options offset with $95.5 million of put options, and $46.9 million of buy forwards offset with $53.1 million of sell forwards. Included within foreign exchange contracts at December 31, 2016 were $78.3 million of call options offset with $78.3 million of put options, and $61.6 million of buy forwards offset with $57.5 million of sell forwards.
The amounts of derivative gains (losses) recognized in accumulated other comprehensive loss were as follows (in millions):
|  | Commission Revenue |  |  | Compensation Expense |  |  | Operating Expense |  |  | Interest Expense |  |  | Total |
March 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 0.8 |  |  | $ | 0.8 |
Foreign exchange contracts |  |  | 2.4 |  |  |  | 1.8 |  |  |  | 1.2 |  |  |  | — |  |  |  | 5.4 |
Total |  | $ | 2.4 |  |  | $ | 1.8 |  |  | $ | 1.2 |  |  | $ | 0.8 |  |  | $ | 6.2 |
March 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1.1 |  |  | $ | 1.1 |
Foreign exchange contracts |  |  | (3.4 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3.4 | )
Total |  | $ | (3.4 | ) |  | $ | — |  |  | $ | — |  |  | $ | 1.1 |  |  | $ | (2.3 | )
The amounts of derivative gains (losses) reclassified from accumulated other comprehensive loss into income (effective portion) were as follows (in millions):
|  | Commission Revenue |  |  | Compensation Expense |  |  | Operating Expense |  |  | Interest Expense |  |  | Total |
March 31, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts |  |  | (2.8 | ) |  |  | 0.2 |  |  |  | 0.2 |  |  |  | — |  |  |  | (2.4 | )
Total |  | $ | (2.8 | ) |  | $ | 0.2 |  |  | $ | 0.2 |  |  | $ | — |  |  | $ | (2.4 | )
March 31, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts |  |  | (1.2 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1.2 | )
Total |  | $ | (1.2 | ) |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (1.2 | )
We estimate that approximately $4.7 million of pretax gains currently included within accumulated other comprehensive loss will be reclassified into earnings in the next twelve months. The amount of gain (loss) recognized in earnings on the ineffective portion of derivatives for three-months ended March 31, 2017 and 2016 was $0.2 million and $0.3 million, respectively.

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