Derivatives and Hedging Activity

3 Months Ended

Mar. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

14.	Derivatives and Hedging Activity

We adopted ASC 2017-12 on January 1, 2019. Among other provisions, the new standard required modification to existing presentation and disclosure requirements on a prospective basis. As such, certain disclosures below conform to the disclosure requirements prior to the adoption of ASC 2017-12.

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 three 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 three years into the future.

We have not received or pledged any collateral related to derivative arrangements at March 31, 2019.

The notional and fair values of derivatives designated as hedging instruments are as follows at March 31, 2019 and December 31, 2018 (in millions):

			Derivative Assets				Derivative Liabilities
Instrument	Notional Amount		Balance Sheet Classification		Fair Value		Balance Sheet Classification		Fair Value
At March 31, 2019
Interest rate contracts	$	750.0		Other current assets	$	0.6		Accrued compensation and other current liabilities	$	29.8
Foreign exchange contracts (1)		41.2		Other current assets		1.0		Accrued compensation and other current liabilities		2.7
				Other noncurrent assets		4.2		Other noncurrent liabilities		4.0
Total	$	791.2			$	5.8			$	36.5
At December 31 , 2018
Interest rate contracts	$	850.0		Other current assets	$	3.0		Accrued compensation and other current liabilities	$	13.0
Foreign exchange contracts (1)		51.4		Other current assets		0.9		Accrued compensation and other current liabilities		4.9
				Other noncurrent assets		5.7		Other noncurrent liabilities		7.9
Total	$	901.4			$	9.6			$	25.8

(1)

Included within foreign exchange contracts at March 31, 2019 were $248.8 million of call options offset with $248.8 million of put options, and $26.9 million of buy forwards offset with $68.1 million of sell forwards. Included within foreign exchange contracts at December 31, 2018 were $276.4 million of call options offset with $276.4 million of put options, and $23.1 million of buy forwards offset with $72.9 million of sell forwards.

The effect of cash flow hedge accounting on accumulated other comprehensive earnings (loss) for the three-month periods ended

March 31, 2019 and 2018 were as follows (in millions):

Instrument	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Earnings (1)			Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Earnings into Earnings			Amount of Gain (Loss) Recognized in Earnings Related to Amount Excluded from Effectiveness Testing			Statement of Earnings Classification
Three-month period ended March 31, 2019
Interest rate contracts	$	(20.9	)	$	(0.3	)	$	—		Interest expense
Foreign exchange contracts		3.7			(0.1	)		(0.2	)	Commission revenue
					(0.2	)		0.4		Compensation expense
					(0.1	)		0.2		Operating expense
Total	$	(17.2	)	$	(0.7	)	$	0.4
Three-month period ended March 31, 2018
Interest rate contracts	$	4.2		$	0.2					Interest expense
Foreign exchange contracts		4.3			0.7					Commission revenue
					0.5					Compensation expense
					0.4					Operating expense
Total	$	8.5		$	1.8

(1)	For the three-month period ended March 31, 2019, the amount excluded from the assessment of hedge effectiveness for our foreign exchange contracts recognized in accumulated other comprehensive earnings was a loss of $0.1 million.

We estimate that approximately $1.7 million of pretax loss currently included within accumulated other comprehensive loss will be reclassified into earnings in the next twelve months.