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Derivatives and Hedging | 9 Months Ended
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Sep. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Hedging | Derivatives and Hedging The Company is exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, the Company enters into various derivative instruments that reduce these risks by creating offsetting exposures. The Company does not enter into derivative transactions for trading or speculative purposes. Foreign Exchange Risk Management The Company is exposed to foreign exchange risk when it earns revenues, pays expenses, or enters into monetary intercompany transfers denominated in a currency that differs from its functional currency, or other transactions that are denominated in a currency other than its functional currency. The Company uses foreign exchange derivatives, typically forward contracts, options and cross currency swaps, to reduce its overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than two years. These derivatives are accounted for as hedges, and changes in fair value are recorded each period in Other comprehensive income (loss) in the Condensed Consolidated Statements of Comprehensive Income. The Company also uses foreign exchange derivatives, typically forward contracts and options to economically hedge the currency exposure of the Company's global liquidity profile, including monetary assets or liabilities that are denominated in a non-functional currency of an entity, typically on a rolling 30 day basis, but may be for up to one year in the future. These derivatives are not accounted for as hedges, and changes in fair value are recorded each period in Other income in the Condensed Consolidated Statements of Income. Interest Rate Risk Management The Company holds variable-rate short-term brokerage and other operating deposits. The Company uses interest rate derivatives, typically swaps, to reduce its exposure to the effects of interest rate fluctuations on the forecasted interest receipts from these deposits for up to two years in the future. Certain derivatives also give rise to credit risks from the possible non-performance by counterparties. The credit risk at the balance sheet date is generally limited to the fair value of those contracts that are favorable to the Company. The Company has reduced its credit risk by (1) using International Swaps and Derivatives Association master agreements, collateral and credit support arrangements, (2) entering into non-exchange-traded derivatives with highly-rated major financial institutions and (3) using exchange-traded instruments. The Company monitors the creditworthiness of, and exposure to, its counterparties. As of September 30, 2015, all net derivative positions were free of credit risk contingent features. The Company had not received or pledged any collateral related to derivative arrangements as of September 30, 2015. The notional and fair values of derivative instruments are as follows (in millions):
| Notional Amount |  | Derivative Assets (1) |  | Derivative Liabilities (2)
| September 30, 2015 |  | December 31, 2014 |  | September 30, 2015 |  | December 31, 2014 |  | September 30, 2015 |  | December 31, 2014
Derivatives accounted for as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts | 965 |  |  | 1,200 |  |  | 34 |  |  | 46 |  |  | 50 |  |  | 58 |
Total | 965 |  |  | 1,200 |  |  | 34 |  |  | 46 |  |  | 50 |  |  | 58 |
Derivatives not accounted for as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts (3) | 176 |  |  | 165 |  |  | — |  |  | — |  |  | 1 |  |  | — |
Total | $ | 1,141 |  |  | $ | 1,365 |  |  | $ | 34 |  |  | $ | 46 |  |  | $ | 51 |  |  | $ | 58 |
______________________________________________
(1) | Included within Other current assets ($16 million at September 30, 2015 and $24 million at December 31, 2014) or Other non-current assets ($18 million at September 30, 2015 and $22 million at December 31, 2014).
(2) | Included within Other current liabilities ($40 million at September 30, 2015 and $52 million at December 31, 2014) or Other non-current liabilities ($11 million at September 30, 2015 and $6 million at December 31, 2014).
(3) | These contracts typically are for 30 day durations and executed close to the last day of the most recent reporting month, thereby resulting in nominal fair values at the balance sheet date.
Offsetting of financial assets and derivatives assets are as follows (in millions):
| Gross Amounts of Recognized Assets |  | Gross Amounts Offset in the Statement of Financial Position |  | Net Amounts of Assets Presented in the Statement of Financial Position (1)
| September 30, 2015 |  | December 31, 2014 |  | September 30, 2015 |  | December 31, 2014 |  | September 30, 2015 |  | December 31, 2014
Derivatives accounted for as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts | 34 |  |  | 46 |  |  | (14 | ) |  | (14 | ) |  | 20 |  |  | 32 |
Total | 34 |  |  | 46 |  |  | (14 | ) |  | (14 | ) |  | 20 |  |  | 32 |
Derivatives not accounted for as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | 34 |  |  | $ | 46 |  |  | $ | (14 | ) |  | $ | (14 | ) |  | $ | 20 |  |  | $ | 32 |
______________________________________________ (1) Included within Other current assets ($8 million at September 30, 2015 and $12 million at December 31, 2014) or Other non-current assets ($12 million at September 30, 2015 and $20 million at December 31, 2014). Offsetting of financial liabilities and derivative liabilities are as follows (in millions):
| Gross Amounts of Recognized Liabilities |  | Gross Amounts Offset in the Statement of Financial Position |  | Net Amounts of Liabilities Presented in the Statement of Financial Position (1)
| September 30, 2015 |  | December 31, 2014 |  | September 30, 2015 |  | December 31, 2014 |  | September 30, 2015 |  | December 31, 2014
Derivatives accounted for as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Interest rate contracts | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts | 50 |  |  | 58 |  |  | (15 | ) |  | (14 | ) |  | 35 |  |  | 44 |
Total | 50 |  |  | 58 |  |  | (15 | ) |  | (14 | ) |  | 35 |  |  | 44 |
Derivatives not accounted for as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts | 1 |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  | — |
Total | $ | 51 |  |  | $ | 58 |  |  | $ | (15 | ) |  | $ | (14 | ) |  | $ | 36 |  |  | $ | 44 |
______________________________________________ (1) Included within Other current liabilities ($32 million at September 30, 2015 and $40 million at December 31, 2014) or Other non-current liabilities ($4 million at September 30, 2015 and $4 million at December 31, 2014). The amounts of derivative gains (losses) recognized in the Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2015 and 2014 are as follows (in millions):
Three Months Ended September 30, 2015 |  |  |  |  |  |  |  |
|  | Location of future reclassification from Accumulated Other Comprehensive Loss |  | Gain (Loss) recognized in Accumulated Other Comprehensive Loss:
|  | Compensation and Benefits |  | Other General Expenses |  | Interest Expense |  | Other Income (Expense) |  | Total
Cash flow hedges: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts |  | (8 | ) |  | (2 | ) |  | — |  |  | (4 | ) |  | (14 | )
Total |  | $ | (8 | ) |  | $ | (2 | ) |  | $ | — |  |  | $ | (4 | ) |  | $ | (14 | )
Three Months Ended September 30, 2014 |  |  |  |  |  |  |  |
|  | Location of future reclassification from Accumulated Other Comprehensive Loss |  | Gain (Loss) recognized in Accumulated Other Comprehensive Loss:
|  | Compensation and Benefits |  | Other General Expenses |  | Interest Expense |  | Other Income (Expense) |  | Total
Cash flow hedges: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts |  | (2 | ) |  | (3 | ) |  | — |  |  | 2 |  |  | (3 | )
Total |  | $ | (2 | ) |  | $ | (3 | ) |  | $ | — |  |  | $ | 2 |  |  | $ | (3 | )
Nine Months Ended September 30, 2015 |  |  |  |  |  |  |  |
|  | Location of future reclassification from Accumulated Other Comprehensive Loss |  | Gain (Loss) recognized in Accumulated Other Comprehensive Loss:
|  | Compensation and Benefits |  | Other General Expenses |  | Interest Expense |  | Other Income (Expense) |  | Total
Cash flow hedges: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts |  | (2 | ) |  | (1 | ) |  | — |  |  | 2 |  |  | (1 | )
Total |  | $ | (2 | ) |  | $ | (1 | ) |  | $ | — |  |  | $ | 2 |  |  | $ | (1 | )
Nine Months Ended September 30, 2014 |  |  |  |  |  |  |  |
|  | Location of future reclassification from Accumulated Other Comprehensive Loss |  | Gain (Loss) recognized in Accumulated Other Comprehensive Loss:
|  | Compensation and Benefits |  | Other General Expenses |  | Interest Expense |  | Other Income (Expense) |  | Total
Cash flow hedges: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts |  | 14 |  |  | (1 | ) |  | — |  |  | (9 | ) |  | 4 |
Total |  | $ | 14 |  |  | $ | (1 | ) |  | $ | — |  |  | $ | (9 | ) |  | $ | 4 |
Three Months Ended September 30, 2015
Gain (Loss) reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion): |  | Compensation and Benefits |  | Other General Expenses |  | Interest Expense |  | Other Income (Expense) |  | Total
Cash flow hedges: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts |  | 2 |  |  | — |  |  | (2 | ) |  | — |  |  | — |
Total |  | $ | 2 |  |  | $ | — |  |  | $ | (2 | ) |  | $ | — |  |  | $ | — |
Three Months Ended September 30, 2014
Gain (Loss) reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion): |  | Compensation and Benefits |  | Other General Expenses |  | Interest Expense |  | Other Income (Expense) |  | Total
Cash flow hedges: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts |  | (1 | ) |  | 3 |  |  | (3 | ) |  | 5 |  |  | 4 |
Total |  | $ | (1 | ) |  | $ | 3 |  |  | $ | (3 | ) |  | $ | 5 |  |  | $ | 4 |
Nine Months Ended September 30, 2015 |  |
Gain (Loss) reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion): |  | Compensation and Benefits |  | Other General Expenses |  | Interest Expense |  | Other Income (Expense) |  | Total
Cash flow hedges: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Foreign exchange contracts |  | 3 |  |  | (1 | ) |  | (6 | ) |  | (3 | ) |  | (7 | )
Total |  | $ | 3 |  |  | $ | (1 | ) |  | $ | (6 | ) |  | $ | (3 | ) |  | $ | (7 | )
Nine Months Ended September 30, 2014 |  |
Gain (Loss) reclassified from Accumulated Other Comprehensive Loss into Income (Effective Portion): |  | Compensation and Benefits |  | Other General Expenses |  | Interest Expense |  | Other Income (Expense) |  | Total
Cash flow hedges: |  |  |  |  |  |  |  |  |  |
Interest rate contracts |  | $ | — |  |  | $ | — |  |  | $ | (1 | ) |  | $ | — |  |  | $ | (1 | )
Foreign exchange contracts |  | (4 | ) |  | 3 |  |  | (8 | ) |  | (6 | ) |  | (15 | )
Total |  | $ | (4 | ) |  | $ | 3 |  |  | $ | (9 | ) |  | $ | (6 | ) |  | $ | (16 | )
The Company estimates that approximately $8 million of pretax losses currently included within Accumulated other comprehensive loss will be reclassified into earnings in the next twelve months. The amount of gain (loss) recognized in income on the ineffective portion of derivatives for the three and nine months ended September 30, 2015 and 2014 was not material. During the three and nine months ended September 30, 2015, the Company recorded a loss of $15 million and $6 million, respectively, in Other income for foreign exchange derivatives not designated or qualifying as hedges. During the three and nine months ended September 30, 2014, the Company recorded a loss of $11 million and $13 million, respectively, in Other income for foreign exchange derivatives not designated or qualifying as hedges.

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