XML 39 R21.htm IDEA: XBRL DOCUMENT
v3.8.0.1

Derivatives and Hedging | 12 Months Ended
--- | ---
Dec. 31, 2017
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, enters into monetary intercompany transfers denominated in a currency that differs from its functional currency, or enters into 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 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 (expense) in the Consolidated Statements of Income. The notional and fair values of derivative instruments are as follows (in millions):
| Notional Amount |  | Net Amount of Derivative Assets Presented in the Statements of Financial Position (1) |  | Net Amount of Derivative Liabilities Presented in the Statements of Financial Position (2)
As of December 31 | 2017 |  | 2016 |  | 2017 |  | 2016 |  | 2017 |  | 2016
Foreign exchange contracts: |  |  |  |  |  |  |  |  |  |  |
Accounted for as hedges | $ | 701 |  |  | $ | 758 |  |  | $ | 31 |  |  | $ | 13 |  |  | $ | 3 |  |  | $ | 12 |
Not accounted for as hedges (3) | 254 |  |  | 189 |  |  | 1 |  |  | 1 |  |  | 3 |  |  | 1 |
Total | $ | 955 |  |  | $ | 947 |  |  | $ | 32 |  |  | $ | 14 |  |  | $ | 6 |  |  | $ | 13 |
(1) | Included within Other current assets ($9 million in 2017 and $5 million in 2016) or Other non-current assets ($23 million in 2017 and $9 million in 2016).
(2) | Included within Other current liabilities ($3 million in 2017 and $6 million in 2016) or Other non-current liabilities ($3 million in 2017 and $7 million in 2016).
(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.
The amounts of derivative gains (losses) recognized in the Consolidated Financial Statements are as follows (in millions):
|  | 2017 |  | 2016 |  | 2015
Gain (Loss) Recognized in Accumulated Other Comprehensive Loss |  | $ | 18 |  |  | $ | (25 | ) |  | $ | (9 | )
Location of future reclassification from Accumulated Other Comprehensive Loss |  |  |  |  |  |
Compensation and Benefits |  | $ | 12 |  |  | $ | 8 |  |  | $ | 4 |
Other General Expenses |  | 4 |  |  | (13 | ) |  | (3 | )
Interest Expense |  | — |  |  | — |  |  | — |
Other Income (Expense) |  | 2 |  |  | (20 | ) |  | (10 | )
The amounts of derivative gains (loss) reclassified from Accumulated Other Comprehensive Loss into Income (effective portion) are as follows (in millions):
|  | 2017 |  | 2016 |  | 2015
Compensation and Benefits |  | $ | 14 |  |  | $ | 2 |  |  | $ | 4 |
Other General Expenses |  | (5 | ) |  | (4 | ) |  | (1 | )
Interest Expense |  | (1 | ) |  | (1 | ) |  | (9 | )
Other Income (Expense) |  | (9 | ) |  | (7 | ) |  | (11 | )
Total |  | $ | (1 | ) |  | $ | (10 | ) |  | $ | (17 | )
The Company estimates that approximately $9 million of pretax losses currently included within Accumulated other comprehensive loss will be reclassified in to earnings in the next twelve months. The amount of gain (loss) recognized in income on the ineffective portion of derivatives for 2017, 2016, and 2015 was immaterial. The Company recorded a gain of $7.0 million for 2017 and a loss of $0.2 million and $8 million for 2016 and 2015, respectively, in Other income (expense) for foreign exchange derivatives not designated or qualifying as hedges. Net Investments in Foreign Operations Risk Management The Company uses non-derivative financial instruments to protect the value of its investments in a number of foreign subsidiaries. In 2016, the Company designated a portion of its Euro-denominated commercial paper issuances as a non-derivative hedge of the foreign currency exposure of a net investment in its European operations. The change in fair value of the designated portion of the Euro-denominated commercial paper due to changes in foreign currency exchange rates is recorded in Foreign currency translation adjustment, a component of Accumulated other comprehensive income (loss), to the extent it is effective as a hedge. The foreign currency translation adjustment of the hedged net investments that is also recorded in Accumulated other comprehensive income (loss). Ineffective portions of net investment hedges, if any, are reclassified from Accumulated other comprehensive income (loss) into earnings during the period of change. As of December 31, 2017, the Company had no outstanding Euro-denominated commercial paper designated as a hedge of the foreign currency exposure of its net investment in its European operations. As of December 31, 2017, the unrealized gain recognized in Accumulated other comprehensive income (loss) related to the net investment non derivative hedging instrument was immaterial. The Company did not reclassify any deferred gains or losses related to net investment hedges from Accumulated other comprehensive income (loss) to earnings during the twelve months ended December 31, 2017. In addition, the Company did not incur any ineffectiveness related to net investment hedges during the twelve months ended December 31, 2017.

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