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Derivatives (Tables) | 6 Months Ended
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Jun. 30, 2022
Derivatives |
Notional Amounts of Foreign Currency Forward Contracts | The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of June 30, 2022 and December 31, 2021 were as follows (in millions):
|  | June 30, 2022 |
Contracts designated as hedges: |  |  |
Euro |  | $ | 399.7 |
Canadian dollar |  |  | 128.8 |
Australian dollar |  |  | 55.3 |
Swiss franc |  |  | 45.0 |
British pound |  |  | 38.0 |
Swedish krona |  |  | 30.4 |
Japanese yen |  |  | 26.3 |
Other (a) |  |  | — |
Contracts not designated as hedges: |  |  |
Euro |  | $ | 550.8 |
British pound |  |  | 157.2 |
Canadian dollar |  |  | 89.8 |
Mexican peso |  |  | 78.0 |
Indian rupee |  |  | 52.8 |
Australian dollar |  |  | 48.8 |
Chinese yuan |  |  | 34.0 |
Swedish krona |  |  | 34.0 |
Brazilian real |  |  | 30.2 |
Other (a) |  |  | 192.7 |
|  | December 31, 2021 |
Contracts designated as hedges: |  |  |
Euro |  | $ | 399.9 |
Canadian dollar |  |  | 134.0 |
Australian dollar |  |  | 58.4 |
Swiss franc |  |  | 45.9 |
British pound |  |  | 43.8 |
Swedish krona |  |  | 30.7 |
Japanese yen |  |  | 30.4 |
Other (a) |  |  | 0.9 |
Contracts not designated as hedges: |  |  |
Euro |  | $ | 755.7 |
British pound |  |  | 148.1 |
Canadian dollar |  |  | 144.2 |
Australian dollar |  |  | 98.1 |
Mexican peso |  |  | 96.3 |
Philippine peso |  |  | 76.2 |
Indian rupee |  |  | 63.4 |
Japanese yen |  |  | 46.0 |
Russian ruble |  |  | 44.4 |
Chinese yuan |  |  | 31.6 |
New Zealand dollar |  |  | 26.6 |
Swiss franc |  |  | 25.1 |
Swedish krona |  |  | 25.1 |
Other (a) |  |  | 132.7 |
(a) Comprised of exposures to various currencies; none of these individual currency exposures is greater than $25 million.
Fair Value of Derivatives | The following table summarizes the fair value of derivatives reported in the Company’s Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 (in millions):
|  | Derivative Assets |  |  | Derivative Liabilities |
|  |  |  | Fair Value |  |  |  |  | Fair Value |
|  | Balance Sheet |  | June 30, |  |  | December 31, |  |  | Balance Sheet |  | June 30, |  |  | December 31, |
|  | Location |  | 2022 |  |  | 2021 |  |  | Location |  | 2022 |  |  | 2021 |
Derivatives designated as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency cash flow hedges |  | Other assets |  | $ | 56.7 |  |  | $ | 30.6 |  |  | Other liabilities |  | $ | 0.2 |  |  | $ | 2.6 |
Total derivatives designated as hedges |  |  |  | $ | 56.7 |  |  | $ | 30.6 |  |  |  |  | $ | 0.2 |  |  | $ | 2.6 |
Derivatives not designated as hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Business Solutions operations - foreign currency (a) |  | Other assets |  | $ | 152.3 |  |  | $ | 213.1 |  |  | Other liabilities |  | $ | 152.8 |  |  | $ | 174.1 |
Foreign currency |  | Other assets |  |  | 5.8 |  |  |  | 4.0 |  |  | Other liabilities |  |  | 3.5 |  |  |  | 7.1 |
Total derivatives not designated as hedges |  |  |  | $ | 158.1 |  |  | $ | 217.1 |  |  |  |  | $ | 156.3 |  |  | $ | 181.2 |
Total derivatives |  |  |  | $ | 214.8 |  |  | $ | 247.7 |  |  |  |  | $ | 156.5 |  |  | $ | 183.8 |
(a) In many circumstances, the Company allows its Business Solutions customers to settle part or all of their derivative contracts prior to maturity. However, the offsetting positions entered into with Convera do not allow for similar settlement. To mitigate this, additional foreign currency contracts are entered into with Convera to offset the original economic hedge contracts. This frequently results in changes in the Company’s derivative assets and liabilities that may not directly align with the performance in the underlying derivatives business.
Gross and Net Fair Value of Derivative Assets | The following tables summarize the gross and net fair value of derivative assets and liabilities as of June 30, 2022 and December 31, 2021 (in millions): Offsetting of Derivative Assets
|  |  |  |  | Gross |  |  | Net Amounts |  |  | Derivatives |  |  |  |
|  | Gross |  |  | Amounts Offset in |  |  | Presented in |  |  | Not Offset in |  |  |  |
|  | Amounts of |  |  | the Condensed |  |  | the Condensed |  |  | the Condensed |  |  |  |
|  | Recognized |  |  | Consolidated |  |  | Consolidated |  |  | Consolidated |  |  | Net |
June 30, 2022 |  | Assets |  |  | Balance Sheets |  |  | Balance Sheets |  |  | Balance Sheets |  |  | Amounts |
Derivatives subject to a master netting arrangement or similar agreement |  | $ | 126.8 |  |  | $ | — |  |  | $ | 126.8 |  |  | $ | (67.0 | ) |  | $ | 59.8 |
Derivatives that are not or may not be subject to master netting arrangement or similar agreement |  |  | 88.0 |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  | $ | 214.8 |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives subject to a master netting arrangement or similar agreement |  | $ | 163.9 |  |  | $ | — |  |  | $ | 163.9 |  |  | $ | (92.4 | ) |  | $ | 71.5 |
Derivatives that are not or may not be subject to master netting arrangement or similar agreement |  |  | 83.8 |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  | $ | 247.7 |  |  |  |  |  |  |  |  |  |  |  |  |
Gross and Net Fair Value of Derivative Liabilities | Offsetting of Derivative Liabilities
|  |  |  |  | Gross |  |  | Net Amounts |  |  | Derivatives |  |  |  |
|  | Gross |  |  | Amounts Offset in |  |  | Presented in |  |  | Not Offset in |  |  |  |
|  | Amounts of |  |  | the Condensed |  |  | the Condensed |  |  | the Condensed |  |  |  |
|  | Recognized |  |  | Consolidated |  |  | Consolidated |  |  | Consolidated |  |  | Net |
June 30, 2022 |  | Liabilities |  |  | Balance Sheets |  |  | Balance Sheets |  |  | Balance Sheets |  |  | Amounts |
Derivatives subject to a master netting arrangement or similar agreement |  | $ | 113.9 |  |  | $ | — |  |  | $ | 113.9 |  |  | $ | (67.0 | ) |  | $ | 46.9 |
Derivatives that are not or may not be subject to master netting arrangement or similar agreement |  |  | 42.6 |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  | $ | 156.5 |  |  |  |  |  |  |  |  |  |  |  |  |
December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives subject to a master netting arrangement or similar agreement |  | $ | 109.6 |  |  | $ | — |  |  | $ | 109.6 |  |  | $ | (92.4 | ) |  | $ | 17.2 |
Derivatives that are not or may not be subject to master netting arrangement or similar agreement |  |  | 74.2 |  |  |  |  |  |  |  |  |  |  |  |  |
Total |  | $ | 183.8 |  |  |  |  |  |  |  |  |  |  |  |  |
Schedule of Amount and Location of Gains/(Losses) from Hedging Activities | The following table presents the pre-tax amount of unrealized gains/(losses) recognized in other comprehensive income from cash flow hedges for the three and six months ended June 30, 2022 and 2021 (in millions):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Foreign currency derivatives (a) |  | $ | 37.3 |  |  | $ | (6.2 | ) |  | $ | 43.5 |  |  | $ | 14.7 |
Interest rate derivatives |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3.3 |
(a) Losses of $0.7 million and $0.3 million for the three months ended June 30, 2022 and 2021, respectively, and $4.9 million and $1.0 million for the six months ended June 30, 2022 and 2021, respectively, represent amounts excluded from the assessment of effectiveness and recognized in other comprehensive income, for which an amortization approach is applied. The following table presents the location and amounts of pre-tax net gains/(losses) from cash flow hedging relationships recognized in the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2022 and 2021 (in millions):
|  | Three Months Ended June 30,
|  | 2022 |  |  | 2021
|  | Revenues |  |  | Interest Expense |  |  | Revenues |  |  | Interest Expense |  |
Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded |  | $ | 1,138.3 |  |  | $ | (24.8 | ) |  | $ | 1,289.7 |  |  | $ | (25.6 | ) |
Gain/(loss) on cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |
Gains/(losses) reclassified from AOCL into earnings |  |  | 13.9 |  |  |  | — |  |  |  | (3.3 | ) |  |  | — |  |
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach |  |  | 1.4 |  |  |  | — |  |  |  | 1.6 |  |  |  | — |  |
Interest rate derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |
Losses reclassified from AOCL into earnings |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (0.2 | ) |
|  | Six Months Ended June 30, |
|  | 2022 |  |  | 2021 |
|  | Revenues |  |  | Interest Expense |  |  | Revenues |  |  | Interest Expense |  |  | Other income/(expense), net |
Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded |  | $ | 2,294.0 |  |  | $ | (49.6 | ) |  | $ | 2,499.7 |  |  | $ | (54.0 | ) |  | $ | 28.6 |
Gain/(loss) on cash flow hedges: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gains/(losses) reclassified from AOCL into earnings |  |  | 14.9 |  |  |  | — |  |  |  | (9.4 | ) |  |  | — |  |  |  | — |
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach |  |  | 2.5 |  |  |  | — |  |  |  | 3.5 |  |  |  | — |  |  |  | — |
Interest rate derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gains/(losses) reclassified from AOCL into earnings |  |  | — |  |  |  | (0.1 | ) |  |  | — |  |  |  | (0.4 | ) |  |  | 0.7 |
Undesignated Hedges The following table presents the location and amount of pre-tax net gains/(losses) from undesignated hedges in the Condensed Consolidated Statements of Income on derivatives for the three and six months ended June 30, 2022 and 2021 (in millions):
|  |  |  | Three Months Ended |  |  | Six Months Ended |
|  |  |  | June 30, |  |  | June 30, |
Derivatives (a) |  | Location |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Foreign currency derivatives (b) |  | Selling, general, and administrative |  | $ | 43.3 |  |  | $ | 1.9 |  |  | $ | 55.0 |  |  | $ | 17.9 |
(a) The Company uses foreign currency forward and option contracts as part of its Business Solutions payments operations. These derivative contracts are excluded from this table as they are managed as part of a broader currency portfolio that includes non-derivative currency exposures. The gains and losses on these derivatives are included as part of the broader disclosure of portfolio revenue for this business discussed above. (b) The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange losses on settlement assets and obligations, cash balances, and other assets and liabilities, not including amounts related to derivative activity as displayed above and included in Selling, general, and administrative in the Condensed Consolidated Statements of Income, were $39.9 million and $3.2 million for the three months ended June 30, 2022 and 2021, respectively, and $49.8 million and $25.0 million for the six months ended June 30, 2022 and 2021, respectively.

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