Capital One 2014 Annual Report Download - page 228

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Cash Flow and Net Investment Hedges
The table below shows the net gains (losses) related to derivatives designated as cash flow hedges and net investment
hedges for the years ended December 31, 2014, 2013 and 2012:
Table 10.4: Gains and Losses on Derivatives Designated as Cash Flow Hedges and Net Investment Hedges
Year Ended December 31,
(Dollars in millions) 2014 2013 2012
Gains (losses) recorded in AOCI:
Cash flow hedges:
Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 251 $ (103) $ 116
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23) (21) (23)
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228 (124) 93
Net investment hedges:
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 00
Net derivatives gains (losses) recognized in AOCI . . . . . . . . . . . . . . . . . . . . . . . . . $ 360 $ (124) $ 93
Gains (losses) recorded in earnings:
Cash flow hedges:
Gains (losses) reclassified from AOCI into earnings:
Interest rate contracts(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 131 $ 53 $ 42
Foreign exchange contracts(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23) (22) (22)
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 31 20
Gains (losses) recognized in earnings due to ineffectiveness:
Interest rate contracts(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1(1) 0
Net derivative gains recognized in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 109 $ 30 $ 20
(1) Amounts reclassified are recorded in our consolidated statements of income in interest income or interest expense.
(2) Amounts reclassified are recorded in our consolidated statements of income in other non-interest income.
In the next 12 months, we expect to reclassify to earnings net after-tax gains of $181 million currently recorded in
AOCI as of December 31, 2014. These amounts will offset the cash flows associated with the hedged forecasted
transactions. The maximum length of time over which forecasted transactions were hedged was approximately five
years as of December 31, 2014. The amount we expect to reclassify into earnings may change as a result of changes
in market conditions and ongoing actions taken as part of our overall risk management strategy.
206
CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Capital One Financial Corporation (COF)