Freddie Mac 2015 Annual Report Download - page 275

Financial Statements Notes to the Consolidated Financial Statements | Note 10
Freddie Mac 2015 Form 10-K 273
Reclassifications from AOCI to Net Income
The table below presents reclassifications from AOCI to net income, including the affected line item in our
consolidated statements of comprehensive income.
Details about
Accumulated Other
Comprehensive
Income Components Three Months Ended December 31, Year Ended December 31,
Affected Line Item in the
Consolidated
Statements of Comprehensive
Income
(in millions) 2015 2014 2015 2014
AOCI related to
available-for-sale
securities
$ 188 $ 500 $ 1,343 $1,712 Other gains (losses) on investment
securities recognized in earnings
(48) (251)(292)(938)Net impairment of available-for-sale
securities recognized in earnings
140 249 1,051 774 Total before tax
(49) (87) (368)(271) Tax (expense) or benefit
91 162 683 503 Net of tax
AOCI related to cash
flow hedge relationships
— — (2) (2) Interest expense — Other debt
(52) (71) (228)(301) Expense related to derivatives
(52) (71) (230)(303) Total before tax
1 25 48 106 Tax (expense) or benefit
(51) (46) (182)(197) Net of tax
AOCI related to defined
benefit plans
— 1 1 4 Salaries and employee benefits
— (1) — (2) Tax (expense) or benefit
— — 1 2 Net of tax
Total reclassifications in
the period $ 40 $ 116 $ 502 $308 Net of tax
Future Reclassifications from AOCI to Net Income Related to Closed Cash Flow Hedges
The total AOCI related to derivatives designated as cash flow hedges was a loss of $0.6 billion and $0.8
billion at December 31, 2015 and 2014, respectively, composed of deferred net losses on closed cash
flow hedges. Closed cash flow hedges involve derivatives that have been terminated or are no longer
designated as cash flow hedges. Fluctuations in prevailing market interest rates have no effect on the
deferred portion of AOCI relating to losses on closed cash flow hedges.
The previously deferred amount related to closed cash flow hedges remains in our AOCI balance and will
be recognized into earnings over the expected time period for which the forecasted transactions affect
earnings, unless it is deemed probable that the forecasted transactions will not occur. Over the next
12 months, we estimate that approximately $141 million, net of taxes, of the $0.6 billion of cash flow
hedge losses in AOCI at December 31, 2015 will be reclassified into earnings. The maximum remaining
length of time over which we have hedged the exposure related to the variability in future cash flows on
forecasted transactions, primarily forecasted debt issuances, is 18 years.