Western Union 2015 Annual Report Download - page 237

THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
135
Undesignated Hedges
The following table presents the location and amount of net gains/(losses) from undesignated hedges for the years ended
December 31, 2015, 2014 and 2013 (in millions):
Gain/(Loss) Recognized in Income on Derivatives (d)
Income Statement Location Amount
Derivatives 2015 2014 2013
Foreign currency contracts (e) . . . . . . . Selling, general and administrative . . . . . $ 35.9 $ 46.5 $ (3.7)
Foreign currency contracts (f) . . . . . . . Derivative gains/(losses), net . . . . . . . . . 1.3 2.2 (0.9)
Total gain/(loss) . . . . . . . . . . . . . . . . . . $ 37.2 $ 48.7 $ (4.6)
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(a) The 2015 loss of $2.3 million was comprised of a loss in value on the debt of $16.0 million and amortization of hedge
accounting adjustments of $13.7 million. The 2014 loss of $4.4 million was comprised of a loss in value on the debt of
$16.8 million and amortization of hedge accounting adjustments of $12.4 million. The 2013 gain of $19.3 million was
comprised of a gain in value on the debt of $8.5 million and amortization of hedge accounting adjustments of $10.8
million.
(b) The portion of the change in fair value of a derivative excluded from the effectiveness assessment for foreign currency
forward contracts designated as cash flow hedges represents the difference between changes in forward rates and spot
rates.
(c) The Company uses derivatives to hedge the forecasted issuance of fixed-rate debt and records the effective portion of the
derivative's fair value in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. These amounts
are reclassified to "Interest expense" in the Consolidated Statements of Income over the life of the related notes.
(d) 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.
(e) 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 derivatives activity as
displayed above and included in "Selling, general, and administrative" in the Consolidated Statements of Income were
$36.1 million, $51.8 million and $5.4 million for the years ended 2015, 2014 and 2013, respectively.
(f) The derivative contracts used in the Company's revenue hedging program are not designated as hedges in the final month
of the contract.
An accumulated other comprehensive pre-tax gain of $51.5 million related to the foreign currency forward contracts is expected
to be reclassified into revenue within the next 12 months as of December 31, 2015. Approximately $3.6 million of net losses on
the forecasted debt issuance hedges are expected to be recognized in "Interest expense" in the Consolidated Statements of Income
within the next 12 months as of December 31, 2015. No amounts have been reclassified into earnings as a result of the underlying
transaction being considered probable of not occurring within the specified time period.
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