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69Xerox 2009 Annual Report
Notes to the Consolidated
Financial Statements
Dollars in millions, except per-share data and unless otherwise indicated.
Accumulated Other Comprehensive Loss (“AOCL”)
The following table provides a summary of the activity associated
with all of our designated cash flow hedges (interest rate and
foreign currency) reflected in AOCL for the three years ended
December 31, 2009:
Year Ended December 31,
2009 2008 2007
Beginning cash flow hedges
balance, net of tax $ — $ — $ 1
Changes in fair value gain (loss) (1) 1 4
Reclass to earnings 2 (1) (5)
Ending Cash Flow Hedges
Balance, Net of Tax $ 1 $ — $ —
During the three years ended December 31, 2009, we recorded
Currency losses, net of $26, $34 and $8, respectively. Currency losses,
net includes the mark-to-market of the derivatives not designated
as hedging instruments and the related cost of those derivatives,
as well as the re-measurement of foreign currency-denominated assets
and liabilities.
Summary of Non-Designated Derivative Instruments Gains (Losses)
Non-designated derivative instruments are primarily instruments
used to hedge foreign currency-denominated assets and liabilities.
They are not designated as hedges since there is a natural offset
for the re-measurement of the underlying foreign currency-
denominated asset or liability.
The following table provides a summary of gains (losses) on
non-designated derivative instruments for the three years ended
December 31, 2009:
Derivatives NOT Designated as
Hedging Instruments Location of Derivative Gain (Loss) 2009 2008 2007
Foreign exchange contracts – forwards Other expense – Currency losses, net $ 49 $ (143) $ (10)
Foreign exchange contracts – options Other expense – Currency losses, net — (4) 3
Total Non-designated Derivatives $ 49 $ (147) $ (7)