Xerox 2011 Annual Report Download - page 86

Download and view the complete annual report

Please find page 86 of the 2011 Xerox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 116

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116

84
Years Ended December 31,
Derivative Gain (Loss) Hedged Item Gain (Loss)
Derivative in Fair Value Location of Gain (Loss) Recognized in Income Recognized in Income
Relationships Recognized in Income 2011 2010 2009 2011 2010 2009
Interest rate contracts Interest expense $ 15 $ 99 $(18) $(15) $(99) $18
Year Ended December 31,
Derivative Gain (Loss)
Location of Derivative Gain
Gain (Loss)
Recognized in OCI
(Loss) Reclassified from
Reclassified from AOCI
Derivatives in Cash Flow
(Effective Portion)
AOCI into Income
to Income (Effective Portion)
Hedging Relationships 2011 2010 2009 (Effective Portion) 2011 2010 2009
Foreign exchange contracts – forwards $30 $46 $(1) Cost of sales $14 $28 $(2)
SummaryofDerivativeInstrumentsFairValue:The following table provides a summary of the fair value amounts of our derivative instruments:
December 31,
Designation of Derivatives Balance Sheet Location 2011 2010
Derivatives Designated as Hedging Instruments
Foreign exchange contracts – forwards Other current assets $ 37 $ 19
Other current liabilities (11) (1)
Interest rate swaps Other long-term assets — 11
Net Designated Asset $ 26 $ 29
Derivatives NOT Designated as Hedging Instruments
Foreign exchange contracts – forwards Other current assets $ 21 $ 26
Other current liabilities (20) (18)
Net Undesignated Asset $ 1 $ 8
Summary of Derivatives Total Derivative Assets $ 58 $ 56
Total Derivative Liabilities (31) (19)
Net Derivative Asset $ 27 $ 37
Summary of Derivative Instruments Gains (Losses)
Derivative gains (losses) affect the income statement based on whether
such derivatives are designated as hedges of underlying exposures. The
following is a summary of derivative gains and (losses).
No amount of ineffectiveness was recorded in the Consolidated Statements
of Income for these designated cash flow hedges and all components of
each derivative’s gain or (loss) were included in the assessment of hedge
effectiveness. In addition, no amount was recorded for an underlying
exposure that did not occur or was not expected to occur.
At December 31, 2011, net gains of $26 were recorded in accumulated
other comprehensive loss associated with our cash flow hedging activity.
DesignatedDerivativeInstrumentsGains(Losses):The following tables
provide a summary of gains (losses) on derivative instruments:
The entire balance is expected to be reclassified into net income within
the next 12 months, providing an offsetting economic impact against the
underlying anticipated transactions.
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.
Notes to the Consolidated
Financial Statements
(in millions, except per-share data and where otherwise noted)