Xerox 2014 Annual Report Download - page 117
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Summary of Derivative Instruments Gains (Losses)
Derivative gains and (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).
Designated Derivative Instruments Gains (Losses)
The following tables provide a summary of gains (losses) on derivative instruments:
Year Ended December 31,
Derivatives in Fair Value
Relationships
Location of Gain (Loss)
Recognized in Income
Derivative Gain (Loss)
Recognized in Income
Hedged Item Gain (Loss)
Recognized in Income
2014 2013 2012 2014 2013 2012
Interest rate contracts Interest expense $ 5 $ — $ — $ (5) $ — $ —
Year Ended December 31,
Derivatives in Cash
Flow
Hedging Relationships
Derivative Gain (Loss) Recognized in OCI
(Effective Portion)
Location of Derivative
Gain (Loss)
Reclassified
from AOCI into Income
(Effective Portion)
Gain (Loss) Reclassified from AOCI to
Income (Effective Portion)
2014 2013 2012 2014 2013 2012
Foreign exchange
contracts – forwards/
options $(20)$
(126) $ (50) Cost of sales $ (36)$ (123)$ 37
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.
As of December 31, 2014, net after-tax losses of $22 were recorded in accumulated other comprehensive loss
associated with our cash flow hedging activity. 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 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 losses on non-designated derivative instruments:
Year Ended December 31,
Derivatives NOT Designated as
Hedging Instruments Location of Derivative Loss 2014 2013 2012
Foreign exchange contracts – forwards Other expense – Currency losses, net $ (10)$ (86)$ (38)
During the three years ended December 31, 2014, we recorded Currency (losses) gains, net of $(5), $7 and $(3),
respectively. Currency (losses) gains, net includes the mark-to-market adjustments 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.
Xerox 2014 Annual Report 102