Xerox 2015 Annual Report Download - page 121

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Foreign Currency Cash Flow Hedges
We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-
denominated inventory purchases, sales and expenses. 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 was included in the assessment of hedge effectiveness. The net liability fair value of these contracts
were $1 and $30 as of December 31, 2015 and December 31, 2014, respectively.
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 2015 2014
Derivatives Designated as Hedging Instruments
Foreign exchange contracts – forwards Other current assets $ 4$7
Other current liabilities (4) (39)
Foreign currency options Other current assets — 2
Other current liabilities (1) —
Interest rate swaps Other long-term assets 75
Net Designated Derivative Asset (Liability) $6$(25)
Derivatives NOT Designated as Hedging Instruments
Foreign exchange contracts – forwards Other current assets $ 51 $ 13
Other current liabilities (8) (19)
Net Undesignated Derivative Asset (Liability) $ 43 $ (6)
Summary of Derivatives Total Derivative Assets $ 62 $ 27
Total Derivative Liabilities (13)(58)
Net Derivative Asset (Liability) $49$(31)
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
2015 2014 2013 2015 2014 2013
Interest rate contracts Interest expense $ 7 $ 5 $ — $ (7) $ (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)
2015 2014 2013 2015 2014 2013
Foreign exchange contracts –
forwards/options $ 13 $ (20) $ (126) Cost of sales $ (28)$ (36) $ (123)
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.
Xerox 2015 Annual Report 104