Derivatives (Tables)

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Notional Amounts of Foreign Currency Forward Contracts

The aggregate equivalent United States dollar notional amounts of foreign currency forward contracts as of September 30, 2022 and December 31, 2021 were as follows (in millions):

	September 30, 2022
Contracts designated as hedges:
Euro	$	364.3
Canadian dollar		124.1
Australian dollar		55.4
Swiss franc		43.3
British pound		36.0
Swedish krona		27.5
Other (a)		24.5
Contracts not designated as hedges:
Euro	$	532.8
Mexican peso		154.6
British pound		80.7
Australian dollar		67.4
Indian rupee		55.9
Chinese yuan		41.8
Canadian dollar		32.9
Japanese yen		32.1
Swiss franc		28.3
Brazilian real		25.1
Other (a)		168.5

	December 31, 2021
Contracts designated as hedges:
Euro	$	399.9
Canadian dollar		134.0
Australian dollar		58.4
Swiss franc		45.9
British pound		43.8
Swedish krona		30.7
Japanese yen		30.4
Other (a)		0.9
Contracts not designated as hedges:
Euro	$	755.7
British pound		148.1
Canadian dollar		144.2
Australian dollar		98.1
Mexican peso		96.3
Philippine peso		76.2
Indian rupee		63.4
Japanese yen		46.0
Russian ruble		44.4
Chinese yuan		31.6
New Zealand dollar		26.6
Swiss franc		25.1
Swedish krona		25.1
Other (a)		132.7

(a)Comprised of exposures to various currencies; none of these individual currency exposures is greater than $25 million.

Fair Value of Derivatives

The following table summarizes the fair value of derivatives reported in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 (in millions):

	Derivative Assets					Derivative Liabilities
		Fair Value					Fair Value
	Balance Sheet	September 30,		December 31,		Balance Sheet	September 30,		December 31,
	Location	2022		2021		Location	2022		2021
Derivatives designated as hedges:
Foreign currency cash flow hedges	Other assets	$	83.2	$	30.6	Other liabilities	$	0.2	$	2.6
Total derivatives designated as hedges		$	83.2	$	30.6		$	0.2	$	2.6
Derivatives not designated as hedges:
Business Solutions operations - foreign currency (a)	Assets held for sale	$	232.9	$	213.1	Liabilities associated with assets held for sale	$	235.0	$	174.1
Foreign currency	Other assets		12.1		4.0	Other liabilities		7.1		7.1
Total derivatives not designated as hedges		$	245.0	$	217.1		$	242.1	$	181.2
Total derivatives		$	328.2	$	247.7		$	242.3	$	183.8

(a)In many circumstances, the Company allows its Business Solutions customers to settle part or all of their derivative contracts prior to maturity. However, the offsetting positions entered into with Convera do not allow for similar settlement. To mitigate this, additional foreign currency contracts are entered into with Convera to offset the original economic hedge contracts. This frequently results in changes in the Company’s derivative assets and liabilities that may not directly align with the performance in the underlying derivatives business.

Gross and Net Fair Value of Derivative Assets

The following tables summarize the gross and net fair value of derivative assets and liabilities as of September 30, 2022 and December 31, 2021 (in millions):

Offsetting of Derivative Assets

			Gross		Net Amounts		Derivatives
	Gross		Amounts Offset in		Presented in		Not Offset in
	Amounts of		the Condensed		the Condensed		the Condensed
	Recognized		Consolidated		Consolidated		Consolidated			Net
September 30, 2022	Assets		Balance Sheets		Balance Sheets		Balance Sheets			Amounts
Derivatives subject to a master netting arrangement or similar agreement	$	176.5	$	—	$	176.5	$	(89.2	)	$	87.3
Derivatives that are not or may not be subject to master netting arrangement or similar agreement		151.7
Total	$	328.2
December 31, 2021
Derivatives subject to a master netting arrangement or similar agreement	$	163.9	$	—	$	163.9	$	(92.4	)	$	71.5
Derivatives that are not or may not be subject to master netting arrangement or similar agreement		83.8
Total	$	247.7

Gross and Net Fair Value of Derivative Liabilities

Offsetting of Derivative Liabilities

			Gross		Net Amounts		Derivatives
	Gross		Amounts Offset in		Presented in		Not Offset in
	Amounts of		the Condensed		the Condensed		the Condensed
	Recognized		Consolidated		Consolidated		Consolidated			Net
September 30, 2022	Liabilities		Balance Sheets		Balance Sheets		Balance Sheets			Amounts
Derivatives subject to a master netting arrangement or similar agreement	$	159.5	$	—	$	159.5	$	(89.2	)	$	70.3
Derivatives that are not or may not be subject to master netting arrangement or similar agreement		82.8
Total	$	242.3
December 31, 2021
Derivatives subject to a master netting arrangement or similar agreement	$	109.6	$	—	$	109.6	$	(92.4	)	$	17.2
Derivatives that are not or may not be subject to master netting arrangement or similar agreement		74.2
Total	$	183.8

Schedule of Amount and Location of Gains/(Losses) from Hedging Activities

The following table presents the pre-tax amount of unrealized gains/(losses) recognized in other comprehensive income from cash flow hedges for the three and nine months ended September 30, 2022 and 2021 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Foreign currency derivatives (a)	$	43.4	$	17.7	$	86.9	$	32.4
Interest rate derivatives		—		—		—		3.3

(a)Gains/(losses) of $0.2 million and $(0.2) million for the three months ended September 30, 2022 and 2021, respectively, and $(4.7) million and $(1.2) million for the nine months ended September 30, 2022 and 2021, respectively, represent amounts excluded from the assessment of effectiveness and recognized in other comprehensive income, for which an amortization approach is applied.

The following table presents the location and amounts of pre-tax net gains/(losses) from cash flow hedging relationships recognized in the Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2022 and 2021 (in millions):

	Three Months Ended September 30,
	2022					2021
	Revenues		Interest Expense			Revenues			Interest Expense
Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded	$	1,089.6	$	(25.2	)	$	1,286.3		$	(25.7	)
Gain/(loss) on cash flow hedges:
Foreign currency derivatives:
Gains/(losses) reclassified from AOCL into earnings		17.5		—			(0.6	)		—
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach		1.5		—			1.4			—
Interest rate derivatives:
Losses reclassified from AOCL into earnings		—		—			—			(0.1	)

	Nine Months Ended September 30,
	2022					2021
	Revenues		Interest Expense			Revenues			Interest Expense			Other income/(expense), net
Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of cash flow hedges are recorded	$	3,383.6	$	(74.8	)	$	3,786.0		$	(79.7	)	$	26.8
Gain/(loss) on cash flow hedges:
Foreign currency derivatives:
Gains/(losses) reclassified from AOCL into earnings		32.4		—			(10.0	)		—			—
Amount excluded from effectiveness testing recognized in earnings based on an amortization approach		4.0		—			4.9			—			—
Interest rate derivatives:
Gains/(losses) reclassified from AOCL into earnings		—		(0.1	)		—			(0.5	)		0.7

Undesignated Hedges

The following table presents the location and amount of pre-tax net gains/(losses) from undesignated hedges in the Condensed Consolidated Statements of Income on derivatives for the three and nine months ended September 30, 2022 and 2021 (in millions):

		Three Months Ended				Nine Months Ended
		September 30,				September 30,
Derivatives (a)	Location	2022		2021		2022		2021
Foreign currency derivatives (b)	Selling, general, and administrative	$	42.6	$	23.4	$	97.6	$	41.3

(a)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.

(b)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 derivative activity as displayed above and included in Selling, general, and administrative in the Condensed Consolidated Statements of Income, were $40.6 million and $25.7 million for the three months ended September 30, 2022 and 2021, respectively, and $90.4 million and $50.7 million for the nine months ended September 30, 2022 and 2021, respectively.