DERIVATIVES

We are exposed to certain risks relating to our ongoing business operations. The primary risks managed by using derivative instruments are interest rate risk and foreign currency exchange rate risk. Accordingly, we have instituted interest rate and foreign currency hedging programs that are accounted for in accordance with ASC 815.


•	Our interest rate hedging program is a cash flow hedge program designed to minimize interest rate volatility. We swap the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount, at specified intervals. Our interest rate contracts are designated as hedging instruments.

•

Our foreign currency hedging program is a cash flow hedge program designed to mitigate foreign currency exchange rate volatility due to the foreign currency exchange exposure related to intercompany and significant external transactions. This program also is intended to reduce the impact of foreign exchange rate risk on our direct costs and our service revenues. We primarily utilize forward currency exchange contracts and cross-currency swaps with maturities of no more than 12 months. These contracts are designated as hedging instruments.

We also enter into other economic hedges to mitigate foreign currency exchange risk related to intercompany and significant external transactions. These contracts are not designated as hedges in accordance with ASC 815.

During three month ended December 31, 2016, we entered into a forward share repurchase contract in connection with our 2017 accelerated share repurchase program with HSBC.

The following table presents the notional amounts and fair values of our derivatives as of December 31, 2016 and June 30, 2016. The gross position of all asset and liability amounts is reported in other current assets, other assets, other current liabilities, and other liabilities in our consolidated balance sheets.



(in millions)	December 31, 2016					June 30, 2016
	Notional Amount		Asset (Liability)			Notional Amount		Asset (Liability)
Derivatives designated as hedging instruments under ASC 815
Derivatives in an asset position:
Interest rate contracts	$	200.0	$	0.5		$	—	$	—
Foreign exchange contracts	59.9		2.4			81.2		3.5
Derivatives in a liability position:
Interest rate contracts	—		—			200.0		(1.3		)
Foreign exchange contracts	95.8		(7.6		)	103.3		(8.9		)
Total designated derivatives	$	355.7	$	(4.7	)	$	384.5	$	(6.7	)
Derivatives not designated as hedging instruments under ASC 815
Derivatives in an asset position:
Foreign exchange contracts	$	108.0	$	1.6		$	36.2	$	1.5
Forward share repurchase contract	$	200.0	$	19.7		$	—	$	—
Derivatives in a liability position:
Foreign exchange contracts	38.8		(1.7		)	48.0		(1.4		)
Total non-designated derivatives	$	346.8	$	19.6		$	84.2	$	0.1
Total derivatives	$	702.5	$	14.9		$	468.7	$	(6.6	)

Under certain circumstances, such as the occurrence of significant differences between actual cash payments and forecasted cash payments, the ASC 815 programs could be deemed ineffective. We record the effective portion of any change in the fair value of derivatives designated as hedging instruments under ASC 815 to other accumulated comprehensive loss in our consolidated balance sheets, net of deferred taxes, and any ineffective portion to miscellaneous income (expense), net in our consolidated statements of income. During the three months ended December 31, 2016 and 2015, we recorded losses of $0.6 million and $0.7 million, respectively, in miscellaneous income (expense), net in our consolidated statements of income to reflect ineffective portions of hedges. During the six months ended December 31, 2016 and 2015, we recorded losses of $0.4 million and $1.7 million, respectively, in miscellaneous income (expense), net in our consolidated statements of income to reflect ineffective portions of hedges.

The amounts recognized in other comprehensive income (loss), net of taxes, are presented below:



(in millions)	Three Months Ended						Six Months Ended
	December 31, 2016			December 31, 2015			December 31, 2016			December 31, 2015
Derivatives designated as hedging instruments under ASC 815
Interest rate contracts	$	1.4		$	0.7		$	1.9		$	0.2
Foreign exchange contracts	(2.5		)	(0.8		)	(0.8		)	(2.4		)
Total designated derivatives	$	(1.1	)	$	(0.1	)	$	1.1		$	(2.2	)

The unrealized gain (loss) on derivative instruments is net of $0.3 million and $0.4 million taxes, respectively, for the three months ended December 31, 2016 and 2015. The unrealized gain (loss) on derivative instruments is net of $0.5 million and $0.4 million taxes, respectively, for the six months ended December 31, 2016 and 2015.The estimated net amount of the existing losses that are expected to be reclassified into earnings within the next twelve months is $6.3 million.

The change in the fair value of derivatives not designated as hedging instruments under ASC 815 is recorded to miscellaneous (expense) income, net in our consolidated statements of income. The total gains and losses related to foreign exchange contracts not designated as hedging instruments were losses of $0.9 million and of $3.3 million for the three months ended December 31, 2016 and 2015, respectively. The total gains and losses related to foreign exchange contracts not designated as hedging instruments were losses of $0.8 million and of $3.6 million for the six months ended December 31, 2016 and 2015, respectively. The loss related to the forward share repurchase contract for the three months ended December 31, 2016 was $20.3 million.

The unrealized losses recognized are presented below:



(in millions)	Three Months Ended						Six Months Ended
	December 31, 2016			December 31, 2015			December 31, 2016			December 31, 2015
Derivatives not designated as hedging instruments under ASC 815
Forward share repurchase contract	$	(20.3	)	$	—		$	(20.3	)	$	—
Foreign exchange contracts	(1.2		)	(0.1		)	(1.4		)	(0.7		)
Total non-designated derivative unrealized loss, net	$	(21.5	)	$	(0.1	)	$	(21.7	)	$	(0.7	)