Hedging Activities

12 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Hedging Activities

Hedging Activities

In the normal course of business, we are exposed to interest rate changes and foreign currency fluctuations. At times, we limit these risks through the use of derivatives such as interest rate swaps and forward foreign exchange contracts. In accordance with our policy, derivatives are only used for hedging purposes. We do not use derivatives for trading or speculative purposes.

Foreign currency rate risk

The majority of our operations are conducted in U.S. dollars; however, certain assets and liabilities, revenues and expense and purchasing activities are incurred in and exposed to other currencies. We have certain foreign currency rate risk programs that manage the impact of foreign currency fluctuation. These programs are utilized on a transactional basis when we consider there to be a risk in fair value or volatility in cash flows. These programs reduce but do not entirely eliminate foreign currency rate risk.

At March 31, 2015 and 2014, forward contracts to hedge the U.S. dollar against cash flows denominated in Canadian dollars with total notional values of $399 million and $463 million were designated for hedge accounting. These contracts will mature between March 2016 and March 2020. Changes in the fair values for contracts designated for hedge accounting are recorded to accumulated other comprehensive income and reclassified into earnings in the same period in which the hedged transaction affects earnings; losses reclassified into earnings for contracts designated for hedge accounting were not material in 2015, 2014 and 2013.

We also have a number of forward contracts to primarily hedge the Euro against cash flows denominated in British pounds and other European currencies. At March 31, 2015 and 2014, the total notional value of these contracts was $1,755 million and $1,091 million. These contracts will mature from April 2015 to February 2016 and none of these contracts were designated for hedge accounting. Changes in the fair values for contracts not designated for hedge accounting are recorded directly to earnings and accordingly, net losses from the changes in the fair value of these contracts of $189 million were recorded within operating expenses in 2015 and were not material in 2014. However, the losses from these contracts are largely offset by changes in the value of the underlying intercompany foreign currency loans.

Interest rate risk

From time to time, we have entered into interest rate swaps to hedge the interest rate risk associated with variable rate debt. Interest rate swaps are used to modify the market risk exposures in connection with the variable rate debt to achieve primarily fixed rate interest expense. The interest rate swap transactions generally involve the exchange of floating or fixed interest payments. Our interest rate swaps that were outstanding at March 31, 2014 all matured during the first half of 2015. These contracts were not designated for hedge accounting and, accordingly, changes in the fair value of these swaps were recorded directly in earnings. At March 31, 2014, the total gross notional value of these contracts was $96 million. Amounts recorded to earnings were not material for 2015 and 2014.

Information regarding the fair value of derivatives on a gross basis is as follows:

	Balance Sheet Caption	March 31, 2015						March 31, 2014
		Fair Value of Derivative				U.S. Dollar Notional		Fair Value of Derivative				U.S Dollar Notional
(In millions)		Asset		Liability				Asset		Liability
Derivatives designated for hedge accounting
Foreign exchange  contracts (current)	Prepaid expenses and other	$	14	$	—	$	76	$	4	$	—	$	64
Foreign exchange  contracts (non-current)	Other assets	53		—		323		27		—		399
Total		$	67	$	—			$	31	$	—
Derivatives not designated for hedge accounting
Foreign exchange  contracts (current)	Prepaid expenses and other	$	7	$	—	$	493	$	2	$	—	$	255
Foreign exchange  contracts (current)	Other accrued liabilities	—		79		1,262		—		13		836
Interest rate swap contracts (current)	Other accrued liabilities	—		—		—		—		1		96
Total		$	7	$	79			$	2	$	14

Refer to Financial Note 20, “Fair Value Measurements,” for more information on these recurring fair value measurements.