Notes to Consolidated Financial Statements continued The ineffective portion of these interest rate swaps was insignificant for the years ended December 31, 2017 and 2016. As of December 31, 2017 and 2016, the following amounts were recorded on the balance sheets related to cumulative basis adjustments for fair value hedges: (dollars in millions) Line item in balance sheets in which hedged item is included Carrying amount of hedged liabilities Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities 2017 2016 2017 2016 Long-term debt $ 22,011 $13,013 $316 $113 Forward Interest Rate Swaps In order to manage our exposure to future interest rate changes, we have entered into forward interest rate swaps. We designated these contracts as cash flow hedges. During 2016, we entered into forward interest rate swaps with a total notional value of $1.3 billion and subsequently settled all outstanding forward interest rate swaps. During 2016, a pre-tax loss of $0.2 billion was recognized in Other comprehensive income (loss). Cross Currency Swaps We have entered into cross currency swaps designated as cash flow hedges to exchange our British Pound Sterling, Euro, Swiss Franc and Australian Dollar-denominated cash flows into U.S. dollars and to fix our cash payments in U.S. dollars, as well as to mitigate the impact of foreign currency transaction gains or losses. During 2017, we entered into cross currency swaps with a total notional value of $14.0 billion and settled $10.2 billion notional amount of cross currency swaps. A pre-tax gain of $1.4 billion was recognized in Other comprehensive income (loss) with respect to these swaps. During 2016, we entered into cross currency swaps with a total notional value of $3.3 billion and settled $0.1 billion notional amount of cross currency swaps upon redemption of the related debt. A pre-tax loss of $0.1 billion was recognized in Other comprehensive income (loss) with respect to these swaps. A portion of the gains and losses recognized in Other comprehensive income (loss) was reclassified to Other income (expense), net to offset the related pre-tax foreign currency transaction gain or loss on the underlying hedged item. Net Investment Hedges We have designated certain foreign currency instruments as net investment hedges to mitigate foreign exchange exposure related to non-U.S. dollar net investments in certain foreign subsidiaries against changes in foreign exchange rates. The notional amount of the Euro-denominated debt as a net investment hedge was $0.9 billion and $0.8 billion at December 31, 2017 and 2016, respectively. Undesignated Derivatives We also have the following derivative contracts which we use as an economic hedge but for which we have elected not to apply hedge accounting. Interest Rate Caps We enter into interest rate caps to mitigate our interest exposure to interest rate increases on our ABS Financing Facility and Asset-Backed Notes. During 2017, we entered into interest rate caps with a notional value of $0.3 billion. During 2016, we entered into such interest rate caps with a notional value of $2.5 billion. During 2017 and 2016, we recognized an insignificant increase and reduction in Interest expense, respectively. Concentrations of Credit Risk Financial instruments that subject us to concentrations of credit risk consist primarily of temporary cash investments, short-term and long-term investments, trade receivables, including device payment plan agreement receivables, certain notes receivable, including lease receivables and derivative contracts. 80 verizon.com/2017AnnualReport
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