Microsoft 2012 Annual Report Download - page 57

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Fair Value Hedge Gains (Losses)
We recognized in other income (expense) the following gains (losses) on contracts designated as fair value hedges and
their related hedged items:
(In millions)
Year Ended June 30,
2012
2011
2010
Foreign Exchange Contracts
Derivatives
$
52
$
(92
)
$
(57
)
Hedged items
(50
)
85
60
Total
$
2
$
(7
)
$
3
Cash Flow Hedge Gains (Losses)
We recognized the following gains (losses) on foreign exchange contracts designated as cash flow hedges (our only cash
flow hedges during the periods presented):
(In millions)
Year Ended June 30,
2012
2011
2010
Effective Portion
Gain (loss) recognized in OCI, net of tax effect of $127, $(340) and $188
$
236
$
(632
)
$
349
Gain (loss) reclassified from OCI into revenue
$
(27
)
$
(7
)
$
495
Amount Excluded from Effectiveness Assessment and Ineffective Portion
Loss recognized in other income (expense)
$
(231
)
$
(276
)
$
(174
)
We estimate that $137 million of net derivative gains included in OCI at June 30, 2012 will be reclassified into earnings
within the following 12 months. No significant amounts of gains (losses) were reclassified from OCI into earnings as a
result of forecasted transactions that failed to occur during fiscal year 2012.
Non-Designated Derivative Gains (Losses)
Gains (losses) from changes in fair values of derivatives that are not designated as hedges are primarily recognized in
other income (expense). These amounts are shown in the table below, with the exception of gains (losses) on derivatives
presented in income statement line items other than other income (expense), which were immaterial for the periods
presented. Other than those derivatives entered into for investment purposes, such as commodity contracts, the gains
(losses) below are generally economically offset by unrealized gains (losses) in the underlying available-for-sale
securities.
(In millions)
Year Ended June 30,
2012
2011
2010
Foreign exchange contracts
$
(119
)
$
(27
)
$
106
Equity contracts
(85
)
35
12
Interest-rate contracts
93
19
(4
)
Credit contracts
(7
)
24
22
Commodity contracts
(121
)
148
(1
)
Total
$
(239
)
$
199
$
135