Honeywell 2010 Annual Report Download - page 84

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HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
Gains (losses) recognized in OCI (effective portions) consist of the following:
Year Ended
December, 31
Designated Cash Flow Hedge 2010 2009
Foreign currency exchange contracts $ 12 $ 18
Commodity contracts (7) (1)
Gains (losses) reclassified from AOCI to income consist of the following:
Year Ended
December 31,
Designated Cash Flow Hedge Income Statement Location 2010 2009
Foreign currency exchange contracts Product sales $ (19) $ 54
Cost of products sold 30 (44)
Sales & general administrative (3) (1)
Commodity contracts Cost of products sold $ (8) $ (7)
Ineffective portions of foreign currency exchange contracts and commodity derivative instruments designated in cash flow hedge relationships were
insignificant in the years ended December 31, 2010 and 2009 and are located in cost of products sold.
Interest rate swap agreements are designated as hedge relationships with gains or (losses) on the derivative recognized in Interest and other financial
charges offsetting the gains and losses on the underlying debt being hedged. Gains or (losses) on interest rate swap agreements recognized in earnings were
$24 and $(2) million in the years ended December 31, 2010 and 2009 respectively.
We also economically hedge our exposure to changes in foreign exchange rates principally with forward contracts. These contracts are marked-to-
market with the resulting gains and losses recognized in earnings offsetting the gains and losses on the non-functional currency denominated monetary assets
and liabilities being hedged. We recognized $18 million and $85 million of expense, in Other (Income) Expense for the years ended December 31, 2010 and
2009, respectively.
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