Kraft 2009 Annual Report Download - page 96
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Fair Value Hedges:
The effect of fair value hedges for the year ended December 31, 2009 was:
Gain / (Loss)
Recognized
in Income on
Derivatives
Gain / (Loss)
Recognized
in Income on
Borrowings
(in millions)
Interest rate contracts $ 7 $ (7)
We include the gain or loss on hedged long-term debt and the offsetting loss or gain on the related interest rate swap in interest and other
expense, net.
Hedges of Net Investments in Foreign Operations:
The effect of hedges of net investments in foreign operations for the year ended December 31, 2009 was:
Gain / (Loss)
Recognized in
OCI
Location of
Gain / (Loss)
Recorded in
AOCI
(in millions)
Euro notes $ (65)
Currency Translation
Adjustment
Our currency translation adjustment included gains of $83 million for the year ended December 31, 2008 and $28 million for the year ended
December 31, 2007 related to the euro denominated borrowings.
Economic Hedges:
The effect of economic hedges, derivatives that are not designated as hedging instruments, for the year ended December 31, 2009 was:
Gain / (Loss)
Recognized in
Earnings
Location of
Gain / (Loss)
Recognized
in Earnings
(in millions)
Foreign exchange contracts - intercompany
loans and forecasted interest payments $ (10) Interest expense
Foreign exchange contracts - forecasted
transactions (10) Cost of sales
Commodity contracts 37 Cost of sales
Total $ 17
For commodity contracts not designated as hedging instruments, the impact to earnings was insignificant in 2008, and we recognized net gains of
$56 million in 2007. For foreign exchange contracts not designated as hedging instruments, we recognized net losses of $50 million in 2008 and
$231 million in 2007. The majority of these losses were attributable to hedges of intercompany loans and were economically offset with foreign
currency gains from the intercompany receivable.
93
Source: KRAFT FOODS INC, 10-K, February 25, 2010 Powered by Morningstar® Document Research℠