National Oilwell Varco 2010 Annual Report Download - page 70

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Non-designated Hedging Strategy
For derivative instruments that are non-designated, the gain or loss on the derivative instrument is recognized in the same line item associated
with the hedged item in current earnings.
The Company enters into forward exchange contracts to hedge certain nonfunctional currency monetary accounts. The purpose of the
Companys foreign currency hedging activities is to protect the Company from risk that the eventual U.S. dollar-equivalent cash flows from the
nonfunctional currency monetary accounts will be adversely affected by changes in the exchange rates.
As of December 31, 2010, the Company had the following outstanding foreign currency forward contracts that hedge the fair value of
nonfunctional currency monetary accounts (in millions):
Currency Denomination
December 31,
Foreign Currency 2010 2009
British Pound Sterling £ 8 £ 10
Danish Krone DKK 115 DKK 77
Euro 97  106
Norwegian Krone NOK 1,442 NOK 3,096
Swedish Krone SEK SEK 5
U.S. Dollar $ 328 $ 501
Russian Ruble RUB 780 RUB 2,812
As of December 31, 2010 and 2009, the Company has the following respective fair values of its derivative instruments and their balance sheet
classifications (in millions):
Asset Derivatives Liability Derivatives
Fair Value Fair Value
Balance
Sheet December 31, Balance
Sheet December 31,
Location 2010 2009 Location 2010 2009
Derivatives designated as hedging
instruments under ASC Topic
815
Foreign exchange contracts
Prepaid and
other current
assets $ 28 $ 56 Accrued
liabilities $ 12 $ 39
Foreign exchange contracts Other Assets 12 17 Other
Liabilities 1 7
Total derivatives designated as
hedging instruments under ASC
Topic 815 $ 40 $ 73 $ 13 $ 46
Derivatives not designated as
hedging instruments under ASC
Topic 815
Foreign exchange contracts
Prepaid and
other current
assets $ 7 $ 30 Accrued
liabilities $ 10 $ 8
Foreign exchange contracts Other Assets 1 Other
Liabilities  1
Total derivatives not designated
as hedging instruments under
ASC Topic 815 $ 7 $ 31 $ 10 $ 9
Total derivatives $ 47 $ 104 $ 23 $ 55
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