UPS 2010 Annual Report Download - page 120
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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Balance Sheet Recognition
The following table indicates the location on the balance sheet in which our derivative assets and liabilities
have been recognized, and the related fair values of those derivatives (in millions). The table is segregated
between those derivative instruments that qualify and are designated as hedging instruments and those that are
not, as well as by type of contract and whether the derivative is in an asset or liability position.
Asset Derivatives Balance Sheet Location
Fair Value
Hierarchy
Level
December 31, 2010
Fair Value
December 31, 2009
Fair Value
Derivatives designated as hedges:
Foreign exchange contracts ........ Other current assets Level 2 $ 36 $ 63
Interest rate contracts ............. Other non-current assets Level 2 182 74
Total Asset Derivatives ....... $218 $137
Liability Derivatives Balance Sheet Location
Fair Value
Hierarchy
Level
December 31, 2010
Fair Value
December 31, 2009
Fair Value
Derivatives designated as hedges:
Foreign exchange contracts ........ Other current liabilities Level 2 $ (9) $—
Foreign exchange contracts ........ Other non-current liabilities Level 2 (99) (51)
Interest rate contracts ............. Other non-current liabilities Level 2 (29) (13)
Derivatives not designated as
hedges:
Interest rate contracts ............. Other non-current liabilities Level 2 (1) (2)
Foreign exchange contracts ........ Other current liabilities Level 2 (3) —
Total Liability Derivatives ..... $(141) $ (66)
Income Statement Recognition
The following table indicates the amount and location in the income statement in which derivative gains and
losses, as well as the related amounts reclassified from AOCI, have been recognized for those derivatives
designated as cash flow hedges for the years ended December 31, 2010 and 2009 (in millions):
Derivative Instruments in Cash
Flow Hedging Relationships
2010 Amount of
Gain (Loss)
Recognized in
OCI on
Derivative
(Effective
Portion)
2009 Amount of
Gain (Loss)
Recognized in
OCI on
Derivative
(Effective
Portion)
Location of Gain
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)
2010 Amount of
Gain (Loss)
Reclassified from
Accumulated
OCI into Income
(Effective
Portion)
2009 Amount of
Gain (Loss)
Reclassified from
Accumulated
OCI into Income
(Effective
Portion)
Interest rate contracts ..... $ 7 $127 Interest Expense $ (18) $ (15)
Foreign exchange
contracts ............. (48) (42) Interest Expense (27) (4)
Foreign exchange
contracts ............. 30 (75) Revenue 96 96
Commodity contracts ..... — — Revenue — 82
Total .............. $(11) $ 10 $ 51 $159
As of December 31, 2010, $55 million of pre-tax losses related to cash flow hedges that are currently
deferred in AOCI are expected to be reclassified to income over the 12 month period ended December 31, 2011.
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