DuPont 2012 Annual Report Download - page 60

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(Dollars in millions, except per share)
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The company's worldwide operations utilize the U.S. dollar or local currency as the functional currency, where applicable. For subsidiaries where the USD is
the functional currency, all foreign currency asset and liability amounts are remeasured into USD at end-of-period exchange rates, except for inventories,
prepaid expenses, property, plant and equipment, goodwill and other intangible assets, which are remeasured at historical rates. Foreign currency income and
expenses are remeasured at average exchange rates in effect during the year, except for expenses related to balance sheet amounts remeasured at historical
exchange rates. Exchange gains and losses arising from remeasurement of foreign currency-denominated monetary assets and liabilities are included in income
in the period in which they occur.
For subsidiaries where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-
period exchange rates and the resultant translation adjustments are reported, net of their related tax effects, as a component of accumulated other comprehensive
income (loss) in equity. Assets and liabilities denominated in other than the local currency are remeasured into the local currency prior to translation into USD
and the resultant exchange gains or losses are included in income in the period in which they occur. Income and expenses are translated into USD at average
exchange rates in effect during the period.
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Derivative instruments are reported in the Consolidated Balance Sheets at their fair values. For derivative instruments designated as fair value hedges, changes
in the fair values of the derivative instruments will generally be offset in the income statement by changes in the fair value of the hedged items. For derivative
instruments designated as cash flow hedges, the effective portion of any hedge is reported in accumulated other comprehensive income (loss) until it is cleared
to earnings during the same period in which the hedged item affects earnings. The ineffective portion of all hedges is recognized in current period earnings.
Changes in the fair values of derivative instruments that are not designated as hedges are recorded in current period earnings.
In the event that a derivative designated as a hedge of a firm commitment or an anticipated transaction is terminated prior to the maturation of the hedged
transaction, gains or losses realized at termination are deferred and included in the measurement of the hedged transaction. If a hedged transaction matures, or
is sold, extinguished, or terminated prior to the maturity of a derivative designated as a hedge of such transaction, gains or losses associated with the derivative
through the date the transaction matured are included in the measurement of the hedged transaction and the derivative is reclassified as for trading purposes.
Derivatives designated as a hedge of an anticipated transaction are reclassified as for trading purposes if the anticipated transaction is no longer probable.
Cash flows from derivative instruments accounted for as either fair value hedges or cash flow hedges are reported in the same category as the cash flows from
the items being hedged. Cash flows from all other derivative instruments are generally reported as investing activities in the Consolidated Statements of Cash
Flows. See Note 20 for additional discussion regarding the company's objectives and strategies for derivative instruments.
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On August 30, 2012, the company entered into a definitive agreement with Flash Bermuda Co. Ltd., a Bermuda exempted limited liability company formed by
affiliates of The Carlyle Group (collectively referred to as "Carlyle") in which Carlyle agreed to purchase certain subsidiaries and assets comprising the
company's Performance Coatings business for approximately $4,900 in cash and the assumption of certain liabilities. On February 1, 2013, the sale of
Performance Coatings was completed, resulting in about $4,000 in after-tax proceeds.
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