DuPont 2012 Annual Report Download - page 90
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(Dollars in millions, except per share)
Foreign Currency Contracts
The company routinely uses forward exchange contracts to reduce its net exposure, by currency, related to foreign currency-denominated monetary assets and
liabilities of its operations so that exchange gains and losses resulting from exchange rate changes are minimized. The netting of such exposures precludes the
use of hedge accounting; however, the required revaluation of the forward contracts and the associated foreign currency-denominated monetary assets and
liabilities intends to achieve a minimal earnings impact, after taxes. Additionally, the company has cross-currency swaps to hedge foreign currency
fluctuations on long-term intercompany loans.
In 2012, the company initiated a program to utilize forward exchange contracts to reduce the net exposure related to foreign currency-denominated monetary
assets and liabilities of its discontinued operations.
Commodity Contracts
The company utilizes options, futures and swaps that are not designated as hedging instruments to reduce exposure to commodity price fluctuations on
purchases of inventory such as corn, soybeans and soybean meal.
The table below presents the fair values of the company's derivative assets and liabilities within the fair value hierarchy, as described in Note 1, as of
December 31, 2012 and 2011.
Derivatives designated as hedging instruments:
Interest rate swaps1Other assets $55 $66
Foreign currency contracts Accounts and notes receivable, net 744
62 110
Derivatives not designated as hedging instruments:
Foreign currency contracts1Accounts and notes receivable, net 88 100
Foreign currency contracts Other assets —43
88 143
Total asset derivatives $ 150 $ 253
Cash collateral1Other accrued liabilities $44 $ —
Derivatives designated as hedging instruments:
Foreign currency contracts Other accrued liabilities $10 $ 12
Commodity contracts Other accrued liabilities — 1
10 13
Derivatives not designated as hedging instruments:
Foreign currency contracts Other accrued liabilities 76 21
Commodity contracts Other accrued liabilities 1 2
77 23
Total liability derivatives $ 87 $ 36
1. Cash collateral held as of December 31, 2012 represents $13 related to interest rate swap derivatives designated as hedging instruments and $31 related to foreign currency
derivatives not designated as hedging instruments. No cash collateral was held as of December 31, 2011.
F-42