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2010 Annual Report
43
(7) Financial Instruments
HEDGING ACTIVITIES
The notional value of foreign currency hedge positions totaled approximately $1.4 billion as of September 30, 2010.
Commodity hedges outstanding at year end included a total of approximately 73 million pounds of copper and
aluminum. The majority of hedging gains and losses deferred as of September 30, 2010 are expected to be recognized
over the next 12 months as the underlying forecasted transactions occur. Presented below are amounts reclassified
from accumulated other comprehensive income into earnings, amounts recognized in other comprehensive income
and amounts recognized in earnings for derivatives not receiving deferral accounting. All derivatives receiving deferral
accounting are cash flow hedges.
gain/(loss) reclassified gain/(loss) recognized in
into earnings other comprehensive income
2009 2010 2009 2010
Derivatives Receiving
Deferral Accounting Location
Foreign currency Sales $ (24) (5) (18) 11
Foreign currency Cost of sales (32) 6 (40) 30
Commodity Cost of sales (96) 42 (40) 44
Total $(152) 43 (98) 85
gain/(loss)
recognized in earnings
2009 2010
Derivatives Not Receiving
Deferral Accounting Location
Foreign currency Other income (deductions) $(67) 117
Commodity Cost of sales (11) –
Total $(78) 117
Regardless of whether or not derivatives receive deferral accounting, the Company expects hedging gains or losses to
be essentially offset by losses or gains on the related underlying exposures. The amounts ultimately recognized will
differ from those presented above for open positions which remain subject to ongoing market price fluctuations until
settled. Derivatives receiving deferral accounting are highly effective, no amounts were excluded from the assessment
of hedge effectiveness, and hedge ineffectiveness was immaterial in 2010, 2009 and 2008, including gains or losses on
derivatives that were discontinued because forecasted transactions were no longer expected to occur.
FAIR VALUE MEASUREMENTS
Fair values of derivative contracts outstanding as of September 30 follow:
assets liaBilities assets liaBilities
2009 2009 2010 2010
Derivatives Receiving Deferral Accounting
Foreign currency $15 (33) 31 (9)
Commodity $30 (4) 28 –
Derivatives Not Receiving Deferral Accounting
Foreign currency $6 (7) 36 (41)
Commodity $2 (2) 3 (3)
The Company neither posted nor held any collateral as of September 30, 2010. The maximum collateral the Company
could have been required to post as of September 30, 2010 was $10. As of September 30, 2010 and 2009, the fair value
of long-term debt was $5,292 and $4,915, respectively, which was in excess of the carrying value by $635 and $351,
respectively.