National Oilwell Varco 2011 Annual Report Download - page 79

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Index to Financial Statements
At December 31, 2011 and 2010, the Company has the following respective fair values of its derivative instruments and their balance sheet classifications (in millions):
$0000.00 $0000.00 $0000.00 $0000.00 $0000.00 $0000.00
Asset Derivatives Liability Derivatives
Fair Value Fair Value
Balance Sheet December 31, Balance Sheet December 31,
Location 2011 2010 Location 2011 2010
Derivatives designated as hedging instruments
under ASC Topic 815
Foreign exchange contracts Prepaid and other current assets $ 16 $ 28 Accrued liabilities $ 62 $ 12
Foreign exchange contracts Other Assets 1 12 Other Liabilities 13 1
Total derivatives designated as hedging instruments
under ASC Topic 815 $ 17 $ 40 $ 75 $ 13
Derivatives not designated as hedging instruments
under ASC Topic 815
Foreign exchange contracts Prepaid and other current assets $ 9 $ 7 Accrued liabilities $ 21 $ 10
Total derivatives not designated as hedging
instruments under ASC Topic 815 $ 9 $ 7 $ 21 $ 10
Total derivatives $ 26 $ 47 $ 96 $ 23
The Effect of Derivative Instruments on the Consolidated Statement of Income
($ in millions)
Derivatives in
ASC Topic
815
Cash Flow
Hedging
Relationships
Amount of Gain
(Loss)
Recognized in OCI
on
Derivative (Effective
Portion) (a)
Location of Gain
(Loss)
Reclassified from
Accumulated OCI
into
Income
(Effective Portion)
Amount of Gain
(Loss)
Reclassified from
Accumulated OCI
into
Income (Effective
Portion)
Location of Gain
(Loss) Recognized in
Income on
Derivative (Ineffective
Portion and Amount
Excluded from
Effectiveness
Testing)
Amount of Gain
(Loss)
Recognized in Income
on
Derivative (Ineffective
Portion and Amount
Excluded from
Effectiveness Testing)
(b)
Years Ended
December 31, Years Ended
December 31, Years Ended
December 31,
2011 2010 2011 2010 2011 2010
Revenue 8 10
Foreign exchange contracts (43) (25) Cost of revenue 40 (22) Other income (expense), net 17 9
Total (43) (25) 48 (12) 17 9
Derivatives
in ASC Topic
815
Fair Value
Hedging Relationships
Location of Gain
(Loss)
Recognized in Income
on Derivative
Amount of Gain (Loss)
Recognized in Income
on
Derivative
ASC Topic 815
Fair Value Hedge
Relationships
Location of Gain (Loss)
Recognized in Income
on
Related Hedged Item
Recognized in Income
on
Related Hedged
Items
Years Ended
December 31, Years Ended
December 31,
2011 2010 2011 2010
Foreign exchange contracts Revenue (2) Firm commitments Revenue 2
Total (2) 2
Derivatives Not Designated as
Hedging Instruments under ASC Topic 815
Location of Gain (Loss)
Recognized in Income
on Derivative
Amount of Gain (Loss)
Recognized in Income on
Derivative
Years Ended
December 31,
2011 2010
Foreign exchange contracts Other income (expense), net (39) 8
Total (39) 8
(a) The Company expects that $43 million of the Accumulated Other Comprehensive Income (Loss) will be reclassified into earnings within the next twelve months with
an offset by gains from the underlying transactions resulting in no impact to earnings or cash flow.
(b) The amount of gain (loss) recognized in income represents $17 million and $9 million related to the ineffective portion of the hedging relationships for the years ended
December 31, 2011 and 2010, respectively, and $18 million and $12 million related to the amount excluded from the assessment of the hedge effectiveness for the
years ended December 31, 2011 and 2010, respectively.