Financial Instruments

9 Months Ended

Sep. 30, 2011

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments

Financial Instruments

Interest Rate Risk Management

We use interest rate swap agreements to manage our interest rate exposure and to achieve a desired proportion of variable and fixed rate debt. These derivatives may be designated as fair value hedges or cash flow hedges depending on the nature of the risk being hedged.

Fair Value Hedges

At September 30, 2011, we did not have any interest rate swaps. At December 31, 2010, pay variable/receive fixed interest rate swaps, with notional amounts of $950 and net asset fair values of $11, were designated and accounted for as fair value hedges. The swaps were structured to hedge the fair value of related debt by converting them from fixed rate instruments to variable rate instruments. No ineffective portion was recorded to earnings during 2011 or 2010.

Terminated Swaps

During the nine months ended September 30, 2011, we early terminated several interest rate swaps that had been designated as fair value hedges of certain debt instruments. The net proceeds from these terminated swaps were $27 and are classified in cash flows from operations in the Condensed Consolidated Statements of Cash Flows. These terminated interest rate swaps had an aggregate notional value of $2,150. The $27 fair value credit adjustment to debt is being amortized to interest expense over the remaining term of the related notes.

Foreign Exchange Risk Management

We are a global company that is exposed to foreign currency exchange rate fluctuations in the normal course of our business. As a part of our foreign exchange risk management strategy, we use derivative instruments, primarily forward contracts and purchase option contracts, to hedge the following foreign currency exposures, thereby reducing volatility of earnings or protecting fair values of assets and liabilities:

• Foreign currency-denominated assets and liabilities

• Forecasted purchases and sales in foreign currency

Summary of Foreign Exchange Hedging Positions

At September 30, 2011, we had outstanding forward exchange and purchased option contracts with gross notional values of $3,777, which is reflective of the amounts that are normally outstanding at any point during the year. These contracts generally mature in 12 months or less.

The following is a summary of the primary hedging positions and corresponding fair values as of September 30, 2011:

Currency Hedged (Buy/Sell)	Gross Notional Value		Fair  Value Asset (Liability)(1)
Euro/U.K. Pound Sterling	$	782	$	(5	)
U.S. Dollar/Euro	589		20
Japanese Yen/U.S. Dollar	501		13
Japanese Yen/Euro	347		21
Swiss Franc/Euro	236		(4		)
U.K. Pound Sterling/U.S. Dollar	218		(5		)
U.K. Pound Sterling/Euro	161		—
Canadian Dollar/Euro	146		(1		)
Swedish Krona/Euro	96		(1		)
U.K. Pound Sterling/Swiss Franc	76		—
Euro/U.S. Dollar	75		—
Mexican Peso/U.S. Dollar	68		(6		)
Indian Rupee/U.S. Dollar	66		(3		)
Danish Krone/Euro	63		—
U.S. Dollar/Japanese Yen	56		—
Norwegian Krone/Euro	55		(1		)
All Other	242		(1		)
Total Foreign Exchange Hedging	$	3,777	$	27

_____________________________

(1) Represents the net receivable (payable) amount included in the Condensed Consolidated Balance Sheet at September 30, 2011.

Foreign Currency Cash Flow Hedges

We designate a portion of our foreign currency derivative contracts as cash flow hedges of our foreign currency-denominated inventory purchases, sales and expenses. No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or loss was included in the assessment of hedge effectiveness. The net asset fair value of these contracts was $30 and $18 as of September 30, 2011 and December 31, 2010, respectively.

Summary of Derivative Instruments Fair Value

The following table provides a summary of the fair value amounts of our derivative instruments:

Designation of Derivatives	Balance Sheet Location	September 30, 2011			December 31, 2010
Derivatives Designated as Hedging Instruments
Foreign exchange contracts – forwards	Other current assets	$	39		$	19
	Other current liabilities	(9		)	(1		)
Interest rate swaps	Other long-term assets	—			11
	Net Designated Asset	$	30		$	29
Derivatives NOT Designated as Hedging Instruments
Foreign exchange contracts – forwards	Other current assets	$	19		$	26
	Other current liabilities	(22		)	(18		)
	Net Undesignated Asset	$	(3	)	$	8
Summary of Derivatives	Total Derivative Assets	$	58		$	56
	Total Derivative Liabilities	(31		)	(19		)
	Net Derivative Asset	$	27		$	37

Summary of Derivative Instruments Gains (Losses)

Derivative gains and (losses) affect the income statement based on whether such derivatives are designated as hedges of underlying exposures. The following is a summary of derivative gains and (losses).

Designated Derivative Instruments Gains (Losses)

The following tables provide a summary of gains (losses) on derivative instruments:

Derivatives in Fair Value Relationships	Location of Gain (Loss) Recognized in Income	Derivative Gain (Loss) Recognized in Income Three Months Ended September 30,				Hedged Item Gain (Loss) Recognized in Income Three Months Ended September 30,
		2011		2010		2011			2010
Interest rate contracts	Interest expense	$	—	$	35	$	—		$	(35	)
Derivatives in Fair Value Relationships	Location of Gain (Loss) Recognized in Income	Derivative Gain (Loss) Recognized in Income Nine Months Ended September 30,				Hedged Item Gain (Loss) Recognized in Income Nine Months Ended September 30,
		2011		2010		2011			2010
Interest rate contracts	Interest expense	$	16	$	113	$	(16	)	$	(113	)

Derivatives in Cash Flow Hedging Relationships	Derivative Gain (Loss) Recognized in OCI (Effective Portion) Three Months Ended September 30,					Location of Derivative Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	Gain (Loss) Reclassified from AOCI to Income (Effective Portion) Three Months Ended September 30,
	2011		2010				2011		2010
Foreign exchange contracts – forwards	$	43	$	(2	)	Cost of sales	$	4	$	7
Derivatives in Cash Flow Hedging Relationships	Derivative Gain (Loss) Recognized in OCI (Effective Portion) Nine Months Ended September 30,					Location of Derivative Gain (Loss) Reclassified from AOCI into Income (Effective Portion)	Gain (Loss) Reclassified from AOCI to Income (Effective Portion) Nine Months Ended September 30,
	2011		2010				2011		2010
Foreign exchange contracts – forwards	$	19	23			Cost of sales	$	—	18

No amount of ineffectiveness was recorded in the Condensed Consolidated Statements of Income for these designated cash flow hedges and all components of each derivative’s gain or (loss) was included in the assessment of hedge effectiveness. In addition, no amount was recorded for an underlying exposure that did not occur or was not expected to occur.

At September 30, 2011, net gains of $40 were recorded in accumulated other comprehensive loss associated with our cash flow hedging activity. The entire balance is expected to be reclassified into net income within the next 12 months, providing an offsetting economic impact against the underlying anticipated transactions.

Non-Designated Derivative Instruments Gains (Losses)

Non-designated derivative instruments are primarily instruments used to hedge foreign currency-denominated assets and liabilities. They are not designated as hedges since there is a natural offset for the re-measurement of the underlying foreign currency-denominated asset or liability.

The following table provides a summary of gains (losses) on non-designated derivative instruments:

Derivatives NOT Designated as Hedging Instruments		Three Months Ended September 30,					Nine Months Ended September 30,
	Location of Derivative Gain (Loss)	2011		2010			2011		2010
Foreign exchange contracts – forwards	Other expense – Currency gains (losses), net	$	19	$	(2	)	$	3	$	87

During the three months ended September 30, 2011 and 2010, we recorded Currency losses, net of $10 and $0, respectively. During the nine months ended September 30, 2011 and 2010, we recorded Currency losses, net of $11 and $20, respectively. Currency losses, net includes the mark-to-market adjustments of the derivatives not designated as hedging instruments and the related cost of those derivatives, as well as the re-measurement of foreign currency-denominated assets and liabilities.