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Derivative Financial Instruments
 12 Months Ended
Dec. 31, 2012
Summary of Derivative Instruments [Abstract]  
Derivative Financial Instruments
Derivative Financial Instruments
Cash Flow Hedges
Our cash flow hedges include foreign currency forward contracts, foreign currency option contracts, commodity swaps, and commodity purchase contracts. We use foreign currency forward and option contracts to manage currency risk associated with certain transactions, specifically forecasted sales and purchases made in foreign currencies. Our foreign currency contracts hedge forecasted transactions principally occurring within five years in the future, with certain contracts hedging transactions up to 2021. We use commodity derivatives, such as swaps and fixed-price purchase commitments to hedge against potentially unfavorable price changes for items used in production. These include commitments to purchase electricity at fixed prices through 2016.
Fair Value Hedges
Interest rate swaps under which we agree to pay variable rates of interest are designated as fair value hedges of fixed-rate debt. The net change in fair value of the derivatives and the hedged items is reported in BCC interest expense.
Derivative Instruments Not Receiving Hedge Accounting Treatment
We also hold certain derivative instruments, primarily foreign currency forward contracts, for risk management purposes that are not receiving hedge accounting treatment.
Notional Amounts and Fair Values
The notional amounts and fair values of derivative instruments in the Consolidated Statements of Financial Position as of December 31 were as follows:

Notional
amounts(1)
Other assets
Accrued
liabilities

2012

 
2011

2012

 
2011

2012

 
2011

Derivatives designated as hedging instruments:
 
 
 
 
 
 
 
 
 
Foreign exchange contracts

$2,310

 

$2,536


$202

 

$185


($16
)
 

($33
)
Interest rate contracts
388

 
388

26

 
29


 
 
Commodity contracts
99

 
102


 
 
(71
)
 
(112
)
Derivatives not receiving hedge accounting treatment:
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
412

 
605

3

 
2

(42
)
 
(47
)
Commodity contracts
15

 
 


 
 
(8
)
 
 
Total derivatives

$3,224

 

$3,631


$231

 

$216


($137
)
 

($192
)
Netting arrangements
 
 
 
(53
)
 
(61
)
53

 
61

Net recorded balance
 
 
 

$178

 

$155


($84
)
 

($131
)
(1) 
Notional amounts represent the gross contract/notional amount of the derivatives outstanding.
Gains/(losses) associated with our cash flow and undesignated hedging transactions and their effect on Other comprehensive loss and Net earnings were as follows:
Years ended December 31,
2012

 
2011

Effective portion recognized in other comprehensive loss, net of taxes:
 
 
 
Foreign exchange contracts

$35

 

$12

Commodity contracts
(10
)
 
(25
)
Effective portion reclassified out of Accumulated other comprehensive loss into earnings, net of taxes:
 
 
 
Foreign exchange contracts
35

 
42

Commodity contracts
(30
)
 
(26
)
Forward points recognized in Other income/(expense), net:
 
 
 
Foreign exchange contracts
22

 
37

Undesignated derivatives recognized in Other income/(expense), net:
 
 
 
Foreign exchange contracts
(16
)
 
(21
)

Based on our portfolio of cash flow hedges, we expect to reclassify gains of $45 (pre-tax) out of Accumulated other comprehensive loss into earnings during the next 12 months. Ineffectiveness related to our hedges recognized in Other income/(expense) was insignificant for the years ended December 31, 2012 and 2011.
We have derivative instruments with credit-risk-related contingent features. For foreign exchange contracts with original maturities of at least five years, our derivative counterparties could require settlement if we default on our five-year credit facility. For commodity contracts, our counterparties could require collateral posted in an amount determined by our credit ratings. The fair value of foreign exchange and commodity contracts that have credit-risk-related contingent features that are in a net liability position at December 31, 2012 was $9. At December 31, 2012, there was no collateral posted related to our derivatives.