Fair Value Measurements and Derivatives

9 Months Ended

Sep. 30, 2011

Fair Value Measurements and Derivatives

Note 12.  Fair Value Measurements and Derivatives

In measuring the fair value of our assets and liabilities, we use market data or assumptions that we believe market participants would use in pricing an asset or liability including assumptions about risk when appropriate.  Our valuation techniques include a combination of observable and unobservable inputs.

Fair value measurements on a recurring basis — Assets and liabilities that are carried in our balance sheet at fair value are as follows:

			Fair Value Measurements Using
			Quoted
			Prices in		Significant		Significant
			Active		Inputs		Inputs
			Markets		Observable		Unobservable
September 30, 2011	Total		(Level 1)		(Level 2)		(Level 3)
Notes receivable - noncurrent asset	$	110	$	-	$	-	$	110
Marketable securities - current asset		50		24		26
Currency forward contracts - current asset		1				1
Currency forward contracts - current liability		19				19
December 31, 2010
Notes receivable - noncurrent asset	$	103	$	-	$	-	$	103
Marketable securities - current asset		54		16		38
Currency forward contracts - current asset		1				1
Currency forward contracts - current liability		5				5

Foreign currency derivatives — The total notional amounts of outstanding foreign currency derivatives as of September 30, 2011 and December 31, 2010 were $230 and $108 comprised of currency forward contracts involving the exchange of various currencies, as shown in the table below, as well as a cross-currency swap of $3 involving the exchange of Australian dollars and South African rand.  

At September 30, 2011, currency forward contracts with notional amounts of $210 were designated as cash flow hedges.  These contracts are primarily associated with forecasted transactions involving the purchases and sales of inventory through the next twelve months.

		Notional Amount (U.S. Dollar Equivalent)
Functional Currency	Traded Currency	Designated as Cash Flow Hedges		Undesignated		Total		Maturity
Mexican peso	U.S. dollar	$	108	$	-	$	108	Sep-12
Euro	U.S. dollar, Canadian dollar, Hungarian forint, Japaneses yen		43		8		51	Sep-12
British pound	U.S. dollar, Euro		30		1		31	Sep-12
Swedish krona	Euro		17		1		18	Sep-12
Australian dollar	U.S. dollar		12		-		12	Sep-12
Other	Various		-		7		7	Dec-11
Total forward contracts		$	210	$	17	$	227

Amounts to be reclassified to earnings — Deferred losses of $14 at September 30, 2011, which are reported in AOCI are expected to be reclassified to earnings during the next twelve months.  The deferred losses are primarily attributable to the significant strengthening of the U.S. dollar against the Mexican peso during the third quarter of 2011.  Amounts expected to be reclassified to earnings assume no change in the current hedge relationships or to September 30, 2011 market rates.  Deferred losses at December 31, 2010 and the amounts reclassified from AOCI to earnings in the first nine months of 2011 were not significant.

Changes in Level 3 recurring fair value measurements —

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
Notes receivable	2011			2010		2011			2010
Beginning of period	$	109		$	97	$	103		$	94
Accretion of value (interest income)		3			3		9			8
Note sold in Structures sale										(2	)
Unrealized gain (loss) (OCI)		(2	)				(2	)
End of period	$	110		$	100	$	110		$	100

     Substantially all of the notes receivable balance consists of one note, due 2019, obtained in connection with a divestiture in 2004.  Its fair value is adjusted each quarter to the lower of its callable value or its market value, which is based on the publicly traded debt of the operating subsidiary of the obligor.  The fair value of the note at September 30, 2011 was $2 lower than the callable value.  At December 31, 2010, the fair value of the note approximated the callable value.  We believe that the note will be paid in full at the end of the term or sooner.

Fair value measurements on a nonrecurring basis — In addition to items that are measured at fair value on a recurring basis, we also have long-lived assets that may be measured at fair value on a nonrecurring basis.  These assets include intangible assets and property, plant and equipment which may be written down to fair value as a result of impairment.