Fair Value Measurements and Derivatives

3 Months Ended

Mar. 31, 2012

Fair Value Measurements and Derivatives

Note 11. 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
March 31, 2012	Total		(Level 1)		(Level 2)		(Level 3)
Notes receivable - noncurrent asset	$	119	$	-	$	-	$	119
Marketable securities - current asset		58		37		21
Currency forward contracts - current asset		2				2
Currency forward contracts - current liability		4				4
December 31, 2011
Notes receivable - noncurrent asset	$	116	$	-	$	-	$	116
Marketable securities - current asset		56		33		23
Currency forward contracts - current asset		1				1
Currency forward contracts - current liability		16				16

Foreign currency derivatives — The total notional amounts of outstanding foreign currency forward contracts as of March 31, 2012 and December 31, 2011 were $177 and $213 comprised of currency forward contracts involving the exchange of various currencies.

The following currency forward contracts were outstanding at March 31, 2012 and 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
U.S. dollar	Mexican peso	$	90	$	-	$	90		Mar-13
Euro	U.S. dollar, Canadian dollar, Hungarian forint, Japanese yen		26		5		31		Dec-12
British pound	U.S. dollar, Euro		13				13		Dec-12
Swedish krona	Euro		12				12		Dec-12
Australian dollar	U.S. dollar		8				8		Dec-12
Indian rupee	U.S. dollar, British pound, Euro				16		16		Dec-12
Other	Various		6		1		7		Dec-12
Total forward contracts		$	155	$	22	$	177

Cash flow hedges — With respect to contracts designated as cash flow hedges, changes in fair value during the period in which the contracts remain outstanding are reported in other comprehensive income (OCI) to the extent such contracts remain effective. Changes in fair value of those contracts that are not designated as cash flow hedges are reported in income in the period in which the changes occur. Forward contracts associated with product-related transactions are marked to market in cost of sales while other contracts are marked to market through other income, net. Amounts recorded in OCI are ultimately reclassified to earnings in the same periods in which the underlying transactions affect earnings.

Amounts to be reclassified to earnings — Deferred losses of $3 at March 31, 2012, which are reported in AOCI, are expected to be reclassified to earnings during the next twelve months. Amounts expected to be reclassified to earnings assume no change in the current hedge relationships or to March 31, 2012 market rates. Deferred losses at December 31, 2011 were $13, of which $2 was reclassified from AOCI to earnings in the first quarter of 2012. The remainder of the reduction of deferred losses in AOCI was primarily attributable to the weakening of the U.S. dollar against the Mexican peso during the first quarter of 2012.

Changes in Level 3 recurring fair value measurements —

	Three Months Ended
	March 31,
Notes receivable	2012			2011
Beginning of period	$	116		$	103
Accretion of value (interest income)		4			3
Other		(1	)
End of period	$	119		$	106

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.