Change in Accounting Method

6 Months Ended

Jun. 30, 2012

Change in Accounting Method

Change in Accounting Method

2. Change in Accounting Method

Effective January 1, 2012, the Company elected to change the method of valuing U.S. inventories to the average cost method, while in prior years these inventories were valued using the last-in, first-out (“LIFO”) method.  The Company believes the average cost method is preferable as it conforms the inventory costing methods globally, improves comparability with industry peers and better reflects the current value of inventory on the consolidated balance sheets. All prior periods presented have been adjusted to apply the new method retrospectively.

There was no effect of the change on the condensed consolidated results of operations for the three months ended June 30, 2011. The effect of the change for the six months ended June 30, 2011 is as follows:

	As originally
	reported under			Effect of		As
	LIFO			Change		Adjusted
Manufacturing, shipping and delivery expense	$	(2,990	)	$	10	$	(2,980	)
Amounts attributable to the Company:
Net earnings from continuing operations	144			10		154

The effect of the change on the condensed consolidated balance sheets as of December 31, 2011 and June 30, 2011 is as follows:

	As originally
	reported under		Effect of		As
	LIFO		Change		Adjusted
December 31, 2011
Assets:
Inventories	$	1,012	$	49	$	1,061
Share owners’ equity:
Retained earnings	2,295		49		2,344
June 30, 2011
Assets:
Inventories	$	1,065	$	49	$	1,114
Share owners’ equity:
Retained earnings	2,785		49		2,834

The effect of the change on the consolidated share owners’ equity as of January 1, 2011 is as follows:

	As originally
	reported under		Effect of		As
	LIFO		Change		Adjusted
Retained earnings	$	2,640	$	39	$	2,679

The effect of the change on the condensed consolidated cash flows for the six months ended June 30, 2011 is as follows:

	As originally
	reported under			Effect of			As
	LIFO			Change			Adjusted
Net earnings	$	156		$	10		$	166
Change in components of working capital	(209		)	(10		)	(219		)

Had the Company not made this change in accounting method, manufacturing, shipping and delivery expense for the three and six months ended June 30, 2012 would have been higher by $7 million and $1 million, respectively, and net earnings attributable to the Company would have been lower by $7 million and $1 million, respectively, than reported in the condensed consolidated results of operations.