2.2.0.7 false Financial Instruments and Hedging Activities, Concentrations of Credit Risk and Fair Value of Financial Instruments 0216 - Disclosure - Financial Instruments and Hedging Activities, Concentrations of Credit Risk and Fair Value of Financial Instruments true false false false 1 USD false false Shares Standard http://www.xbrl.org/2003/instance shares xbrli 0 Pure Standard http://www.xbrl.org/2003/instance pure xbrli 0 USD Standard http://www.xbrl.org/2003/iso4217 USD iso4217 0 USDEPS Divide http://www.xbrl.org/2003/iso4217 USD iso4217 http://www.xbrl.org/2003/instance shares xbrli 0 $ 2 Financial Instruments and Hedging Activities, Concentrations of Credit Risk and Fair Value of Financial Instruments [Abstract] 0 cbe_FinancialInstrumentsAndHedgingActivitiesConcentrationsOfCreditRiskAndFairValueOfFinancialInstrumentsAbstract cbe false na duration Financial Instruments and Hedging Activities, Concentrations of Credit Risk and Fair Value of Financial Instruments. false false false false false true false false false false false false 1 false false false false 0 0 false false false xbrli:stringItemType string Financial Instruments and Hedging Activities, Concentrations of Credit Risk and Fair Value of Financial Instruments. false 3 Financial Instruments and Hedging Activities, Concentrations of Credit Risk and Fair Value of Financial Instruments 1 cbe_FinancialInstrumentsAndHedgingActivitiesConcentrationsOfCreditRiskAndFairValueOfFinancialInstrumentsTextBlock cbe false na duration This element is used to disclose the entity's entire derivative instruments and hedging activities disclosure and complete... false false false false false false false false false false false verboselabel false 1 false false false false 0 0   <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 16. Financial Instruments and Hedging Activities, Concentrations of Credit Risk and Fair Value of Financial Instruments</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Derivative Instruments and Hedging Activities</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     All derivatives are recognized as assets and liabilities and measured at fair value. For derivative instruments that are not designated as hedges, the gain or loss on the derivative is recognized in earnings currently. A derivative instrument may be designated as a hedge of the exposure to changes in the fair value of an asset or liability or variability in expected future cash flows if the hedging relationship is expected to be highly effective in offsetting changes in fair value or cash flows attributable to the hedged risk during the period of designation. If a derivative is designated as a fair value hedge, the gain or loss on the derivative and the offsetting loss or gain on the hedged asset, liability or firm commitment is recognized in earnings. For derivative instruments designated as a cash flow hedge, the effective portion of the gain or loss on the derivative instrument is reported as a component of accumulated nonowner changes in equity and reclassified into earnings in the same period that the hedged transaction affects earnings. The ineffective portion of the gain or loss is immediately recognized in earnings. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Hedge accounting is discontinued prospectively when (1) it is determined that a derivative is no longer effective in offsetting changes in the fair value or cash flows of a hedged item; (2) the derivative is sold, terminated or exercised; (3) the hedged item no longer meets the definition of a firm commitment; or (4) it is unlikely that a forecasted transaction will occur within two months of the originally specified time period. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     When hedge accounting is discontinued because it is determined that the derivative no longer qualifies as an effective fair-value hedge, the derivative will continue to be carried on the balance sheet at its fair value, and the hedged asset or liability will no longer be adjusted for changes in fair value. When hedge accounting is discontinued because a hedged item no longer meets the definition of a firm commitment, the derivative will continue to be carried on the balance sheet at its fair value, and any asset or liability that was recorded pursuant to recognition of the firm commitment will be removed from the balance sheet and recognized as a gain or loss currently in earnings. When hedge accounting is discontinued because it is probable that a forecasted transaction will not occur within two months of the originally specified time period, the derivative will continue to be carried on the balance sheet at its fair value, and gains and losses reported in accumulated nonowner changes in equity will be recognized immediately in earnings. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     As a result of having sales, purchases and certain intercompany transactions denominated in currencies other than the functional currencies of Cooper’s businesses, Cooper is exposed to the effect of currency exchange rate changes on its cash flows and earnings. Cooper enters into currency forward exchange contracts to hedge significant non-functional currency denominated transactions for periods consistent with the terms of the underlying transactions. Contracts generally have maturities that do not exceed one year. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Currency forward exchange contracts executed to hedge forecasted transactions are accounted for as cash flow hedges. Currency forward exchange contracts executed to hedge a recognized asset, liability or firm commitment are accounted for as fair value hedges. Cooper sometimes enters into certain currency forward exchange contracts that are not designated as hedges. These contracts are intended to reduce cash flow volatility related to short-term intercompany financing transactions. Cooper also enters into commodity swaps to reduce the volatility of price fluctuations on a portion of up to eighteen months of forecasted material purchases. These instruments are designated as cash flow hedges. Cooper does not enter into speculative derivative transactions. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     During October 2005, Cooper entered into cross-currency swaps to effectively convert its newly issued $325 million, 5.25% fixed-rate debt maturing in November 2012 to €272.6 million of 3.55% fixed-rate debt. The $325 million debt issuance proceeds were swapped to €272.6 million and lent through an intercompany loan to a non-U.S. subsidiary to partially fund repayment of the 300 million Euro bond debt that matured on October 25, 2005. The cross-currency swaps mature in November 2012. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Assets and liabilities measured at fair value are based on one or more of three valuation techniques. Valuation techniques utilized for each individual asset and liability category are referenced in the tables below. The valuation techniques are as follows: </div> <div style="margin-top: 6pt"> <table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left"> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(a)</td> <td width="1%"> </td> <td>Market approach – Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;</td> </tr> <tr> <td style="font-size: 6pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(b)</td> <td width="1%"> </td> <td>Income approach – Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing and excess earnings models);</td> </tr> <tr> <td style="font-size: 6pt"> </td> </tr> <tr valign="top" style="font-size: 10pt; color: #000000; background: transparent"> <td width="2%" style="background: transparent"> </td> <td width="3%" nowrap="nowrap" align="left">(c)</td> <td width="1%"> </td> <td>Cost approach – Amount that would be required to replace the service capacity of an asset (replacement cost).</td> </tr> </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The inputs used in measuring fair value are prioritized using a three-tier fair value hierarchy as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Assets and liabilities measured at fair value as of June 30, 2010 on a recurring basis are as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Assets</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Liabilities</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Significant other</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Significant other</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">observable inputs</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">observable inputs</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Valuation</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(in millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">(Level 2)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">(Level 2)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Technique</td> </tr>   <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Short-term currency forward exchange contracts </div></td> <td> </td> <td align="right">$</td> <td align="right">18.0</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(33.2</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(a</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term currency forward exchange contracts </div></td> <td> </td> <td> </td> <td align="right">72.8</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(30.8</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(a</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Short-term commodity swaps </div></td> <td> </td> <td> </td> <td align="right">0.3</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(1.3</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(a</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term cross-currency swaps </div></td> <td> </td> <td> </td> <td align="right">1.7</td> <td> </td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(a</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Currency forward exchange contracts representing approximately $45.0 million of assets and $33.1 million of liabilities at June 30, 2010 are not designated as hedging instruments. Except as discussed in the preceding sentence, the currency forward exchange contracts and commodity swaps in the above table are designated as hedging instruments. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Assets and liabilities measured at fair value as of December 31, 2009 on a recurring basis are as follows: </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="64%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> <td width="5%"> </td> <td width="3%"> </td> <td width="1%"> </td> <td width="3%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Assets</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000">Liabilities</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Significant other</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Significant other</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">observable inputs</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">observable inputs</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Valuation</td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td nowrap="nowrap" align="left">(in millions)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">(Level 2)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">(Level 2)</td> <td> </td> <td nowrap="nowrap" align="center" colspan="3">Technique</td> </tr>   <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Short-term currency forward exchange contracts </div></td> <td> </td> <td align="right">$</td> <td align="right">13.6</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right">$</td> <td align="right">(12.7</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(a</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term currency forward exchange contracts </div></td> <td> </td> <td> </td> <td align="right">55.8</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(22.5</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(a</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Short-term commodity swaps </div></td> <td> </td> <td> </td> <td align="right">3.3</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(0.7</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(a</td> <td nowrap="nowrap">)</td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Long-term cross-currency swaps </div></td> <td> </td> <td> </td> <td align="right">—</td> <td> </td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(54.4</td> <td nowrap="nowrap">)</td> <td> </td> <td nowrap="nowrap" align="right"> </td> <td align="right">(a</td> <td nowrap="nowrap">)</td> </tr> <tr style="font-size: 1px"> <td colspan="13" align="left" style="border-top: 1px solid #000000"> </td> </tr>  </table> </div> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Currency forward exchange contracts representing approximately $35.7 million of assets and $24.1 million of liabilities at December 31, 2009 are not designated as hedging instruments. Except as discussed in the preceding sentence, the currency forward exchange contracts and commodity swaps in the above table are designated as hedging instruments. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     There were no changes in the valuation techniques used to measure asset or liability fair values on a recurring basis during the six months ended June 30, 2010. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Gains or losses on derivative instruments are reported in the same line item as the underlying hedged transaction in the consolidated statements of income. The net gain or loss on currency forward exchange contracts was not material in the six months ended June 30, 2010 and 2009. For commodity swaps, Cooper recognized, in cost of sales, a net gain of $1.7 million in the six months ended June 30, 2010 and a net loss of $14.6 million in the six months ended June 30, 2009. At June 30, 2010, Cooper estimates that approximately $0.8 million of net losses on derivative instruments designated as cash flow hedges will be reclassified from accumulated other nonowner changes in equity to earnings during the next twelve months. The amount of discontinued cash flow hedges in the six months ended June 30, 2010 and 2009 was not material. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The table below summarizes the U. S. dollar equivalent contractual amounts of Cooper’s forward exchange contracts at June 30, 2010 and December 31, 2009. </div> <div align="center"> <table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">  <tr valign="bottom"> <td width="76%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> <td width="5%"> </td> <td width="1%"> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">June 30,</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2">December 31,</td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2010</td> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000">2009</td> <td> </td> </tr> <tr style="font-size: 8pt" valign="bottom"> <td> </td> <td> </td> <td nowrap="nowrap" align="center" colspan="6">(in millions)</td> <td> </td> </tr>   <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">U.S. Dollar </div></td> <td> </td> <td align="left">$</td> <td align="right">560.7</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">533.1</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Euro </div></td> <td> </td> <td> </td> <td align="right">333.3</td> <td> </td> <td> </td> <td> </td> <td align="right">353.4</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">British Pound Sterling </div></td> <td> </td> <td> </td> <td align="right">308.4</td> <td> </td> <td> </td> <td> </td> <td align="right">294.0</td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">Canadian Dollar </div></td> <td> </td> <td> </td> <td align="right">28.1</td> <td> </td> <td> </td> <td> </td> <td align="right">5.7</td> <td> </td> </tr> <tr valign="bottom" style="background: #cceeff"> <td> <div style="margin-left:15px; text-indent:-15px">Other </div></td> <td> </td> <td> </td> <td align="right">33.7</td> <td> </td> <td> </td> <td> </td> <td align="right">28.1</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td> <td> </td> </tr> <tr valign="bottom"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td align="left">$</td> <td align="right">1,264.2</td> <td> </td> <td> </td> <td align="left">$</td> <td align="right">1,214.3</td> <td> </td> </tr> <tr style="font-size: 1px"> <td> <div style="margin-left:15px; text-indent:-15px">  </div></td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> <td> </td> <td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td> <td> </td> </tr>  </table> </div> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The contractual amounts of Cooper’s commodity swap contracts at June 30, 2010 and December 31, 2009 were approximately $19 million and $15 million, respectively. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Other Instruments</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     In the normal course of business, Cooper executes stand-by letters of credit, performance bonds and other guarantees that ensure Cooper’s performance or payment to third parties that are not reflected in the consolidated balance sheets. The aggregate notional value of these instruments was $106.7 million and $107.4 million at June 30, 2010 and December 31, 2009, respectively. In the past, no significant claims have been made against these financial instruments. Management believes the likelihood of demand for payment under these instruments is minimal and expects no material losses to occur in connection with these instruments. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Concentrations of Credit Risk</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Concentrations of credit risk with respect to trade receivables are limited due to the wide variety of customers as well as their dispersion across many different geographic areas with no one customer receivable exceeding 4.7% of accounts receivable at June 30, 2010 (5.2% at December 31, 2009). </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Fair Value of Financial Instruments Other than Derivatives</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Cooper’s financial instruments other than derivative instruments consist primarily of cash and cash equivalents, trade receivables, trade payables and debt instruments. The book values of cash and cash equivalents, trade receivables, and trade payables are considered to be representative of their respective fair values. Cooper had a book value of approximately $935.3 million and $934.4 million for debt instruments at June 30, 2010 and December 31, 2009, respectively. The fair value of these debt instruments, as represented primarily by quoted market prices, was approximately $1.04 billion and $1.01 billion at June 30, 2010 and December 31, 2009, respectively. </div> </div>  <!-- Begin Block Tagged Note false false false us-types:textBlockItemType textblock This element is used to disclose the entity's entire derivative instruments and hedging activities disclosure and complete disclosure regarding the fair value of financial instruments and the measurements of those instruments, assets, and liabilities as a single block of text. No authoritative reference available. false 1 2 false UnKnown UnKnown UnKnown false true